<PAGE>

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

                                  FORM 20-F/A-1

      (mark one)

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

                         Commission file number 0-29392

                              CALAIS RESOURCES INC.
                              ---------------------
             (Exact name of Registrant as specified in its charter)

                            British Columbia, Canada
                            ------------------------
                 (Jurisdiction of incorporation or organization)

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

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

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

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

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

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

<PAGE>

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

<PAGE>

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

                                     PART I

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

                                     PART II

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

                                    PART III

Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
Signature Page

<PAGE>

                                  INTRODUCTION

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

BUSINESS OF CALAIS RESOURCES, INC.

We are a mineral exploration company engaged directly and indirectly through
subsidiaries, in the acquisition and exploration of mineral interests. Our
primary property is the Caribou prospect (exploration stage) located in
Nederland, Colorado. We have reported the existence of measured, indicated and
inferred mineral resources on our Caribou prospect (as described in more detail
below). We have calculated these resources in accordance with the requirements
of Canadian National Instrument 43-101 - Standards of Disclosure of Mineral
Projects, but we will not know that a commercially viable mineral deposit or a
reserve exists in the Caribou prospect until a sufficient and appropriate
exploration work is done and a comprehensive evaluation of such work concludes
economic and legal feasibilty. United States investors are advised that while
terms such as "measured," "indicated" and "inferred" mineral resources are
recognized and required by Canadian regulations, the United States Securities
and Exchange Commission (the "SEC") does not recognize them. "Mineral resources"
have a great amount of uncertainty as to their existence, and great uncertainty
as to their economic and legal feasibility. It cannot be assumed that all or any
part of a mineral resource will ever be upgraded to a higher category. Under
Canadian rules, estimates of inferred mineral resources may not form the basis
of feasibility or other economic studies. United States investors are cautioned
not to assume that all or any part of mineral resources will ever be converted
into mineral reserves or ever recovered profitably, if at all.

      Calais Resources, Inc also has interests in exploration prospects in
Nevada, and Panama.

FINANCIAL AND OTHER INFORMATION

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

FORWARD-LOOKING STATEMENTS

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

<PAGE>

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

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

3.A. SELECTED HISTORICAL FINANCIAL DATA

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

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

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

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

<PAGE>

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

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

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

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

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

(1) Cumulative Net Loss since incorporation is ($31,284).

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

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

<PAGE>

Item 3.A(3) - Exchange Rates

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

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

      For purposes of this table, the rate of exchange means the noon buying
rate in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York. The table sets forth
the number of Canadian Dollars required under that formula to buy one U.S.
Dollar. The average rate means the average of the exchange rates on the last day
of each month during the period. The rate of exchange on March 31, 2004 was
Cdn$1.31, meaning that at that date Cdn$1.31 would purchase US$1.00, or US$.76
would purchase Cdn$1.00.

<TABLE>
<CAPTION>
   MONTH ENDED         HIGH      LOW
------------------    ------    ------
<S>                   <C>       <C>
June 30, 2004         $ 1.20    $ 0.85

May 31, 2004          $ 1.33    $ 1.01

April 30, 2004        $ 1.35    $ 0.92

March 31, 2004        $ 1.35    $ 1.31

February 29, 2004     $ 1.34    $ 1.31

January 31, 2004      $ 1.33    $ 1.27

December 31, 2003     $ 1.33    $ 1.26

November 30, 2003     $ 1.33    $ 1.29

October 31, 2003      $ 1.35    $ 1.30

September 30, 2003    $ 1.38    $ 1.33

August 31, 2003       $ 1.41    $ 1.38

July 31, 2003         $ 1.41    $ 1.33

June 30, 2003         $ 1.38    $ 1.33

May 31, 2003          $ 1.44    $ 1.34
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED MAY 31    AVERAGE     HIGH      LOW
-----------------    -------    ------    ------
<S>                  <C>        <C>       <C>
2004

2003                 $  1.46    $ 1.59    $ 1.33

2002                 $  1.57    $ 1.60    $ 1.52

2001                 $  1.52    $ 1.58    $ 1.47

2000                 $  1.47    $ 1.51    $ 1.44

1999                 $  1.51    $ 1.58    $ 1.45
</TABLE>

3.B. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

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

<PAGE>

Not applicable.

3.D. RISK FACTORS

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

RISKS ASSOCIATED WITH OUR FINANCIAL RESULTS AND CAPITALIZATION:

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

      Note 1 to our consolidated financial statements for the year ended May 31,
2003, included herein expresses the following concerns about our ability to
continue as a going concern even following the US$4,500,000 loan we received in
August 2003:

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

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

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

      These losses have continued during our 2004 fiscal year and we expect that
these losses will continue for the foreseeable future. In view of the matters
described in the preceding paragraphs, recoverability of a major portion of the
recorded asset amounts shown in our consolidated financial statements is
dependent upon our continued operations, which in turn is dependent upon our
ability to meet our financing requirements on a continuing basis, to maintain
present financing, and to succeed in our future operations. The consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should we be unable to
continue in existence.

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

<PAGE>

      Until we completed financing with accredited investors in August 2003, we
incurred significant working capital shortages, with negative working capital at
May 31, 2003 of approximately Cdn$(3,135,000). While the August financing made
approximately US$3,500,000 net proceeds available to us, it is not likely that
this funding will be sufficient to achieve our business goals. As of February
29, 2004, our working capital had reduced to Cdn$1,129,961, and has continued to
decrease subsequently. We need a significant amount of additional funding within
the next twelve to 24 months in order to carry out our business plan, and we
cannot offer any assurance that such funding will be available on reasonable
terms when required, if any funding is available at all.

      Our ability to exploit our mineral interests will be dependent upon our
ability to obtain financing through the joint venturing of projects, conveying
an interest in our mineral prospects to persons who will further explore,
define, and (if warranted) develop those prospects, obtaining investment from
industry partners who want to develop the prospects through Calais, debt
financing, equity financing or other means. If we are unable to obtain such
financing on reasonable terms, our ability to exploit our mineral prospects may
be delayed or indefinitely postponed. Although our goal is to continue
exploration for mineral resources, ultimately if we are unable to finance future
exploration, we may lose our interest in these prospects.

OUR BALANCE SHEET REFLECTS A SIGNIFICANT INVESTMENT IN MINERAL PROSPECTS AS
REQUIRED BY CANADIAN ACCOUNTING PRINCIPLES, ALL OF WHICH IS EXPENSED FOR UNITED
STATES ACCOUNTING PURPOSES.

      Our financial statements reflect an investment in our mineral prospects of
Cdn$13,207,000 at May 31, 2003 and Cdn$12,710,000 at May 31, 2002
(Cdn$14,136,000 at February 29, 2004) under generally accepted accounting
principles in effect in Canada. United States GAAP requires us to expense all of
our mineral prospect expenses and, therefore, we carry the prospects on our
balance sheet at a zero cost for United States reporting purposes.

      As a result, our shareholder's equity under Canadian accounting principals
becomes a shareholder deficiency under United States principals, as reflected in
the following table:

<TABLE>
<CAPTION>
                    Shareholders' equity under   Shareholders' deficiency under
                           Canadian GAAP                    U.S. GAAP
                    --------------------------   ------------------------------
<S>                 <C>                          <C>
February 29, 2004          Cdn$9,169,000                 Cdn$(5,400,000)

May 31, 2003               Cdn$5,542,000                 Cdn$(8,137,000)

May 31, 2002               Cdn$5,574,000                 Cdn$(7,660,000)
</TABLE>

      These significant differences reflects the questions as to recoverability
of our balance sheet values which are treated differently in the United States
and Canada, and there can be no assurance that we will be able to recover our
investment in our mineral interests or that either the United States accounting
treatment or the Canadian accounting treatment accurately reflect the value of
our mineral interests.

THERE IS A RISK THAT CALAIS MAY LOSE ITS INTEREST IN ITS CARIBOU PROSPECTS IF IT
DOES NOT MEET ITS OBLIGATIONS TO A LENDER HOLDING THOSE PROSPECTS AS COLLATERAL.

We have pledged our interest in our Caribou prospect to collateralize the August
2003 loan of US$4,500,000. Although there are no material covenants with respect
to the loan and no payments are due until July 31, 2005, if we are unable to
repay the loan when due, our creditors will have the right to

<PAGE>

foreclose against the Caribou prospect and acquire it from Calais. This would
result in the loss of our most significant asset. At the present time, we do not
have the necessary resources with which to repay the amount due. One of our
focuses during the next year is to obtain the financing necessary to repay this
loan or negotiate with our creditors to extend the term of the loan. We cannot
offer any assurance that we will be able to accomplish either.

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

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

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

      As described below and even though we have identified mineral resources in
accordance with Canadian National Instrument 43-101 - Standards of Disclosure of
Mineral Projects, we cannot offer any assurance that we will be able to achieve
production of valuable minerals from any of our prospects. Unless we are able to
achieve such production within a reasonable period of time and in a manner that
results in revenues greater than the expenses incurred, we will not be able to
continue to finance our operations, and we will likely not be able to attract
further equity or debt investment when necessary.

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

      During the course of the last two fiscal years and subsequently, we have
been required to raise in excess of $5,000,000 of net working capital (after
expenses) to finance our business operations and acquisitions. We have raised
this capital by issuing shares of common stock and warrants to accredited
investors, secured loan, unsecured loans, and by issuing convertible debentures
to certain insiders. During this same period of time, we have issued common
stock warrants and shares of common stock to several persons in exchange for
their promises to perform services for us. In many cases, we have issued shares
of common stock and warrants and options exercisable for shares of common stock
at prices below the then-current market price for our common stock as reported
on the OTC Bulletin Board. It is our experience that persons purchasing shares
in these capital raising transactions will not purchase shares unless the shares
are issued at discounts from the price of our common stock as reported in the
market at the time of the transaction.

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

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

<PAGE>

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

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

      We have 100,000,000 shares of our common stock authorized, of which
11,193,385 shares were outstanding as of May 31, 2003 and 10,676,818 were
outstanding as of May 31, 2002 (20,018,453 shares were outstanding at February
29, 2004). In addition, as of May 31, 2003 we have reserved an additional
981,500 shares for issuance upon the exercise of options and 548,803 shares for
issuance upon exercise of warrants that were outstanding, and we have reserved
an additional 4,143,988 shares for issuance upon conversion of outstanding
convertible debentures. As of February 29, 2004 we have reserved 1,232,500
shares for issuance upon the exercise of options and 80,000 shares for issuance
upon exercise of warrants that were outstanding, and we have reserved 4,143,988
shares for issuance upon conversion of outstanding convertible debentures.

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

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

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

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

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

<PAGE>

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

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

FOREIGN OPERATIONS ARE SUBJECT TO MANY RISKS.

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

RISKS ASSOCIATED WITH OUR MANAGEMENT AND PRINCIPAL SHAREHOLDERS

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

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

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

      Our management, directors, and greater-than-5% stockholders (and their
affiliates), acting together, have the ability to control substantially all
matters submitted to the Company's stockholders for approval (including the
election and removal of directors and any merger, consolidation or sale of all
or substantially all of our assets) and to control our management and affairs.
Accordingly, this concentration of ownership may have the effect of delaying,
deferring or preventing a change in control of the Company, impeding a merger,
consolidation, takeover or other business combination involving the Company or
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of Calais which in turn could materially adversely
affect the market price of our stock.

<PAGE>

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

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

      When we first became subject to the reporting requirements of the
Securities Exchange Act of 1934 as a "foreign private issuer," we became liable
for filing annual reports with the Securities and Exchange Commission on Form
20-F and other reports on Form 6-K as we filed reports with Canadian authorities
or issued press releases or proxy statements. While we have filed our annual
reports on Form 20-F, prior to our 2003 Form 20-F (filed in November 2003), the
reports were not reviewed by legal counsel and do not know whether there are any
deficiencies. Furthermore, we did not file any Forms 6-K which were required by
the Securities and Exchange Commission's rules. Consequently, we may be subject
to enforcement action from the Securities and Exchange Commission or possible
civil action from investors who may have relied on reports that are subsequently
judged to be incomplete or inaccurate in any material respect. If any person or
regulatory agency brings any action against us, it will involve a significant
amount of time and cost and will distract our management from pursuing our
business plan as described herein.

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

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

RISKS ASSOCIATED WITH OUR BUSINESS AND OPERATIONS

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

      Our operations are and will continue to be subject to all of the hazards
and risks normally associated with exploring for mineral resources. These risks
include finding insufficient ore reserves (if any), fluctuations in production
costs that may make the mineral interests unattractive for further exploration
or subsequent activities; significant environmental and other regulatory
restrictions; labor disputes; geological problems; pit-

<PAGE>

walls or tailings dam failures; force majeure events; and the risk of injury to
persons, property or the environment. Operating cost increases can have a
negative effect on the value of and ability to finance our mineral exploration
activities and may require that we cease operations on or abandon some
interests.

THE MINING INDUSTRY IS SUBJECT TO ENVIRONMENTAL RISKS.

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

FEDERAL, STATE AND LOCAL GOVERNMENTAL REGULATIONS.

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

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

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

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

      Title to mineral interests is complex and involves many issues (not all of
which are of record with the local clerk and recorder's office). We have
performed a large amount of work to provide us the greatest assurance that we
have good title to the patented and unpatented mining claims included within our
Caribou prospect.

      The mineral interests in Nevada are generally unpatented mining claims,
and such claims are subject to greater uncertainties than are associated with
patented mineral interests. Furthermore we do not own title of record to the
Nevada prospect, although we are seeking to acquire record title in accordance
with our earlier agreements. We cannot offer any assurance that we will be able
to cause our predecessors in title to transfer their title to us,
notwithstanding what we believe is their contractual obligations. If we are
unable to obtain

<PAGE>

good title to the Nevada prospect, we will not explore those prospects and we
will not be able to benefit from the monies we have expended on them to date.

      Our mineral interests in Panama are made up completely of concessions from
the government of Panama. Based on our review of the interests we acquired in
Panama, and although the concessions are not registered in our name, we believe
that we have the right to explore and benefit from those concessions under
Panamanian law.

WE HAVE NO PROVEN RESERVES ON ANY OF OUR MINERAL INTERESTS.

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

      As is discussed above, we have identified mineral resources on our Caribou
prospect in accordance with the requirements of Canadian National Instrument
43-101 - Standards of Disclosure of Mineral Projects. United States investors
are advised that while terms such as "measured," "indicated" and "inferred"
mineral resources are recognized and required by Canadian regulations, the
United States Securities and Exchange Commission (the "SEC") does not recognize
them. "Mineral resources" have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal feasibility. It
cannot be assumed that all or any part of a mineral resource will ever be
upgraded to a higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or other economic
studies. United States investors are cautioned not to assume that all or any
part of our mineral resources will ever be converted into mineral reserves or
ever recovered profitably, if at all. Unsuccessful exploration efforts could
have a significant negative impact on our financial condition and operations.

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

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

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

FORWARD-LOOKING STATEMENTS MAY PROVE TO BE INACCURATE.

      In our effort to make the information in this report more meaningful, this
report contains both historical and forward-looking statements. All statements
other than statements of historical fact are forward-looking statements within
the meanings of Section 27A of the Securities Act of 1933, and Section 21E of
the Securities

<PAGE>

Exchange Act of 1934. Forward-looking statements in this report are not based on
historical facts, but rather reflect the current expectations of our management
concerning future results and events.

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

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

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

ITEM 4. INFORMATION ON THE COMPANY

4.A.  HISTORY AND DEVELOPMENT OF THE COMPANY.

GENERAL INFORMATION

      Our legal name is Calais Resources Inc. We were incorporated under the
laws of British Columbia, Canada, on December 30, 1986 under the name "Millenium
Resources Inc." We changed our name to Calais Resources, Inc. on March 19, 1992.
We are engaged in the exploration of natural resource prospects. To date our
activities have not included development or mining operations. Our primary
mineral interests are the Caribou prospect in Colorado and mineral concessions
in the Panama. We also claim interests in certain prospects in Nevada.

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

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

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

      We operate through various subsidiaries.

<PAGE>

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

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

      The information contained in this Annual Report is current as at May 31,
2004, except where a different date is specified. In response to Item 4.A(7) of
Form 20-F, there are no pending public takeover offers by any third party in
respect of our shares or otherwise, or by us in respect to any other person's
shares. To our knowledge, there have been no public takeover offers in more than
the last three fiscal years.

SUBSEQUENT TO FISCAL 2003

Capital Raising Activities

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

<TABLE>
<S>                                               <C>
Prepayment of two-years interest to the lender    US$1,161,000

Repayment of remaining amounts due to bank        US$1,080,000

Repayment of interim mortgage due to Thomas S.
Hendricks for funds he advanced                   US$  587,680

Repayment of trade payables                       US$  700,000

Repayment of accrued compensation                 US$  223,822

Financing costs                                   US$   95,000
</TABLE>

<PAGE>

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

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

      From August, 2003 through May 2004, we raised an additional US$218,600
cash from the sale of our restricted common stock and warrants to accredited
investors and to option holders upon exercise of options held by them. We have
also issued 205,000 shares of our restricted stock to five accredited investors
(including officers) for services rendered to Calais or for property purchased
by Calais - in both cases permitting us to preserve working capital for other
purposes.

      Subsequent to May 31, 2004, we have not raised any additional funds from
the sale of our restricted common stock or warrants

Property Exploration and Maintenance Activities

      After receiving the investment from the accredited investors, we commenced
a drilling program on our Caribou prospect which we hope will expand the mineral
resources we have already identified on this property and which were announced
publicly in January 2004. During September and October 2003 we drilled two core
holes at a cost of about US$150,000, and subsequently drilled an additional four
holes at a cost of approximately US$250,000. We also have updated all of the
geologic information about the Caribou prospect in a three-dimensional program
which we expect will assist us in determining future exploration activities,
whether development drilling is warranted, and have identified and reported
mineral resources on our Caribou prospect as required by Canadian regulation
under Canadian National Instrument 43-101 - Standards of Disclosure of Mineral
Projects. We have not identified any reserves or determined whether commencement
of commercial production is warranted.

      We have also sent a team to Panama (including the brother of our
president) to explore our Panamanian mineral concessions in the Faja de Oro
District. In this process we have extended certain obligations we undertook, and
to complete a $250,000 exploration program for lode deposits by September 25,
2004, and an additional $250,000 program to explore for placer gold deposits and
install a pilot placer operation. During our 2005 fiscal year we will attempt to
commence a small placer operation on our Panama concession if we can obtain the
necessary financing to do so. Even if we are able to commence that operation
(which is required not later than September 25, 2004, by our agreements for that
property), it is not expected to be significant enough to generate profits, but
rather (if successful) may serve as a method to generate revenue to continue
further placer and initial hard rock explorations. We need additional financing
to meet these obligations or, if we are not able to do so, we may lose our
interest in the Panamanian concession.

      During fiscal 2004, we have accomplished no additional exploration work on
our Nevada prospect, but we have done a significant amount of work to ascertain
the status of title to the Nevada prospect. Furthermore, we obtained an
agreement from Marlowe Harvey (a significant shareholder, previously an officer
and director of, and the person who has agreed to transfer a significant portion
of the Manhattan prospect to Calais) pursuant to which he recognized his
responsibility to provide us evidence of good title to the mineral interests in
Nevada. At the present time, although we believe we have enforceable contractual
rights to acquire title to the mineral interests in Nevada, issues remain and we
have not yet been assigned any direct interest in those prospects.

<PAGE>

      Because of working capital shortages, we did not perform any significant
drilling on our mineral interests during fiscal 2003 (ended May 31, 2003).

4.B. BUSINESS OVERVIEW

THE NATURE OF OUR BUSINESS OPERATIONS.

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

      If we identify prospects, we endeavor to acquire the rights to the
prospect and surrounding claims. During the acquisition process, we also proceed
through a due diligence period to the commencement of a full scientific analysis
of the district, followed by an exploration program and (if ever warranted) a
development program. Suitable results at each step in the process are a
prerequisite to further exploration. Upon suitable identification of a mineral
deposit and reserve (of which there can be no assurance), we will then make the
decision to either proceed with the mining thereof, to joint venture with a
major mining company, or to sell outright.

      Exploration of mineral resources can be expensive. Through the years, we
have been accomplishing limited exploration activities with funds provided
through debt and equity investment. We have been using, and expect to continue
to use, the net proceeds from the August 2003 financing and subsequent capital
raising activities to expand our drilling operations on our Caribou prospect and
to commence exploration operations on our concession in Panama. We have also
performed an investigation of title to the mineral interests in Nevada in which
we own contractual interests. We do not expect to expend significant proceeds on
the Nevada prospect, until we are satisfied with the title to our patented and
unpatented mining claims.

      If we reach the development and mining stages for any of our prospects
(which cannot be assured), we plan to seek industry partners as well as other
sources of capital, and we may have to sell an interest in our prospects, enter
into joint venture or other arrangements, or otherwise dilute our interest in
our mineral interests in order to attract third party financing. We will likely
only be able to attract interest in our mineral prospects on
commercially-reasonable terms if we are able to show positive results from our
exploration programs and our other work (such as mapping) sufficient to attract
third-party financing or industry participants.

      Our activities on our three mineral interests are not affected by
seasonality, although during the rainy season (November through March, annually)
access to our Panamanian properties is more difficult.

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

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

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

REGULATIONS AND GOVERNMENT RULES

<PAGE>

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

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

COMPETITION

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

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

4.C.  ORGANIZATIONAL STRUCTURE.

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

4.D.  PROPERTY, PLANT AND EQUIPMENT.

EXECUTIVE OFFICES

      On August 1, 2003 we opened a U.S. corporate office in Greenwood Village
Colorado in an office we have rented on a month-to-month basis for rent of
approximately US$5,000 per month. We are looking for more permanent space. We
closed our Canadian offices in November 2003. We also have operational offices
on our Caribou prospect for which we pay no rent (since we own the property).

CARIBOU PROSPECT, COLORADO, USA; GOLD/SILVER EXPLORATION

<PAGE>

Acquisition Details

      The Caribou Consolidated District, located near Nederland, Colorado, is a
3.5 square mile consolidated precious metals district accessible all year
(except occasionally during the winter as the result of extremely heavy
snowfall) through paved and maintained gravel roads. Historic production in the
district dates back to 1869. Production between 1977 and 1985 totaled $5 million
through exploration work and old mine dump reclamation. The district consists of
three modern surface plants, roads, and power lines. Calais has the following
permits which it believes are sufficient for its contemplated operations:

 1.    Mined Land Reclamation Permit #M-1977-410 issued by the Colorado
       Department of Natural Resources;

 2.    Water Discharge Permit #CO-0032751 issued by the Water Quality Control
       Division (WQCD-PE-B2) of the Colorado Department of Public Health and
       Environment;

 3.    Explosives permit Number 3, Mine Number 17, issued by the Colorado
       Division of Minerals and Geology of the Colorado Department of Natural
       Resources;

 4.    MSHA Permit number 0502730 issued by the federal Mine Safety and Health
       Administration; and

 5.    Permits issued by the Boulder County Land Use Office.

These permits, when taken together, allow mining at the Cross Mine located
within our Caribou prospect, as well as exploration activities on the property.
These permits do not allow milling. It should be noted that there is no
functional mill on the property.

      We have completed 150,000 feet of of core drilling through May 31, 2004,
and we have a modern core library. All data is in the Vulcan/Maptek program and
has an extensive database. The Cross Mine has high grade vein widths from 3 feet
to 50 feet, going to significant depths and significant strike lengths. The
Caribou district has recorded production dating back to 1869 of 300,000 oz. gold
and 20,000,000 oz. silver. We owe royalty obligations to related and to
unrelated parties as described below under "Royalty Obligations on Caribou
Prospect."

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

      Of the 128 patented claims in our land position, six claims represent
fractional ownership, and an additional eight claims represent ownership of the
subsurface minerals only, together with either a partial interest in the
surface, and/or a mining easement in favor of the Company. Four of the 128
mining claims are leased interests. Calais and an affiliated company, Aardvark
Agencies, Inc. ("AAI") has fee ownership of some 376 net surface acres, and
approximately 564.3 net mineral acres. Approximately 12.5 acres of these mineral
lands are leased lands. The difference between the net mineral acres and net
surface acres represents lands where the Company owns the subsurface and a
mining easement upon the surface, but not the entire surface interest. AAI is
owned by Calais' previous chairman, Marlowe Harvey. Following a series of
transactions between AAI, Mr. Harvey, Calais, and Mr. Hendricks which resulted
in litigation brought by Mr. Hendricks against Mr. Harvey, Mr. Harvey, AAI, Mr.
Hendricks and Calais entered into a mutual release and settlement agreement
effective July 18, 2000. This agreement (which was modified in 2004) provides
that Calais has the right to reacquire the claims held by AAI for a debenture
(which Calais has already paid to AAI) and for a payment from Calais to AAI
"equal to pay the capital gains triggered by the" reconveyance of the property
to Calais. (The cash payment will be deducted from the debenture.) Although the
original agreement estimated the payment to be about US$750,000, currently the
parties estimate the tax

<PAGE>

obligation (which arises as a result of a Section 1031 exchange completed by
AAI) to be about US$500,000. See Item 7.B, Major Shareholders and Related Party
Transactions.

      In March 2004, Mr. Harvey and his affiliates entered into a settlement
agreement with Calais which, among other things, included a more precise
definition of Calais' right (which expires August 31, 2011) to repurchase the
interest of AAI in the Caribou prospect, including the price payable for the
reacquisition (a total of Cdn$747,728 which is included in the debentures in our
financial statements) and AAI's right to convert that debenture before it is
paid. That agreement also defined Calais' right to borrow against, enter in and
upon the mineral interests in the Caribou prospect owned by AAI, construct
buildings and mines on those prospect, and remove and sell minerals from Caribou
for Calais' own account.

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

      The vast majority of exploration to date on the Company's lands has taken
place on patented claims. Under the General Mining Law, as amended, unpatented
claims may only be validly located by the making of a discovery, within the
meaning of that law, upon open lands within the exterior boundaries of the
claims. Though mineralization has been encountered on some of the unpatented
claims, there can be no guarantee that there is a valid discovery on any of
those claims. The patenting of mining claims, done with relative ease during the
period 1872-1920, is now very difficult, and most patent applications are either
suspended or prohibited from being filed. Thus, there is no likelihood of the
acquisition of a fee title to any of the unpatented lands, and unpatented claims
now held are held subject to potentially adverse changes in laws and regulations
governing them.

Royalty Obligations on the Caribou Prospect

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

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

<PAGE>

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

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

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

      The Caribou prospect includes the Cross Gold Mine, the Potosi Mine and
several other district prospects. The prospect is on the east flank of the Front
Range Mountains, approximately 25 miles west of Boulder, Colorado. It is reached
by a five-mile all-weather graded gravel road from the small town of Nederland,
which connects with Boulder via paved State Highway 119. The prospect area
encompasses claims with additional Federal claims on public lands north and west
of the Cross Mine. Gold and silver mineralization occurs in a broad,
west-northwest trending zone that includes the Cross Mine and extends about
2,500 feet on the prospect.

      Three-phase power, sufficient to service a 500 tpd (tons per day) mine and
mill complex, is installed and active on the Caribou prospect. An 18-gauge rail
haulage system and equipment, hoisting equipment, compressed air, water and
ventilation services are installed and maintained in good working condition in
the Cross Mine. Mine water treatment facilities are currently operating in
compliance and were upgraded in recent years.

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

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

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

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

Geological Setting.

      The Caribou prospect is situated in the northeast end of the
northeast-trending Colorado mineral belt, a regional trend of mineralization
extending across Colorado resulting from deep-seated crustal structures. The
prospect area includes metamorphic rocks of Precambrian age that are intruded by
mult-phase Tertiary rocks, and are predominately monzonite in character. A
system of northeast striking veins which cut east-west striking veins has been
the source of past gold and silver production in the prospect

<PAGE>

area. Of greatest length are the northeast trending veins which parallel the
Colorado mineral belt and follow an ancient zone of structural weakness. The
northeast striking No Name vein and the Caribou Peak breccia zone are
mineralized shear components of the Colorado mineral belt with strike slip
movement. Both the No Name and Caribou Peak zones were probably conduits for
fluids which mineralized numerous east-west striking veins and the Pegmatite
Reef zone. In the vein systems, late phase gold mineralization over-prints
earlier mesothermal silver, lead, zinc and copper mineralization. A deep-test
core hole documents strong gold mineralization persisting 2,000 feet below the
surface.

      From the results of core holes we have drilled, surface exploration,
geological reconnaissance, and other analysis, we believe the No Name vein
system is at least 1,800 feet in length or strike. We interpret the surface
expressions, outcroppings, assay results, and other analysis to indicate that
the No Name pierces the surface for a significant distance. Based on prior
studies, we believe that the vertical depth of the No Name vein at the Caribou
Mine is approximately 1,400 feet. Geology and mineralogy studies suggest that
the gold/ silver vein systems extend to great depth below the deepest level of
the known mine workings. The No Name vein outcropped the surface at the Caribou
mine and was mined from the surface to 1,400 feet down and was mined for 500
feet on the strike. The No Name vein ranged up to 30 feet true width at the
Caribou Mine and measured 43 feet with hole 97-104, however there were also
widths encountered as small as 1 foot wide. As is the case with mineral veins in
general, widths of the No Name vein pinch and swell in size throughout its
strike and depth. While we have a significant amount of information, we are
continuing to assemble data about the dimensions of the NoName vein system.

      The No Name is a large gold vein system, but it is only one of many gold
vein systems previously identified at the Consolidated Caribou Gold and Silver
District. There are many large veins that need further exploration to fully
identify their size and potential including: Anaconda Vein, Rare Metals Vein,
Caribou Park Zone, Apache Vein, Postosi Vein, East and West Nelson Veins,
Golconda Vein, and the Pegmatite Reef. Individual veins range in width from
inches to tens of feet, but generally average between two to ten feet, and
consist of sheared zones containing quartz and disseminated sulfides. Altered
host rock within and adjacent to veins shows limited sulfide mineralization, due
to lesser amount of rock fracturing. Primary sulfides include fine grained
pyrite, galena, chalcopyrite and sphalerite in a quartz and carbonate gangue.
The gold and silver are generally microscopic and are associated with the
sulfide minerals.

Mine structure

      The Cross Mine is an underground mine with 4 levels of tunnels. Drilling
depths are 2,180 feet below the surface. The Cross and Caribou Mines are located
25 miles west of the city of Boulder, in Boulder County, Colorado. The property
consists of approximately 3,000 acres of patented and unpatented mining claims
situated in the Grand Island Mining District. The Caribou Mine was the largest
historical producer in the district, having produced 20,000,000 ounces of
silver, with lesser production of gold and silver from the Cross mine. Pine
forested mountain slopes predominate the area, with elevations ranging from
9,500 to 10,500 feet above sea level.

      At the Cross Mine gold and silver mineralization is contained within a
series of veins occurring near the contact between biotite gneiss of the
Precambrian age Idaho Springs Formation and quartz monzonite of an early
Tertiary age intrusive stock. The veins are hosted by both rocks types and pass
undisrupted across the contact. The Cross Mine occurs largely within the gneiss
and is dominated by gold mineralization, while the Caribou Mine occurs in the
monzonite and is dominated by silver mineralization.

      Precious metal grades in the Cross Mine typically run 0.05 to 1.0 ounces
of gold per ton and 0.1 to 30.0 ounces of silver per ton, while in the Caribou
Mine they run 0.05 to 0.5 ounces of gold per ton and 0.5

<PAGE>

to 200.0 ounces of silver per ton. Surface weathering has partially oxidized
sulfide minerals to depths of approximately 100 feet below the surface.

Exploration Work During 2003 and 2004

      Because of working capital shortages, we performed no exploration work on
the Caribou prospect during our 2003 or 2004 fiscal years prior to August 2003.

      After receiving the funds from the August 2003 financing, we commenced a
drilling and exploration program on the Caribou prospect which resulted in the
drilling of six exploration holes (totaling approximately 13,500 vertical feet)
at a cost of 400,000.

Resource Estimation

      We have mapped all of our exploration work in a three dimensional program
which has also allowed us to estimate mineral resources in accordance with the
requirements of Canadian National Instrument 43-101 - Standards of Disclosure of
Mineral Projects. As a result, although we have not identified any mineral
reserves, we have identified mineral resources as described below. United States
investors are advised that while terms such as "measured," "indicated" and
"inferred" mineral resources are recognized and required by Canadian
regulations, the United States Securities and Exchange Commission (the "SEC")
does not recognize them. "Mineral resources" have a great amount of uncertainty
as to their existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of a mineral resource
will ever be upgraded to a higher category. Under Canadian rules, estimates of
inferred mineral resources may not form the basis of feasibility or other
economic studies. United States investors are cautioned not to assume that all
or any part of mineral resources will ever be converted into mineral reserves or
ever recovered profitably, if at all.

      The international consulting firm of Pincock Allen Holt of Lakewood,
Colorado, believes it is appropriate to refer to the estimated mineralization in
the Caribou prospect as a mineral resource (as that term is defined in Canadian
regulations) in that no particular economic parameters or cutoff grades had been
applied to identify economically mineable area. Pincock Allen Holt concluded
that Calais mineral resource estimates contained in a report prepared by the
Company's vice president, Robert Akright, represented reasonable estimations for
the eight project veins being considered and that the manual procedures used in
the calculations are were in accordance with standard engineering practice.

      Original mineral resource estimates were made using hand drawn polygons on
longitudinal sections in the planes of the veins. The longitudinal sections were
generated on the 3-D Vulcan computer. Vein widths were measured also using the
Vulcan computer by viewing the veins from several perspectives in 3-D. Mineral
resources were classified as either measured, indicated, or inferred, in order
of increasing geological confidence, depending on projections from data points.
An inferred mineral resource has a lower level of confidence than that applied
to an indicated mineral resource. An indicated mineral resource has a higher
level of confidence than an inferred mineral resource but has a lower level of
confidence than a measured mineral resource. Measured mineral resources were
estimated using hand drawn polygons on the longitudinal sections with an area of
approximately 50 feet beyond data points. Indicated mineral resources were
estimated by making modest projections beyond the measured mineral resource
blocks, generally a distant of approximately 50 feet. Inferred mineral resources
were based on modest geological projections beyond the measured mineral resource
areas in the planes of the veins. Areas used in volume calculations were
measured on the longitudinal sections using a K & E hand operated compensating
planimeter. Tons were calculated using a factor of 12.0 cubic per short ton base
on the density of the host rock and information from past underground mining
information. Assay data used in the study were from

<PAGE>

conventional fire assays produced in commercial laboratories and reported in
ounces of gold and silver per ton avoirdupois. Mineral resource estimates are
not precise calculations, being dependent on the interpretation of limited
information on the location, shape and continuity of the occurrence and on the
available sampling results. Reporting of tonnage and grade figures as reported
in this News Release have been rounded off to what the Company's geologist
considers to be appropriately significant figures to reflect the order of
accuracy given the imprecise nature of a mineral resource estimate.

     Table 1 below summarizes the mineral resource estimate contained in the
                               original reports.

                                     Table 1

                             Calais Resources, Inc.
                         Cross/ Caribou Mines, Colorado
                           Mineral Resources Aug 2002

<TABLE>
<CAPTION>
   Vein       Measured Mineral Resource   Indicated Mineral Resource   Inferred Mineral Resource
-----------   -------------------------   --------------------------   -------------------------
                         Gold    Silver              Gold     Silver              Gold    Silver
                Tons    (opt)    (opt)     Tons      (opt)    (opt)     Tons      (opt)    (opt)
              -------   -----   -------   -------   -------   ------   -------   ------   ------
<S>           <C>       <C>     <C>       <C>       <C>       <C>      <C>       <C>      <C>
Juliet         19,000    0.18      0.67         0         0        0         0        0        0

Rare Metals    98,000    0.40      2.58         0         0        0    92,000     0.40     2.58

Apache         41,000    0.35      8.57         0         0        0    27,000     0.35     8.57

Potosi          8,000    0.22     10.84         0         0        0     7,000     0.22    10.84

Anaconda            0       0         0    35,000      0.51     1.15    30,000     0.51     1.15

No Name             0       0         0   133,000      0.25     9.67   423,000     0.25     8.88

E. Nelson           0       0         0    30,000      0.11    13.32         0        0        0

W. Nelson           0       0         0    79,000      1.78    71.78         0        0        0
              166,000    0.35      4.24   277,000      0.45    18.65   578,000     0.30     7.48
</TABLE>

     NOTES:

(1)  No cutoff grade or dilution factor was applied for resource tabulation.

(2)  The resource for the Juliet and Rare Metals veins in the Cross Mine area
     are only those that occur below the lowest workings (Fourth level - 9515
     feet).

(3)  The resource for the East Nelson and West Nelson veins in the Caribou Mine
     area are only those that occur below the lowest workings (1239 Level - 8951
     feet).

(4)  The resource for the No Name veins in the Caribou Mine area includes
     unstoped areas as well as areas that occur below the lowest workings (1239
     Level - 8951 feet).

     Pincock Allen Holt believed it was appropriate to refer to the estimated
mineralization as a mineral resource in that no particular economic parameters
or cutoff grades had been applied to identify economically mineable area and
concluded that Calais mineral resource estimates contained in the Akright report
represented reasonable estimations for the eight project veins being considered
and that the manual procedures used in the calculations are in accordance with
standard engineering practice.

      Subsequent to the 1998 report prepared by Pincock Allen Holt, the Company
added an indicated mineral resource estimate with respect to the Cross Mine
using data from the mine's historical operations (using level four of the Cross
Mine to the surface ground) taken from a report entitled "Project Status and

<PAGE>

Recommendations for Continued Evaluation - Cross Mine" prepared by geologists
Larry Barrett and William Schuiling in June, 1988. Table 2 summarizes the
additional indicated mineral resource estimate with respect to the specified
areas of the Cross Mine.

                                     Table 2

                             Calais Resources, Inc.
                          Cross Caribou Mines, Colorado
                           Mineral Resources Aug 2002

<TABLE>
<CAPTION>
   Vein       Measured Mineral Resource   Indicated Mineral Resource   Inferred Mineral Resource
-----------   -------------------------   --------------------------   -------------------------
                       Gold      Silver             Gold     Silver              Gold     Silver
              Tons     (opt)     (opt)     Tons     (opt)    (opt)      Tons     (opt)     (opt)
              -----   -------   -------   ------   ------   --------   ------   -------   ------
<S>           <C>     <C>       <C>       <C>      <C>      <C>        <C>      <C>       <C>
Cross Mine      0        0          0     37,000     0.32       3.96     0          0         0

Total/ Avg.     0        0          0     37,000     0.32       3.96     0          0         0
</TABLE>

      The Company believes the subsequent indicated mineral resource represent a
reasonable estimate of the designated areas of the Cross Mine based on
historical data determined while the Cross Mine was in production and
subsequently obtained by the Company.

      All references to mineral resources or inferred mineral resources set out
in the original reports by Akright and Pincock Allen Holt or reported by the
Company that are not mineral reserves do not have demonstrated economic
viability. Due to the uncertainty that may attach to categories of mineral
resources, the Company advises that there is no assurance that mineral resources
will be upgraded to proven and probable mineral reserves as a result of
continued exploration. The development (if warranted) of a commercially
productive mineral reserves and the marketability of any minerals discovered are
also affected by numerous factors which are beyond the Company's control and
which cannot be predicted, such as the potential for further financing and
environmental, permitting, legal, title, taxation, socio-political, marketing,
or other relevant issues.

Previous work

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

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

Proposed Work (fiscal 2005) for the Caribou Prospect

      We plan to conduct further drilling and other exploration activities and
scoping studies, depending on the availability of financing. Although we believe
that we will be able to obtain the necessary financing on reasonable terms, we
cannot offer any assurance that we will be able to do so.

<PAGE>

MANHATTAN PROSPECT; NEVADA, USA; GOLD EXPLORATION

Acquisition Details

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

      In December 1994, we paid Marlowe Harvey US$1,176,000 for a 51% interest
in various mineral interests known as the Manhattan prospect. We also agreed to
acknowledge the 5% net smelter return royalty on certain claims in that project
that Mr. Harvey claimed to own. It appears that Mr. Harvey owned no interest in
these prospects at that time, although he believes that he had and still has
rights to acquire interests in those prospects. We are attempting to determine
title to these prospects. In October 2003 we received some title information
relating to these prospects which consist of 28 patented mining claims and 147
unpatented mining claims. Certain of these claims overlie other claims. Based on
the preliminary research done to date, the claims appear to be owned of record
by one or more of the following (collectively the "Manhattan Parties"):

      Argus Resources, Inc. (a Nevada corporation affiliated with Marlowe Harvey
      who advises us that he and his wife own approximately 26% of the
      outstanding Argus Resources stock),

      Nevada Manhattan Group, Inc. (formerly known as Nevada Manhattan Mining,
      Inc., a publicly-held Nevada corporation which appears not to have filed
      any reports with the Securities and Exchange Commission since April 10,
      2000 and is believed to be currently subject to an SEC enforcement action
      as a result of its failure to file reports),

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

      Moran Holdings, Inc. (a corporation owned by Marlowe Harvey), and

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

      We entered into an agreement and settlement dated September 7, 2000 with
Nevada Manhattan Mining Incorporated ("NMMI") to settle and purchase its
interest in the property. (NMMI is not affiliated with us.) We agreed to make
four annual payments of US$75,000. During the term of the agreement the Company
has agreed to pay NMMI a 2% net smelter return royalty. The Company can purchase
the entire NMMI interest and royalty for US$7.5 million, payable over 30 years.
The total amount payable would be reduced by any production royalties paid. We
have been unable to make the most recent payments because NMMI no longer has an
address. We are considering petitioning the Nevada court to hold the funds for
NMMI so that Calais can prove compliance with the settlement agreement and
obtain court assistance in obtaining title to any interest claimed by NMMI. In
its last (2000) report filed with the SEC, NMMI described its ownership of
certain of the mineral interests included within the Manhattan prospect that
Calais claims as follows:

      In March 1997, the Company ["NMMI" in this and the following paragraph]
      entered into a Sale and Purchase Agreement with the Selig Entities. The
      Selig Entities were the original owners of the patented and unpatented
      mining claims comprising the Nevada prospect, having perfected their
      rights to ownership pursuant to Federal and local law. Under the terms of
      this agreement, the Selig Entities agreed to sell to the Company one
      hundred percent (100%) of their interests in a certain promissory note
      (the "Nevada Note"), the Deed of Trust and the Nevada prospect for the sum
      of

<PAGE>

      Three Hundred Seventy Five Thousand Dollars ($375,000) payable as follows:
      One Hundred Thousand Dollars $100,000) in March 1997 and the balance plus
      all accrued and unpaid interest (calculated at the rate of 5.25%) on or
      before February 6, 1999. The Company in fact paid the first installment of
      One Hundred Thousand Dollars ($100,000) in March 1997 and prepaid the
      remaining balance in June 1997. As a result, all obligations to the Selig
      Entities have been fulfilled by the Company and the original note and deed
      of trust have been delivered by the Selig Entities to the Company. The
      agreement also acknowledges that the Company is the only person or entity
      legally entitled to conduct mineral operations on the Nevada prospect. The
      Company is also required to pay all U.S. Bureau of Land Management annual
      maintenance fees associated with the claims comprising the Nevada
      prospect. Such fees have been paid by the Company through August 2000.

      The Company ["NMMI"] entered into a Subscription Agreement with Silenus
      Limited on April 14, 1997 (the "Subscription Agreement"). The Subscription
      Agreement required the Company to grant to Silenus Limited a $2,000,000
      deed of trust encompassing the Nevada prospect until the Debentures issued
      to Silenus are converted, redeemed or paid in full. The Company has
      neither delivered nor recorded this deed.

      Our litigation against NMMI was resolved after the events described in the
NMMI report and we believe that we can enforce our contractual rights in a
manner that they are superior to the rights of Silenus, although we cannot offer
any assurance that a court will accept the positions and arguments we might
proffer. We have not attempted to make these arguments up to this point in time.

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

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

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

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

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

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

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

      As indicated above, we have only recently been able to commence any title
review of the property. The record title consists of a number of inconsistent
and incompatible documents. Consequently there can be no assurance that the
preliminary conclusions reached above are accurate or complete, and we cannot
offer any assurance that we will be able to obtain legal title to the mineral
interests that we believed we acquired in December 1994. We do not intend to
expend any funds on exploration of this property until the title situation

<PAGE>

has been resolved to our satisfaction. In November 2003, Marlowe Harvey resigned
from the Board of Directors of Calais and threatened to convey his interest in
the Nevada mineral interests to third parties.

      On March 8, 2004, we entered into an agreement with Marlowe Harvey and his
related entities by which Mr. Harvey and his related entities agreed to assign
their interests in the Manhattan prospect to Calais and agreed to convey to
Calais (not later than December 31, 2005) the entire right, title and interest
in the Manhattan prospect from all parties ("marketable title"). Although
required by the agreement, Mr. Harvey and his related entities have not formally
made this assignment yet or (to Calais' knowledge) commenced the work necessary
to obtain marketable title. Upon receipt of the initial assignment and
marketable title, Calais will pay one of Mr. Harvey's related entities 250,000
shares of Calais restricted stock. Calais agreed to undertake certain drilling
obligations after receiving good title, and to issue 2,500,000 shares of common
stock to Argus Resources, Inc., one of Mr. Harvey's related entities if Calais
identifies gold or gold equivalent mineral resources (as determined in
accordance with Canadian standards) exceeding 2,000,000 ounces. In the
settlement agreement, Mr. Harvey agreed to convey "marketable title" to Calais
by December 31, 2005. To our knowledge, Mr. Harvey has not attempted the
curative measures necessary to provide marketable title to the mineral interests
to Calais and, even if he commences this work, we cannot offer any assurance
that he will be able to do so.

Geological Setting; No Significant Exploration Work

      We have not accomplished a significant amount of exploration work on the
prospects constituting the Manhattan prospect. Based on work performed by others
on these prospects and in the district, we believe that the prospects may
contain gold and silver resources. Geology, structure, and ore mineralogy
determined from other properties in the district suggests a potential for a
system of high-grade feeder veins and/or replacement gold deposits at depth. The
oldest rocks in the Manhattan district are phyllite, schist, quartzite and
limestone units of the Cambrian Gold Hill formation. Of these, the White caps
limestone has been the most productive mineralized unit in the district. Until
we obtain greater assurances as to title to our mineral interests in the
Manhattan prospect, however, we do not intend to perform any exploration work to
confirm the geology or locate any such mineralization.

Previous Work

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

Proposed Work (fiscal 2005)

      As discussed above, we do not intend to perform any significant work on
the mineral interests constituting the Manhattan prospect until (if ever) the
uncertainties relating to the title to those mineral interests are resolved.
Consequently we have not allocated an exploration budget for those prospects in
our 2005 fiscal year subject to available financing.

TITLE OF MINING CLAIMS IN THE UNITED STATES

<PAGE>

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

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

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

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

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

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

<PAGE>

challenge our title or right to occupy the ground. No challenges are currently
outstanding either by adverse locators, or by the Federal government.

PANAMA PROSPECT; GOLD EXPLORATION

Acquisition Details

      Pursuant to an agreement dated October 6, 2000, we received an option to
purchase a 40,000 acre mineral concession in an historic gold producing district
of Panama with Panama Mining of Golden Cycle of Panama Incorporated ("PMGC"). We
acquired concessions to 61,000 acres in the eastern Veraguas district of Panama
in 2001 through a five-year lease agreement with PMGC and a related company,
Golden Cycle of Panama, Inc. ("GCP"). The prior agreements were cancelled in a
new agreement we entered into on February 28, 2003 entitled a "Purchase Option
Agreement." As consideration for the Purchase Option Agreement, we paid the
following:

      200,000 shares of stock issued to the two owners of PMGC and GCP (Mr. and
      Mrs. Gary Zook as to 50% and Herbert Hendricks as to 50%) (including
      100,000 shares initially issued in 2000);

      US$10,000 total amount paid to the two owners of PMGC and GCP; and

      Assumed US$15,750 of the seller's payables to third parties.

      We also committed to perform certain work on the prospects. As a result of
an extension agreement entered into on January 31, 2004, we have an obligation
to complete a $250,000 exploration program for lode deposits by September 25,
2004, and an additional $250,000 program to explore for placer gold deposits and
install a pilot placer operation. We also hired a shareholder of the sellers,
Herbert Hendricks, to oversee the project, and we have been paying him US$3,000
per month to do so. Herbert Hendricks is the brother of our president, Thomas
Hendricks, but they do not share the same home, they make independent business
decisions, and are not otherwise affiliated.

      To exercise the option and acquire the lode prospect or the placer
prospect, we must commence production of gold from the respective prospect. The
terms of acquisition for the two prospects are different:

      To acquire the lode prospect, we must pay the sellers a royalty equal to
      2% net smelter return from all lode minerals produced from the concession
      until the sellers have received a total of US$5,000,000. At that time, we
      will have acquired the concession and the net smelter return will be
      terminated. Alternatively, prior to August 28, 2004, Calais may purchase
      the concession from the sellers for a $2,500,000 cash payment and a
      continuing 0.5% net smelter return.

      To acquire the placer prospect, we must pay the sellers a royalty equal to
      6% of the gross revenues from placer mineral production until the sellers
      have received a total of US$5,000,000. Thereafter, the royalty will be
      reduced to 1% for the life of the placer production.

      In the Purchase Option Agreement, we agreed to keep all mineral interests
in good and clean standard, to pay all taxes, and to comply with other
governmental requirements. In the extension agreement, the sellers warranted
that they had taken all necessary steps to properly register, document or record
the Purchase Option Agreement and that they will take such steps with respect to
the extension. Although we have made a request to the sellers for these
documents, we have not yet received them and, consequently, we have no
independent confirmation of their title to the two prospects included within the
Purchase Option Agreement. We do not intend to expend any significant funds for
the exploration of these prospects until we have obtained the necessary
assurances that they have good title to convey to us and that our interest in
the prospects are protected under Panamanian law.

<PAGE>

      If we default on our obligations, the Purchase Option Agreement gives the
sellers the right to give us 30 days notice of our right to cure the default
and, if we fail to cure the default or contest the default, the agreement will
be terminated.

Geological Setting

      We have done no exploration work on our Panamanian concession except
limited surface sampling and some geological mapping. We have reviewed
literature about the area and prior production from the Margaja and Cocuyo mines
and a report on the area prepared in 1969 for the United Nations, and we have
obtained an airborne geophysical survey made for another company that is no
longer active in Panama. The steep, hilly, mountainous terrain of the project
area is covered with dense tropical rain forest. Some rain can be expected every
month of the year with annual rainfall estimated as high as 200 inches. Heaviest
rain typically occurs from November through March. The driest months are from
April through June, and September and October. The Rio Concepcion, Rio Veraguas,
and Rio Belen flow north to the Caribbean from the east-west trending
continental divide in the project area.

      Detailed geologic mapping or exploration of our concessions in Panama is
lacking. In general, the area is characterized by a package of Miocene to
Pliocene volcanic rocks, primarily andesites, basalts, volcanic breccias,
agglomerates, and ignimbrites. Previous work has identified diorate and
granodiorite intrusives in the area. Deep weathering of bedrock and oxidation
and leaching of sulfide minerals would be normal in a wet, tropical environment
like Panama. Rapid erosion of the mountainous terrain in the project area may
have locally stripped away soil, weathered bedrock, thereby exposing unaltered
bedrock and sulfide minerals, especially along ridge lines.

      Alluvial gold occurs in the three rivers, river terrace deposits,
paleo-channels covered by volcanic flows, beaches along the Mosquito coast, and
marine deltaic deposits. Gold in these alluvial environments appears to have its
origin in a gold vein trend roughly parallel to the Mosquito coast. In some
literature, this gold vein trend is referred to as the "Faja de Oro."

Previous Work

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

Proposed Work (fiscal 2005)

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

Access to Panama concession

<PAGE>

      Access to our Panamanian properties is by boat (about a nine hour ride) or
helicopter (about a 30 minute ride) from Colon, Panama. Once on the property,
there are dirt roads that allow good transportation throughout the property
except during the rainy season (approximately November to March, annually).
During the rainy season, access is more difficult but can be accomplished using
tracked vehicles instead of four-wheel drive vehicles.

Title to the Panamanian Property.

      The Panamanian property (including both the lode prospects and the
prospects for placer production) is a government concession originally granted
to Paul Zook. When Mr. Zook's concessions expired, his son Gary Zook acquired
3,000 hectares of the original concessions under the name of Golden Cycle of
Panama. Gary Zook later acquired an additional 21,000 hectares under the name of
Panama Mining of Golden Cycle. Panama Mining of Golden Cycle also has an
agreement with Golden Cycle of Panama for the original 3,000 hectares. The total
concession now consists of approximately 24,000 hectares, and includes river
marine placer, off shore marine placer, and hard rock prospects located in the
eastern Veraguas district of Panama.

EXPLORATION EXPENDITURES

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

<TABLE>
<CAPTION>
                      Estimated
                         2004       Actual 2003   Actual 2002   Actual 2001
                     ------------   -----------   -----------   -----------
<S>                  <C>            <C>           <C>           <C>
Manhattan prospect       None       Cdn$151,215   Cdn$292,886   Cdn$176,175
Colorado prospect    US$2,000,000   Cdn$198,206   Cdn$120,601   Cdn$190,566
Panama prospect       US$500,000    Cdn$147,260    Cdn$65,070    Cdn$78,988
</TABLE>

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

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

      Our consolidated financial statements have been prepared in accordance
with generally accepted accounting principles as applied in Canada. There are
several differences in determining expenses and net loss between Canadian GAAP
and U.S. GAAP. Revenues remain the same at nil under both Canadian and U.S.
GAAP.

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

-     exploration expenditures are capitalized under Canadian GAAP, but expensed
      under U.S. GAAP. In each of the last two years, exploration costs
      approximated Cdn$500,000 (Cdn$930,000 for the nine months ending February
      29, 2004).

<PAGE>

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

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

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

SUMMARY

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

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

      Geographic Segments

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

IDENTIFIABLE ASSETS AT YEAR END:

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

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

5.A.  OPERATING RESULTS.

      During the last five fiscal years we have not achieved any revenues from
operations and we do not expect to receive any such revenues in the near future
until such time, if ever, we produce precious metals which we can market. There
is a possibility that we may produce gold from placer operations that we expect
to undertake on our Panamanian prospect during the fiscal year ending May 31,
2005, but even if we achieve such revenues we anticipate that we will reinvest
them in our Panamanian operations, reducing the capital that will be required
from our United States operations. (As discussed above, we have a contractual
commitment to commence small-scale placer production by September 25, 2004,
although our ability to meet this obligation is dependent on additional
financing and we cannot offer any assurance that we will be able to obtain such
financing.) It is not likely that any revenues obtained from the anticipated
Panamanian

<PAGE>

placer operations will exceed the cost of those operations until we have the
capital necessary to expand the operations beyond the phase that we currently
anticipate.

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

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

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

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

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

      Our operating expenses for our 2001 fiscal year were Cdn$749,000 -
significantly more than for the following two years discussed above. Our
operating expenses included a Cdn$312,000 loss on abandonment of a mineral
interest. Other costs were generally less than those incurred during the next
two years was because the level of our activities was significantly reduced
since we had insufficient working capital or ability to borrow funds to pay
expenses associated with greater activity.

      As a result of these factors, our loss for the 2003 fiscal year was about
the same as our loss for the 2002 fiscal year (Cdn$592,000 loss in 2003 as
compared to Cdn$602,000 loss in 2002). Had we not realized the Cdn$250,000 gain
on foreign currency during 2003, our actual loss would have been significantly
greater during 2003 than during 2002.

      Our net loss was significantly greater in the 2001 fiscal year
notwithstanding the lower level of operations during that year. During 2001, we
recognized a Cdn$312,749 write down of properties due to the abandonment of
mining claims located in Yukon, Canada (the Flug claims) and claims located in
Oppdal, Norway (the Kells claims). During 2001 we also recognized a foreign
currency loss of Cdn$75,207.

      We anticipate that the 2004 and 2005 fiscal years will result in greater
operating losses than realized in fiscal 2001, 2002 or 2003, since we received
the loan from accredited investors in August 2003 (resulting in a net of
US$652,498 after payment of prepaid interest, bank loan, financing costs and
pre-existing obligations) and we intend to increase our operations on our
Caribou and Panamanian prospects. Furthermore, because we lost our status as a
foreign private issuer under the United States securities laws, we will incur
additional expenses in complying with the duplicative reporting requirements in
the United

<PAGE>

States and Canada. We also have increased our general and administrative
expenses by opening our administrative office in Greenwood Village, Colorado and
have assumed the administrative costs associated with that office and our new
chief financial officer, expenses we had not incurred in previous fiscal years.
Through the nine months ended February 29, 2004, our net loss was
Cdn$(3,320,271), significantly greater than the losses in the previous fiscal
years because of the greater amount of funds available to us during the period
and the increased operating, mineral exploration, and other expenses incurred as
a result.

5.B.  LIQUIDITY AND CAPITAL RESOURCES.

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

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

      a Cdn$96,000 note payable at May 31, 2003 which did not exist at the end
      of the prior fiscal year; and

      an increase in loans from shareholders of $151,000 to help fund operations
      for the year.

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

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

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

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

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

      We expect that we will have positive cash flow during our 2004 fiscal year
even though we also anticipate increased negative cash flow from operations and
investing activities. Our positive cash flow will be due primarily to the August
2003 loan of US$4,500,000 received from six accredited investors and subsequent
capital-raising activities. At February 29, 2004, we had working capital
available to us of

<PAGE>

Cdn$1,129,961, although we expect that this working capital will continue to
reduce during the final quarter of the 2004 fiscal year and into 2005.

      In the future we expect that we will continue to be dependent on our
financing activities to finance anticipated continuing negative cash flows from
operating and investing activities. Alternatively we will have to find joint
venture partners or industry partners who are willing to invest funds in our
mineral interests or in Calais itself to fund our continuing operations. If we
are able to establish mineralization or reserves through our exploration
activities, we may be able to attract joint venture partners, industry partners,
or other investors who will be willing to provide us the necessary capital on
commercially-reasonable terms.

Material Capital Commitments/Significant Uncertainties

      We are a party to a lease for temporary office trailer at the Caribou Mine
site at a cost of US$317.50 per month for approximately one and a half more
years

      At May 31, 2003, we were the borrower from Peak National Bank in the
amount of US$1,081,000. We paid this loan in full on August 1, 2003 and no
amounts remain due or owing.

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

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

      We have a year-to-year contract with Panama Mining of Golden Cycle to
spend US$250,000 on placer exploration or production, and an additional
US$250,000 of hard rock exploration per calendar year on our Panama prospect. We
have an obligation to spend US$250,000 before the end of September 2005 or we
will risk losing our interest in the Panama concession.

      We intend to expend approximately US$3,000,000 for the exploration of the
Caribou prospect in our 2005 fiscal year.

      We will continue to incur significant expenses for compliance and general
and administrative expenses which, through the first nine months of the 2004
fiscal year amounted to about Cdn$1,000,000 (not including bank charges and
interest expense).

      For significant uncertainties, see Item 3.D - Risk Factors, above.

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

Not applicable.

5.D.  TREND INFORMATION.

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

<PAGE>

Critical Accounting Policies

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

      The consolidated financial statements have been prepared on the going
concern basis, which assumes the realization of assets and liquidation of
liabilities in the normal course of operations. If the Company was not to
continue as a going concern, it would likely not be able to realize on its
assets at values comparable to the carrying value or the fair value estimates
reflected in the balances set out in the preparation of the consolidated
financial statements. As described elsewhere in this report, at May 31, 2003,
there were certain conditions that currently exist which raise substantial doubt
about the validity of this assumption. The Company anticipates the need to raise
additional private placement debt or equity funds or through joint venture
arrangements to accomplish its budgeted expenditures. These private placements
are not assured. Failure to raise additional funds may result in the Company
being unable to complete its planned programs, to comply with its obligations
relating to its Panamanian concession, curtailing operations or writing down its
assets.

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

      For Canadian GAAP purposes, the Company capitalizes exploration costs
incurred as property, plant and equipment (tangible assets) pursuant to CICA
3061, EIC-126 and related guidance. Due to certain inconsistencies in the CICA
Handbook, there are opposing views that exploration costs should be considered
to be intangible assets. As intangible assets, they would be amortized over the
term of the mineral interest. In the United States, in Abstract 04-2 the
Emerging Issue Task Force reached a consensus that such interests are tangible
assets. The Emerging Issues Committee in Canada is currently reviewing the
application of EITF 04-2 to Canadian GAAP.

Effect of New Accounting Pronouncements

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

<PAGE>

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

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

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

      The provisions of FASB Statement No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities," are effective for contracts
entered into or modified after June 30, 2003 and hedging relationships
designated after June 30, 2003. Except for the provisions related to FASB
Statement no. 133, "Accounting for Derivative Instruments and Hedging
Activities," all provisions of this Statement should be applied prospectively.
The provisions of the Statement related to Statement 133 implementation issues
that have been cleared by the Board and that have been effective for fiscal
quarters that began prior to June 15, 2003, should continue to be applied in
accordance with their respective effective dates. We do not expect any material
changes as a result of adopting this Statement.

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

      FASB Interpretation No. 46, "Consolidation of Variable Interest Entities,"
applies immediately to enterprises that hold a variable interest in variable
interest entities created after January 31, 2003. It applies in the first fiscal
year or interim period beginning after June 15, 2003 to enterprises that hold a
variable interest in variable interest entities created before February 1, 2003.
The Interpretation applies to public enterprises as of the beginning of the
applicable interim or annual period, and it applies to non-public enterprises no
later than the end of the applicable annual period. This Interpretation may be
applied

<PAGE>

prospectively with a cumulative-effect adjustment as of the date on which it is
first applied, or by restating previously issued financial statements for one or
more years with a cumulative-effect adjustment as of the beginning of the first
year restated. We do not expect a material change as a result of adopting this
Interpretation.

5.E   OFF-BALANCE SHEET ARRANGEMENTS.

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

5.F   TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS.

<TABLE>
<CAPTION>
                                                           Payment due by period
                                      ---------------------------------------------------------------
                                                    Less than 1                           More than 5
      Contractual obligations            Total          year      1-3 years   3-5 years      years
-----------------------------------   -----------   -----------   ---------   ---------   -----------
<S>                                   <C>           <C>           <C>         <C>         <C>
Long-term debt obligations            $ 6,267,116   $ 1,642,200   $       -   $       -   $ 4,624,916

Capital (Finance) lease obligations   $         -   $         -   $       -   $       -   $         -

Operating lease obligations           $    16,500   $    16,500   $       -   $       -   $         -

Purchase obligations                  $         -   $         -   $       -   $       -   $         -

Other long-term liabilities
reflected on our balance sheet
under the GAAP of the primary
financial statement                   $   697,753   $   697,573   $       -   $       -   $         -
                                      -----------   -----------   ---------   ---------   -----------
Total                                 $ 6,981,209   $ 2,356,293   $       -   $       -   $ 4,624,916
                                      -----------   -----------   ---------   ---------   -----------
</TABLE>

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

5.G   SAFE HARBOR.

      See "Introduction - Forward-Looking Statements."

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A   DIRECTORS AND SENIOR MANAGEMENT.

      The following table lists, as of October 31, 2003, the names of all of our
directors and senior management. Our directors generally serve in their
respective capacities from their election on the day of our Annual General
Meeting (last held on December 18, 2003) and will serve until the next Annual
General Meeting or until a successor is duly elected, unless the office is
vacated in accordance with our Articles.

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

<PAGE>

replaced. Our senior management (executive officers) are appointed by the Board
of Directors and hold office indefinitely at the pleasure of the Board of
Directors.

<TABLE>
<CAPTION>
                                                            DATE FIRST ELECTED OR
       NAME            AGE          POSITIONS HELD               APPOINTED
-------------------    ---    --------------------------    ---------------------
<S>                    <C>    <C>                           <C>
Marlowe Harvey*        50     Chairman of the Board                 1992

Thomas S. Hendricks    54     Director, president, chief            1998
                              executive officer

Art Daher              71     Director, Secretary                   1995

Robert Akright         79     Vice President                        1998

Matt Witt                     Chief Financial Officer               2003

Melvin Martin          63     Director                              1992

Thomas Patton+         60     Director                              2000
</TABLE>

*Resigned on November 11, 2003.

+Not re-elected in December 2003.

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

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

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

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

      Thomas S. Hendricks has been one of our directors since we acquired the
assets of Hendricks Mining Company ("HMC") in 1998, a company that Mr. Hendricks
formed and operated in 1974 for the purpose of acquiring and operating the Cross
Mine and neighboring mineral interests. Mr. Hendricks has been engaged in
exploring and limited mining operations at the Cross Mine and neighboring
mineral interests (now referred to as the "Caribou prospect") on a full time
basis since 1975. Mr. Hendricks is not an officer or a director of any other
company whose shares are registered under the Securities Exchange Act of 1934,
as amended.

<PAGE>

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

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

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

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

      Thomas Patton was a director of Calais Resources from June 2000 until he
resigned in December 2003. Mr. Patton has been president, director, and chief
operating officer of Western Silver Corp. (formerly Western Copper Holdings,
Ltd.) for more than the past five years. Western Silver Corp. is a publicly-held
company exploring for silver and gold in Mexico. Western Silver's shares are
registered under the Securities Exchange Act of 1934 and its shares are trading
on the American Stock Exchange under the symbol "WTZ" and on the Toronto Stock
Exchange.

6.B.  COMPENSATION.

Compensation Table

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

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

<PAGE>

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

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

Compensation of directors

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

Employee benefits

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

Stock options - plans and grants

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

Change of control arrangements

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

6.C   BOARD PRACTICES.

<PAGE>

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

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

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

      Calais does not have a formal audit committee.

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

6.D   EMPLOYEES.

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

6.E   SHARE OWNERSHIP.

Share Ownership Information

      The following table sets forth information regarding the ownership of our
common stock as of September 30, 2003 by: (i) each director or nominee for
director; (ii) each of the executive officers named in the Summary Compensation
Table; (iii) all executive officers and directors of the Company as a group; and
(iv) all those known by us to be beneficial owners of more than 5% of our common
stock based on the total of 19,627,703 shares outstanding as of October 31,
2003.

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

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

Stephen A. Benaske(8)                                      5,415,455               27.6%
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                BENEFICIAL OWNERSHIP
              BENEFICIAL OWNER                    NUMBER OF SHARES     PERCENT OF TOTAL
              ----------------                  --------------------   ----------------
<S>                                             <C>                    <C>
Marlowe Harvey(1)                                          5,192,488               22.6%
1625 Larimer Street, Suite 2407
Denver, CO  80202
</TABLE>

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

<TABLE>
<CAPTION>
Name of Holder (relationship to
          Mr. Harvey)             Amount (Cdn$)   Underlying shares
-------------------------------------------------------------------
<S>                               <C>             <C>
Judy Harvey (wife)                $   3,149,955           2,560,939

Argus Resources, Inc.             $     215,422             175,140

Aardvark Agencies, Inc.           $     747,728             607,909

Thomas Hendricks (see note 2)     $     984,000             893,864
</TABLE>

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

(2)   Mr. Hendricks' beneficial ownership includes 893,864 shares of stock and a
convertible debenture in the total amount of Cdn$984,000 which is convertible
into common stock at Cdn$1.23 per share through May 11, 2011, although Mr.
Hendricks has executed an assignment which, when effective, will result in the
assignment of this debenture to Judy Harvey. No other member of Mr. Hendricks'
family owns any shares or rights to acquire shares. In July 2004, the Calais
board of directors granted Mr. Hendricks a compensatory stock option to purchase
3,000,000 of Calais common stock for US$0.85 per share, exercisable through July
7, 2009.

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

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

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

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

<PAGE>

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

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

Options to purchase securities from registrant or subsidiaries

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

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

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

Options/SAR Grants in Last Fiscal Year

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

<TABLE>
<CAPTION>
       NAME           NUMBER OF OPTIONS    EXERCISE PRICE         TERM
------------------    -----------------    --------------    ---------------
<S>                   <C>                  <C>               <C>
Fiscal 2002 grants

none

Fiscal 2003 grants

Marlowe Harvey                   82,500+          US$1.26     November, 2004

Subsequent grants

Matt Witt                       500,000*          US$3.00    August 11, 2013
                                500,000*          US$5.00    August 11, 2013

Robert Akright                  100,000          Cdn$0.45     August 1, 2008
</TABLE>

<PAGE>

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

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

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

Fiscal year end values

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

<TABLE>
<CAPTION>
                                                                      Number of
                                                                     Unexercised          Value of
                                                                     securities      unexercised in the
                                                                     underlying            money
                                                                   options/SARs at     options/SARs at
                                                  Value realized    5/31/2003 (#)    5/31/2003 ($) (a)
                             Shares acquired on        ($)           Exercisable/       Exercisable/
            Name                exercise (#)           (a)           unexercisable     unexercisable
--------------------------   ------------------   --------------   ---------------   ------------------
<S>                          <C>                  <C>              <C>               <C>
Marlowe Harvey                        0                 $0                     0/0         $0/$0

Thomas S. Hendricks                   0                 $0            100,000(b)/0       $45,000/$0

Art Daher                             0                 $0            100,000(c)/0       $45,000/$0

Robert Akright                        0                 $0            100,000(d)/0       $45,000/$0

Mel Martin                            0                 $0                       0           $0

Thomas Patton                         0                 $0            100,000(e)/0       $45,000/$0

Persons who are neither
officers nor directors but
who are providing services
to us                                 0                 $0                     0/0           0/0
</TABLE>

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

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

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

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

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

<PAGE>

Subsequent exercises

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

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

Art Daher                         50,000(c)         US$54,000         50,000/0          US$59,000/0
</TABLE>

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

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

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

Warrants and convertible securities that are outstanding

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

      In July 2000, we issued convertible debentures to Judy Harvey, Argus
Resources, and Aardvark Agencies in the total amount of Cdn$5,442,018. We
reissued those convertible debentures in May 2001, and it is the May 2001
debentures that are currently outstanding. Judy Harvey is Marlowe Harvey's wife;
Mr. Harvey controls both Argus Resources and Aardvark Agencies. The debentures
are all non-interest bearing and are due May 11, 2011. The debentures were
convertible into Common Shares at Cdn$1.23 per share. The following chart sets
forth the beneficial owners of the convertible debentures and the number of
shares underlying such debentures as of May 31, 2003. To our knowledge, there
have been no further transfers of any debentures during the fiscal year ended
May 31, 2003 or subsequently. No person has converted any of the debentures into
common stock. During fiscal 2002, Cdn$344,913 of the debentures were repaid to
Mrs. Harvey.

<PAGE>

<TABLE>
<CAPTION>
         Name              Original Principal amount    Accrued Interest    Underlying shares
-----------------------    -------------------------    ----------------    -----------------
<S>                        <C>                          <C>                 <C>
Marlowe Harvey(a)                Cdn$4,113,105                 $0              3,343,988

Thomas S. Hendricks (b)           Cdn$984,000                  $0              1,306,036

Melvin Martin(c)                 Cdn$1,103,214                 $0                896,922
</TABLE>

(a)   Owned of record by Mr. Harvey's wife, Judy Harvey and entities affiliated
      with or controlled by Mr. Harvey. Of these debentures, Mrs. Harvey is
      holding Cdn$1,103,214 for the benefit of Mr. Martin. Mrs. Harvey disclaims
      any interest in the debentures (or the shares underlying the debentures)
      she is holding for Mr. Martin. See also note (b), below, which describes
      Mr. Hendricks' reassignment to Mrs. Harvey of the Cdn$984,000 debenture.

(b)   Mr. Hendricks acquired these debentures from Mrs. Harvey in settlement of
      litigation he had brought against Mr. Harvey, not sure if it was against
      Calais Resources or Harvey. Mr. Hendricks has agreed to assign this
      debenture to Mrs. Harvey based on the March 2004 settlement agreement
      involving Mr. and Mrs. Harvey and Mr. Hendricks has executed an assignment
      to do so. Mr. and Mrs. Harvey are reviewing the terms of acceptance of the
      debenture. Consequently, Calais still has the Cdn$984,000 debenture
      registered in Mr. Hendricks' name.

(c)   Mrs. Harvey is holding debentures in this amount for the benefit of Mr.
      Martin. Mr. Martin disclaims any affiliation with Mrs. Harvey, Mr. Harvey,
      or entities they control. See note (b), above, for Mrs. Harvey's interest
      in a Cdn$984,000 debenture currently registered in Mr. Hendricks' name but
      which he has attempted to assign to Mrs. Harvey, subject to compliance
      with securities laws, as required in the March 2004 settlement agreement
      involving Mr. and Mrs. Harvey and Calais (among other parties). Mrs.
      Harvey has not yet agreed to provide evidence to Calais that Mr.
      Hendricks' assignment to her complies with the securities laws.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

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

7.A   MAJOR SHAREHOLDERS.

   1.    Major Shareholders.

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

<PAGE>

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

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

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

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

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

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

      Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires our directors, executive officers and persons who own more than ten
percent of a registered class of our equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of Calais. Officers, directors and greater than 10%
shareholders are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file.

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

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

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

      -     Mr. Harvey's Form 3 was due on September 3, 2003 and has not yet
            been filed. In addition, we have received information that Mr.
            Harvey has sold shares on September 3, 4, 8, 9, and 15 (45,700
            shares in September), and October 6 and 14 (21,700 shares), and
            November 6 (58,000 shares). Mr. Harvey has not reported any of these
            transactions on Form 4 and, therefore, eight Form 4s have not

<PAGE>

            been filed. Mr. Harvey or persons affiliated with him may have sold
            additional shares of our common stock without the knowledge of
            Calais for which he has not filed a Form 4. Mr. Hendricks' assigned
            his convertible debenture to Mrs. Harvey on June 25, 2004, although
            she has not accepted that assignment and has not filed a Form 4
            reflecting the additional beneficial interest.

      -     Mr. Daher's Form 3 was due on September 3, 2003 and was filed on
            December 8, 2003. Mr. Daher sold some shares of our common stock in
            October 2003 for which he filed a Form 4 on December 8, 2003. In
            addition, Mr. Daher made two sales of our common stock in February,
            2004, for which he filed late Form 4s and sold additional shares in
            June 2004, for which he filed a late Form 4.

      -     Mr. Akright's Form 3 was due on September 3, 2003 and was filed on
            November 12, 2003. Furthermore, he sold some shares of our common
            stock in September and October 2003, for which Form 4s were filed
            late. In addition, a Form 4 was filed in April, 2004 for the
            acquisition of shares of common stock in February, 2004.

      -     Mr. Martin's Form 3 was due on September 3, 2003 and was filed in
            December 2003. Mr. Martin received shares of our common stock as a
            stock bonus in February 2004 and filed a Form 4 reflecting those
            shares in June 2004.

      -     Mr. Patton's Form 3 was due on September 3, 2003 but was never
            filed. Mr. Patton was not reelected as a director at the annual
            meetings held in December 2003.

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

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

7.B   RELATED PARTY TRANSACTIONS.

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

Resignation of Marlowe Harvey

      On November 11, 2003, Mr. Harvey resigned as an officer and director of
Calais, demanding a return of the Cdn$984,000 debenture Mrs. Harvey assigned to
Mr. Hendricks and also advising Calais that he intends to enter into an
agreement to vend the Nevada prospect, or a portion thereof, to third parties.
Calais intends to assert its rights as appropriate. In the March 2004 settlement
agreement, Mr. Hendricks agreed to return the debenture to Mr. Harvey, subject
to compliance with applicable securities laws. Mr. Hendricks has executed the
assignment to return the debenture to Mrs. Harvey (as directed by Mr. Harvey),
but Mrs. Harvey has yet to show compliance with securities laws and, therefore,
the debenture is still registered on Calais' books in Mr. Hendricks' name.

<PAGE>

Purchases of Common Shares by Officers/Directors

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

<TABLE>
<CAPTION>
                         Subsequent to fiscal 2003           Fiscal 2003                   Fiscal 2002
                         -------------------------    -------------------------    -------------------------
                         # of shares    Cdn$ value    # of shares    Cdn$ value    # of shares    Cdn$ value
                         -----------    ----------    -----------    ----------    -----------    ----------
<S>                      <C>            <C>           <C>            <C>           <C>            <C>
Marlowe Harvey(a)                  -             -              -             -        166,000        49,800

Thomas S. Hendricks(b)       100,000    $   45,000         91,667    $   40,333        100,000        30,000

Art Daher(b)                  50,000    $   22,500         20,000    $   21,400         75,000        22,500

Robert Akright                     -             -              -             -        100,000    $   30,000

Thomas Patton                      -             -              -             -              -             -

Melvin Martin                      -             -              -             -              -             -
</TABLE>

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

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

Loans to Calais Resources

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

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

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

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

<PAGE>

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

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

<TABLE>
<CAPTION>
                                                         AMOUNT OWED BY CALAIS ON
                                            --------------------------------------------------
         NAME              INTEREST RATE    SEPTEMBER 30, 2003    MAY 31, 2003    MAY 31, 2002
-----------------------    -------------    ------------------    ------------    ------------
<S>                        <C>              <C>                   <C>             <C>
Tom Hendricks                          0%           $0               US$94,281     U.S.$28,987

Marlowe and Judy Harvey               12%           $0              Cdn$70,000         $0
</TABLE>

Royalty Interests.

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

      The majority of the mineral interests that Calais acquired from the former
Hendricks Mining Co. ("HMC") in 1998, or acquired within five years thereafter,
are subject to net smelter return royalties in amounts varying from 2.0% to 0.5%
of net smelter returns in favor of the former shareholders of HMC (which include
Thomas S. Hendricks (as to 85.354%), Mr. Hendricks' mother (10.101%), and Mr.
Hendricks' attorney (4.545%) who has continued as attorney for Calais; see Item
7, Major Shareholders and Related Party Transactions). The period for which
Calais was obligated to make further royalty grants as to new acquisitions
expired in April, 2003. The royalty grants now outstanding and of record are
effective for a period of 20 years after the date of the grants, with expiration
of the royalties beginning in March 2018, and ending in April 2023. These
individuals own the net smelter return royalty covering substantially all of the
Caribou prospect. (The net smelter return does not include mineral interests
acquired since April 2003.) Calais, and Mr. Harvey acknowledged the validity of
these royalties in the July 2000 settlement of the litigation Mr. Hendricks
brought against Mr. Harvey and Aardvark. See further discussion above in Item
4.D, "Property, Plant and Equipment - Caribou prospect."

Aardvark Enterprises, Inc.

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

<PAGE>

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

Litigation

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

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

      b.    Mr. Harvey's wife transferred a Cdn$984,000 debenture (which had
            been issued to her by Calais) to Mr. Hendricks (which as a result of
            a March 2004 settlement agreement Mr. Hendricks has reassigned to
            Mrs. Harvey, subject to her demonstration that the reassignment is
            in compliance with applicable securities laws);

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

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

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

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

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

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

      On November 11, 2003, Marlowe Harvey made certain allegations which, if he
pursues, may result in legal action. It is premature to reach any conclusions
with respect to Mr. Harvey's allegations at this time, and Calais believes that
the parties have resolved their issues in the March 8, 2004 settlement agreement
discussed below.

Settlement Agreement with Mr. and Mrs. Harvey and their affiliates

<PAGE>

      On March 8, 2004, we entered into an agreement with Marlowe Harvey, his
wife Judy Harvey, and several related entities by which Calais and Mr. and Mrs.
Harvey resolved a number of issues that have arisen between them, some of which
have been previously discussed in Calais' Form 20-F and other reports. Under the
agreement,

      -     Mr. Harvey and Calais agreed on a more precise definition of Calais'
            right (which expires August 31, 2011) to repurchase the interest of
            Aardvark Agencies, Inc. ("AAI") in the Caribou properties, including
            the price payable for the reacquisition (a total of Cdn$747,728
            which is included in the debentures in our financial statements) and
            AAI's right to convert that debenture before it is paid;

      -     Further defining Calais' right to borrow against, enter in and upon
            those properties, construct buildings and mines on those properties,
            and remove and sell minerals from those properties for Calais' own
            account;

      -     Mr. Harvey and his related entities have agreed to assign their
            interests in the Manhattan prospect to Calais and agreed to convey
            to Calais (not later than December 31, 2005) the entire right, title
            and interest in the Manhattan prospect from all parties ("marketable
            title"). Mr. Harvey and his related entities have not formally made
            this assignment yet or (to Calais' knowledge) commenced the work
            necessary to obtain marketable title. Upon receipt of the initial
            assignment and marketable title, Calais will pay one of Mr. Harvey's
            related entities 250,000 shares of Calais restricted stock. Calais
            agreed to undertake certain drilling obligations after receiving
            good title, and to issue 2,500,000 shares of common stock to Argus
            Resources, Inc., one of Mr. Harvey's related entities, if Calais
            identifies gold or gold equivalent mineral resources (as determined
            in accordance with Canadian standards) exceeding 2,000,000 ounces.

      -     Mr. Harvey and his related entities agreed to comply with their
            shareholder filing obligations in the United States and Canada (if
            any) not later than April 30, 2004. Mr. Harvey has also returned a
            stock option agreement to Calais which defines the option to acquire
            82,500 shares of Calais common stock granted to him in November 2002
            which he continues to hold. That option expires (unless exercised)
            on November 15, 2004, and has an exercise price of US$0.80 per
            share.

      -     Calais agreed to propose to its shareholders at its next shareholder
            meeting that the conversion price of the debentures be repriced from
            Cdn$1.23 to US$.55.

      -     Calais agreed to retain Mr. Harvey as a consultant for one year at
            US$3,000 per month.

      To facilitate the settlement, Thomas S. Hendricks agreed to transfer to
Mr. Harvey a debenture he holds for Cdn$984,000 that Mrs. Harvey assigned to him
in 2000. Mr. Hendricks has executed the assignment of this debenture and has
delivered both the original debenture and the assignment to Calais to hold
pending Mrs. Harvey's acceptance of that debenture in a manner that complies
with applicable securities laws. To date, Mrs. Harvey has refused to return to
Calais documents that Calais believes is necessary to show compliance with
securities laws, and Mrs. Harvey has not proposed any alternative procedure.
Consequently the debenture is still registered in Mr. Hendricks' name and will
remain so registered until Mrs. Harvey provides Calais with sufficient evidence
of compliance with applicable securities laws.

<PAGE>

      In addition, Calais, Mr. Harvey, and his related entities entered into
mutual releases. Calais has previously announced that it does not intend to
expend any significant exploration dollars on the Manhattan prospect until such
time as it has received further assurances as to title.

      At the present time, we have no evidence that Mr. Harvey or his related
entities have complied with their obligations under the settlement agreement, or
have even commenced doing so. Mr. Hendricks has assigned the debenture to Mrs.
Harvey, although we delivered the signed debenture with a legend reflecting that
the delivery was subject to Mr. Harvey and his related entities' obligations to
comply with their obligations under the settlement agreement.

C.    INTERESTS OF EXPERTS AND COUNSEL

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

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

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

      ITEM 8. FINANCIAL INFORMATION

8.A(1-6) - Financial Statements

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

      The audited financial statements for the year ended May 31, 2003 and 2002
as required under ITEM #17 are included hereto immediately following the
signature page of this Annual Report and are, by this reference, incorporated
into this Item 8.A. The auditors' report of KPMG LLP, Independent Accountants,
are included herein immediately preceding the financial statements and is also
incorporated by this reference into this Item 8.A.

<PAGE>

8.A(7) - Legal proceedings.

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

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

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

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

8.A(8)   Our policy on dividends

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

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

8.B   SIGNIFICANT CHANGES.

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

<TABLE>
<S>                                               <C>
Prepayment of two years interest expense          US$1,161,000

Repayment of remaining amounts due to bank        US$1,080,000

Repayment of interim mortgage due to Thomas S.    US$ 587,6800
Hendricks for funds he advanced
</TABLE>

<PAGE>

<TABLE>
<S>                                                 <C>
Repayment of trade payables                         US$700,000

Financing costs                                      US$95,000
</TABLE>

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

      To secure the loan, we pledged our interests in the Caribou prospect as
collateral.

ITEM 9. THE OFFER AND LISTING

9.A   OFFER AND LISTING DETAILS.

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

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

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

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

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

      MOST RECENT SIX MONTHS

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

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

<PAGE>

<TABLE>
<S>                 <C>             <C>             <C>              <C>
   Low              US$0.20         US$0.25         US$0.20          US$0.20
</TABLE>

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

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

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

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

      On October 31, 2002, the shareholders' list for the Company's Common
Shares showed 341 registered shareholders and 10,744,218 Common Shares
outstanding. 38 of these shareholders were U.S. residents, holding 1,958,967
shares representing 18.2% of the issued and outstanding Common Shares.

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

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

9.A(5-6)     Not applicable.

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

<PAGE>

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

9.B   PLAN OF DISTRIBUTION.

      Not applicable to annual reports on Form 20-F.

9.C   MARKETS.

      Not applicable to annual reports on Form 20-F.

9.D   SELLING SHAREHOLDERS.

      Not applicable to annual reports on Form 20-F.

9.E   DILUTION.

      Not applicable to annual reports on Form 20-F.

9.F   EXPENSES OF THE ISSUE.

      Not applicable to annual reports on Form 20-F.

ITEM 10. ADDITIONAL INFORMATION

10.A  SHARE CAPITAL.

      Not applicable to annual reports on Form 20-F.

10.B  MEMORANDUM AND ARTICLES OF ASSOCIATION.

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

      Upon liquidation, dissolution or winding up, holders of our Common Shares
are entitled to receive pro rata our assets, if any, remaining after payments of
all debts and liabilities. No shares have been issued subject to call or
assessment. There are no pre-emptive or conversion rights and no provisions for
redemption or purchase for cancellation, surrender, or sinking or purchase
funds.

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

<PAGE>

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

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

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

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

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

      c.    Material conflicts of interest by Directors;

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

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

      f.    Certain alterations of share capital, including:

            (1)   increasing the number of authorized shares;

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

            (3)   reduction in capital

      g.    Changing our name;

      h.    Altering any restrictions on our business; and

      i.    Amalgamations with another company.

10.C  MATERIAL CONTRACTS.

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

      An investment in our Common Shares by a non-Canadian, other than a WTO
investor, would be reviewable under the Investment Act if it were an investment
to acquire direct control of Calais and the value of the assets were $5.0
million or more, as indicated on our financial statements for our fiscal year
immediately preceding the implementation of the investment.

      A non-Canadian, whether a WTO investor or otherwise, would acquire control
of Calais for the purposes of the Investment Act if he, she or it acquired a
majority of our Common Shares or acquired all or substantially all of the assets
used in our business. The acquisition of less than a majority, but one-third or
more of our Common Shares would be presumed to be an acquisition of control of
Calais unless it could be

<PAGE>

established that Calais was not controlled in fact by the acquirer through the
ownership of the Common Shares.

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

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

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

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

10.E  TAXATION.

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

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

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

Canadian Federal Income Tax Considerations

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

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

<PAGE>

Part XIII Tax from each dividend so paid and remit the withheld amount directly
to the Receiver General for Canada for the account of the Holder.

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

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

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

United States Taxation

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

      U.S. Holders. As used herein, a "U.S. Holder" includes a holder of Common
Shares of the Company who is a citizen or resident of the United States, a
corporation created or organized in or under the laws of the United States or of
any political subdivision thereof, an estate whose income is taxable in the
United States irrespective of source or a trust subject to the primary
supervision of a court within the United States and control of a United States
fiduciary as described in Section 7701(a)(30) of the Code. This summary does not
address the tax consequences to, and U.S. Holder does not include, persons
subject to special provisions of

<PAGE>

Federal income tax law, such as tax-exempt organizations, qualified retirement
plans, financial institutions, insurance companies, real estate investment
trusts, regulated investment companies, broker-dealers, non-resident alien
individuals, persons or entities that have a "functional currency" other than
the U.S. dollar, shareholders who hold Common Shares as part of a straddle,
hedging or conversion transaction, and shareholders who acquired their Common
Shares through the exercise of employee stock options or otherwise as
compensation for services. This summary is limited to U.S. Holders who own
Common Shares as capital assets. This summary does not address the consequences
to a person or entity holding an interest in a shareholder or the consequences
to a person of the ownership, exercise or disposition of any options, warrants
or other rights to acquire Common Shares.

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

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

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

      Under current Treasury Regulations, dividends paid on our Common Shares,
if any, generally will not be subject to U.S. information reporting, and
generally will not be subject to U.S. backup withholding tax. However, dividends
and the proceeds from a sale of our Common Shares paid in the U.S. through a
U.S. or U.S. related paying agent (including a broker) will be subject to U.S.
information reporting requirements and may also be subject to the 31% U.S.
backup withholding tax, unless the paying agent is furnished with a duly
completed and signed Form W-9. Any amounts withheld under the U.S. backup
withholding tax rules will be allowed as a refund or a credit against the U.S.
Holder's U.S. federal income tax liability, provided the required information is
furnished to the IRS.

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

<PAGE>

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

Other Considerations

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

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

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

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

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

      Passive Foreign Investment Company. As a foreign corporation with U.S.
Holders, we could potentially be treated as a passive foreign investment company
("PFIC"), as defined in Section 1297 of the

<PAGE>

Code, depending upon the percentage of our income which is passive, or the
percentage of our assets which is held for the purpose of producing passive
income.

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

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

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

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

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

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

      The United States generally taxes United States Shareholders of a CFC
currently on their pro rata shares of the Subpart F income of the CFC. Such
United States Shareholders are generally treated as having received a current
distribution out of the CFC's Subpart F income and are also subject to current
U.S. tax on their pro rata shares of the CFC's earnings invested in U.S.
property. The foreign tax credit described above may reduce the U.S. tax on
these amounts. In addition, under Section 1248 of the Code, gain from the sale
or exchange of shares by a U.S. Holder of Common Shares of the Corporation which
is or was a United States Shareholder at any time during the five-year period
ending with the sale or exchange is treated as ordinary income to the extent of
our earnings and profits (accumulated in corporate tax years beginning after
1962, but only while the shares were held and while the Company was
"controlled") attributable to the shares sold or exchanged. If a foreign
corporation is both a PFIC and a CFC, the foreign corporation generally will not
be treated as a PFIC with respect to the United States Shareholders of the CFC.
This rule generally will be effective for taxable years of United States
Shareholders beginning after 1997 and for taxable years of foreign corporations
ending with or within such taxable years of United States Shareholders. The PFIC
provisions continue to apply in the case of PFIC that is also a CFC with respect
to the U.S. Holders that are less than 10%

<PAGE>

shareholders. Because of the complexity of Subpart F, a more detailed review of
these rules is outside of the scope of this discussion.

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

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

10.F  DIVIDENDS AND PAYING AGENTS.

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

10.G  STATEMENT BY EXPERTS.

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

10.H  DOCUMENTS ON DISPLAY.

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

10.I  SUBSIDIARY INFORMATION.

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

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      We do not engage in hedging transactions. Our functional currency is the
Canadian dollar. However, we incur significant expenditures in the U.S dollar.
Accordingly, Calais bears the risk of changes between the Canadian and U.S.
dollar exchange rates. In the year ended May 31, 2003, such exchange rate
changes resulted in a foreign exchange gain of approximately Cdn.$250,000. To
date, Calais has not entered into any derivative or other financial instruments
to mitigate the impact of future exchange rate changes.

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

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN DEBT SECURITIES

<PAGE>

      Not applicable to annual reports on Form 20-F.

                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

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

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

14.A-D MATERIAL MODIFICATIONS.

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

14.E USE OF PROCEEDS.

      Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

15(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

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

      Disclosure controls and procedures are controls and other procedures that
are designed to ensure that information required to be disclosed in our reports
filed or submitted under the Securities Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in our reports filed under the Exchange Act
is accumulated and communicated to management, including our principal executive
officer and our principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.

15(b) CHANGES IN INTERNAL CONTROLS.

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

ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT

<PAGE>

      Calais has not appointed an audit committee financial expert.

ITEM 16B     CODE OF ETHICS

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

ITEM 16C     PRINCIPAL ACCOUNTANT FEES AND SERVICES

(a)   AUDIT FEES.

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

(b)   AUDIT-RELATED FEES.

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

(c)   TAX FEES.

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

(d)   ALL OTHER FEES.

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

(e)   AUDIT COMMITTEE'S PRE-APPROVAL PRACTICE

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

<PAGE>

ITEM 16D     EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

      Not applicable.

                                    PART III

ITEM 17.     FINANCIAL STATEMENTS

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

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

ITEM 18.     FINANCIAL STATEMENTS

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

ITEM 19.     EXHIBITS

(A) AUDITED FINANCIAL STATEMENTS

-    Auditor's Report, dated October 9, 2003

-    Consolidated Balance Sheets at May 31, 2003 and 2002

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

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

-    Notes to Consolidated Financial Statements

(B) EXHIBITS

Exhibits Pursuant to Item 601 of Regulation S-B:

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

3.02a       Articles of Incorporation

3.03a       Special Resolution filed March 19, 1992

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

10.02a      Mutual Release effective July 18, 2000, between Marlowe Harvey,
            Aarvark Agencies, Inc., Calais
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                    TITLE
---------                                  -----
<S>         <C>
            Resources Colorado, Inc., Calais Resources, Inc., on the one part,
            and Thomas S. Hendricks

10.03a      Form of convertible debentures

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

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

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

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

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

10.09a      Employment Agreement with Matthew C. Witt

10.10b      Settlement Agreement and General Mutual Releases between Calais
            Resources, Inc., Marlowe Harvey, and others, dated March 8, 2004

10.11b      Purchase Option Agreement between Calais Resources, Inc. and Golden
            Cycle of Panama, Inc. and Panama Mining of Golden Cycle, Inc., dated
            February 28, 2003

10.12b      Extension of Purchase Option Agreement and Partial Acknowledgement
            of Performance, dated January 31, 2004, relating to Exhibit 10.11

21a         List of subsidiaries.

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

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

+           Filed herewith.

a           Incorporated by reference from exhibits filed with the original
            filing on Form 20-F for the year ended May 31, 2003.

b.          Incorporated by reference from exhibits filed with quarterly
            report on Form 10-QSB for the quarter ended February 29, 2004


<PAGE>

                                 SIGNATURE PAGE

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

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

     Dated July 27, 2003                By /s/ Thomas S. Hendricks
                                           ----------------------------------
                                           Thomas S. Hendricks, President
<PAGE>

                    Consolidated Financial Statements of

                    CALAIS RESOURCES INC.

                    Years ended May 31, 2003 and 2002
                    (In Canadian dollars)


<PAGE>

MANAGEMENT'S STATEMENT OF RESPONSIBILITY

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

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

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

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

Director, Calais Resources Inc.
Chilliwack, BC

October 9, 2003

<PAGE>

[KPMG LOGO]

            KPMG Enterprise

            #200-9123 Mary Street               Telephone (604) 793-4700
            Chilliwack BC V2P 4H7               Telefax (604) 793-4747
            Canada                              www.kpmg.ca/enterprise

AUDITORS' REPORT TO THE DIRECTORS

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

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

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

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

KPMG LLP

Chartered Accountants

Chilliwack, British Columbia

October 9, 2003

KPMG LLP, a Canadian limited liability partnership is the Canadian
member of KPMG International, a Swiss nonoperating association

<PAGE>

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

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

KPMG LLP

Chartered Accountants

Chilliwack, Canada

October 9, 2003

<PAGE>

                           EVANCIC PERRAULT ROBERTSON
                          CERTIFIED GENERAL ACCOUNTANTS

AUDITORS' REPORT

To the Directors of Calais Resources Inc.

We have audited the consolidated statements of earnings, deficit and cash flows
of Calais Resources Inc. for the year ended May 31, 2001. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the results of the Company's operations and its cash flows
for the year ended May 31, 2001 in accordance with generally accepted accounting
principles in Canada.

"signed"  Evancic Perrault Robertson

EVANCIC PERRAULT ROBERTSON
CERTIFIED GENERAL ACCOUNTANTS

Maple Ridge, BC
October 17, 2001, except as to Note 5 which is as of November 21, 2001

                22377 Dewdney Trunk Road, Maple Ridge, BC V2X 3J4
                   Telephone (604) 467-5561 Fax (604) 467-1219
                    E-Mail eprmr@epr.ca Website http://epr.ca

                  Offices Across Canada, Affiliations Worldwide

<PAGE>

                           EVANCIC PERRAULT ROBERTSON
                          CERTIFIED GENERAL ACCOUNTANTS

COMMENTS BY AUDITOR FOR US READERS ON CANADA-US REPORTING CONFLICT

The preceding opinion is expressed in accordance with standards of reporting
established and generally accepted in Canada. Had the report been prepared in
accordance with United States reporting standards, our report on the financial
statements would have contained the following explanatory paragraph after the
opinion paragraph.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in the nature of the
business, the Company has suffered substantial losses from operations and has a
deficit. Until it achieves a continuous profitable level of operations, the
Company may be dependent upon management obtaining sufficient financing to allow
the Company to meet its objectives. These factors raise substantial doubt about
the Company's ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

"signed"  Evancic Perrault Robertson

EVANCIC PERRAULT ROBERTSON
CERTIFIED GENERAL ACCOUNTANTS

Maple Ridge, BC
October 17, 2001, except as to Note 5 which is as of November 21, 2001



                22377 Dewdney Trunk Road, Maple Ridge, BC V2X 3J4
                   Telephone (604) 467-5561 Fax (604) 467-1219
                    E-Mail eprmr@epr.ca Website http://epr.ca

                  Offices Across Canada, Affiliations Worldwide

<PAGE>

CALAIS RESOURCES INC.

Consolidated Balance Sheets
Expressed in Canadian Dollars
May 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                                                                                   2002
                                                                                                                   ----
                                                                                           2003                 (Restated -
                                                                                           ----                   Note 3)
<S>                                                                                    <C>                    <C>
Assets
Current assets:
      Restricted cash (Note 7)                                                         $          -            $      67,415
      Assets held for sale                                                                  283,301                  283,301
      Prepaid expenses and deposits                                                               -                    7,612
                                                                                       ------------            -------------
                                                                                            283,301                  358,328

Capital assets (Note 4)                                                                      94,846                  126,216

Mineral interests (Note 5)                                                               13,206,552               12,709,871
                                                                                       ------------            -------------

                                                                                       $ 13,584,699            $  13,194,415
                                                                                       ============            =============
Liabilities and Shareholders' Equity

Current liabilities:
      Bank overdraft                                                                   $      7,586            $       9,399
      Accounts payable and accrued liabilities                                              974,816                  659,154
      Note payable (Note 6)                                                                  95,795                        -
      Bank loan (Note 7)                                                                  1,642,200                1,832,616
      Advances from shareholders, without
      interest or fixed terms of
      repayment; unsecured                                                                  697,573                  546,138
                                                                                       ------------            -------------
                                                                                          3,417,970                3,047,307

Long-term debt (Note 8)                                                                   4,624,916                4,573,136

Shareholders' equity:
      Share capital (Note 9)                                                             23,457,480               22,897,780
      Deficit                                                                           (17,915,667)             (17,323,808)
                                                                                       ------------            -------------
                                                                                          5,541,813                5,573,972
                                                                                       ------------            -------------
Future operations (Note 1)
Contingency (Note 12)
Commitments (Note 15)
Subsequent events (Note 16)                                                            $ 13,584,699            $ 13,194,415
                                                                                       ============            =============
</TABLE>

On behalf of the Board:

_______________________   Director

_______________________   Director

See accompanying notes to consolidated financial statements.


                                       2
<PAGE>

CALAIS RESOURCES INC.
Consolidated Statements of Operations and Deficit
Expressed in Canadian Dollars

Years ended May 31, 2003, 2002 and 2001

<TABLE>
<CAPTION>
                                                                                           2002                    2001
                                                                                           ----                    ----
                                                                         2003           (Restated-             (Restated -
                                                                         ----             Note 3)                Note 3)
<S>                                                                 <C>                <C>                     <C>
Revenues                                                            $          -       $          -            $           -
Expenses:
      Advertising                                                          3,846              1,947                    4,523
      Amortization                                                         5,433              7,043                   10,694
      Consulting fees                                                     44,789             91,500                   71,727
      Filing fees, licenses, permits                                       1,044              2,586                    2,924
      Foreign exchange loss (gain)                                      (249,440)             4,699                   75,207
      Gain on sale of capital assets                                           -             (7,142)                       -
      Insurance                                                              451              2,591                    1,303
      Interest and bank charges                                          624,073            318,553                   35,288
      Loss on abandonment of mineral interests                                 -                  -                 (312,749)
      Office and general                                                  18,314              8,889                   15,807
      Professional fees                                                   99,681            128,478                  133,999
      Rent                                                                13,503             19,800                        -
      Telephone                                                           12,750             13,997                   12,871
      Transfer agent fees                                                  3,939              2,521                    3,551
      Travel                                                               2,649              2,001                    7,211
      Utilities                                                           12,360             10,820                    2,456
      Wages and benefits                                                       -                  -                   58,639
                                                                    ------------       ------------            -------------
                                                                         593,392            608,283                  748,949
                                                                    ------------       ------------            -------------
Loss from operations                                                    (593,392)          (608,283)                (748,949)

Other income:
      Interest income                                                        600              3,092                    1,081
      Rental income                                                          933              2,978                        -
                                                                    ------------       ------------            -------------
                                                                           1,533              6,070                    1,081
                                                                    ------------       ------------            -------------

Loss for the year                                                       (591,859)          (602,213)                (747,868)

Deficit, beginning of year (Note 3)                                  (17,323,808)       (16,721,595)             (15,973,727)
                                                                    ------------       ------------            -------------

Deficit, end of year                                                $(17,915,667)      $(17,323,808)           $ (16,721,595)
                                                                    ============       ============            =============

Net loss per common share, basic
  and diluted                                                       $      (0.05)      $      (0.06)           $       (0.08)
                                            =                       ============       ============            =============

Weighted average common shares
   outstanding, basic and diluted                                     10,812,795         10,184,635                9,618,218
                                                                    ============       ============            =============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

CALAIS RESOURCES INC.
Consolidated Statements of Cash Flows
Expressed in Canadian Dollars
Years ended May 31, 2003, 2002 and 2001

<TABLE>
<CAPTION>
                                                                                           2002                     2001
                                                                                           ----                     ----
                                                                        2003           (Restated -              (Restated -
                                                                        ----             Note 3)                  Note 3)
<S>                                                                 <C>                <C>                     <C>
Cash provided by (used in):
Operations:
      Loss for the year                                             $   (591,859)      $   (602,213)           $    (747,868)
      Items not involving cash:
          Accretion expense                                               51,780             51,204                        -
          Amortization                                                     5,433              7,043                   10,694
          Shares issued for services                                     143,234            141,300                   45,000
          Loss on abandonment of mineral interests                             -                  -                  312,749
          Warrants issued for services                                   205,645                  -                        -
          Gain on sale of capital assets                                       -             (7,142)                       -
          Loss on settlement of accounts payable and
           accrued liabilities with issuance of shares                     1,911                  -                        -
          Foreign exchange loss (gain)                                  (249,440)             4,699                        -
          Change in non-cash operating working capital:
          Restricted cash                                                 67,415            (67,415)                       -
          Advances receivable                                                  -                  -                   65,594
          Other receivables                                                    -                818                    5,218
          Prepaid expenses and deposits                                    7,612                  -                    7,343
          Accounts payable and accrued liabilities                       307,499           (190,411)                  80,293
          Note payable                                                    95,795                  -                        -
                                                                    ------------       ------------            -------------
                                                                          45,025           (662,117)                (220,977)
Financing:
      Bank loan                                                                -          1,832,616                        -
      Advances from (to) shareholders                                    129,184           (274,755)                 330,292
      Long term debt                                                           -           (623,575)                 278,662
      Issue of capital stock                                              90,021                  -                        -
                                                                    ------------       ------------            -------------
                                                                         219,205            934,286                  608,954
Investments:
      Mineral interests                                                 (262,030)          (289,106)                (373,383)
      Proceeds from disposal of capital assets                                 -              7,412                        -
      Net additions to capital assets                                       (387)              (506)                  (1,416)
                                                                    ------------       ------------            -------------
                                                                        (262,417)          (282,200)                (374,799)
                                                                    ------------       ------------            -------------

Increase (decrease) in cash                                                1,813            (10,031)                  13,178

Cash (bank overdraft), beginning of year                                  (9,399)               632                  (12,546)
                                                                    ------------       ------------            -------------

Cash (bank overdraft), end of year                                  $     (7,586)      $     (9,399)           $        (632)
                                                                    ============       ============            =============

Supplementary cash flow information:
     Interest paid                                                  $    107,790       $    195,877            $      35,288
                                                                    ============       ============            =============
     Income taxes paid                                                         -                  -                        -
                                                                    ============       ============            =============
     Interest received                                                       600              3,092                    1,081
                                                                    ============       ============            ======-======
     Non cash transactions:

          Shares issued to settle accounts payable and
            accrued liabilities                                     $     38,800       $          -            $           -
                                                                    ============       ============            =============
          Shares issued for mineral interest exploration                  82,000             30,000                   15,000
                                                                    ============       ============            =============
          Amortization capitalized to mineral interests                   26,324             36,645                   57,346
                                                                    ============       ============            =============
          Accrued costs capitalized to mineral interests                 126,327             28,418                        -
                                                                    ============       ============            =============
</TABLE>

                                       4
<PAGE>


<TABLE>
<S>                                                                 <C>                <C>                     <C>
          Shares issued for repayment of shareholder advances                  -             75,000                        -
                                                                    ============       ============            =============
          Advances receivable allocated to mineral interests                   -            122,806                        -
                                                                    ============       ============            =============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

CALAIS RESOURCES INC.
Notes to Consolidated Financial Statements
Expressed in Canadian Dollars

Years ended May 31, 2003, 2002 and 2001


1.    GENERAL AND FUTURE OPERATIONS:

      Calais Resources Inc. (the "Company") was incorporated under the laws of
      the Province of British Columbia on December 30, 1986. The Company is
      currently in the process of exploring and developing various mineral
      interests to determine whether these interests contain ore reserves that
      are economically recoverable. The recoverability of the amounts shown for
      the mineral interests 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 exploration and upon
      future profitable production.

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

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

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

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

                                       6
<PAGE>

2.    SIGNIFICANT ACCOUNTING POLICIES:

(a)   Basis of consolidation:

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

(b)   Use of estimates:

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

(c)   Cash equivalents:

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

(d)   Financial instruments:

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

(e)   Assets held for sale:

      Assets held for sale consist of used mining equipment held for sale.
      Assets held for sale are recorded at the lower of cost or net realizable
      value.

(f)   Mineral interests:

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

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

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

                                       7
<PAGE>

      In March 2000, the Accounting Standards Board of the Canadian Institute of
      Chartered Accountants (CICA) issued Accounting Guideline No. 11 entitled
      Enterprises in the Development Stage - (AcG 11). The guideline addresses
      three distinct issues: (i) capitalization of costs/expenditures, (ii)
      impairment and (iii) disclosure. Prior to its issuance, development stage
      entities were exempt from following certain aspects of Canadian GAAP. AcG
      11 requires that all companies account for transactions based on the
      underlying characteristics of the transaction rather than the maturity of
      the enterprise. In addition, AcG 11 requires specific disclosure of
      information by development stage companies.

      In March 2002, the Emerging Issues Committee of the CICA issued EIC-126 -
      "Accounting by Mining Enterprises for Exploration Costs" which interprets
      how AcG 11 affects mining companies with respect to the deferral of
      exploration costs. EIC-126 refers to CICA Handbook Section 3061 "Property,
      Plant and Equipment", paragraph .21, which states that for a mining
      property, the cost of the asset includes exploration costs if the
      enterprise considers that such costs have the characteristics of property,
      plant and equipment. EIC-126 then states that a mining enterprise that has
      not established mineral reserves objectively, and therefore does not have
      a basis for preparing a projection of the estimated cash flow from the
      property is not precluded from considering the exploration costs to have
      the characteristics of property, plant and equipment. EIC-126 also sets
      forth the Committee's consensus that a mining enterprise in the
      development stage is not required to consider the conditions in AcG 11
      regarding impairment in determining whether exploration costs may be
      initially capitalized. With respect to impairment of capitalized
      exploration costs, EIC-126 sets forth the Committee's consensus that that
      a mining enterprise in the development stage that has not established
      mineral reserves objectively, and therefore does not have a basis for
      preparing a projection of the estimated cash flow from the property is not
      obliged to conclude that capitalized costs have been impaired. However,
      such an enterprise should consider the conditions set forth in AcG-11 and
      CICA Handbook Section 3061 in determining whether subsequent write-down of
      capitalized exploration costs related to mining properties is required.

      The Company considers that exploration costs have the characteristics of
      property, plant and equipment, and, accordingly, defers such costs.
      Furthermore, pursuant to EIC-126, deferred exploration costs would not
      automatically be subject to regular assessment of recoverability, unless
      conditions, such as those discussed in AcG 11 exist.

      AcG 11 also provides guidance on measuring impairment of when
      pre-operating costs have been deferred. While this guidance is applicable,
      the Company does not believe its application will result in impairment."

      For Canadian GAAP purposes, the Company capitalizes exploration costs
      incurred as property, plant and equipment (tangible assets) pursuant to
      CICA 3061,EIC-126 and related guidance. Due to certain inconsistencies in
      the CICA Handbook, there are opposing views that exploration costs should
      be considered to be intangible assets. As intangible assets, they would be
      amortized over the term of the interest. In the United States, in Abstract
      04-2 the Emerging Issues Tax Force reached a consensus that such interests
      are tangible assets. The Emerging Issues Committee in Canada is currently
      reviewing the application of EITF 04-2 to Canadian GAAP.

(g)   Capital assets and amortization:

                                       8
<PAGE>

      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 interest cost.

(h)   Foreign currency:

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

(i)   Income taxes:

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

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

(j)   Net loss per share:

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

(k)   Stock-based compensation:

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

                                       9
<PAGE>

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

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

3.    PRIOR PERIOD ADJUSTMENTS:

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

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

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

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

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

      The impact on previously reported amounts is as follows:

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

<TABLE>
<CAPTION>
                                                                  2001                                        2001
                                                               previously                                      as
                                                                reported           Adjustment               restated
                                                                --------           ----------               --------
<S>                                                           <C>                <C>                     <C>
Accounts payable and accrued liabilities                      $    780,994       $     35,498            $     816,492
                                                              ============       ============            =============
Long-term debt                                                   5,720,680           (575,173)               5,145,507
                                                              ============       ============            =============
Share capital                                                   22,076,307            575,173               22,651,480
                                                              ============       ============            =============
Deficit, end of year                                           (16,686,097)           (35,498)             (16,721,595)
                                                              ============       ============            =============
</TABLE>

                                       10
<PAGE>

4.    CAPITAL ASSETS:

<TABLE>
<CAPTION>
                                                                                        2003                    2002
                                                                                        ----                    ----
<S>                                                                                <C>                     <C>
Cost:
     Land                                                                          $      8,215            $       8,215
     Furniture                                                                           10,947                   10,947
     Computer equipment                                                                  37,494                   37,494
     Automotive equipment                                                                57,331                   57,331
     Exploration/mining equipment                                                       498,988                  498,988
     Software                                                                             6,647                    6,260
                                                                                   ------------            -------------
                                                                                        619,622                  619,235

  Accumulated depreciation:
     Furniture                                                                            7,783                    7,065
     Computer equipment                                                                  32,378                   30,502
     Automotive equipment                                                                50,172                   47,506
     Exploration/mining equipment                                                       428,149                  401,825
     Software                                                                             6,294                    6,121
                                                                                   ------------            -------------
                                                                                        524,776                  493,019
                                                                                   ------------            -------------

  Net book value                                                                   $     94,846            $     126,216
                                                                                   ============            =============
</TABLE>


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

5.    MINERAL INTERESTS:

<TABLE>
<CAPTION>
                                                                                                             2002
                                                                                      2003                   ----
                                                                                      ----                 (Note 3)
<S>                                                                              <C>                     <C>
Nevada U.S.A.                                                                    $  3,449,004            $   3,297,789
Colorado, U.S.A.                                                                    9,466,230                9,268,024
Panama, Central America                                                               291,318                  144,058
                                                                                 ------------            -------------

                                                                                 $ 13,206,552            $  12,709,871
                                                                                 ============            =============
</TABLE>

      Title to mining interests 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 interests. The Company has
      investigated title to all of its mineral interests and, to the best of its
      knowledge, title to all of its interests are in good standing as described
      below. All of the interests in which the Company owns or 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.:

                                       11
<PAGE>

      In December 1994, the Company paid US$1,176,000 to a then director for a
      51% interest in various properties in Nevada known as the Manhattan
      project. The Company also agreed to acknowledge the 5% net smelter return
      royalty on certain claims in that project to the previous director. It
      appears that the director owned no interest in these properties at that
      time, although he believes that he had and still has rights to acquire
      interests in those properties. We are attempting to determine title to
      these properties. In October 2003 we received some title information
      relating to these properties which consist of 28 patented mining claims
      and 47 unpatened mining claims. Certain of these claims overlie other
      claims. Based on the preliminary research done to date, the claims appear
      to be owned of record by one or more of the following (collectively, the
      "Manhattan Parties"):

      -     Argus Resources, Inc. (a Nevada corporation affiliated with Marlowe
            Harvey who advises the Company that he and his spouse indirectly own
            approximately 26% of the outstanding Argus Resources stock),

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

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

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

      The Company entered into an agreement and settlement dated September 7,
      2000 with Nevada Manhattan Mining Incorporated ("NMMI") to settle and
      purchase its interest in the property (the "NMMI Settlement") in which the
      Company agreed to make four annual payments of US$75,000. During the term
      of the agreement the Company has agreed to pay NMMI a 2% net smelter
      return royalty. The Company can purchase the entire NMMI interest and
      royalty for US$7.5 million, payable over 30 years. The total amount
      payable would be reduced by any production royalties paid.

(b)   Colorado, U.S.A.:

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

                                       12
<PAGE>

(c)   Panama, Central Zmerica:

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

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

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

6.    NOTE PAYABLE:

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

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

7.    BANK LOAN:

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

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

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

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


                                       13
<PAGE>

8.    LONG-TERM DEBT:

<TABLE>
<CAPTION>
                                                                                                              2002
                                                                                     2003                     ----
                                                                                     ----                   (Note 3)
<S>                                                                              <C>                     <C>
Debentures payable, without interest, due May 2011, convertible to common
  shares at an conversion price of $1.23 per share at holders
  discretion; unsecured                                                          $  5,097,105            $   5,097,105

Less:  Cumulative accretion remaining                                                (472,189)                (523,969)
                                                                                 ------------            -------------
                                                                                 $  4,624,916            $   4,573,136
                                                                                 ============            =============
</TABLE>

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

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

9.    SHARE CAPITAL:

      (a)   Authorized: 100,000,000 Common shares without par value

      (b)   Issued and outstanding shares:

<TABLE>
<CAPTION>
                                                                                 Number                     2002
                                                                                of shares                  Amount
                                                                                ---------                  ------
<S>                                                                           <C>                     <C>
Balance, May 31, 2000                                                            9,655,718              $22,015,767
Issued for services                                                                100,000                   45,000
Issued under exercise of stock
  options                                                                          100,000                   15,000
Fair value conversion option on
  convertible debentures                                                                 -                  575,713
                                                                              ------------            -------------

Balance, May 31, 2001                                                            9,855,718               22,651,480

Issued to settle debt                                                              250,000                   75,000
Issued for services                                                                471,000                  141,300
Issued for acquisition of
  mineral interests                                                                100,000                   30,000
                                                                              ------------            -------------

Balance, May 31, 2002                                                           10,676,718               22,897,780

Issued to settle debt                                                               67,500                   38,800
Issued for cash                                                                     62,500                   78,771
Issued on exercise of options                                                       25,000                   11,250
</TABLE>

                                       14
<PAGE>

<TABLE>
         <S>                                                                           <C>                     <C>
         Issued for services                                                                261,667                  143,234
         Issued for acquisition of
           mineral interests                                                                100,000                   82,000
         Warrants issued for services                                                             -                  205,645
                                                                                       ------------            -------------

         Balance, May 31, 2003                                                           11,193,385            $  23,457,480
                                                                                       ============            =============
</TABLE>

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

(c)   Stock options:

<TABLE>
<CAPTION>
                                                                                                           Weighted average
                                                                                                            exercise price
         Date                                                                               Number             per share
         ----                                                                               ------         ---------------
         <S>                                                                           <C>                     <C>
         Issued and outstanding, May 31, 2000                                               824,250            $        0.45 (i)
         Issued in the year                                                                 155,000                     0.45
         Expired in the year                                                                (14,000)                   (0.45)
                                                                                       ------------            -------------

         Issued and outstanding, May 31, 2001                                               965,250                     0.45
         Issued in the year                                                                  60,000                     0.77
                                                                                       ------------            -------------

         Issued and outstanding, May 31, 2002                                             1,025,250                     0.47
         Issued in the year                                                                  82,500                     1.26
         Issued in the year                                                                  15,000                     0.45
         Exercised in the year                                                              (25,000)                   (0.45)
         Expired in the year                                                               (116,250)                   (0.45)
                                                                                       ------------            -------------

         Balance, May 31, 2003                                                              981,500            $        0.54
                                                                                       ============            =============
</TABLE>

      Options outstanding at May 31, 2003 are as follows:

<TABLE>
<CAPTION>
                                                           Exercise price                                  Weighted average
                                                      Number        per share           Expiry date          remaining life
                                                      ------        ---------           -----------          --------------
         <S>                                          <C>           <C>               <C>                  <C>
         Other                                        60,000              $0.77           June 2003              0.1 years
         Director and employee options               684,000              $0.45        October 2003         0.4 years (ii)
         Director options                             82,500              $1.26       November 2004              1.5 years
         Director and employee options               155,000              $0.45         August 2005        2.3 years (iii)
                                                     -------                                               ---------------
                                                     981,500                                                     0.8 years
                                                     -------                                               ---------------
</TABLE>

All outstanding options are exercisable when issued.

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

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

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

                                       15
<PAGE>

(d)   Warrants:

<TABLE>
<CAPTION>
                                                                                                           Weighted average
                                                                                                            exercise price
                                                                                             Number           per share
                                                                                             ------        ----------------
      <S>                                                                              <C>                 <C>
      Issued and outstanding, May 31, 2001 and May 31, 2002                                       -        $               -
      Issued in the year for services                                                       548,803                 US $0.81
                                                                                       ------------            -------------

      Balance, May 31, 2003                                                                 548,803                 US $0.81
                                                                                       ============            =============
</TABLE>

      Warrants outstanding at May 31, 2003 are as follows:

<TABLE>
<CAPTION>
                                                                    Exercise                                     Weighted
                                                                    price per             Expiry                  average
                                                      Number         warrant               date               remaining life
                                                      ------         -------               ----               ----------------
                                                     <S>            <C>               <C>                      <C>
                                                      62,500        US $0.80          September 2003             0.3 years (i)
                                                     486,303        US $0.81            October 2004             1.4 years
                                                     -------        --------                                      ---------
                                                     548,803        US $0.81                                      1.3 years
                                                     =======        ========                                      =========
</TABLE>

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

10.   INCOME TAXES:

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

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

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

                                       16
<PAGE>

<TABLE>
<CAPTION>
                                                                                             2003                   2002
                                                                                             ----                   ----
    <S>                                                                                <C>                     <C>
    Future tax assets:

         Operating loss carryforwards                                                  $  1,120,000            $   1,186,000
         Capital assets                                                                           -                   27,000
                                                                                       ------------            -------------
                                                                                          1,120,000                1,213,000
      Valuation allowance for future tax assets                                          (1,109,000)              (1,213,000)
                                                                                       ------------            -------------
                                                                                             11,000                        -
      Future tax liabilities:
         Capital assets                                                                     (11,000)                       -
                                                                                       ------------            -------------
      Net future tax assets                                                            $          -            $           -
                                                                                       ============            =============
</TABLE>

11.   RELATED PARTY TRANSACTIONS:

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

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

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

12.   CONTINGENCY:

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

                                       17
<PAGE>

13.   SEGMENTED INFORMATION:

      The Company operates principally in the mining industry segment.

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

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

14.   FINANCIAL INSTRUMENTS:

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

      (a)   Foreign currency risk:

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

      (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.

                                       18
<PAGE>

15.   COMMITMENTS:

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

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

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

16.   SUBSEQUENT EVENTS:

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

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

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

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

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

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

                                       19
<PAGE>

17.   COMPARATIVE FIGURES:

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

18.   RECONCILIATION WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES:

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

      (a)   Mineral interest exploration expenditures:

      Statement of Financial Accounting Standards No. 144 ("SFAS 144"),
      "Accounting for the Impairment or Disposal of Long-Lived Assets" in the
      U.S. requires that long-lived assets be reviewed for impairment whenever
      events or changes in circumstances indicate that the carrying amount of an
      asset may not be recoverable. In performing the review for recoverability,
      the Company is to estimate the future cash flows expected to result from
      the use of the asset and its eventual disposition. If the sum of the
      expected future cash flows (undiscounted and without interest charges) is
      less than the carrying amount of the asset, an impairment loss is
      measured, equal to the excess of the carrying amount over the fair value
      of the assets. A common interpretation of SFAS 144 is that it requires
      mineral interest exploration 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 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 interests significant accounting
      policy note.

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

<TABLE>
<CAPTION>
                                                                                    2002                2001
                                                                 2003               ----                ----
                                                                 ----             (Note 3)            (Note 3)
<S>                                                            <C>                <C>                 <C>
Mineral exploration costs                                      $496,681           $506,975            $445,729
                                                               ========           ========            ========
</TABLE>

                                       20
<PAGE>

(b)   Stock-based compensation:

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

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

(c)   The Company has 150,000 common shares held in escrow. The release of the
      shares is contingent on certain performance conditions. Compensation under
      U.S. GAAP, if any, is recognized when the contingency is resolved and the
      shares are released from escrow based upon value of the shares as they
      become releasable. As at May 31, 2003, no shares are releasable from
      escrow. No similar compensation expense would be recognized under Canadian
      GAAP. These shares are excluded from earnings per share calculations for
      both Canadian and U.S. GAAP.

(d)   Fair value conversion option:

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

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

(f)   The following table presents the consolidated balance sheet, statement of
      operations and deficit, and cash flows under U.S. GAAP:

      Balance Sheet

                                       21
<PAGE>

<TABLE>
<CAPTION>
                                                              2003             2002
                                                           ------------    ------------
                                                                             (Note 3)
<S>                                                        <C>             <C>
Total assets under Canadian GAAP                           $ 13,584,699    $ 13,194,415
Adjustments to mineral interest exploration
  expenditures  (a)                                         (13,206,552)    (12,709,871)
                                                           ------------    ------------

Total assets under U.S. GAAP                               $    378,147    $    484,544
                                                           ============    ============
Total liabilities under Canadian GAAP                      $  8,042,886    $  7,620,443
Fair value conversion option (d)                                472,189         523,969
                                                           ------------    ------------
Total liabilities under U.S. GAAP                             8,515,075       8,144,412

Share capital, Canadian GAAP                                 23,457,480      22,897,780
Stock-based compensation  (b)                                   264,832         308,996
Fair value conversion option (d)                               (575,173)       (575,173)
                                                           ------------    ------------
Share capital, U.S. GAAP                                     23,147,139      22,631,603
Accumulated deficit, U.S. GAAP                              (31,284,067)    (30,291,471)
                                                           ------------    ------------
Shareholders' deficiency, U.S. GAAP                          (8,136,928)     (7,659,868)
                                                           ------------    ------------
Shareholders' deficiency and liabilities under U.S. GAAP   $    378,147    $    484,544
                                                           ============    ============
</TABLE>

Statement of Operations and Deficit

<TABLE>
<CAPTION>
                                       Cumulative         Year           Year            Year
                                          from           ended          ended            ended
                                      Inception to       May 31,       May 31,          May 31,
                                      May 31, 2003        2003          2002              2001
                                      ------------    ------------    ------------    ------------
                                                                        (Note 3)        (Note 3)
<S>                                   <C>             <C>             <C>             <C>
Net loss under Canadian GAAP          $(17,915,667)   $   (591,859)   $   (602,213)   $   (747,868)

Adjustments:
   Mineral interest exploration
     expenditures                      (13,206,552)       (496,681)       (506,975)       (445,729)
   Loss on mineral interest
     exploration previously
     recorded for U.S. GAAP                      -               -               -         312,749
   Stock-based compensation               (264,832)         44,164        (125,917)       (183,079)
Fair value conversion option               102,984          51,780          51,204
                                      ------------    ------------    ------------    ------------
Net loss, being comprehensive loss,
  under U.S. GAAP                      (31,284,067)       (992,596)     (1,183,901)     (1,063,927)

Accumulated opening deficit under
  U.S. GAAP                                      -     (30,291,471)    (28,677,570)    (27,613,643)
                                      ------------    ------------    ------------    ------------
Ending deficit, U.S. GAAP             $(31,284,067)   $(31,284,067)   $(29,861,471)   $(28,677,570)
                                      ============    ============    ============    ============
Net loss per share, basic and
  diluted, U.S. GAAP                                  $      (0.09)   $      (0.12)   $      (0.11)
                                                      ============    ============    ============
</TABLE>

(g)   Statement of cash flows:

      For Canadian GAAP, cash flows relating to mineral interest exploration
      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:

                                       22
<PAGE>

<TABLE>
<CAPTION>
                                                               2003         2002         2001
                                                             ---------    ---------    ---------
                                                                          (Note 3)      (Note 3)
<S>                                                          <C>          <C>          <C>
Cash provided by (used in) operations under Canadian GAAP    $  45,025    $(662,117)   $(220,977)
Adjustment for mineral exploration costs                      (262,030)    (289,106)    (373,383)
                                                             ---------    ---------    ---------
Cash used in operations under U.S. GAAP                       (217,005)    (951,223)    (594,360)

Cash provided by (used in) investments under Canadian GAAP    (262,417)    (282,200)    (374,799)
Adjustment for mineral exploration costs                       262,030      289,106      373,383
                                                             ---------    ---------    ---------
Cash provided by (used in) investments under U.S. GAAP            (387)       6,906       (1,416)

Financing activities under Canadian GAAP                       219,205      934,286      608,954
Increase (decrease) in bank overdraft                           (1,813)       9,399      (12,546)
                                                             ---------    ---------    ---------
Financing activities under U.S. GAAP                           217,392      943,685      596,408
                                                             ---------    ---------    ---------
Increase (decrease) in cash under Canadian GAAP                  1,831      (10,031)      13,178

Additional bank overdraft financing (repayment)                 (1,831)       9,399      (12,546)
                                                             ---------    ---------    ---------
Increase (decrease) in cash under U.S. GAAP                          -         (632)         632
Cash, beginning of year, U.S. GAAP                                   -          632            -
                                                             ---------    ---------    ---------
Cash, end of year, U.S. GAAP                                  $      -            -    $     632
                                                             =========    =========    =========
</TABLE>

(h)   Development stage enterprise:

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

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

<TABLE>
<CAPTION>
                                                               Cumulative
                                                             from inception
                                                             Dec 30, 1986 to
                                                              May 31, 2003
                                                             ---------------
<S>                                                          <C>
Operating, exploration and administrative expenses            $(22,809,852)
Loss on disposition of subsidiary                              (12,537,072)
Other income                                                     4,062,857
                                                              ------------

Net loss for the period since inception to May 31, 2003       $(31,284,067)
                                                              ============
</TABLE>

      Consolidated statements of cash flows:

<TABLE>
<CAPTION>
                                                Cumulative
                                              from inception
                                              Dec 30, 1986 to
                                               May 31, 2003
                                               ------------
<S>                                           <C>
Operating activities                           $(10,185,965)
Financing activities                             15,913,132
Investing activities                             (5,727,167)
                                               ------------
Net cash inflows from inception to May 3$                 -
                                               ============
</TABLE>

                                       23
<PAGE>

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

<TABLE>
<CAPTION>
                                                                        Deficit
                                              Common shares           accumulated
                                           Number       Amount      since inception
                                        -----------   -----------   ---------------
<S>                                     <C>           <C>           <C>
Balance at inception                              -      $      -
    Issued for cash:
         December 1986                            1             1
         January 1987                        80,000       100,000
         April 1987                         150,000         7,500
Net loss for the year under U.S. GAAP             -             -     $  (108,647)
                                        -----------   -----------     -----------

Balance, May 31, 1987                       230,001       107,501        (108,647)
    Issued for cash:
         September 1987                      11,600        14,500
         March 1988                         100,000       150,000
Net loss for the year under U.S. GAAP             -             -         (42,412)
                                        -----------   -----------     -----------

Balance, May 31, 1988                       341,601       272,001        (151,059)
    Issued for cash:
         August 1988                         31,000        54,250
    Issued upon exercise of warrants:
         August 1988                         20,000        40,000
         March 1989                           5,000        10,000
Net loss for the year under U.S. GAAP             -             -        (185,968)
                                        -----------   -----------     -----------

Balance, May 31, 1989                       397,601       376,251        (337,027)
    Issued for cash:
         July 1989                           40,000       136,000
    Issued upon exercise of options:
         August 1989                         20,000        75,000
Net loss for the year under U.S. GAAP             -             -         (54,515)
                                        -----------   -----------     -----------

Balance, May 31, 1990                       457,601       587,251         391,542
    Acquisition of Cineonix Limited:
         July 1989                        1,000,000       750,000
    Issued for finder's fee                  30,000        90,000
Net loss for the year under U.S. GAAP             -             -      (1,179,904)
                                        -----------   -----------     -----------

Balance, May 31, 1991                     1,487,601     1,427,251      (1,571,446)
    Issued for mineral interests:
         April 1992                          50,000        20,000
Net loss for the year under U.S. GAAP             -             -         (71,702)
                                        -----------   -----------     -----------

Balance, May 31, 1992                     1,537,601     1,447,251      (1,643,148)
    Issued for cash:
         July 1992                        1,000,000       150,000
         March 1993                         600,000       132,000
</TABLE>

                                       24
<PAGE>

<TABLE>
<S>                                            <C>          <C>            <C>
    Issued for debt settlement:
         August 1992                             115,468         23,094
    Issued for finder's fee                       30,000         26,100
Net loss for the year under U.S. GAAP                  -              -       (118,136)
                                               ---------    -----------    -----------

Balance, May 31, 1993                          3,283,069    $ 1,778,445    $(1,761,284)
    Issued for mineral interests Oct. 1993        50,000         30,500
    Issued for exercise of warrants:
         June 1993                             1,000,000        150,000
         September 1993                          145,000         31,900
    Issued for cash:
         January 1994                            170,000        102,000
Net loss for the year under U.S. GAAP                  -              -       (329,175)
                                               ---------    -----------    -----------

Balance, May 31, 1994                          4,648,069      2,092,845     (2,090,459)
    Issued for cash:
         November 1994                           200,000        150,000
    Issued for exercise of warrants:
         October 1994                            205,000         55,000
         December 1994                            40,000         10,400
         January 1995                            215,000         55,900
         May 1995                                  3,000          2,250
    Cancellation of shares                      (905,209)            (1)
Net loss for the year under U.S. GAAP                  -              -       (661,833)
                                               ---------    -----------    -----------

Balance, May 31, 1995                          4,405,860      2,366,394     (2,752,292)
    Issued for cash:
         June 1995                               700,000        700,000
         December 1995                           209,200        796,142
         April 1996                              285,750      1,091,565
         May 1996                                359,300      1,372,526
    Issued for mineral interests:
         June 1995                               100,000        300,000
    Issued upon exercise of warrants:
         June 1995                                81,500         61,125
         August 1995                             141,500         97,635
         September 1995                            8,000          6,800
         October 1995                             73,500         66,215
         November 1995                           300,000        300,000
         April 1996                               43,500         36,975
         May 1996                                 36,500         31,025
    Issued for finder's fee:
         May 1996                                  4,364              -
Net loss for the year under U.S. GAAP                  -              -     (2,149,041)
                                               ---------    -----------    -----------

Balance, May 31, 1996                          6,748,974      7,266,402     (4,901,333)
    Issued for cash:
         September 1996                          199,820      2,038,163
    Issued for finder's fee:
         September 1996                            5,962
    Issued upon exercise of options:
         August 1996                              10,000         13,000
         September 1996                            3,000          3,900
         December 1996                             1,000          1,300
         January 1997                              1,000          1,300
</TABLE>

                                       25
<PAGE>

<TABLE>
<S>                                                 <C>           <C>             <C>
         February 1997                                   7,000          16,520
         March 1997                                        500             650
         April 1997                                     75,900          98,670
         May 1997                                       81,000         105,300
    Issued upon exercise of warrants:
         June 1996                                      27,500          23,375
         February 1997                                 285,750       1,428,750
         March 1997                                    222,700       1,113,500
Net loss for the year under U.S. GAAP                        -               -     (2,928,560)
                                                    ----------    ------------    -----------

Balance, May 31, 1997                                7,670,106      12,070,830     (7,829,893)
    Issued for October 1997                            537,200       2,686,000
    Issued upon exercise of options:
         July 1997                                       1,400           1,820
         August 1997                                     1,000           1,300
         September 1997                                  7,000           9,100
         October 1997                                   39,562          61,823
         May 1998                                      207,000          60,030
    Issued for mineral interests:
         February 1998                                  11,250          97,538
         March 1998                                    619,000       3,683,050
Net loss for the year under U.S. GAAP                        -               -    (10,779,708)
                                                    ----------    ------------    -----------

Balance, May 31, 1998                                9,093,518      18,671,491    (18,609,601)
    Returned to Treasury:
         July 1998                                     (22,039)            -
    Issued upon exercise of options:
         March 1999                                     25,000          33,500
    Issued for debt settlement:
         January 1999                                  180,125         270,188
    Issued for mineral interests:
         November 1998                                  80,364         478,166
         March 1999                                    288,750       2,503,462
         March 1999                                     10,000          59,500
Net loss for the year under U.S. GAAP                        -               -     (7,158,555)
                                                    ----------    ------------    -----------

Balance, May 31, 1999                                9,655,718      22,016,307    (25,768,156)
Net loss for the year under U.S. GAAP                        -               -     (2,275,487)
                                                    ----------    ------------    -----------

Balance, May 31, 2000                                9,655,718      22,016,307    (28,043,643)
    Issued under settlement of services:
         August 2000                                   100,000          45,000
    Issued under exercise of options:
         January 2001                                  100,000          15,000
    Stock-based compensation                                 -         183,079
Net loss for the year under U.S. GAAP                        -               -     (1,063,927)
                                                    ----------    ------------    -----------

Balance, May 31, 2001                                9,855,718      22,259,386    (29,107,570)
    Issued for debt settlement:
         October 2001                                  250,000          75,000
    Issued under settlement of services:
         October 2001                                  471,000         141,300
    Issued for mineral interests:
         October 2001                                  100,000          30,000
    Stock-based compensation                                 -         125,917
</TABLE>

                                       26
<PAGE>

<TABLE>
<S>                                                 <C>           <C>            <C>
Net loss for the year under U.S. GAAP                      -               -       (1,183,901)
                                                    ----------    ------------   ------------

Balance, May 31, 2002                               10,676,718      22,631,603    (30,291,471)
    Issued for debt settlement:
         June 2002 and August 2002                      67,500          38,800
    Issued under settlement of services:
         October 2002 and January 2003                 261,667         143,234
    Issued for mineral interests:
         February 2003                                 100,000          82,000
    Issued under exercise of options:
         January 2003                                   25,000          11,250
    Issued for cash
         October 2002                                   62,500          78,771
    Warrants issued under settlement of services:
         October 2002                                        -         205,645
Stock based compensation                                     -         (44,164)
Net loss for the year under U.S. GAAP                        -                       (992,596)
                                                    ----------    ------------   ------------

Balance, May 31, 2003                               11,193,385    $ 23,147,13    $(31,284,067)
                                                    ==========    ============   ============
</TABLE>

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

                                       27
<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER        TITLE
------        -----
<S>           <C>
3.01a         Memorandum
3.02a         Articles of Incorporation
3.03a         Special Resolution filed March 19, 1992

10.01a        Loan agreement dated August 1, 2003 with accredited investors
10.02a        Mutual Release effective July 18, 2000, between Marlowe Harvey, Aarvark Agencies, Inc., Calais Resources Colorado,
              Inc., Calais Resources, Inc., on the one part, and Thomas S. Hendricks
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER        TITLE
------        -----
<S>           <C>
10.03a        Form of convertible debentures
10.04a        Purchase Option Agreement dated February 28, 2003 by and between Calais Resources,  Inc. and Golden Cycle of Panama,
              Inc. and Panama Mining of Golden Cycle, Inc.
10.05a        Grant of Royalty Interest For Fixed Term, Modification of Prior Royalty Grants and Assignment of Royalty Buyout
              Rights Under Prior Grants dated March 1998 by Calais Resources Colorado, Inc. in favor of Thomas S. Hendricks,
              Marjorie J. Hendricks, and John R. Henderson.
10.06a        Right to Redeem and Re-Acquire Agreement dated March 26, 1999 between Aardvark Agencies, Inc. and Calais Resources
              Colorado, Inc.
10.07a        Right to Redeem and Re-Acquire  Agreement dated July 20, 2000 between Aardvark  Agencies,  Inc. and Calais Resources
              Colorado, Inc.
10.08a        Grant of Royalty Interest For Fixed Term by Calais Resources Colorado, Inc. and Aardvark Agencies, Inc. dated July
              2000 by Calais Resources Colorado, Inc. in favor of Thomas S. Hendricks, Marjorie J. Hendricks, and John R.
              Henderson
10.09a        Employment Agreement with Matthew C. Witt
10.10b        Settlement  Agreement and General Mutual Releases between Calais Resources,  Inc., Marlowe Harvey, and others, dated
              March 8, 2004
10.11b        Purchase  Option  Agreement  between Calais  Resources,  Inc. and Golden Cycle of Panama,  Inc. and Panama Mining of
              Golden Cycle, Inc., dated February 28, 2003
10.12b        Extension of Purchase Option Agreement and Partial Acknowledgement of Performance,  dated January 31, 2004, relating
              to Exhibit 10.11

21a           List of subsidiaries.

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

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

      +     Filed herewith.

      a     Incorporated by reference from exhibits filed with the original
            filing on Form 20-F for the year ended May 31, 2003.

      b.    Incorporated by reference from exhibits filed with quarterly report
            on Form 10-QSB for the quarter ended February 29, 2004