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

                                   FORM 10-K/A

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 
                     For the Fiscal Year ended June 30, 1996
                                       or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT
OF 1934 
           For the transition period from               to            

                          COMMISSION FILE NUMBER 0-9897
 
                               SOLV-EX CORPORATION
             (Exact name of registrant as specified in its charter)

           NEW MEXICO                                        85-0283729         
     (State of Incorporation)                  (IRS Employer Identification No.)

     500 MARQUETTE N.W., SUITE 300
        ALBUQUERQUE, NEW MEXICO                              87102 
     (Address of principal executive offices)              (Zip Code)

      Registrant's telephone number (including area code):  (505) 243-7701

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

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

                          COMMON STOCK, $.01 PAR VALUE

     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 90 days.                       Yes /X/ No  / /

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

     As of September 4, 1996, the aggregate value of the voting stock held by
non-affiliates of the Registrant was approximately $210,000,000 based on the
average of the high ($11.875) and low ($10.50) sales prices on that date as
reported by the National Association of Securities Dealers Automated Quotation
System ("NASDAQ").

     The number of shares of the Registrant's common stock outstanding at
September 4, 1996 was 22,886,202.

     No documents are incorporated herein by reference.

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                               SOLV-EX CORPORATION

                                     PART I

     Unless otherwise indicated, "the Company", "Registrant" and "Solv-Ex" are
used in this report to refer to the business of Solv-Ex Corporation and its
consolidated subsidiaries.

ITEM 1.  BUSINESS.  

GENERAL DEVELOPMENT OF BUSINESS.  

-SUMMARY

     Solv-Ex Corporation is a New Mexico corporation incorporated in 1980, which
has concentrated its efforts in recent years towards the improvements of its
existing, and development of new, technology to process and recover bitumen
(heavy, low specific gravity, oil) and mineral products from oil sands.  The
Company's technologies, several of which are patented, have been tested at its
Albuquerque Pilot Plant and Research Center with results which the Company
believes are favorable.  The technologies have not been demonstrated on a
commercial basis.  The Company has received no significant revenues from
operations.

     The Company's principal assets are its technology (including the Pilot
Plant and Research Center) and two oil sands leases in Canada.  The Company's
executive offices are located at 500 Marquette N.W., Suite 300, Albuquerque, New
Mexico, 87102 and its telephone number at that address is (505) 243-7701.

     The Company was originally organized for the purpose of developing a
process to extract bitumen from oil sands.  Bitumen is a semi-solid hydrocarbon
compound which can be converted through an upgrading process into crude oil
(referred to herein as "pipelineable crude oil" or "PCO-Registered Trademark-")
which meets specifications for being transported by pipeline into fungible
markets for the oil.  Through years of research and testing at its Research
Center and Pilot Plant in Albuquerque, New Mexico, the Company has developed and
continuously improved a patented process for bitumen extraction which it
believes is commercially attractive at today's oil prices, particularly in view
of stronger markets which have developed for heavier crude oils.  It has also
developed a patented process to extract marketable mineral products from the
fine clays contained in oil sands or in waste tailings which exist as a result
of oil sands processed by others.

     Historically, a significant part of expenses incurred by the Company to
develop its technology have been classified as research and development for
accounting purposes.  Funds to perform such work have been raised through sales
of Common Stock (in public and private offerings), as well as exercise of
options, government grants and a joint venture.  The Company's operations
through 1995 had resulted in operating losses and its inability to obtain
adequate funding to build an initial stage plant that would allow the Company to
commence commercial production of bitumen. This had resulted in an Independent
Auditors' Opinion indicating there was substantial doubt as to the ability of
the Company to continue as a going concern. Principally as a result of the
Company raising approximately $73,000,000 in debt and equity financing during
the fiscal year ended June 30, 1996 which has provided adequate funding to both
conduct normal operations and to begin construction of an initial stage plant
that, once completed, would allow the Company to commence commercial production
of 

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bitumen, the Independent Auditors' Opinion for 1996 no longer has an 
explanatory paragraph for uncertainties concerning the Company's ability to 
continue as a going concern.

     During the last four fiscal years, Solv-Ex has made significant
improvements in its extraction technologies for both bitumen and mineral
products contained in the fine clays.  These improvements have resulted from
extensive pilot plant operations, together with extensive work with independent
third parties, both as to technology and projected capital and operating costs
for commercial plants using the technology. As hereinafter described, continued
progress has enabled the Company to raise funds for such work on an on-going
basis. 

     During the year ended June 30, 1995, the Company completed a detailed
feasibility study for development of and commercial operations on the Bitumount
Lease, one of its two oil sands leases (see "BITUMOUNT LEASE" under Item 2. 
Properties). On the basis of this study, a decision was made to proceed with
development of the Bitumount Lease and raise funds required for construction of
an oil extraction and upgrading plant. During the fiscal year ending June 30,
1996, the Company raised approximately $43.8 million in equity investments from 
United States and European-based investors and an additional $33 million in
convertible debt through European investors. In addition, the Company received
$500,000 from United Tri-Star Resources Limited ("UTS"), which holds a 10%
working interest in the Bitumount Lease, as an advance towards construction in
process.  At June 30, 1996, the Company had recorded approximately $23,756,000
as Construction in Process towards commercial operations and believes that the
funds it has on hand (together with the 10% of costs to be paid by UTS) are
sufficient to permit it to complete a facility (the "initial stage plant") which
is expected to produce marketable bitumen at an initial rate of 100,000 barrels
per month. Construction and commissioning of the plant is expected to be
completed during the first quarter of calendar year 1997.

     The Company originally planned to begin oil production at a rate of 14,000
barrels per calendar day of a pipelineable crude oil upgraded from bitumen, to
be followed by a minerals extraction plant about one year later. However, the
initial stage plant will commence operations at the lower rate and initially
will not have facilities to upgrade the bitumen to PCO-Registered Trademark-.
See "BITUMOUNT PROJECT" AND "MARKETING AND FINANCE - OIL" under this Item 1 for
a description of circumstances related to the change in plans for initial
operations, as well as information with respect to the capital which will be
required to achieve design capacity and minerals extraction capability.  

     The Company believes that demonstration of operating cash flow from
production and sale of bitumen, if reasonably in line with projections, should
provide a basis for obtaining the additional funds necessary to expand the
initial stage plant, to add the equipment necessary to upgrade the bitumen to
pipelineable crude oil ("PCO-Registered Trademark-") and to add the minerals
extraction facility.   As described more fully below, because the Company's
bitumen extraction technology does not use solvents or other toxic reagents, the
waste resulting from the bitumen extraction process can be used as clean
backfill even though it is not processed for recovery of minerals and metals.

     The Company considers completion of the initial stage plant on the
Bitumount Project as a matter of priority because the Company's oil sands lease
for this project requires installation of productive capacity by December 14,
1997 in order to extend the lease into its

                                     -2-

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third term without additional action by the Company or governmental approval 
(see "BITUMOUNT LEASE" under Item 2. Properties).

-DESCRIPTION OF BUSINESS DEVELOPMENT

     Much of the Company's work during the mid-1980's was performed pursuant to
a joint venture with Shell Canada Limited during 1987 and 1988, which
successfully processed approximately 1,000 tons of oil sands for bitumen
recovery using a solvent extraction process.  The oil sands processed by the
venture were mined from the Athabasca region of Northern Alberta in Canada,
which is known to contain the world's largest deposits of oil sands.  The
venture was terminated in 1988 due to declining oil prices at the time, but it
served to establish the technical feasibility of the Company's bitumen recovery
process. Upon termination of the venture, the Company received a bonus of
$250,000 for successful completion of the work.  As hereinafter described, the
Company has greatly simplified and achieved significant improvements in its
process since termination of the Shell venture, the most notable of which has
been elimination of solvent use in bitumen extraction.  

     In 1988, the Company acquired the 100% working interest in its own oil
sands lease (the "Bitumount Lease") from Can-Amera Oil Sands, Inc.  ("Can-
Amera"), a Canadian company organized in 1953 to develop oil sands deposits and
which had held the lease since December, 1955. In connection with this
transaction, Can-Amera will receive a royalty equal to C$.07 per barrel for oil
production from the lease.  (See Item 2.  Properties, under the caption
"BITUMOUNT LEASE").  The Bitumount Lease Property is known to contain
substantial quantities of surface minable bitumen-bearing material and is
currently the subject of the Company's efforts to develop its own commercial
project.  

     In December 1989, in a transaction independent from acquisition of the
Bitumount Lease, the Company also acquired approximately 48.5% of the
outstanding stock of Can-Amera and received an assignment of voting rights to an
additional 22.5%.  During the 1993 fiscal year, certain Corporate Notes issued
by Can-Amera in 1955 were redeemed with Can-Amera Common Stock, which diluted
the Company's control to approximately 60.5%.  The remaining 39.5% of the
outstanding stock of Can-Amera not controlled by the Company is held by
approximately 600 other shareholders.

     As of July 1, 1994, the Company entered into an agreement with United Tri-
Star Resources Limited ("UTS"), a Canadian oil and gas company headquartered in
Toronto, Ontario, the stock of which is listed on the Toronto Stock Exchange. 
As more fully described in this Item 1 under the caption "BITUMOUNT PROJECT,"
UTS provided the Company with C$3 million towards completion of a feasibility
report for development of the Bitumount Lease and certain pre-construction
activities in connection therewith.  Pursuant to the agreement, UTS also
acquired an undivided 10% working interest in the Bitumount Lease and has the
option to acquire 10% of any working interest acquired by Solv-Ex (on the same
terms and conditions as Solv-Ex) in other projects for oil sands development in
the Athabasca Region using the Solv-Ex technology. The Company is in the process
of finalizing a limited partnership agreement with UTS pursuant to which UTS
will pay its 10% share of project costs (in addition to amounts paid in 1995),
$500,000 of which has already been paid by UTS pursuant to an informal
understanding pending completion of financing arrangements for the project. 
(See "MARKETING AND FINANCE - OIL" and "BITUMOUNT PROJECT" under this Item 1.) 

                                     -3-

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     In July 1995, Solv-Ex acquired a second oil sands lease (adjacent to and
much larger than the Bitumount Lease) from Petro-Canada.  (See Item 2. 
Properties, under the caption "FORT HILLS LEASE").  Pursuant to the above
described UTS Agreement, UTS acquired  an undivided 10% working interest in the
Petro-Canada Lease by paying 10% of the acquisition cost.  

     During the last four fiscal years, the Company modified its Albuquerque
Pilot Plant to incorporate the latest improvements in its bitumen extraction
process and to add process equipment required for production of minerals from
the fine clays associated with oil sands, including oil sands waste tailings. 
During this period, extensive pilot work was conducted on a continuing basis to
demonstrate both bitumen extraction and production of minerals from oil sands
and tailings.  More than 100 tons of tailings and 300 tons of oil sands crude
ore were processed under the program, all of which were obtained from the
Athabasca region of Northern Alberta.  The initial phase of the program
regarding minerals extraction was conducted with the assistance of the Alberta
Oil Sands Technology and Research Authority ("AOSTRA"), which committed to
provide $300,000 for the program pursuant to an agreement entered into in
November 1992.  AOSTRA is a Crown corporation (owned by the Province of Alberta)
and can recover a maximum of three times the amount of its contribution from
certain defined future commercial operations which use the technology.

     There are currently two major operations in Northern Alberta which produce
synthetic crude oil from the oil sands.  These operations have generated vast
amounts of residues (or "tailings"), which are known to contain significant
quantities of various minerals and metals, primarily aluminum, titanium,
potassium and iron.  However, the tailings from these operations are currently
being contained in large, deep ponds which many observers believe represent an
environmental problem.  Following the joint venture with Shell, the Company
undertook a substantial research and test program for commercial recovery of
minerals and metals from the fine clays contained in both oil sands and tailings
in an effort to improve the overall economics of production operations.  As a
result of such efforts, the Company has also developed patented process
technology which it believes can be used in commercial operations for recovery
of minerals and metals, either from tailings generated by others or from primary
production of bitumen from oil sands.  The products will be initially extracted
as metallic sulfates, which can easily be processed into either an intermediate
mineral compound or elemental metal, depending upon the market into which such
products will be sold.

     In September, 1994 the Company entered into an agreement with one of the
two major Athabasca operators, Suncor Inc. ("Suncor").  Under this agreement,
Suncor granted the Company access to its tailings for the purpose of
constructing and operating a plant adjacent to the tailings to demonstrate use
of the Company's patented technology to process tailings for recovery of mineral
and metal products. In the Spring of 1996, however, the Company decided to
undertake development of its technology for recovery of metals and minerals from
fine clays associated with oil sands from the Bitumount Lease as a more
efficient means of commercializing the technology in connection with planned oil
extraction on the lease. Following this decision and discussions with Suncor,
the agreement was terminated in August, 1996. The Company has had further
discussions with Suncor and believes that it will be allowed access to tailings
for processing when appropriate.  Because the minerals extraction plant will be
located on the Bitumount Lease, however, it will be necessary to truck tailings
from the existing ponds to the completed minerals extraction plant in order to
commercially prove the technology as applicable to tailings. The minerals/metals

                                     -4-

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extraction facility, when completed on the Bitumount Lease, would only process
these tailings to demonstrate the technology, however, and both a new agreement
with Suncor and a new minerals/metals plant at a location closer to the tailings
would be required for a commercial operation to process tailings. 

     Work is continuing at the Company's pilot plant for the purposes of (i)
testing further improvements or changes made from time to time in the Company's
processes; (ii) producing minerals in bulk quantities in connection with
marketing activities; and (iii) additional testing of the Company's patented
process and design for a new electrolytic cell to produce aluminum metal from
alumina contained in the Athabasca fine clays.  

     Solv-Ex has recently incorporated Solv-Ex Canada Limited in Alberta,
Canada, which is a wholly owned subsidiary expected to be the operating entity
for Canadian operations.

     Duo-Ex Corporation ("Duo-Ex"), a wholly owned subsidiary of the Company and
its wholly owned subsidiary, Shale Research, Inc.  ("Shale"), were incorporated
in 1981 and 1988, respectively.  These subsidiaries had been involved in the
development of processes to extract hydrocarbons from oil shale.  Duo-Ex and
Shale have both been inactive corporations since the fiscal year ended June 30,
1987 because these operations were transferred to the Company.  Neither Duo-Ex
nor Shale has any assets, liabilities, or operations.

     In 1993, the Company formed Applied Remedial Technologies, Inc. (doing
business as Applied Remediation Technologies or "ART") as another wholly owned
subsidiary which employs most of the personnel at the pilot plant.  

     During the fiscal year ended June 30, 1996, neither the Company nor any of
its subsidiaries has been involved in any bankruptcy, receivership, merger or
consolidation; has acquired or disposed of any material amount of assets
otherwise than in the ordinary course of business; nor experienced any material
change in its mode of conducting business.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.

     Not applicable inasmuch as the Company is engaged in business in a single
industry segment.

NARRATIVE DESCRIPTION OF BUSINESS.  

     -PROCESS DESCRIPTION AND COMMERCIAL DEVELOPMENT   

     The Company has developed a bitumen extraction process that combines 
continuous extraction and hot water treatment of oil sands without 
conventional air flotation and without use of caustic soda.  Initially, the 
oil sands are mined using conventional open pit methods and transported to 
the plant.  The oil sands are then crushed and conditioned with hot water and 
steam in a manner which allows for easy removal and stockpiling of rocks and 
other oversize materials using standard mechanical equipment for eventual 
return to mined out areas of the pit as backfill.  The remaining material 
consists of water, bitumen, fine clays and coarse sand, which is fed to 
conventional equipment for mechanical separation without significant 
agitation.  Pilot work has clearly established that under these conditions, 
the "thermal shock" causes the bitumen to readily separate from the fine 
clays and coarse sand, where it readily

                                     -5-

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"floats" on the surface of a standard thickener tank without addition of air. 
 The fine clay and clean coarse sand are easily separated through 
conventional hydraulic vessels which have been commonly used for many years 
to make similar separations in the sand, gravel and clay industries.  

     The Company's process as initially developed utilized a solvent to assist
in stripping the bitumen from the fine clays.  However, results of extensive
pilot work performed during the last two years has established that use of
solvent is not necessary, which results in major reductions of capital and
operating costs in comparison to the earlier solvent process.

     Once the bitumen is removed from the oil sands, it can be upgraded to
produce a marketable and pipelineable crude oil using one of several alternative
upgrading processes.  Initially the Company plans to sell the bitumen into
established markets. Although this will result in a lower price per barrel than
would be received for an upgraded product, the cost of production without the
upgrader is also lower. Historically, it is difficult to establish a dependable
correlation between the price which could be received for bitumen (a very heavy
crude) or intermediate Canadian heavy oil as compared to the price for light,
sweet crude oils. In recent years, however, the differentials between the market
prices for heavier crudes and light, sweet crude have narrowed because of
fundamental changes in supply and demand patterns as well as the ability of
refineries to efficiently process heavier, sour crudes. 

     The Company believes that production and sale of bitumen from the initial
stage plant will generate positive operating cash flow. When cash flow or third
party financing allows, the Company plans to add an upgrading facility (a
commercially-available visbreaker) to the initial stage plant and accomplish
upgrading to PCO-Registered Trademark- at the plant site. In order for the
Company to do so, substantial amounts of additional funding (as hereinafter
described) will be required, and there can be no assurance that the Company will
be able to obtain the required funds.  However, the Company believes that
demonstration of the bitumen extraction technology in the initial stage plant,
together with operating cash flow therefrom, will greatly facilitate
availability of additional capital required.  (See "MARKETING AND FINANCE - OIL"
and "BITUMOUNT PROJECT" under this Item 1. for a more complete discussion of
these factors.) 

     The clay fines, which have been stripped of remaining soluble bitumen, can
then be further processed to recover contained metals or minerals using sulfuric
acid agglomeration followed by leaching and precipitation or crystallization of
minerals contained in leach solutions.  Most process water will be continuously
recirculated in a closed circuit, which significantly reduces loss (and waste)
of heat and eliminates the need for conventional tailings ponds.  Based upon
tests conducted at the Albuquerque pilot plant, the processed fine clays should
be environmentally suitable for stockpiling and return to the open pit as
backfill.  Any water which is discharged will be of suitable environmental
quality for discharge into natural watercourses.  Even without further
processing, the clay fines can be used as backfill.  

     -BITUMOUNT PROJECT 

     Solv-Ex believes that its work at the Albuquerque Pilot Plant and through
independent third party laboratories and pilot facilities has demonstrated the
Company's technology for co-production of oil and minerals from oil sands crude
ore and fine clays also associated with the oil sands. With respect to oil
production, significant technological improvements have been made and
incorporated into the materials handling, sand separation, bitumen extraction
and PCO-Registered Trademark- upgrading components of the production facility.
Completion and operation of the initial

                                     -6-

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stage plant will determine the actual capabilities of the Company's bitumen 
extraction process and technology, as well actual production costs achieved 
through the technology.

     The oil sands plant being constructed at the Bitumount Lease at the present
time is designed to recover 14,000 barrels of bitumen per calendar day using
four production modules.  However, because of financial constraints which
impaired the Company's ability to complete total financing for the plant
(originally estimated at $125 million), the plant is now scheduled to begin
operations in the first quarter of calendar year 1997 at a rate of about 100,000
barrels of bitumen per month using a single production module followed shortly
thereafter by a second module which has already been ordered. See "MARKETING AND
FINANCE - OIL" under this Item 1 for a description of circumstances related to
the change in plans for initial operations.)  As cash flow or additional
financing allows, the capacity of the initial stage plant will be expanded by
installing and commissioning the additional production modules to reach design
capacity. To the extent cash flow or third party financing is available, the
initial stage plant will be further expanded to add the facility to upgrade the
bitumen to pipelineable crude oil and to recover minerals and metals from the
clay fines. 

     Previous work by the Company has also established that the sand and fine
clays associated with the Bitumount Lease oil contain precious minerals. As
production operations proceed, a thorough assessment will be made as to the
quantities of precious metals contained in the sand and clay obtained through
initial bitumen production and whether or not they exist in sufficient
quantities to warrant commercial recovery.  With respect to the precious metals,
should they be found to exist in commercially recoverable quantities, the
Company does not believe it will be necessary to conduct a complete drilling
program for the purpose of establishing a commercially minable reserve in
accordance with industry standards.  Since these metals will not be the primary
focus of the initial development program, a relatively minor amount of
development drilling, coupled with pre-production and blast hole drilling in the
pit, should provide the Company with sufficient advance information in order to
plan for recovery of these metals in any areas of the oil sands deposit where
they are found to exist in commercial quantities.

     As described above, the Company entered into an agreement as of July 1,
1994, with UTS pursuant to which UTS contributed C$3 million towards the cost of
completing a feasibility report for development of the Bitumount Lease and
certain pre-construction activities in connection therewith.  Pursuant to the
agreement, UTS also acquired an undivided 10% working interest in the Bitumount
Lease and has the option to acquire 10% of any working interest acquired by
Solv-Ex (on the same terms and conditions as Solv-Ex) in other projects for oil
sands development in the Athabasca Region using the Solv-Ex technology,
including the project for tailings processing.  At present, UTS is a co-tenant
in the Bitumount Lease. UTS has advised the Company that it is fully prepared to
fund its 10% share of project costs (some of which has already been funded by
UTS), and the Company and UTS are in the final stages of completing a limited
partnership agreement pursuant to which the balance of such contributions will
be made. The partnership, which will hold the 100% working interest in the
lease, will be owned 90% by Solv-Ex and 10% by UTS.

     As a part of work performed under the UTS agreement, more than 200 tons of
newly mined oil sands from the Bitumount Lease were transported to the Company's
Albuquerque Pilot Plant for processing in order to develop additional design
data for the planned plant and to further demonstrate the process for recovery
of bitumen and co-production of minerals from the clay fines following removal
of rocks and clean sand.

                                     -7-

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     As previously described, the initial feasibility study prepared by the
Company and UTS relates to a plant designed to produce more than 14,000 barrels
per calendar day (approximately 5.1 million barrels per year) of a medium weight
crude oil (16.5oAPI) which, with minor blending with lighter weight diluent,
will meet specifications for pipeline transportation. However, additional
bitumen testing and research conducted in July and August, 1996 at independent
third party pilot facilities has established that a somewhat lighter marketable
oil can be produced with relatively minor additions to the visbreaker as
originally designed and it is now planned to incorporate these additions into
the upgrader when added to the plant. These additions would also increase the
yield of PCO-Registered Trademark- from bitumen to about 15,000 barrels per day.

     Although the 15,000 barrel per day PCO-Registered Trademark- plant is still
the Company's objective, Solv-Ex believes that building and commissioning the
bitumen-only plant using a single production module initially will demonstrate
the extraction technology in the field and facilitate the financial ability to
expand the plant to achieve the stated goal and, perhaps, accelerate the
technical and financial ability to further expand operations.   See "MARKETING
AND FINANCE - OIL" under this Item 1 for a discussion of marketing arrangements
contemplated by the Company with respect to anticipated oil production.

     The estimated capital cost of the initial stage plant operating at the rate
of 100,000 barrels per month of bitumen is approximately $70 million, 90% of
which will be supplied by the Company with the remaining 10% being supplied by
UTS. At June 30, 1996, approximately $23,756,000 had been spent for construction
and related activities. After completion of the initial stage bitumen extraction
plant, the Company estimates that it will cost an additional $65 million to
reach design capacity and to add the upgrading facility and utilities necessary
to produce PCO-Registered Trademark- at the rate of 14-15,000 barrels per day. 
Thereafter, the estimated amount of additional capital required to complete the
minerals extraction facility is approximately $35 million, depending upon the
slate of initial products. (See "MARKETING AND FINANCE - MINERALS" and "RESEARCH
AND DEVELOPMENT" under this Item 1.) The oil extraction plant is being
constructed in a modular form, to facilitate expansion when financing is
available.  If third party financing is not available, the Company will depend
upon operating cash flow from the sale of the bitumen in order to expand the
plant and achieve production of PCO-Registered Trademark-. In addition to the
ability of the Company's extraction process to perform in line with expectations
for productive capacity, product quality and operating costs, the market price
for oil products on a world-wide basis (as well as for bitumen on a localized
basis) will also have a significant impact on operating cash flow. Accordingly,
there can be no assurance that operating cash flow will be sufficient to permit
expansion even if the process performs as expected. 

     The original feasibility study prepared as a part of the UTS work program,
including estimates of capital and operating costs, market analysis and product
marketing, was reviewed in a report prepared by The Pace Consultants (the "Pace
Report"), a member of the Jacobs Engineering Group. The report has been of
considerable assistance to the Company in obtaining financing during the fiscal
year ended June 30, 1996, which the Company believes allow it to construct and
commence operations of the initial bitumen extraction plant.  All tests which
the Company has completed indicate that the bitumen extraction technology will
result in the production of bitumen which is marketable and which can be sold at
a profit.  Since the technology has not been tested on a commercial scale, there
can be no assurance that the bitumen extraction plant will perform as
anticipated, will be completed on schedule or that it will not require
modifications to achieve anticipated performance.

                                     -8-

<PAGE>

     With respect to the Bitumount Lease, it should also be noted that under the
terms of the existing Lease, productive capacity must be installed prior to
December 15, 1997 in order to renew the Lease under existing terms.  Regulations
of the Alberta Ministry of Energy also provide for lease renewal without
production but the Company does not anticipate that it will be necessary to
extend the lease under these provisions.  (See Item 2.  Properties, under
the caption "BITUMOUNT LEASE" regarding renewal of the Lease without installed
productive capacity).

     The Company received formal approval of its plans to proceed with
construction of the bitumen extraction plant, PCO-Registered Trademark-
upgrading facility, and minerals extraction facility from the Energy and
Utilities Board, under the Alberta Ministry of Energy in December 1995.  As part
of the permitting process, the Company prepared an environmental impact
assessment required under the Alberta Environmental Protection and Enhancement
Act, and conducted an extensive program of community consultation with
environmental groups and other interested parties in the Fort McMurray, Alberta,
area.

     Solv-Ex management is aware of the importance which will be attached to the
operating results from the initial stage plant for bitumen extraction, including
results as to technological performance, product quality and cash operating
costs, and has based its projections upon the latest information available to
the Company.  

     As in the case of any new operation, particularly one in which a new or
second generation technology is involved, the degree of success will be measured
against actual operating results and will probably be affected by factors which
have not been considered by or known to the Company. However, the Company has a
very large resource base and believes that sufficient work has been performed to
justify its projections and its confidence that the bitumen and mineral
extraction processes will perform in line with expectations.  While there can be
no assurance that this will be the case or that product markets will not change
in a manner which adversely affects the ability to generate operating earnings,
it is the intent of Solv-Ex to prove its technology through operation in a
manner which: (i) will facilitate obtaining additional capital required for
expansion; and (ii) expand its operations to the optimum productive capability
of its resource base to the extent permitted by available capital and markets
for its products. 

     The Company plans to take an aggressive approach in applying for
governmental approvals to expanded operations for both oil and minerals as soon
as it has been able to demonstrate the commercial success of each phase of its
technology. Among other things, the Company believes that this is particularly
important in the case of successful bitumen extraction and production of PCO-
Registered Trademark-, which would economically justify third party construction
of additional pipeline capacity into the area, eliminate the requirement for
initial transportation of production by truck into the market and increase the
cash flow for pipelineable oil by as much as $2 per barrel. While there can be
no assurance that the Company will be able to accomplish these objectives,
management believes that it is important to emphasize the importance of being
able to achieve success through initial operations and the impact which initial
operations, if successful, will have on the Company's ability to develop a
multi-billion barrel oil resource base with co-production of minerals and metals
on a world-class scale.

                                     -9-

<PAGE>

     -COMMERCIAL PROCESSING OF TAILINGS

     The two large-scale existing extraction facilities in operation in the
Athabasca region of Alberta both use a hot water process to extract the oil
(bitumen) from the oil sands.  These operations generate massive quantities of
waste known as "fine tails", which are pumped into large tailings ponds.  As
discussed above under the caption "General Development of Business," the Company
previously processed more than 100 tons of such material at its Pilot Plant for
the purpose of demonstrating the technical and economic feasibility of producing
minerals therefrom.  Equally as important, however, the Company also believes
that the pilot work demonstrated that its process will separate and detoxify the
emulsified water contained in the tailings (about 60-80% by weight) and that the
final clean residue following processing will be environmentally inert in terms
of water soluble minerals and thereby suitable for return to the operators' open
pit mines as clean backfill.

     As hereinbefore mentioned, the test work conducted by the Company has
established that after remaining soluble bitumen has been stripped from the
tailings, contained minerals (primarily alumina, with by-product sulfates) can
be readily extracted using agglomeration with high strength sulfuric acid
followed by leaching.  Once the minerals are thus in solution, recovery in
marketable form can be accomplished by a combination of proprietary and
conventional techniques using equipment which has been commercially proven in
other applications.

     The Company believes that its mineral extraction technology can be of
significant value in detoxifying extensive, existing tailings ponds in the
Athabasca region at the two existing facilities.  Although previously the
Company had entered into an agreement with one of the two oil sands operators in
the Athabasca region for access to the tailings to construct and operate a
demonstration plant utilizing the Company's mineral extraction technology, that
contract has been terminated.  The Company's intent now is eventually to
construct a minerals extraction facility at the initial stage plant currently
under construction, and to use that facility both for extraction of minerals
from the Company's bitumen ore as well as to detoxify tailings moved to the
plant by pipeline or truck.  The purpose will be to demonstrate on a commercial
scale the economic and technical feasibility of using the Company's process to
recover the metal products in marketable quantities while concurrently
detoxifying contained water and producing a final residue which is
environmentally suitable for use as backfill in mined out pits or natural
depressions.  The Company has no agreement with either operator in the Athabasca
region for the supply of tailings, but the Company believes that it will be able
to obtain tailings when appropriate.  The economic viability of the minerals
extraction facility is not dependent on the processing of any tailings, however.
Rather, if the minerals extraction facility is able to process and detoxify the
tailings as Pilot Plant tests indicate, it will provide a means to detoxify the
huge existing tailings ponds on a commercial and potentially economic scale. 
(See "MARKETING AND FINANCE - MINERALS" and "RESEARCH AND DEVELOPMENT" under
this Item 1.)

     - MARKETING AND FINANCE - OIL

     On June 20, 1995, Solv-Ex entered into a letter agreement with Calgary
based Gibson Petroleum Ltd.  ("Gibson") for marketing upgraded crude oil to be
produced from the Bitumount Lease. Gibson currently handles more than 300,000
barrels of oil per day through its two pipelines, nine terminals and a
transportation fleet which will move Solv-Ex production to market until new
pipeline capacity is available.  Through its major terminal facilities at


                                     -10-

<PAGE>

Edmonton and Hardisty, Gibson already markets and provides market access for
heavy crude oil to eastern Canada and the mid-western U.S.  through the
InterProvincial Pipeline ("IPL") and to the west coast through the Transmountain
Pipeline.

     Gibson is also the operator for an underground facility near Fort McMurray,
Alberta, which produces bitumen at a reported rate of about 2,400 barrels per
day and has the demonstrated capability to market the bitumen which will be
produced from the initial-stage plant.  While the Company has not yet entered
into a separate letter agreement or definitive agreement with Gibson for the
marketing of bitumen, the Company has on-going discussions with Gibson on this
point and is confident that it will be able to enter into an agreement when
appropriate.   

     The Company anticipates that Gibson will be acting as the oil marketing arm
for the project (including bitumen) with the objective of obtaining the highest
price available at the plant gate (referred to as the "Netback Price").  This
entails handling all transportation, logistics, diluent procurement/blending and
market analysis of the best available stream into which the bitumen and the PCO-
Registered Trademark- will be delivered.  Based on the information available to
the Company, projected direct operating costs (excluding interest expense,
depreciation, amortization, taxes and royalties) for the production of bitumen
from the Company's initial-stage plant are in the range of $5.50 per barrel,
with the expectation that such costs will drop below $5 per barrel by reason of
economies of scale as production is increased. When the plant reaches full
capacity with the installed PCO-Registered Trademark- upgrading facility, the
Company anticipates that the operating costs will be less than $6 per barrel of
PCO-Registered Trademark-. In this regard, the largest component of direct
operating costs is the cost of mining oil sands ore, overburden and interburden.
On the basis of construction work performed to date at the Bitumount Project,
the Company believes that these costs will be approximately $3 per barrel
produced if the extraction process performs as expected.

     Under present market conditions for bitumen, if the first stage plant were
now in operation the Netback Price which the Company would receive for bitumen
would be more than $13 per barrel, which to a large degree reflects the recent
strength in the world oil market. There can be no assurance that the market for
bitumen will not weaken and many observers expect to see lower overall oil
prices in the relatively near future. However, if the first stage plant performs
as expected, the Company believes it will be able to maintain operating cash
flow even if the price of bitumen drops significantly. 

     At such time as the Company is able to add upgrading facilities and produce
PCO-Registered Trademark-, it is expected that the market price for the
Company's product will be more closely aligned with the market price for West
Texas Intermediate ("WTI") oil, an industry benchmark for light, sweet crude
oil. In this regard, medium weight Canadian crude oils similar to the planned
PCO-Registered Trademark- product can be expected to sell at a discount of $3-5
per barrel from the WTI price, which would yield a Netback Price equal to WTI
minus $7-10 per barrel after taking into account the cost of transportation by
truck, blending and diluent costs, terminal charges and miscellaneous marketing
expenses. During the last year, the WTI price has been within a range of
approximately $17-25 per barrel, although there can be no assurance that these
prices are indicative of future prices. The market price for bitumen cannot be
as closely correlated to the WTI price; however, the Company does not envision
that the price for bitumen would in any event be less than 50% of the WTI price.

                                     -11-

<PAGE>

     Bitumen is a very heavy oil (7-8oAPI) that can be blended for pipeline
delivery to refineries.  Based on tests performed by the Company through an
independent laboratory and the Company's Pilot Plant, the Company believes that
it will be able to consistently produce bitumen which meets market
specifications. 

     When the PCO-Registered Trademark- upgrading facility has been installed,
the Company expects to be able to upgrade the bitumen to pipelineable crude oil
(PCO-Registered Trademark-) using a process involving a visbreaker.  A
visbreaker is a piece of equipment used in refineries throughout the world to
reduce the viscosity of heavy oil through application of pressure and heat in a
vessel.  The Company's visbreaker design requires more than 6,000 barrels per
day of production to feed the visbreaker during commissioning. The visbreaker
technology currently in use by other companies, with certain modifications or
additions as tested by Solv-Ex at pilot plants operated by independent third
parties, is expected to produce a uniform and stable PCO-Registered Trademark-
and can process bitumen containing more than .5% solids. 

     In its effort to arrange project financing, Solv-Ex and UTS retained 
Charter Oak Capital (and its Canadian associate Glenpower Investments, Inc., 
collectively "Charter Oak") in May, 1995, as their placement agent to 
complete project financing.  Charter Oak was paid an initial placement fee of 
$50,000 and, at closing of any financing arranged by it, will receive further 
fees equal to 1.75% of funds raised in project debt or equity (.5% for funds 
sourced by Solv-Ex or UTS) but in no event less than $1,750,000.  Charter Oak 
is also reimbursed on a current basis for reasonable out of pocket expenses.  
The Company has paid Charter Oak no additional fees to date. At the present 
time, the efforts of Charter Oak are limited in nature because the Company 
believes it has sufficient funds to complete the initial stage bitumen plant 
and because of the events described below. Funds raised to date by the 
Company are not characterized as project financing as contemplated by the 
agreement with Charter Oak.

     During the fiscal year ended June 30, 1996, primarily starting in February
but continuing to date, the Company has been the subject of numerous reports in
the media which have questioned the ability of the Solv-Ex technology to perform
as projected by the Company. In addition, numerous media reports have been
issued regarding an investigation being conducted by the Securities and Exchange
Commission into trading of Solv-Ex Common Stock, as well as reported
investigations by the Federal Bureau of Investigation and a Los Angeles grand
jury into such trading activities. More recently, there has been an extensive
series of publications in Europe concerning allegedly improper investment
activities of a suspended (and now terminated) fund manager for a major
institution involved in raising capital for Solv-Ex during the period January-
April, 1996. 

     The management of Solv-Ex is not aware of any investigation being conducted
by governmental authorities which is targeted towards allegations of any
improper activities conducted by the Company, its officers, directors and
employees in connection with trading in its Common Stock or the transactions
pursuant to which capital was raised as previously described. The Company has
pledged its full cooperation to governmental regulatory authorities in any
investigations which are being or may be conducted into such trading activities
or transactions. Moreover, the Company does not believe that any of the media
reports questioning the viability or efficacy of the technology are based upon
any in-depth knowledge of or research into the technology, including access to
confidential or proprietary information concerning operation of the Albuquerque
pilot plant, which is only made available to persons who have executed
confidentiality agreements with the Company. (See Item 3, Legal Proceedings, for
a description of certain actions taken by Solv-Ex with respect to

                                     -12-

<PAGE>

improper use of certain confidential information which was provided to third 
parties and trading in its Common Stock.)

     Solv-Ex believes that such publicity has had a significant negative impact
on its ability to complete financing for its total capital requirements,
including the efforts by Charter Oak to consummate project debt, because of: the
extreme volatility in the price of its Common Stock since January, 1996;
inferences drawn from media reports to the effect that the Company was involved
in improper activities; concerns by prospective lenders that the technology may
involve a higher degree of risk than was originally perceived; and the extensive
and wide-spread coverage of negative publicity towards the Company which has not
abated.

     Solv-Ex further believes that questions regarding the ability of the
technology to perform and achieve positive operating cash flow will be addressed
and answered through operation of the initial stage oil (bitumen) facility.
Similarly, although not within the same degree of control by the Company, Solv-
Ex intends to vigorously pursue the litigation it has initiated (and cooperate
fully with regulatory authorities) in an effort to ascertain the full extent of
the motives and methods underlying the negative publicity and its impact in the
marketplace. 

     -MARKETING AND FINANCE - MINERALS AND ALUMINUM    

     The discussion set forth under this caption with respect to marketing is
applicable to the Company's plans to produce minerals through processing of
tailings or through co-production of minerals from the fine clays contained in
its own oil sands leases.  As noted above, the Company anticipates that it will
first co-produce minerals from the fine clays contained in its own oil sands
leases.  The Company does not currently have any agreement with any other entity
to process any tailings.

     Work performed by the Company at its Albuquerque Research Center and Pilot
Plant has resulted in production of alumina which meets specifications for
metallurgical grade alumina (the feed in aluminum smelters to produce aluminum
metal) using a sulfuric acid leach process to recover the alumina from the fine
clays and achieve or exceed required product specifications through established
crystallization and calcining processes.  Evaluation of the Company's process by
both independent consultants and sources within the alumina/aluminum industry
has confirmed the ability to achieve these results within projected operating
costs. However, the Company presently believes that there are opportunities to
market intermediate products produced in its process which are economically more
attractive than producing alumina for third party smelters and does not
presently intend to market alumina to smelters.

     The Company has also designed and tested an electrolytic cell which will be
used for the production of aluminum metal from the alumina expected to be
produced in the minerals extraction facility.  Based on the initial tests of the
electrolytic cell, it appears that it will permit the production of aluminum in
a manner that consumes less electrical power and with lower capital costs than
conventional aluminum smelters.  See also "RESEARCH AND DEVELOPMENT", below. 
The Company has received a United States Patent on the new technology used in
the electrolytic cell, as well as a patent for the process which produces the
unique grade of alumina used in the Solv-Ex electrolytic cell. In this regard,
the alumina

                                     -13-

<PAGE>

is by this particular process is extremely fine and significantly more 
soluble in a molten bath of electrolyte than alumina produced conventionally. 
See "PATENTS", below.

     Testing to date on the unique grade of alumina also indicates that it may
be suitable for the catalyst market, which represents a very high value added
product in comparison to metallurgical grade alumina. See also "RESEARCH AND
DEVELOPMENT", below.

     An important step in the Company's sulfuric acid leach process is the
ability to solubilize minerals in the leach solutions ("leach liquors") in the
form of metallic sulfates.  These sulfates, primarily aluminum sulfate and the
double salt of potassium-aluminum sulfate, are easily recovered through
crystallization and represent intermediate products in the overall process to
produce metallurgical grade alumina.  The Company's process is not limited to
the fine clays recovered through bitumen extraction and has also been
successfully tested on the fine clays contained in oil sands overburden and
interburden (between "pay zones" of oil sands horizons. Accordingly, production
of minerals and metals can be expanded considerably beyond the scope of initial
bitumen or expanded production of PCO-Registered Trademark- when the processes
have been commercially proven in the field. 

     Testing and product research has been very encouraging towards being able
to sell these intermediate products into established markets for industrial
minerals. Work to date indicates that certain of these products appear to be
attractive as a replacement or substitute for higher priced products currently
being used.  Although the ultimate objective of the Company is large-scale
production of metallurgical alumina as hereinafter discussed, the Company's
initial strategy is to penetrate established markets for the intermediate
products in order to develop operating cash flow during the period in which
markets are fully developed for metallurgical grade alumina and other potential
products.  Although market penetration cannot be assured for the intermediate
products, negotiations are being conducted with both end users and existing
suppliers of such products, and the Company is optimistic that satisfactory
marketing arrangements can be concluded before production begins. See also
"RESEARCH AND DEVELOPMENT", below for a discussion of a synthetic mineral which
Solv-Ex has produced at the pilot plant and which appears to have physical
characteristics rendering it highly suitable for use as a filler in the paper,
paint and plastics industries. 

     The Company is also investigating potential markets for the leached clays
(otherwise a final residue or waste), which with minor additional treatment has
physical properties which appear to qualify the material as another marketable
"synthetic mineral" having a variety of potential uses.  

     Solv-Ex has worked with ITC Corporation, Baltimore, Maryland, and other
industry experts with the objective of expanding the scope of minerals to be
marketed beyond metallurgical grade alumina, particularly in the area of
industrial and synthetic minerals.  ITC is a privately owned specialty and
industrial mineral technical sales and export distribution company with a
presence in Asia, North America, Europe and Latin America.  However, the
Company's recent research and marketing efforts have been directed towards
minerals not covered by its arrangements with ITC and the future marketing
relationship will be relative to certain non-metallurgical grades of alumina,
titanium dioxide, clay-derived minerals and ferrous sulfate and will be
contingent upon the ability of the Company to produce such products.  ITC will
not be engaged to market the Company's any metallurgical grade or catalytic
alumina produced.

                                     -14-

<PAGE>

     Penetration of industrial mineral markets cannot be assured and the Company
recognizes that market penetration is universally regarded as difficult for a
new producer, irrespective of product quality.  Oftentimes, attempted market
entry encounters significant price reductions by existing producers in an effort
to maintain market share.  Nevertheless, the Company is encouraged by test
results and marketing discussions to date and, assuming product quality is
established, believes that its ability to produce industrial minerals as low-
cost by-products should greatly enhance its competitive position as a producer
and marketer.  

     As discussed above, the Company believes it has the capability to become
a producer of metallurgical alumina in an industry which has utilized the basic
Bayer process to produce alumina for more than 100 years.  Although sale of
industrial minerals can provide revenue enhancement and operating cash flow for
the initial plant to process tailings, markets for some of these products are
limited in comparison to the quantities which would be generated by large-scale
tailings processing or expanded operations on the Company's oil sands leases. 
Accordingly, the Company plans to phase-in production of alumina at its initial
plant in order to (i) establish product characteristics and quality on a
consistent basis for the alumina catalyst market and (ii) focus upon production
of low cost aluminum metal from such alumina using the Company's new
electrolytic reduction cell. See "RESEARCH AND DEVELOPMENT", below for a
discussion of the new electrolytic cell.

     The primary reasons why intermediate products and alumina can be produced
inexpensively from fine clays associated with the Athabasca oil sands include:
(i) no additional cost is incurred in mining the material; (ii) the fine clays
are recovered in the proper particle size for processing without the need for
costly crushing and grinding; and (iii) testing has established that the fine
clays are very amenable to sulfuric acid leach without any pre-treatment unlike
fine clays common to many other geographical regions.    

     The projected operating costs per ton of alumina using the Company's
process is substantially below the cost of any known producer using the
conventional Bayer process to produce alumina from bauxite and is well below the
lowest quoted market price for alumina in recent years. Although the Company's
initial work produced alumina quite similar to Bayer-produced alumina, the work
performed to produce the intermediate synthetic products also resulted in a
somewhat different alumina which is very fine, highly porous, highly soluble in
molten electrolyte at low temperature (750 DEG C) and ideally suited for use in 
the new Solv-Ex electrolytic cell. Although Solv-Ex can still produce the more
conventional alumina, the Company believes that a better strategy now is to
concentrate on its own requirements for alumina to produce aluminum metal and
alumina catalysts and, if it is later deemed appropriate when the Solv-Ex
technology has been commercially proven, adapt to requirements of conventional
smelters or work with industry to adapt conventional smelters to the unique
Solv-Ex alumina. 

     -RESEARCH AND DEVELOPMENT

     The Company has an on-going research program with respect to determining
the full range of potential products which can be produced from the Athabasca
fine clays using its technology.  Much of this work is conducted in conjunction
with end users of various products or entities which specialize in marketing
various potential products other than metallurgical grade (or "smelter grade")
alumina.  The objective of this program is to optimize the product revenue
stream which can be derived from minerals production, recognizing that
metallurgical grade alumina provides the economic foundation for minerals
production because

                                     -15-

<PAGE>

of the potential magnitude of minerals production and relatively limited 
markets for other products which may be produced.  Among the ongoing research 
are the following:

     The use of an electrolytic cell to produce aluminum metal from
     metallurgical grade alumina produced through the minerals extraction
     process.  Currently the Company is testing various cells and electrodes
     which appear to produce aluminum on a pilot process more efficiently, at
     lower temperatures, than the traditional Hall-Herault cell used in the
     aluminum industry.  The Company has tested a prototype cell and believes
     that the use of temperatures as much as 200 degrees.  Celsius lower than 
     the conventional method will permit the use of non-consumable anodes as
     compared to the graphite anodes which are consumed in the Hall-Herault
     cell's operations.  In addition to the lower temperatures, the use of non-
     consumable anodes will also result in a significant cost savings.  Although
     considerably more work must be performed to confirm total feasibility of
     the process, the results of testing to date have been very encouraging and
     the Company has in fact produced aluminum metal in tests of the cell at the
     Company's Albuquerque Research Center and Pilot Plant.

     The Company is also testing means of producing a potassium-based synthetic
     mineral which can be used as a pigment and filler in the paper, paint, and
     plastic industries.  This mineral appears to have physical characteristics,
     such as brightness, similar to titanium dioxide that is currently being
     used.  The Company refers to this product as "TiO2-S-Registered 
     Trademark-."  Although initial indications are favorable, further research
     and market analysis needs to be accomplished on this product. In this 
     regard, a commercial pilot test of the product for use as a filler is 
     scheduled to be performed at an industry-recognized facility in the near
     future in order to confirm bench-scale work already performed 
     successfully.

     Other research and development is ongoing on other aspects of the minerals
extraction process as well.  There can, however, be no assurance that the
research and development efforts, even if successful, will result in
commercially-viable processes.

     -SOURCE AND AVAILABILITY OF RAW MATERIALS

     The Company believes that its oil sands leases represent a major resource
base that can provide a source of raw materials for its process technology for
many years into the future.  Successful exploitation of the Company's technology
on the Bitumount Lease could also create the opportunity for acquisition of
other oil sands leases in the immediate vicinity (in addition to the Fort Hills
Lease acquired from Petro-Canada).

     In this regard, the oil sands deposits located in the Athabasca region of
Northern Alberta in Canada are among the largest in the world, and are also
known to contain significant quantities of various minerals.  Mining operations
in the region have been conducted for oil alone for more than 25 years.  To
date, however, there have been no significant operations to extract the mineral
values contained in the fine clays because commercially viable technology had
not been developed to do so.  As a result, the fine clays produced in existing
facilities in the Athabasca region and elsewhere are stored in huge tailings
ponds which are considered to be "hazardous materials" under Canadian law. 
Similar oil sands deposits containing significant minerals values are located in
located in a number of countries throughout the world including the Soviet
Union, Colombia, Venezuela, Madagascar, Brazil and Jordan.

                                     -16-

<PAGE>

     If the Company is able to demonstrate its ability to process tailings in 
a manner which results in an environmentally acceptable product and in a 
manner that is technically and financially successful, the available quantity 
of tailings now existing and which will be generated in the future could 
provide a source of feed for a large-scale processing plant or plants for 
many years into the future.  However, there can be no assurance that the 
Company will be able to enter into such agreements as may be required with 
existing oil sands operators for a large-scale plant to process tailings, 
irrespective of the Company's technical and economic success in demonstrating 
the ability to process clays contained in its lease or in tailings obtained 
from other producers of oil sands.

     Oil sands mining operations have been conducted on a limited scale in the
United States for such uses as asphalt road materials.  The oil sands deposits
found in the United States, none of which have been significantly delineated,
are predominantly located in Utah, Alabama, California, Texas and Kentucky. 
Domestic deposits of oil sands tend to contain less bitumen per ton than their
Athabasca counterparts and are not as attractive for commercial development.

     -PATENTS 

     Solv-Ex (including its wholly owned subsidiaries) has been granted numerous
process patents in the United States, Canada and other countries covering its
bitumen and minerals extraction technologies, both for oil sands and oil shale. 
The Company also has several patent applications pending for both its bitumen
and minerals extraction technologies for oil sands, and routinely files
applications for new patents to update its patent protection as improvements in
technology or new discoveries are made.  

     The Company's basic bitumen extraction process is covered by a Canadian
patent which does not expire until January 7, 2009.  On December 15, 1994, an
additional patent application was filed in the United States with respect to
improvements which have been made in the bitumen extraction process, and the
Company has also filed for patent protection in Canada.  There is no assurance
that this patent will be granted in the United States or in Canada, but the
Company does not believe that failure to issue the patent would have a material
effect on its operations or competitive position.

     The Company's basic minerals extraction process for oil sands and fine
clays contained therein is also covered by two United States patents which
expire on June 23, 2009 and February 7, 2012, respectively.  Applications are
pending for Canadian patents on the same process which, if issued, would expire
17 years following date of issuance.  There can be no assurance that the
Canadian patents will be issued, although other patents obtained by the Company
in the U.S. have been granted in Canada in cases where application has been
made.  In the event the Canadian patents are not granted, there would be no
impact on the ability of the Company to extract minerals from its own leases. 
If such patents are not issued in Canada, it could result in other persons using
the Company's proprietary technology. However, Company believes its competitive
position is protected through secrecy agreements entered into with both of the
oil sands operators which are producing crude oil and which have large supplies
of such tailings.

     In 1996, the Company received a United States patent for its new aluminum
reduction cell.  This patent expires in March 2013.  The Company has also
applied for, but has not yet received, a Canadian patent on this cell.

                                     -17-

<PAGE>

     The process patents are owned exclusively by Solv-Ex and are not subject to
any retained rights or royalties by any third parties.  In the case of the
patents, the Company may consider licensing its technology or other arrangements
whereby the technology could be used for development of other leases in the
Athabasca Region, but has not at present determined the basis upon which any
such arrangements would be made.  In this regard, it should be noted that
process patents are oftentimes complicated and may not always adequately protect
the patent holder's exclusive right to use from competitors using very similar
technology.  However, the Company does require that confidentiality agreements
be executed by persons or entities given access by the Company to its
proprietary information in order to further protect its competitive position and
the value of its patents.

     The Company plans to register trademarks with the United States Patent,
Trademark and Copyright office for PCO-Registered Trademark- (the Company's
trademark for pipelineable crude oil) and TiO2-S-Registered Trademark- (the
Company's tradename for a substitute filler and pigment for titanium dioxide in
the paper, paint and plastics industries).

     -SEASONAL NATURE OF BUSINESS 

     The businesses of the Company and its subsidiaries are not considered
seasonal; however, access to certain properties may be limited at times due to
adverse weather conditions.

     -WORKING CAPITAL PRACTICES  

     The Company and its subsidiaries, as development stage companies, have
established no practices relating to working capital items.

     -DEPENDENCE UPON SINGLE CUSTOMER 

     With respect to anticipated production of oil from the Bitumount Lease, the
Company believes that alternative marketing arrangements to those made or
contemplated with Gibson Petroleum would be available and that it will not
necessarily be dependent upon a single customer for sale of its oil. (See
"MARKETING AND FINANCE - OIL" under this Item 1 for a discussion of such
marketing arrangements.)  Similarly, the Company does not believe that it will
be dependent upon a single customer for sale of its mineral products.

     -BACKLOGS

     Not applicable.

     -RENEGOTIATION OF PROFITS 

     Not applicable.  However, see "-BITUMOUNT LEASE" under ITEM 2.  PROPERTIES,
for a discussion of the manner in which the royalty rate will be established in
the event this property is placed into production.  

     -COMPETITIVE CONDITIONS 
 
     A number of companies are in various stages of developing bitumen
extraction processes for Athabasca oil sands and can be expected to have far
greater financial,

                                     -18-

<PAGE>

personnel, technical, and marketing resources than the Company.  Other than 
maintaining a general familiarity with the types of processes these companies 
are pursuing, the Company does not attempt to monitor the status of each of 
these companies' projects.  The Company does not believe, however, that any 
of such other technologies involve co-production of minerals.

     Large-scale extraction of bitumen for production of pipelineable crude oil
(PCO-Registered Trademark-) is currently being conducted by two entities in the
Athabasca region of Alberta, Canada near the Company's Bitumount Lease.  While
these organizations have far greater financial, personnel, technical and
marketing resources than the Company, the Company believes its technology for
oil production, particularly when combined with co-production of minerals,
offers significant advantages over current operations including:

     (i)    in contrast to existing operations, the Solv-Ex process for bitumen
            extraction does not thoroughly mix the bitumen and fine clays, which
            must then be processed using caustic soda, naphtha solvent and
            costly separation equipment; accordingly, there is no requirement
            for conventional tailings containment ponds and subsequent
            detoxification of tailings, which eliminates environmental risk and
            reduces reclamation costs;

     (ii)   the Solv-Ex process does not involve use of chemical reagents which
            affect quality of process water, thereby allowing total
            recirculation of process water without total loss of heat; 

     (iii)  the mineral-bearing fine clays, which account for an average of
            approximately 15% of the weight of the oil sands, become a revenue
            producing asset as opposed to an item of cost in terms of mining,
            transportation to the plant and final disposal; and

     (iv)   gaseous sulfur emissions generated by burning fuel or in the oil
            upgrading process are an asset used to produce sulfuric acid for
            mineral production as opposed to requiring capital and operating
            costs for emissions control.

     With respect to the oil and various metal products which the Company
expects to produce, the Company will be competing against entities having much
greater financial, technical personnel and marketing resources than the Company.
In the case of expected oil production from the Bitumount Lease, the initial
product will be bitumen, a much heavier crude than the light sweet crude (or
other more refined products) produced by current open pit operations in
Athabasca and can be expected to sell at a significant discount from these
products.  Moreover, these operations have captive pipelines for transportation
of product to market, whereas the Company's product will most likely be
transported to market by truck at a much higher transportation cost until
additional pipeline capacity is constructed into the area, of which there can be
no assurance.  The Company believes, however, that these product market
disadvantages are offset by the following factors, irrespective of the separate
advantages which will be derived from co-production of minerals:

     (i)    lower operating, environmental and reclamation costs as described
            above;

     (ii)   elimination of major capital expenditures associated with further
            upgrading of oil to produce a light sweet crude or other more
            refined products;

                                     -19-

<PAGE>

     (iii)  increased consumption of heavier crudes by refineries which have
            installed equipment capable of handling such heavier crudes, which
            has resulted in a significant narrowing of the historical price
            differential between light and heavy crudes.  (See "MARKETING AND
            FINANCE - OIL" for a discussion of these factors.)

     To the knowledge of the Company, large-scale extraction of bitumen for use
as a crude oil substitute has not occurred in the United States, although
research and testing undoubtedly is conducted from time to time with respect to
known domestic deposits.  The Company believes its technology, which has been
tested on domestic deposits for bitumen extraction, will prove to be superior
because its patented mineral extraction process should also be applicable to
fine clays in these deposits, which are similar to the Athabasca deposits,
thereby creating commercial opportunities at lower oil prices.  As hereinbefore
noted, however, domestic oil sands deposits generally contain significantly less
bitumen per ton than the Athabasca deposits and will require higher oil prices
before commercial operations become attractive.

     With respect to industrial mineral markets, the Company will also be
competing against larger, established producers with far greater financial
resources than the Company, and market penetration cannot be assured until such
time, if any, as the Company is able to enter into sales agreements with
consumers for its products. The Company also recognizes that market penetration
is universally regarded as difficult for a new producer, irrespective of product
quality and price.  Oftentimes, attempted market entry encounters significant
price reductions by existing producers in an effort to maintain market share. 
Nevertheless, the Company is encouraged by test results and marketing
discussions to date and, assuming product quality is established, believes that
its ability to produce industrial minerals as low-cost by-products should
greatly enhance its competitive position as a producer and marketer. 

     If Solv-Ex is successful in its plans to commercially produce aluminum from
the alumina in the fine clays associated with the Athabasca oil sands using its
unique grade of alumina and new electrolytic cell, the Company will also be
competing in an international market for sale of its product against established
producers of aluminum having far greater resources than the Company. However,
the Company also believes that it will have a significant cost advantage over
conventional production of aluminum if the cell is placed into commercial
operation and performs as expected. In this regard, technological breakthroughs
have been rare in the history of the aluminum industry and there can be no
assurance that the cell can perform at commercial scale on the same basis as
laboratory testing. 

     -RESEARCH AND DEVELOPMENT EXPENDITURES 

     Costs and expenses incurred by the Company in recent years for research and
development activities were approximately:

            For Fiscal Year Ended              Amount  
            ---------------------            ----------
                    1996                     $4,412,248
                    1995                     $2,117,564
                    1994                     $1,431,431

     Costs and expenses incurred by the Company for research and development
activities sponsored by others was none in the fiscal year ended June 30, 1996,
$2,032,956 in fiscal 1995, and none in fiscal 1994.

                                     -20-

<PAGE>

     -COMPLIANCE WITH ENVIRONMENTAL REGULATIONS

     The Company's Albuquerque Research Center and Pilot Plant is subject to 
governmental regulations regarding environmental quality and other matters.  
The Company believes that it is in substantial compliance with all applicable 
governmental regulations relating to the Pilot Plant's operation.  During 
fiscal 1996, the Company responded to a request for information from the U.S. 
Environmental Protection Agency ("EPA") concerning materials which were 
generated by prior operations and which were stored in barrels for several 
years at the pilot plant.  The matter has been finally resolved in a manner 
which does not have a material effect on the Company.

     Mining of oil sands deposits, processing tailings and operation of any
commercial scale plant in Canada, insofar as it may involve discharges into the
air and water, disturbances of the land surface, any effect on wildlife or other
environmental impacts, will be subject to regulation under the Alberta
Environmental Protection and Enhancement Act and by the provincial agencies
which have jurisdiction over environmental matters thereunder, and comparable
Federal and local agencies, statutes, ordinances, and regulations in Canada as
well as comparable regulating authorities, laws, and regulations in other
countries.  To the extent the Company processes tailing from any other operator
in the Athabasca region, the Company will be required to comply with regulatory
requirements for disposal of materials.

     Compliance with these statutory and contractual requirements may
necessitate capital outlays not previously anticipated by the Company.  However,
with respect to the plant which the Company expects to construct and operate in
Canada as described herein (See "COMMERCIAL PROCESSING OF TAILINGS"  and "-
BITUMOUNT PROJECT"), the Company believes it has adequately anticipated the cost
of compliance with such environmental matters in preparing its estimates of
capital and operating costs.  

     The Company is presently unable to estimate what additional capital
expenditures will be incurred for environmental control for its projects from
time to time, and such requirements are always subject to change in a manner
which could have a material adverse impact on the Company's current and
anticipated operations.  However, in developing its extraction technology, the
Company has spent considerable sums to meet or exceed present and anticipated
environmental regulations in Canada and the United States.  By designing the
technology to these standards, the Company believes it has the technology to
convert what would have been environmentally unacceptable waste to potentially
marketable products.  This could make the technology more economically efficient
and therefore more competitive than technologies currently in use.

     -NUMBER OF EMPLOYEES

     As of September 1, 1996, the Company (including its subsidiaries) employed
approximately 54 persons on a full-time basis.  Of these employees, 18 are
administrative employees at the Company's Albuquerque offices; 20 are employed
at the Company's Albuquerque Research Center and Pilot Plant; and 16 are
involved in the plant construction, engineering and lease development activities
in the Athabasca region of Alberta, Canada.   

     In addition, the Company uses other independent contractors from time to
time as required, primarily for construction activities in Canada and third
party testing or consulting

                                     -21-

<PAGE>

with respect to its technology. At present, approximately 200 persons are 
employed by contractors of the Company in connection with construction 
activities in Canada.

     -FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES

     The Company, as a development stage company, had no operating revenues from
foreign or domestic operations and no significant geographic sales for the past
three years.  However, the Company did record $300,000 in contract revenue
during 1993 from its program with AOSTRA, an agency of the Government of Alberta
in Canada as described above, and initial commercial operations are expected to
occur in Canada, from which its products could be marketed internationally (see
"COMMERCIAL PROCESSING OF TAILINGS").  The Company does not believe at present
that Canadian operations will entail a material degree of political risk.

ITEM 2.  PROPERTIES.

     -BITUMOUNT LEASE

     The Company's Bitumount Lease (Alberta Bituminous Oil Sands Lease Number
7276120T05, the "Bitumount Lease") is located on 5,874 acres approximately 300
miles north of Edmonton in Alberta, Canada.  The Bitumount Lease was originally
issued on December 15, 1955, and was renewed on December 15, 1976, for an
additional term of 21 years.  Annual rental is $C1.00 per acre.  As hereinbefore
described, UTS holds an undivided 10% working interest in the Bitumount Lease.

     The Bitumount Lease provides for successive 21 year renewal terms if the
property is in production at the end of the preceding term.  Under the lease
terms, construction and operation of a plant having a minimum processing
capacity of 10,000 tons per day of bituminous sands or 10,000 barrels of bitumen
per day by December 14, 1997 will satisfy the requirements for renewal. As a
practical matter, the Company does not anticipate any difficulty in proceeding
with third term renewal. Moreover, government regulations allow for third term
renewal without production on terms which the Company could easily meet in any
event, and recent proposed regulations offer the probability that requirements
for third term renewal will be further liberalized in an effort to encourage
additional oil sands development. The Company does not believe there is a
material risk that the lease will be terminated at the expiration of the second
term and will take such action as may be necessary or advisable to extend the
lease.  

     The production royalty is established by the Alberta Provincial government
and expected to be 1% of gross revenues  until invested capital (including
imputed interest and including capital which may be spent for plant expansion)
is recovered, at which time the royalty is expected to be based upon a
percentage of net operating revenues. The Company has held several discussions
with the government regarding computation of royalty for an operation co-
producing minerals and metals with the oil and it has not yet been determined
how this will affect computation of royalties. In any event, payment of
royalties to the government is not expected to have a significant impact on
operation of the initial stage oil plant and, depending upon the ability of the
Company to expand initial operations, may not have a significant impact until
commercial operations have been fully established at ultimate rates of
production.    

                                     -22-
<PAGE>

     The Bitumount Lease has been extensively core drilled.  The results of such
drilling, together with the results of other drilling which has been performed
on adjacent property and made available to the Company, have been analyzed by
the Company and its independent consultants.  It is estimated that the Bitumount
Lease contains oil sands with in-place bitumen reserves of approximately 1.4
billion barrels.  The fine clays in the oil sands are also known to contain
alumina, titanium, potassium and iron in approximately the same quantities as in
the fine clays contained in the tailings which have been processed by the
Company (See "COMMERCIAL PROCESSING OF TAILINGS").  Gold and silver are also
known to be contained in the oil sands on the Bitumount Lease although
additional drilling or actual processing of the oil sands will be required to
determine whether such metals are present in sufficient quantities to warrant
extraction, although it would be relatively easy to modify plant design to
accommodate additional equipment for recovery of precious metals.  The
overburden and interburden in the oil sands, which is also regarded as waste in
conventional operations, are also known to contain recoverable alumina.

     Since Solv-Ex received its permits from the Alberta government in December
1995, it has completed site clearing (approximately 1,000 acres) and road
construction (approximately 17 kilometers) activities for the proposed plant on
the Bitumount Lease.  Detailed engineering work for the plant construction has
been completed, foundation work and the primary erection of the mine maintenance
building have been substantially completed, and a 450 person camp has been
purchased and moved to the site to house construction employees.  Progress is
continuing on the foundation work for the oil and minerals extraction buildings
(the "initial stage plant").  All structural work on the mine maintenance
building and the initial stage plant is scheduled for completion by the end of
October, which will permit the balance of construction, the installation of the
log washers for bitumen extraction, and other construction necessary to complete
the initial stage plant to be completed during the fall and winter seasons.  The
scheduled completion and start-up date for the initial stage plant is during the
first quarter of calendar year 1997.

     Solv-Ex and its contractors have also engaged in extensive earth-moving
activities on the Bitumount Lease as a part of both construction in process for
the initial stage plant and overburden removal in preparation for oil sands
mining. Based on the work to date, it appears that the cost of mining the
overburden and ore, and transportation of the ore to the initial stage plant,
will be approximately $3.00 per barrel of bitumen to be produced (exclusive of
capital depreciation costs), which is in line with projections. Because the cost
of mining (including overburden removal) is the largest component of projected
operating costs  for bitumen or PCO-Registered Trademark- production, this
experience to date significantly reduces one element of risk associated with the
new operation. 

     Although the initial mine planning was accomplished for operations on the
Bitumount Lease at a production rate of 14,000 barrels of oil per day, many
adjustments have been made to reduce the cost of that plant (previously
estimated to be approximately $125 million) to enable the Company to construct
the initial stage plant and commence bitumen extraction and production with the
funds it has available.  As a result, the Company will not include the PCO-
Registered Trademark- upgrading facility in the initial stage plant since the
visbreaker design requires a production capacity of more than 6,000 barrels per
day.  Furthermore, the original design contemplated four extraction modules and
two crushers necessary to achieve full production at 14,000 barrels per day;
because of the reduced size of the initial stage plant, production will begin
with a single extraction module and a single crusher.  The original design also
contemplated the construction of a co-generation facility at which Solv-Ex would
supply its

                                     -23-

<PAGE>

own electricity and steam for the operations.  The modified plan for the 
initial stage plant contemplates using power provided by the local utility, 
and using leased boilers to provide necessary steam.  If the operation of the 
initial stage plant proves to be successful as the Company anticipates, it is 
easily expandable to achieve or exceed the original goals of 14,000 barrels 
per day production and the installation of the minerals extraction facility, 
based on the availability of cash flow or third party financing. 

     -FORT HILLS LEASE

     The Company's Fort Hills Lease (Alberta Bituminous Oil Sands Lease Number
7281020T52, the "Fort Hills Lease") covers approximately 50,000 acres, which is
contiguous to the Bitumount Lease.  As hereinbefore described, UTS holds an
undivided 10% working interest (as a co-tenant) in the Lease.  The terms of the
Fort Hills Lease are the same as for the Bitumount Lease, except that the second
term does not expire until February 18, 2002 and the production requirement to
extend the lease beyond the second term is 25,000 barrels per day.

     The Fort Hills Lease was acquired in July, 1995 from Petro-Canada, which
had previously performed extensive core drilling (84 holes) and evaluation work
with respect to the property.  As hereinbefore noted, the Fort Hills Lease is
contiguous to the Bitumount Lease and the oil sands reserves on the southeast
quadrant of the Bitumount Lease extend across the lease boundary into the Fort
Hills Lease.  At least one other area of the Fort Hills Lease to the north is
also known to contain a major deposit of surface minable oil sands.

     Petro-Canada has delivered all of its data concerning this lease to Solv-
Ex, together with remaining core samples which have been held in storage.  The
Company has not had sufficient time to review all of this information and
determine its own independent estimate of in-place reserves or the amount of oil
sands which may ultimately be recoverable through surface mining, either for
production of oil alone or with co-production of minerals.  However, on the
basis of work performed to date and consultation with personnel who performed
much of the work for the prior owner, the Company believes that the resource
base for bitumen in the Fort Hills Lease is at least three times as large as the
resource base for the Bitumount Lease.   

     The Company has also been advised that certain areas of the Fort Hills
Lease are considered sensitive by at least one environmental group in terms of
future oil sands development.  Although the Company believes that such concerns
may relate to conventional oil sands development, which raises questions that
are not applicable to the Solv-Ex process, the Company has not yet determined
what, if any, impact such concerns may have on its ability to develop the Fort
Hills.  However, the Company expects that development of the Fort Hills Lease,
either independently or in conjunction with operations on the Bitumount Lease,
will be on a much larger scale than the planned operation for the Bitumount
Lease and that issuance of permits will entail public hearings and a much more
extensive permitting process.

     -THE RESEARCH CENTER AND PILOT PLANT

     The Company's Research Center and Pilot Plant is located on 1.5 acres of
land owned by the Company in Albuquerque, New Mexico.  It consists of three
separate buildings containing a total of approximately 8,800 square feet.  These
buildings contain (i) the pilot plant; (ii) office space, analytical laboratory
and maintenance shop; and (iii) electrical and mechanical equipment.  Various
storage tanks, which enable the Company to segregate and

                                     -24-

<PAGE>

store reagents, tailings feedstock and process water for re-use, are located 
outside the pilot plant building in secure areas which meet environmental 
requirements for storage of such materials.

     The laboratory is fully equipped with analytical instruments which provide
a broad range of in-house assay capability.  The Company periodically uses
independent laboratories to perform check analyses of its own work and for
performance of certain complicated analyses required for alumina, such as x-ray
diffraction and x-ray fluorescence spectrometry.  

     In its present configuration, the plant has the capacity to process more
than 48 tons of oil sands per day, from which up to 30 barrels of bitumen per
day can be produced, depending on the grade of oil sands processed.  The
quantity of bitumen recoverable from oil sands depends on its bitumen content,
which typically ranges from 4 to 12 percent.  The minerals extraction facility
is capable of processing up to about 12 tons of fine clays per day, although
this can be varied depending upon the equipment being used to conduct test runs.


     -OTHER PROPERTIES

     The Company's headquarters are located in Albuquerque, New Mexico and
occupy approximately 5,400 square feet of leased office space.  The Company also
has an interest in another oil sands lease in the State of Utah, which is not at
present considered to be a material asset.  In 1996 the Company acquired, from
an unaffiliated party, a 50 acre site at Ruth Lake (about mid-way between Fort
McMurray, Alberta and the Bitumount Lease) to use as a staging area for the
Bitumount Lease construction activities and for possible use as a future 
plant to process tailings.

ITEM 3.  LEGAL PROCEEDINGS.

     Neither the Company nor any of its subsidiaries nor any of their properties
are involved in any legal proceedings considered material to the Company's
operations except as follows.

     The Company's stock price and trading volumes have fluctuated widely
recently.  The Company has historically generated operating losses and has been
dependent on capital infusion from affiliates and third party investors to
provide capital necessary for continuing operations.  Historically, however, the
price of the Company's common stock traded in a range of $1.00 to $6.00 until
January 1995 when the stock price started increasing.  In mid 1995 the stock
price started to increase dramatically until it reached more than $30 per share
in February 1996.  It generally traded in the high $20's and mid-$30's in
February and March 1996 until late March when, as the result of certain
television and press news broadcasts, the price of the stock tumbled to $7.375. 
The dramatic fluctuations and negative press following shortly after a capital
infusion of more than $70,000,000 as discussed above, led the Company to believe
that the downward pressure on the Company's stock price was primarily
attributable to market manipulation by persons not affiliated with the Company. 
As a result, in August 1996, the Company filed an action in the United States
District Court for the Southern District of New York against several parties for
breach of confidentiality agreements, fraud, and other improper actions relating
to what Solv-Ex has alleged is part of a campaign on the part of short sellers
to drive down the price of Solv-Ex shares. The defendants in that include Parker
Quillen, Quilcap Corporation, Martin Zweig, Zweig Advisors, Inc., and Weir-Jones
Engineering Consultants Ltd..  This litigation is in the beginning stages and
has not been answered by the defendants.

                                     -25-

<PAGE>

     The Company is also aware that the Securities and Exchange Commission is
investigating public trading in the Company's common stock.  Finally, the
Company is also aware that a federal Grand Jury in Los Angeles, California is
examining persons believed to have a connection with the trading of Solv-Ex
common stock.  The Company has delivered several boxes of documents in response
to a request by the Securities and Exchange Commission; the Company has not been
contacted in connection with the federal Grand Jury investigation.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended June 30, 1996.

                                     PART II

ITEM 5.  MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The principal market in which the Company's common stock is traded
is the Nasdaq Small-Cap Market.

     The table below states the quarterly high and low sales prices for the
Company's common stock as reported by the National Association of Securities
Dealers Automated Quotation System ("Nasdaq").  The quotations reflect inter-
dealer prices, without retail mark-up, mark-down, or commission and may not
necessarily represent actual transactions.


<TABLE>
<CAPTION>

                                             SALES PRICES 
                                     ---------------------------
                                        LOW                HIGH
                                     --------            --------
     <S>                             <C>                 <C>
     QUARTER ENDED

     September 30, 1994               $1.938              $4.875
     December 31, 1994                 3.00                4.938
     March 31, 1995                    3.375               4.875
     June 30, 1995                     3.625               9.25
     September 30, 1995                6.50                8.875
     December 31, 1995                 7.438              16.75
     March 31, 1996                    6.25               38.00
     June 30, 1996                    10.125              28.625

</TABLE>

SHAREHOLDERS

     The number of holders of record of the Company's common stock as of
September 18, 1996 was approximately 825 according to American Securities
Transfer, Inc., the Company's transfer agent.  This number does not include an
unknown number of persons who hold their shares in street name.

DIVIDENDS

     The Company has never paid a dividend with respect to its common stock and
does not intend to pay a dividend in the foreseeable future.

                                     -26-

<PAGE>

ITEM 6.     SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

                                                     YEAR ENDED JUNE 30
                         ----------------------------------------------------------------------
                               1996           1995           1994           1993           1992 
                               ----           ----           ----           ----           ----
<S>                      <C>            <C>            <C>           <C>              <C>
Revenues                   $642,531         89,950     $   16,749    $   312,862      $  10,990
Net (loss)               (6,202,177)    (1,079,600)    (2,439,471)    (2,249,607)      (758,434)
(Loss) per
  common share                 (.27)          (.05)          (.13)          (.13)          (.05)
Total assets             80,166,838      5,376,843      4,319,619      4,101,648      2,382,021
Long-term
  obligations            33,057,000         66,500         77,634         89,940      1,434,545
Total liabilities        37,649,972        702,136        271,410        396,415      1,640,458

</TABLE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

     THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
"SELECTED FINANCIAL DATA" AND THE COMPANY'S FINANCIAL STATEMENTS AND NOTES
THERETO. INFORMATION DISCUSSED HEREIN, AS WELL AS IN OTHER ITEMS OF THIS ANNUAL
REPORT ON FORM 10-K, MAY INCLUDE FORWARD-LOOKING STATEMENTS REGARDING FUTURE
EVENTS OR THE FUTURE FINANCIAL PERFORMANCE OF THE COMPANY, AND ARE SUBJECT TO A
NUMBER OF RISKS AND OTHER FACTORS WHICH COULD CAUSE THE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD LOOKING STATEMENTS. AMONG SUCH
FACTORS ARE: GENERAL BUSINESS AND ECONOMIC CONDITIONS; CUSTOMER ACCEPTANCE AND
DEMAND FOR THE COMPANY'S ANTICIPATED PRODUCTS, INCLUDING THE ABILITY TO PRODUCE
BITUMEN IN THE INITIAL STAGE PLANT IN A MANNER WHICH CONSISTENTLY MEETS MARKET
SPECIFICATIONS; THE COMPANY'S OVERALL ABILITY TO DESIGN, CONSTRUCT AND OPERATE
THE INITIAL STAGE PLANT ON A TIMELY BASIS AND THE ABILITY OF THE PLANT TO
PERFORM IN ACCORDANCE WITH EXPECTATIONS; AND OTHER RISK FACTORS LISTED FROM TIME
TO TIME IN DOCUMENTS FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

     RESULTS OF OPERATIONS

     The Company incurred a net loss of $6,202,177 for the fiscal year ended
June 30, 1996 as compared to net losses of $1,079,600 and $2,439,471 for the
years ended June 30, 1995 and 1994, respectively.  The 1996 net loss is
significantly greater than losses in previous years because of the greater
corporate activities undertaken in fiscal 1996, including the financing
activities through FIBA Nordic Securities (UK) Ltd., the permitting activities
with the Alberta government (which resulted in the December 1995 permit
issuances), and the construction activities made possible because of the
financing provided through FIBA.  In addition, the Company doubled its research
and development expenditures in fiscal 1996.  Although the 1995 net loss is less
than the losses incurred in 1994 and 1993, the Company's level of research and
development was significantly greater in 1995 and the smaller loss was
attributable to the fact that $2,032,956 of research and development was funded
by United Tri-Star Resources Ltd.  ("UTS").  In 1994, no funds were received
from others for the performance of such work.  The loss in all three years
reflects the cost of the Company's pilot work undertaken during the periods for
the purpose of developing and demonstrating the Company's technology for both 
bitumen and minerals extraction from oil sands crude ore or oil sands tailings.

                                     -27-

<PAGE>

     The Company's expenditures for research and development were $4,412,248,
$2,117,564, and $1,431,431 for the fiscal years ended June 30, 1996, 1995, and
1994, respectively.  These costs were incurred primarily for the development of
the Company's processes for extraction of bitumen and minerals from oil sands
and oil sands tailings.  In 1996 these costs were also associated with the
development of the electrolytic cell for the production of aluminum metal as
well as research and development associated with the production of other
compounds from the minerals extraction process, such as TiO2-S-Registered
Trademark-.  The significant increase in 1996 and 1995 over the prior years
reflects an increased level of activity in connection with work performed by the
Company under its agreement with UTS for development of the Bitumount Lease.

     During the fiscal year ended June 30, 1996, the Company raised in excess of
$43,800,000 from sales of its Common Stock, and an additional $33,000,000 of
debt maturing in April 1999. This debt (obtained through FIBA) bears interest at
12% per annum, and is convertible into common stock at $32.50 per share. 
Interest is to be paid quarterly through maturity, although the first year's
interest was paid in advance.  During the year ended June 30, 1995, the Company
raised $1,598,654 through sales of Common Stock.  As a result of these capital
financing activities, the Company believes it has adequate funds to complete the
construction of the initial stage plant, as described above, and to commence
commercial production of bitumen at the rate of 100,000 barrels per month during
the first quarter of calendar year 1997.  (See "LIQUIDITY AND CAPITAL RESOURCES"
below under this Item 7).  In this regard, it should be noted that the Company
has never generated significant revenues from operations and cannot expect any
significant revenue from operations until operations commence at the initial
stage plant.

     The general and administrative expense for the years ended June 30, 1996,
1995, and 1994 were $2,432,460, $1,084,942, and $1,024,789 respectively.  The
increases in 1996 from 1995 and 1994 reflects the increased level of operations
of the Company during the 1996 fiscal year, associated with its capital raising
activities, permitting and plant design activities, and the commencement of
construction activities, normal salary increases, and additional personnel
employed at the Company's headquarters and in Canada.  Included in the general
and administrative expense are non-cash compensatory expenses for the stock
options and private placements to directors and employees of $185,815 in 1996,
$107,444 in 1995, and $111,352 in 1994.

     Revenues were generated primarily from interest earned on cash balances. 
The interest income for the years ended June 30, 1996, 1995, and 1994, was
$642,531, $88,793, and $16,714, respectively.  The increase in interest income
during 1996 over 1995, and 1995 over 1994 is the result of the greater cash
balances during those years as compared to the preceding year.

     The Company does not believe inflation has had a material impact on its
business or operations during the past three years.

EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

     The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS No. 121 requires
that long lived assets and certain identifiable intangibles to be held and used
by the Company be reviewed for

                                     -28-

<PAGE>

impairment whenever events indicate that the carrying amount of an asset may 
not be recoverable.  The effective date of SFAS No. 121 is for fiscal years 
beginning after December 15, 1995.  The Company does not believe that SFAS 
No. 121 will have an impact on its financial statements.

     In October 1995, the FASB issued Financial Accounting Standard No. 123
("FAS 123"), "Accounting for Stock Based Compensation."  Under the provisions of
FAS 123, companies may elect to account for stock-based compensation plans using
a fair-value-based method or may continue measuring compensation expense for
those plans using the intrinsic-value-based method.  Companies electing to
continue using the intrinsic-value-based method must provide pro forma
disclosures of net income and earning per share as if the fair-value-based
method had been applied.  The Company intends to continue to account for stock-
based compensation using the intrinsic-value-based method and, as such, FAS 123
will not have an impact on the Company's results of operations or financial
position. FAS 123 becomes effective in fiscal year 1997.

LIQUIDITY AND CAPITAL RESOURCES

     The Company has met its liquidity needs for the years ended June 30, 1996,
1995, and 1994 primarily from the proceeds of the sale of common stock and, in
1996, debt financing.  The Company received approximately $43,800,000,
$1,600,000, and $2,500,000 during 1996, 1995, and 1994, respectively, from the
sale of Common Stock, and $33,000,000 in fiscal 1996 from long-term debt.

     The net working capital at June 30, 1996 was $47,501,245 compared to
$369,289 and at June 30, 1995, and $1,513,908 at June 30, 1994.  The significant
increase in working capital from 1995 to 1996 was due to the more than
$76,000,000 of debt and equity financing obtained by Solv-Ex during fiscal 1996,
less the expenditures of those proceeds made for plant design and construction
and the development of the Bitumount Lease.  The net decrease in working capital
from 1994 to 1995 was primarily the result of a reduced cash position at year
end resulting from a higher rate of expenditures in connection with the
Company's permitting activities, research and development expenditures and plans
for development of the Bitumount Lease.

     Because of its inability to generate significant revenue and obtain
financing for a commercial plant during the fiscal year ended June 30, 1995 (see
captions "COMMERCIAL PROCESSING OF TAILINGS" and the "BITUMOUNT PROJECT"), the
Company's ability to continue as a going concern was not assured and the
Company's independent auditors had issued their opinion on the Company's
consolidated financial statements for the year ended June 30, 1995 on this
basis. However, as a result of significant capital raised by the Company during
the fiscal year ended June 30, 1996, which allows the Company to conduct normal
operations and to construct the Company's initial stage plant for commercial
production of bitumen from oil sands in Alberta, Canada, the Independent
Auditors' Opinion for 1996 no longer has an explanatory paragraph for
uncertainties concerning the Company's ability to continue as a going concern.

     As hereinbefore described, the Company believes the on-going work at its
pilot plant has been successful, and that the feasibility report for development
of the Bitumount Lease is positive and clearly justifies project financing
obtained by the Company.  The Company believes that its working capital at June
30, 1996, together with the anticipated contribution

                                     -29-

<PAGE>


from its 10% partner, UTS, is sufficient to complete the construction of the 
initial stage plant. The Company is optimistic that the initial stage plant 
will be operational during the first quarter of calendar year 1997.  Based on 
information available to the Company as of September 1, 1996, the Company 
believes that completion and start up costs for the plant will be 
approximately $70,000,000, including approximately $23,756,000 expended 
through June 30, 1996, some of which has been expensed in accordance with 
generally accepted accounting principles.  If the Company and UTS require 
additional financing to complete the initial stage plant, there can be no 
assurance that the Company will be able to obtain any necessary funding on 
reasonable terms. Although the Company believes any such funding could be 
obtained, if necessary, the Company is also cognizant of the impact caused by 
events occurring in the fiscal year ended June 30, 1996 which the Company 
believes impaired to complete its total funding requirements for the 
Bitumount Project. See "MARKETING AND FINANCE - OIL" under Item 1 above for a 
description of these events. There can be no assurance that similar events 
will not occur in the future, which could have a negative impact on the 
ability to obtain any such additional financing. The Company has, however, 
been successful historically in meeting its cash requirements through sale of 
Common Stock, joint ventures and other sources of funding and believes that 
it will be able to continue to do so in the future through these sources as 
well as operating cash flow which it expects to derive from the initial stage 
bitumen plant. 

     The continuing construction and anticipated operation of the initial stage
plant can be expected to increase the management and staff requirements of the
Company, which will be magnified in the event both project financings are
completed.  The Company's plans include expansion of the initial stage plant to
approximately 14,000 barrels per calendar day, including addition of the
upgrading facility and a complete utilities plant at an estimated capital cost
of approximately $65 million. In addition, the Company plans to complete
installation of the minerals extraction plant at an estimated cost to completion
of approximately $30 million, although this estimate could change based upon the
slate of initial products. 

     While the Company plans to undertake expansion of the initial stage oil
plant and complete the minerals extraction plant during 1997, its ability to do
so will depend upon availability of additional capital and, to a large extent,
upon successful operation of the initial stage plant. While management believes
that the initial stage plant will operate successfully based upon pilot plant
operations and other evaluations performed to date, there can be no assurance
that it will, in fact, operated as anticipated without additions or
modifications. In any event, there can be no assurance that the necessary
financing will be available when needed on reasonable terms.  To the extent
plant expansion and further construction is undertaken, or to the extent
additional plants may be constructed, these requirements will be further
increased. 

                                     -30-

<PAGE>

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The consolidated financial statements and schedules of the Company and its
subsidiaries follow.  The presentation of supplementary data is not applicable
to the Company.

                      SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

     INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 

Independent Auditors' Report

Consolidated Balance Sheets - June 30, 1996 and 1995

Consolidated Statements of Operations  - Years ended June 30, 1996, 1995 and
1994 and cumulative from July 2, 1980 (inception)

Consolidated Statements of Stockholders' Equity - For the period from July 2,
1980 (inception) through June 30, 1996

Consolidated Statements of Cash Flows - Years ended June 30, 1996, 1995, and
1994 and cumulative from July 2, 1980 (inception)

Notes to Consolidated Financial Statements

     All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are inapplicable or the
information required is included in the financial statements or related notes
and therefore have been omitted.

                                     -31-

<PAGE>

KPMG Peat Marwick
6565 Americas Parkway, NE #700
Post Office Box 3939
Albuquerque, NM  87190

                        INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Solv-Ex Corporation:

We have audited the accompanying consolidated balance sheets of Solv-Ex 
Corporation and subsidiaries (development stage enterprises) as of June 30, 
1996 and 1995, and the related consolidated statements of operations, 
stockholders' equity, and cash flows for each of the years in the three-year
period ended June 30, 1996 and cumulative from July 2, 1980 (inception).  
These consolidated financial statements are the responsibility of the 
Company's management.  Our responsibility is to express an opinion on these 
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about 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.  We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of Solv-Ex 
Corporation and subsidiaries (development stage enterprises) at June 30, 1996
and 1995, and the results of their operations and their cash flows for each 
of the years in the three-year period ended June 30, 1996 and cumulative from 
July 2, 1980 (inception), in conformity with generally accepted accounting 
principles.

                KPMG Peat Marwick LLP


Albuquerque, New Mexico
September 10, 1996
<PAGE>
                                      
                     SOLV-EX CORPORATION AND SUBSIDIARIES
                       (DEVELOPMENT STAGE ENTERPRISES)

                         CONSOLIDATED BALANCE SHEETS

                           JUNE 30, 1996 AND 1995

ASSETS                                                1996            1995     
                                                  ------------    ------------ 
Current assets:
  Cash and cash equivalents                       $ 43,902,567    $    854,719 
  Accounts receivable                                2,154,135          30,000 
  Deferred financing costs                           1,067,285          69,954 
  Notes receivable - stockholder                     1,534,950               - 
  Prepaid expenses                                   3,390,920           3,093 
  Other                                                 44,358          47,159 
                                                  ------------    ------------ 
    Total current assets                            52,094,215       1,004,925 
                                                  ------------    ------------ 

Property, plant and equipment, at cost:
  Mineral lease                                      1,976,432       1,741,983 
  Pilot plant land                                     167,768         167,768 
  Buildings                                          2,774,171         329,419 
  Heavy Equipment                                    5,001,753               - 
  Field and laboratory equipment                     2,124,058       1,105,144 
  Furniture, fixtures and leasehold improvements       398,143         284,187 
  Construction in process                           14,362,025       1,237,924 
                                                  ------------    ------------ 
                                                    26,804,350       4,866,425 

  Less accumulated depreciation and amortization     1,078,871         834,377 
                                                  ------------    ------------ 
    Net property, plant and equipment               25,725,479       4,032,048 
                                                  ------------    ------------ 

Patents, at cost, net of accumulated amortization 
 of $47,109 in 1996, and $42,087 in 1995               364,081         337,270 
Deferred financing costs                             1,613,353               - 
Other assets, at cost                                  369,710           2,600 
                                                  ------------    ------------ 

                                                  $ 80,166,838    $  5,376,843 
                                                  ------------    ------------ 
                                                  ------------    ------------ 

LIABILITIES AND STOCKHOLDERS' EQUITY                  1996            1995     
                                                  ------------    ------------ 
Current liabilities:
  Accounts payable and accrued expenses           $  4,468,605    $    526,709 
  Deferred compensation                                 99,000          99,000 
  Current installments of long-term debt                25,367           9,927 

                                                  ------------    ------------ 
    Total current liabilities                        4,592,972         635,636 
                                                  ------------    ------------ 

Long-term debt, excluding current installments      33,057,000          66,500 
                                                  ------------    ------------ 
    Total liabilities                               37,649,972         702,136 
                                                  ------------    ------------ 

Stockholders' equity:                                                          
  Common stock, $.01 par value                                                 
  Authorized 30,000,000 shares; issued and 
   outstanding 22,846,649 shares in 1996, and 
   20,277,440 in 1995                                  228,466         202,774 
  Additional paid-in capital                        67,556,328      23,549,871 
  Unearned compensation                                      -         (12,187)
  Deficit accumulated during development stage     (25,267,928)    (19,065,751)
                                                  ------------    ------------ 
    Total stockholders' equity                      42,516,866       4,674,707 
                                                  ------------    ------------ 

Commitments and contingencies                                                  
 (notes 2, 4 and 5)                                                      




                                                  $ 80,166,838    $  5,376,843 
                                                  ------------    ------------ 
                                                  ------------    ------------ 


See accompanying notes to consolidated financial statements.


                                    -31- 
<PAGE>
                                     
                   SOLV-EX CORPORATION AND SUBSIDIARIES
                      (DEVELOPMENT STAGE ENTERPRISES)
                   CONSOLIDATED STATEMENTS OF OPERATIONS

                 YEARS ENDED JUNE 30, 1996, 1995 AND 1994
               AND CUMULATIVE FROM JULY 2, 1980 (INCEPTION)

<TABLE>
                                         YEARS ENDED JUNE 30               CUMULATIVE     
                             -----------------------------------------  FROM JULY 2, 1980 
                                  1996          1995          1994         (INCEPTION)    
                              -----------    -----------   -----------  ----------------- 
<S>                           <C>            <C>           <C>          <C>               
Revenues:
  Contract fees               $         -    $         -   $         -    $  5,278,637 
  Interest                        642,531         88,793        16,714       2,342,563 
  Gain on sale of equipment             -          1,157            35          15,078 
  State grant                           -              -             -         407,760 
                              -----------    -----------   -----------    ------------ 
                                  642,531         89,950        16,749       8,044,038 
                              -----------    -----------   -----------    ------------ 

Expenses:
  Research and development      4,412,248      2,117,564     1,431,431      19,387,570 
  Research and development
   funded by others                     -     (2,032,956)            -      (2,032,956)
  General and administrative    2,432,460      1,084,942     1,024,789      14,623,819 
  Write-off of mineral lease            -              -             -       1,447,453 
                              -----------    -----------   -----------    ------------ 
                                6,844,708      1,169,550     2,456,220      33,425,886 
                              -----------    -----------   -----------    ------------ 

Minority interest in loss
 of subsidiary                          -              -             -         113,920 
                              -----------    -----------   -----------    ------------ 
  Net (loss)                  $(6,202,177)   $(1,079,600)  $(2,439,471)   $(25,267,928)
                              -----------    -----------   -----------    ------------ 
                              -----------    -----------   -----------    ------------ 

Weighted average number of    
 common shares outstanding     22,749,079     19,950,701    18,665,018      14,423,596 
                              -----------    -----------   -----------    ------------ 
                              -----------    -----------   -----------    ------------ 

(Loss) per common share       $     (0.27)   $     (0.05)  $     (0.13)   $      (1.75)
                              -----------    -----------   -----------    ------------ 
                              -----------    -----------   -----------    ------------ 
</TABLE>

See accompanying notes to consolidated financial staements.

                                       -32-
<PAGE>

                        SOLV-EX CORPORATION AND SUBSIDIARIES
                          (DEVELOPMENT STAGE ENTERPRISES)
                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                   FOR THE PERIOD FROM JULY 2, 1980 (INCEPTION)
                               THROUGH JUNE 30, 1996
<TABLE>
                                                                                       COMMON                 DEFICIT
                                                                                        STOCK               ACCUMULATED
                                PRICE       COMMON STOCK      ADDITIONAL    COMMON    SUBSCRIP-   UNEARNED    DURING
                                 PER    --------------------    PAID-IN      STOCK      TIONS      COMPEN-  DEVELOPMENT
                                SHARE     SHARES     AMOUNT     CAPITAL   SUBSCRIBED  RECEIVABLE   SATION      STAGE       TOTAL
                                ------  ----------  --------  ----------  ----------  ----------  --------  -----------  ----------
<S>                             <C>     <C>         <C>       <C>         <C>         <C>         <C>       <C>          <C>
Issued to officers/directors:
  For costs related to patent,
   July 2, 1980                 $0.010   2,700,000  $ 27,000  $      --    $    --     $    --    $   --     $     --    $   27,000
  For cash, September 1, 1980    0.010   1,500,000    15,000         --         --          --        --           --        15,000
  For services, September                                                             
   1, 1980                       0.010     750,000     7,500         --         --          --        --           --         7,500
                                                                                      
Sold to nonaffiliated parties                                                         
 for cash:                                                                            
  September 10, 1980             0.010     100,000     1,000         --         --          --        --           --         1,000
  September 15, 1980             0.125     200,000     2,000      23,000        --          --        --           --        25,000
  October 10 and                                                                      
   December 31, 1980             0.250   1,520,000    15,200     364,800        --          --        --           --       380,000
                                                                                      
Subscribed, net of offering                                                           
 costs and commissions             --          --        --    3,392,736     40,000         --        --           --     3,432,736
                                                                                      
Common stock warrants              --          --        --          400        --          --        --           --           400
                                                                                      
Net (loss)                         --          --        --          --         --          --        --       (72,058)     (72,058)
                                        ----------  --------  ----------  ----------   --------  --------    ---------   ----------
    Balance at June 30, 1981             6,770,000    67,700   3,780,936      40,000        --        --       (72,058)   3,816,578
                                        ----------  --------  ----------  ----------   --------  --------    ---------   ----------
                                                                                      
Sold for cash in public                                                               
 offering, July 17, 1981         1.000   4,000,000    40,000         --      (40,000)       --        --           --           --
                                                                                      
Issued to officers/directors,                                                         
 November 2, 1981:                                                                    
  For costs related to patent    0.010     200,000     2,000         --          --         --        --           --         2,000
  For cash                       0.010     200,000     2,000         --          --         --        --           --         2,000
                                                                                      
Sold to non
 affiliated parties                                                         
 for cash, December 22, 1981     1.000     225,000     2,250     222,750         --         --        --           --       225,000
                                                                                      
Increase in additional paid-in                                                        
 capital for stock options         --          --        --      161,875         --         --        --           --       161,875
                                                                                      
Issued for mineral leases,                                                            
 February 2, 1982                1.875     150,000     1,500     279,500         --         --        --           --       281,000
                                                                                      
Subscribed                         --          --        --       26,625         250    (22,000)      --           --         4,875
                                                                                      
Net (loss)                         --          --        --          --          --         --        --      (499,100)    (499,100)
                                        ----------  --------  ----------  ----------   --------  --------    ---------   ----------
    Balance at June 30, 1982            11,545,000   115,450   4,471,686         250    (22,000)      --      (571,158)   3,994,228
                                        ----------  --------  ----------  ----------   --------  --------    ---------   ----------
                                                                                                                        (continued)
</TABLE>
See accompanying notes to consolidated financial statements.


                                       -33- 
<PAGE>

                        SOLV-EX CORPORATION AND SUBSIDIARIES
                          (DEVELOPMENT STAGE ENTERPRISES)

                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                   FOR THE PERIOD FROM JULY 2, 1980 (INCEPTION)
                               THROUGH JUNE 30, 1996
<TABLE>
                                                                                       COMMON                 DEFICIT
                                                                                        STOCK               ACCUMULATED
                                PRICE       COMMON STOCK      ADDITIONAL    COMMON    SUBSCRIP-   UNEARNED    DURING
                                 PER    --------------------    PAID-IN      STOCK      TIONS      COMPEN-  DEVELOPMENT
                                SHARE     SHARES     AMOUNT     CAPITAL   SUBSCRIBED  RECEIVABLE   SATION      STAGE       TOTAL
                                ------  ----------  --------  ----------  ----------  ----------  --------  -----------  ----------
<S>                             <C>     <C>         <C>       <C>         <C>         <C>         <C>       <C>          <C>
Increase in additional paid-in
 capital for stock warrants        --          --        --      468,000         --         --        --           --      468,000

Increase in additional paid-in
 capital for stock options
 and subscriptions                 --          --        --      247,600         --         --        --           --      247,600

Collection on stock
 subscription receivable           --          --        --          --          --      12,000       --           --       12,000

Net (loss)                         --          --        --          --          --         --        --    (1,646,475) (1,646,475)
                                       -----------  --------  ----------  ----------   --------  --------  -----------  -----------
    Balance at June 30, 1983            11,545,000   115,450   5,187,286        250     (10,000)      --    (2,217,633)  3,075,353
                                       -----------  --------  ----------  ----------   --------  --------  -----------  -----------

Sold for cash in private
 placements net of
 placement costs,
 July 7 and July 18, 1983       4.250    1,000,000    10,000   3,966,680         --         --        --           --     3,976,680

Increase in additional paid-in
 capital for stock options         --          --        --       20,525         --         --        --           --        20,525

Stock subscription receivable:
  Collection                       --          --        --       10,000         --         --        --           --        10,000
  Issuance of stock,
   March 21, 1984               1.000       25,000       250         --         (250)       --        --           --           --

Net (loss)                         --          --        --          --          --         --        --    (3,823,647)  (3,823,647)
                                       -----------  --------  ----------  ----------   --------  --------  -----------  -----------
    Balance at June 30, 1984       --   12,570,000   125,700   9,174,491         --         --        --    (6,041,280)   3,258,911
                                       -----------  --------  ----------  ----------   --------  --------  -----------  -----------

Net (loss)                         --          --        --          --          --         --        --    (1,786,696)  (1,786,696)
                                       -----------  --------  ----------  ----------   --------  --------  -----------  -----------
    Balance at June 30, 1985       --   12,570,000   125,700   9,174,491         --         --        --    (7,827,976)   1,472,215
                                       -----------  --------  ----------  ----------   --------  --------  -----------  -----------

Stock options exercised:
  September 9, 1985 through
   June 3, 1986                 1.380       22,103       221      30,281         --         --        --           --        30,502
  October 25, 1985 and
   May 8, 1986                  1.047       10,000       100      10,368         --         --        --           --        10,468
  February 4, 1986              0.750       20,000       200      14,800         --         --        --           --        15,000
  February 5 through 
   April 30, 1986               1.200      450,000     4,500     535,500         --         --        --           --       540,000
  February 10 and
   May 29, 1986                 1.219       23,897       239      28,886         --         --        --           --        29,125

Net (loss)                        --           --        --          --          --         --        --      (947,636)    (947,636)
                                       -----------  --------  ----------  ----------   --------  --------  -----------  -----------
    Balance at June 30, 1986            13,096,000   130,960   9,794,326         --         --        --    (8,775,612)   1,149,674
                                       -----------  --------  ----------  ----------   --------  --------  -----------  -----------
                                                                                                                        (continued)
</TABLE>

See accompanying notes to consolidated financial statements.


                                      -34- 
<PAGE>

                   SOLV-EX CORPORATION AND SUBSIDIARIES
                     (DEVELOPMENT STAGE ENTERPRISES)

              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

               FOR THE PERIOD FROM JULY 2, 1980 (INCEPTION)
                          THROUGH JUNE 30, 1996

<TABLE>
                                                                                      COMMON                 DEFICIT
                                                                                       STOCK               ACCUMULATED
                              PRICE        COMMON STOCK      ADDITIONAL   COMMON     SUBSCRIP-   UNEARNED    DURING
                               PER    --------------------     PAID-IN     STOCK        TIONS    COMPEN-   DEVELOPMENT
                              SHARE     SHARES     AMOUNT      CAPITAL   SUBSCRIBED  RECEIVABLE   SATION      STAGE        TOTAL
                              -----   ----------   -------   ----------  ----------  ----------  --------  -----------   ---------
<S>                           <C>     <C>          <C>       <C>         <C>         <C>         <C>       <C>           <C>
Common stock warrant
 exercised:
  April 13, 1987              1.500        2,172        22        3,236       -           -          -             -         3,258

Stock options exercised:
  April 14 through
   June 2, 1987               1.000       14,000       140       13,860       -           -          -             -        14,000
  May 11, 1987                1.047        5,000        50        5,184       -           -          -             -         5,234

Net (loss)                      -            -         -            -         -           -          -         (86,296)    (86,296)
                                      ----------   -------   ----------   -------     -------    -------    ----------   ---------
  Balance at June 30, 1987            13,117,172   131,172    9,816,606       -           -          -      (8,861,908)  1,085,870
                                      ----------   -------   ----------   -------     -------    -------    ----------   ---------

Stock options exercised:
  July 1 through August
   31, 1987                   1.000       36,000       360       35,640       -           -          -             -        36,000
  July 23 through
   September 30, 1987         2.000       30,000       300       59,700       -           -          -             -        60,000
  July 29 through August
   26, 1987                   1.625        8,000        80       12,920       -           -          -             -        13,000
  May 20, 1988                1.062       20,000       200       21,050       -           -          -             -        21,250

Sold for cash in private
 placement net of placement
 costs, August 10, 1987
 through September 22, 1987   1.875      715,000     7,150    1,203,763       -           -          -             -     1,210,913

Acquisition and retirement
 of treasury stock,
 September 16, 1987           2.125       (5,000)      (50)     (10,575)      -           -          -            -       (10,625)

Sold to directors for cash,
 April 25 and 26, 1988        1.125       27,778       278       30,972       -           -          -            -        31,250

Net (loss)                      -            -         -            -         -           -          -        (556,490)   (556,490)
                                      ----------   -------   ----------   -------     -------    -------    ----------   ---------
    Balance at June 30, 1988          13,948,950   139,490   11,170,076       -           -          -      (9,418,398)  1,891,168
                                      ----------   -------   ----------   -------     -------    -------    ----------   ---------
                                                                                                                       (continued)
</TABLE>

                                      -35- 
<PAGE>

                   SOLV-EX CORPORATION AND SUBSIDIARIES
                     (DEVELOPMENT STAGE ENTERPRISES)

              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

               FOR THE PERIOD FROM JULY 2, 1980 (INCEPTION)
                          THROUGH JUNE 30, 1996

<TABLE>
                                                                                      COMMON                 DEFICIT
                                                                                       STOCK               ACCUMULATED
                              PRICE        COMMON STOCK      ADDITIONAL   COMMON     SUBSCRIP-   UNEARNED    DURING
                               PER    --------------------     PAID-IN     STOCK        TIONS    COMPEN-   DEVELOPMENT
                              SHARE     SHARES     AMOUNT      CAPITAL   SUBSCRIBED  RECEIVABLE   SATION      STAGE        TOTAL
                              -----   ----------   -------   ----------  ----------  ----------  --------  -----------   ---------
<S>                           <C>     <C>          <C>       <C>         <C>         <C>         <C>       <C>           <C>
Stock options exercised:
  September 2, 1988 through
   June 8, 1989               1.000       54,478       545       53,933       -           -          -             -        54,478
  September 6, 1988 through
   June 28, 1989              1.047       25,522       255       26,464       -           -          -             -        26,719
  September 13, 1988 through
   May 3, 1989                1.625       36,500       365       58,948       -           -          -             -        59,313
  October 7, 1988 through
   May 8, 1989                2.125       20,000       200       42,300       -           -          -             -        42,500
  December 29, 1988 through
   March 29, 1989             2.312       13,757       137       31,676       -           -          -             -        31,813
  January 9 through June
   30, 1989                   1.219       75,000       750       90,655       -           -          -             -        91,405
  January 17 through
   January 23, 1989           1.438       91,208       912      135,825       -           -          -             -       136,737
  March 10, 1989              1.656       10,000       100       16,462       -           -          -             -        16,562
  June 2 through June
   8, 1989                    1.078       15,000       150       16,022       -           -          -             -        16,172

Sold to director for cash,
 September 3, 1988            1.750       20,000       200       34,800       -           -          -             -        35,000

Net (loss)                      -            -         -            -         -           -          -       1,035,074) (1,035,074)
                                      ----------   -------   ----------   -------     -------    -------   -----------  ----------
   Balance at June 30, 1989           14,310,415   143,104   11,677,161       -           -          -     (10,453,472)  1,366,793
                                      ----------   -------   ----------   -------     -------    -------   -----------  ----------

Stock options exercised:
  July 10, 1989 through
   September 8, 1989          1.078       77,753       778       83,050       -           -          -             -        83,828
  July 21, 1989 through
   October 6, 1989            1.047       55,000       550       57,028       -           -          -             -        57,578
  July 25, 1989 through
   October 4, 1989            1.219      148,076     1,480      178,986       -           -          -             -       180,466
  September 11 through
   September 20, 1989         1.234       81,012       810       99,190       -           -          -             -       100,000
  October 6, 1989             2.156       10,000       100       21,463       -           -          -             -        21,563
  October 6, 1989             0.813       10,000       100        8,025       -           -          -             -         8,125
  October 18, 1989            1.984       10,000       100       19,743       -           -          -             -        19,843
  May 11, 1990 through
   May 25, 1990               1.844       20,760       208       38,069       -           -          -             -        38,277
  May 18, 1990                1.656       15,000       150       24,694       -           -          -             -        24,844
  May 18, 1990                1.625       10,000       100       16,150       -           -          -             -        16,250

Stock issued in connection
 with acquisition of
 controlling interest in
 Can-Amera Oil Sands, Inc.,
 December 18, 1989            1.630       75,000       750      121,500       -           -          -             -       122,250

Sold to director for cash,
 June 7, 1990                 0.500       50,000       500       24,500       -           -          -             -        25,000
                                                                                                                       (continued)
</TABLE>

                                      -36- 

<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  FOR THE PERIOD FROM JULY 2, 1980 (INCEPTION)
                              THROUGH JUNE 30, 1996

<TABLE>
                                                                                                                   COMMON   
                                                                                                                   STOCK    
                                                       PRICE         COMMON STOCK       ADDITIONAL    COMMON      SUBSCRIP- 
                                                        PER       --------------------     PAID-IN    STOCK        TIONS    
                                                       SHARE      SHARES        AMOUNT    CAPITAL   SUBSCRIBED   RECEIVABLE 
                                                       -----      ------        ------  ----------  ----------   ---------- 
<S>                                                    <C>        <C>           <C>      <C>        <C>          <C>        
Increase in additional paid-in capital for stock
  options                                                -            -         -          87,350        -           -      

Increase in additional paid-in capital for Directors
  Compensation-Stock Purchase                            -            -         -         428,000        -           -      

Net (loss)                                               -            -         -            -           -           -      
                                                                ----------  ----------   ----------   -------   ---------   
      Balance at June 30, 1990                           -      14,873,016     148,730   12,884,909      -           -      
                                                                ----------  ----------   ----------   -------   ---------   
Sold to director for cash, July 27, 1990                0.500      100,000       1,000       49,000      -           -      

Stock options exercised:
  August 16, 1990 through August 20, 1990               1.500       20,000         200       29,800      -           -      
  September 13, 1990                                    1.625        5,500          55        8,882      -           -      
  May 1, 1991                                           1.500       10,000         100       14,900      -           -      
  May 2, 1991                                           0.750       30,000         300       22,200      -           -      
  May 2, 1991                                           1.000       25,000         250       24,750      -           -      
  June 4, 1991                                          1.156       10,000         100       11,463      -           -      

Issued to individuals as compensation for services,
  November 8, 1990                                      1.250        1,000          10        1,240      -           -      

Sold to director for cash, March 12, 1991               1.156       21,620         216       24,784      -           -      
Sold to director for cash, April 29, 1991               0.500      100,000       1,000       49,000      -           -      

Increase in additional paid-in capital for
  Director Compensation-Stock Purchase                   -            -           -            -       78,125        -      

Net (loss)                                               -            -           -            -         -           -      
                                                                ----------  ----------   ----------   -------   ---------   
      Balance at June 30, 1991                           -      15,196,136     151,961   13,199,053      -           -      
                                                                ----------  ----------   ----------   -------   ---------   
</TABLE>
<TABLE>
                                                                  DEFICIT   
                                                                ACCUMULATED 
                                                     UNNEARNED    DURING    
                                                      COMPEN-   DEVELOPMENT 
                                                      SATION       STAGE         TOTAL    
                                                     ---------  -----------    ---------- 
<S>                                                  <C>        <C>            <C>        
Increase in additional paid-in capital for stock     
  options                                                 -             -          87,350 
                                                     
Increase in additional paid-in capital for Directors 
  Compensation-Stock Purchase                             -             -         428,000 

Net (loss)                                                -       (1,384,785)  (1,384,785)
                                                     ---------  ------------   ---------- 
      Balance at June 30, 1990                            -      (11,838,257)   1,195,382 
                                                     ---------  ------------   ---------- 

Sold to director for cash, July 27, 1990                  -             -          50,000 
                                                
Stock options exercised:                        
  August 16, 1990 through August 20, 1990                 -             -          30,000 
  September 13, 1990                                      -             -           8,937 
  May 1, 1991                                             -             -          15,000 
  May 2, 1991                                             -             -          22,500 
  May 2, 1991                                             -             -          25,000 
  June 4, 1991                                            -             -          11,563 

Issued to individuals as compensation for services 
  November 8, 1990                                        -             -           1,250 
                                                   
Sold to director for cash, March 12, 1991                 -             -          25,000 
Sold to director for cash, April 29, 1991                 -             -          50,000 

Increase in additional paid-in capital for         
  Director Compensation-Stock Purchase                    -             -          78,125 

Net (loss)                                                -        (700,382)     (700,382)
                                                     ---------  -----------    ---------- 
      Balance at June 30, 1991                            -     (12,538,639)      812,375 
                                                     ---------  -----------    ---------- 

                                                                              (continued) 

</TABLE>


See accompanying notes to consolidated financial statements.


                                     -37- 
<PAGE>

                     SOLV-EX CORPORATION AND SUBSIDIARIES
                       (DEVELOPMENT STAGE ENTERPRISES)

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  FOR THE PERIOD FROM JULY 2, 1980 (INCEPTION)
                             THROUGH JUNE 30, 1996

<TABLE>

                                                                                                                  COMMON
                                                                                                                  STOCK
                                                       PRICE        COMMON STOCK         ADDITIONAL   COMMON     SUBSCRIP-  
                                                        PER       -------------------      PAID-IN     STOCK       TIONS    
                                                       SHARE      SHARES        AMOUNT     CAPITAL  SUBSCRIBED   RECEIVABLE 
                                                       -----      ------        ------   ---------- ----------   ---------- 
<S>                                                    <C>         <C>           <C>        <C>        <C>          <C>       
Stock options exercised:
  July 19, 1991                                         1.500      7,000            70       10,430      -           -      
  July 22, 1991                                         1.063     12,000           120       12,630      -           -      
  July 31, 1991                                         1.500      8,000            80       11,920      -           -      
  October 17, 1991 through November 7, 1991             1.380     35,000           350       47,950      -           -      
  December 3, 1991                                      1.500      7,211            72       10,745      -           -    
  January 15, 1992 through April 13, 1992               1.438     35,000           350       49,962      -           -    
  February 26, 1992                                     1.840     19,500           195       35,685      -           -    
  March 2, 1992                                         1.500     10,000           100       14,900      -           -    
  March 31, 1992                                        1.690     15,000           150       25,163      -           -    
  June 10, 1992                                         1.500     12,000           120       17,880      -           -    

Sold to director for cash, August 23, 1991              0.500    100,000         1,000       49,000      -           -    

Increases in additional paid-in capital for
  Directors Compensation-Stock Purchase                  -          -             -          87,500      -           -    

Issued to individuals as compensation for services
  January 16, 1992                                      1.380     28,985           290       39,710      -           -    

Issued to individuals for deferred and other
  compensation                                          1.250     217,000        2,170      269,080      -           -    

Net (loss)                                               -           -            -          -           -           -    
                                                                ----------  ----------   ----------   -------   --------- 
      Balance at June 30, 1992                                  15,702,832     157,028   13,881,608      -           -    
                                                                ----------  ----------   ----------   -------   --------- 
                                                                ----------  ----------   ----------   -------   ---------   
</TABLE>
<TABLE>
                                                                        DEFICIT   
                                                                      ACCUMULATED 
                                                         UNNEARNED      DURING    
                                                          COMPEN-     DEVELOPMENT 
                                                          SATION         STAGE         TOTAL  
                                                         ---------    -----------     ------- 
<S>                                                     <C>           <C>             <C>     
Stock options exercised:                               
  July 19, 1991                                              -             -          10,500 
  July 22, 1991                                              -             -          12,750 
  July 31, 1991                                              -             -          12,000 
  October 17, 1991 through November 7, 1991                  -             -          48,300 
  December 3, 1991                                           -             -          10,817 
  January 15, 1992 through April 13, 1992                    -             -          50,312 
  February 26, 1992                                          -             -          35,880 
  March 2, 1992                                              -             -          15,000 
  March 31, 1992                                             -             -          25,313 
  June 10, 1992                                              -             -          18,000 
                                               
Sold to director for cash, August 23, 1991                   -             -          50,000 

Increases in additional paid-in capital for           
  Directors Compensation-Stock Purchase                      -             -          87,500 

Issued to individuals as compensation for services   
  January 16, 1992                                           -             -          40,000 

Issued to individuals for deferred and other
  compensation                                               -             -         271,250 

Net (loss)                                                   -         (758,434)    (758,434)
                                                        ---------  ------------    --------- 
      Balance at June 30, 1992                               -      (13,297,073)     741,563 
                                                        ---------  ------------    --------- 
                                                        ---------  ------------    --------- 
                                                                                 (continued) 
</TABLE>

See accompanying notes to consolidated financial statements.


                                     -38-
<PAGE>

                    SOLV-EX CORPORATION AND SUBSIDIARIES
                       (DEVELOPMENT STAGE ENTERPRISES)

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                FOR THE PERIOD FROM JULY 2, 1980 (INCEPTION)
                           THROUGH JUNE 30, 1996
<TABLE>
                                                                                                                    COMMON   
                                                                                                                    STOCK    
                                                          PRICE           COMMON STOCK     ADDITIONAL    COMMON    SUBSCRIP- 
                                                           PER     ---------------------    PAID-IN      STOCK       TIONS   
                                                          SHARE       SHARES      AMOUNT    CAPITAL    SUBSCRIBED  RECEIVABLE
                                                        ---------  -----------   -------   ----------  ----------  ----------
<S>                                                        <C>          <C>         <C>        <C>       <C>          <C>    
Sold for cash in private placements, net of offering
  costs and commissions:
    July 7, 1992 through September 9, 1992                0.750        600,001     6,000     444,000        -           -    
    October 30, 1992 through December 1, 1992             0.750        466,665     4,667     345,333        -           -    
    December 31, 1992                                     1.341        157,500     1,575     209,705        -           -    
    January 15, 1993                                      1.418         25,600       256      36,032        -           -    
    February 28, 1993                                     1.358        120,000     1,200     161,813        -           -    
    March 1, 1993                                         1.358        132,000     1,320     177,970        -           -    
    April 6, 1993                                         2.500        100,000     1,000     222,750        -           -    
    May 31, 1993                                          3.750        278,777     2,788   1,035,477        -           -    
    June 30, 1993                                         3.750         28,000       280     104,720        -           -    
    June 30, 1993                                         3.500        100,000     1,000     349,000        -           -    

Issued to individuals as compensation for services
  and expenses, October 9, 1992                           1.250         30,065       301      37,280        -           -    

Issued as compensation to an officer,
  October 9, 1992                                         1.313         50,000       500      65,125        -           -    

Redemption of consolidated subsidiary,
  Can-Amera Oil Sands, Inc., long-term debt with
  Can-Amera Oil Sands, Inc. common stock                    -              -         -     1,447,980        -           -    

Stock options exercised:
  December 9, 1992                                        1.188         10,000       100      11,775        -           -    
  December 22, 1992                                       1.500         10,000       100      14,900        -           -    
  January 15, 1993                                        1.500         10,000       100      14,900        -           -    
  March 19, 1993                                          1.000         25,000       250      24,750        -           -    
  March 19, 1993                                          1.188         17,211       172      20,266        -           -    
  April 14, 1993                                          1.000         10,000       100       9,900        -           -    
  June 30, 1993                                           1.500         13,000       130      19,370        -           -    
  June 30, 1993                                           2.600          5,000        50      12,950        -           -    

Sold to directors for cash,
  August 6, 1992 through October 16, 1992                 0.500        600,000     6,000     294,000        -           -    

</TABLE>
<TABLE>
                                                                        DEFICIT               
                                                                      ACCUMULATED             
                                                         UNEARNED       DURING                
                                                          COMPEN-     DEVELOPMENT             
                                                          SATION         STAGE        TOTAL   
                                                         --------     ------------  --------- 
<S>                                                       <C>         <C>           <C>       
Sold for cash in private placements, net of offering                                          
  costs and commissions:                                                                      
    July 7, 1992 through September 9, 1992                  -                -        450,000 
    October 30, 1992 through December 1, 1992               -                -        350,000 
    December 31, 1992                                       -                -        211,280 
    January 15, 1993                                        -                -         36,288 
    February 28, 1993                                       -                -        163,013 
    March 1, 1993                                           -                -        179,290 
    April 6, 1993                                           -                -        223,750 
    May 31, 1993                                            -                -      1,038,265 
    June 30, 1993                                           -                -        105,000 
    June 30, 1993                                           -                -        350,000 
                                                                                              
Issued to individuals as compensation for services                                            
  and expenses, October 9, 1992                             -                -         37,581 
                                                                                              
Issued as compensation to an officer,                                                         
  October 9, 1992                                       (24,608)             -         41,017 
                                                                                              
Redemption of consolidated subsidiary,                                                        
  Can-Amera Oil Sands, Inc., long-term debt with                                              
  Can-Amera Oil Sands, Inc. common stock                    -                -      1,447,980 
                                                                                              
Stock options exercised:                                                                      
  December 9, 1992                                          -                -         11,875 
  December 22, 1992                                         -                -         15,000 
  January 15, 1993                                          -                -         15,000 
  March 19, 1993                                            -                -         25,000 
  March 19, 1993                                            -                -         20,438 
  April 14, 1993                                            -                -         10,000 
  June 30, 1993                                             -                -         19,500 
  June 30, 1993                                             -                -         13,000 
                                                                                              
Sold to directors for cash,                                                                   
  August 6, 1992 through October 16, 1992                   -                -        300,000 
                                                                                   (continued)
</TABLE>
   See accompanying notes to consolidated financial statements.

                                      -39- 
<PAGE>

                    SOLV-EX CORPORATION AND SUBSIDIARIES
                       (DEVELOPMENT STAGE ENTERPRISES)


               CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                FOR THE PERIOD FROM JULY 2, 1980 (INCEPTION)
                           THROUGH JUNE 30, 1996
<TABLE>
                                                                                                                    COMMON   
                                                                                                                    STOCK    
                                                          PRICE           COMMON STOCK     ADDITIONAL    COMMON    SUBSCRIP- 
                                                           PER     ---------------------    PAID-IN      STOCK       TIONS   
                                                          SHARE       SHARES      AMOUNT    CAPITAL    SUBSCRIBED  RECEIVABLE
                                                        ---------  -----------   -------   ----------  ----------  ----------
<S>                                                        <C>          <C>         <C>        <C>       <C>          <C>    
Increase in additional paid-in capital for
  Directors Compensation-Stock Purchase                     -            -           -       150,000        -           -    

Net (loss)                                                  -            -           -           -          -           -    
                                                                  ----------     -------  ----------    ---------  ---------
    Balance at June 30, 1993                                      18,491,651     184,917  19,091,604        -           -    
                                                                  ----------     -------  ----------    ---------  ---------
Offering costs and commissions                              -            -           -       (74,662)       -           -    

Earned compensation                                         -            -           -           -          -           -    

Sold for cash in private placements, net of offering
  costs and commissions:
    December 27, 1993                                     3.000      168,000       1,680     474,600        -           -    
    March 8, 1994                                         3.249      100,000       1,000     299,982        -           -    
    May 4, 1994                                           2.720       60,000         600     161,784        -           -    
    May 16, 1994                                          2.820       75,000         750     209,692        -           -    
    June 3, 1994                                          2.750      350,000       3,500     954,187        -           -    
    June 16, 1994                                         2.410      196,000       1,960     468,038        -           -    

Issued to individuals as compensation for
  services and expenses:
    September 23, 1993                                    5.200       25,000         250     129,750        -           -    
    March 1, 1994                                         5.200       10,000         100      51,900        -           -    
    June 28, 1994                                         2.688        7,800          78      20,885        -           -    
    June 28, 1994                                   5.000/5.700       22,200         222     119,298        -           -    
    June 28, 1994                                         0.750       10,000         100       7,400        -           -    
    June 28, 1994                                         1.500        5,000          50       7,450        -           -    

Stock options exercised:
  December 14, 1994                                       1.500        8,334          83      12,418        -           -    

Net (loss)                                                  -            -           -           -          -           -    
                                                                  ----------     -------  ----------    ---------  ---------
    Balance June 30, 1994                                         19,528,985     195,290  21,934,326        -           -    
                                                                  ----------     -------  ----------    ---------  ---------
</TABLE>
<TABLE>
                                                                        DEFICIT               
                                                                      ACCUMULATED             
                                                         UNEARNED       DURING                
                                                          COMPEN-     DEVELOPMENT             
                                                          SATION         STAGE        TOTAL   
                                                         --------     ------------  --------- 
<S>                                                       <C>          <C>           <C>      
Increase in additional paid-in capital for                                                    
  Directors Compensation-Stock Purchase                     -                -        150,000 
                                                                                              
Net (loss)                                                  -         (2,249,607)  (2,249,607)
                                                        -------      -----------   ----------
    Balance at June 30, 1993                            (24,608)     (15,546,680)   3,705,233 
                                                        -------      -----------   ----------
Offering costs and commissions                              -                -        (74,662)
                                                                                              
Earned compensation                                      24,608              -         24,608 
                                                                                              
Sold for cash in private placements, net of offering                                          
  costs and commissions:                                                                      
    December 27, 1993                                       -                -        476,280 
    March 8, 1994                                           -                -        300,982 
    May 4, 1994                                             -                -        162,384 
    May 16, 1994                                            -                -        210,442 
    June 3, 1994                                            -                -        957,687 
    June 16, 1994                                           -                -        469,998 
                                                                                              
Issued to individuals as compensation for                                                     
  services and expenses:                                                                      
    September 23, 1993                                  (52,000)             -         78,000 
    March 1, 1994                                       (43,256)             -          8,744 
    June 28, 1994                                           -                -         20,963 
    June 28, 1994                                           -                -        119,520 
    June 28, 1994                                           -                -          7,500 
    June 28, 1994                                           -                -          7,500 
                                                                                              
Stock options exercised:                                                                      
  December 14, 1994                                         -                -         12,501 
                                                                                              
Net (loss)                                                  -         (2,439,471)  (2,439,471)
                                                        -------      -----------   ----------
    Balance June 30, 1994                               (95,256)     (17,986,151)   4,048,209 
                                                        -------      -----------   ----------
                                                                                   (continued)
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -40- 
<PAGE>

                     SOLV-EX CORPORATION AND SUBSIDIARIES
                       (DEVELOPMENT STAGE ENTERPRISES)

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 

                 FOR THE PERIOD FROM JULY 2, 1980 (INCEPTION)
                           THROUGH JUNE 30, 1996 

<TABLE>
                                                                                    COMMON                DEFICIT                
                                                                                    STOCK               ACCUMULATED              
                         PRICE         COMMON STOCK      ADDITIONAL     COMMON     SUBSCRIP-  UNEARNED    DURING                 
                          PER      --------------------    PAID-IN      STOCK       TIONS     COMPEN-   DEVELOPMENT              
                         SHARE       SHARES     AMOUNT     CAPITAL    SUBSCRIBED  RECEIVABLE  SATION       STAGE        TOTAL    
                      -----------  ----------  --------  -----------  ----------  ----------  --------  -----------  ----------- 
<S>                   <C>          <C>         <C>        <C>          <C>         <C>         <C>       <C>          <C>        
Earned compensation             -           -         -            -         -         -       95,256             -       95,256 

Issued to individual 
 as compensation 
 July 1, 1994               2.440      10,000       100       24,275         -         -      (12,187)            -       12,188 

Sold for cash in 
 private placements,
 net of offering 
 costs and commissions
 December 7, 1994           2.318     668,300     6,683    1,542,670         -         -            -             -    1,549,353 


Stock options 
 exercised:
  October 11, 1994          1.840     20,000        200       36,600         -         -            -             -       36,800 
  November 10, 1994         1.500      8,334         83       12,418         -         -            -             -       12,501 

Stock options 
 exercised with 
 stock                1.840/1.500     41,821        418        (418)         -         -            -             -            - 

Net (loss)                      -          -          -           -          -         -            -    (1,079,600)  (1,079,600)
                                  ----------    -------- -----------    ------     -----     --------  ------------  ----------- 
    Balance at June 
     30, 1995                     20,277,440     202,774  23,549,871         -         -      (12,187)  (19,065,751)   4,674,707 
                                  ----------    -------- -----------    ------     -----     --------  ------------  ----------- 

Earned compensation             -          -           -           -         -         -       12,187             -       12,187 

Issued to individual 
 as compensation 
 July 1, 1995 through 
   November 30, 1995   7.44-11.00     10,200         102      39,652         -         -            -             -       39,754 
  December 1, 1995 
   through June 30, 
   1996                6.25-38.00     13,000         130     133,744         -         -            -             -      133,874 

Issued to GFL Advantage
 per private placement 
 agreement                 17.270     30,000         300        (300)                                                          - 
Sold for cash in 
 private placements, 
 net of offering costs
 and commissions
  July 21, 1995             5.696    100,000       1,000     568,625         -         -            -             -      569,625 
  August 1, 1995            5.688    500,000       5,000   2,839,115         -         -            -             -    2,844,115 
  January 23, 1996    15.00-19.00    543,860       5,439   8,994,561         -         -            -             -    9,000,000 
  March 8, 1996            28.365  1,081,967      10,820  30,679,180         -         -            -             -   30,690,000 

                                                                                                                     (continued) 
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -41- 


<PAGE>

                     SOLV-EX CORPORATION AND SUBSIDIARIES
                       (DEVELOPMENT STAGE ENTERPRISES)

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 

                 FOR THE PERIOD FROM JULY 2, 1980 (INCEPTION)
                           THROUGH JUNE 30, 1996 

<TABLE>
                                                                                    COMMON                DEFICIT                
                                                                                    STOCK               ACCUMULATED              
                         PRICE         COMMON STOCK      ADDITIONAL     COMMON     SUBSCRIP-  UNEARNED    DURING                 
                          PER      --------------------    PAID-IN      STOCK       TIONS     COMPEN-   DEVELOPMENT              
                         SHARE       SHARES     AMOUNT     CAPITAL    SUBSCRIBED  RECEIVABLE  SATION       STAGE        TOTAL    
                      -----------  ----------  --------  -----------  ----------  ----------  --------  -----------  ----------- 
<S>                   <C>          <C>         <C>        <C>          <C>         <C>         <C>       <C>          <C>        
Stock options 
 exercised:
  September 7, 1995       2.600        6,000          60      15,540         -         -            -             -       15,600 
  October 5, 1995         1.500       10,000         100      14,900         -         -            -             -       15,000 
  October 24, 1995        2.600        5,000          50      12,950         -         -            -             -       13,000 
  December 12, 1995       1.500        8,332          83      12,415         -         -            -             -       12,498 
  February 28, 1996   2.56-5.75       37,500         375     162,424         -         -            -             -      162,799 
  March 1, 1996       1.38-2.56       12,500         125      17,715         -         -            -             -       17,840 
  March 5, 1996       2.56-5.75       18,000         180      93,750         -         -            -             -       93,930 
  March 8, 1996       2.56-5.75       44,000         440     200,185         -         -            -             -      200,625 
  March 12, 1996          2.560        2,500          25       6,375         -         -            -             -        6,400 
  March 26, 1996          2.560       10,000         100      25,500         -         -            -             -       25,600 
  March 27, 1996          2.560        2,500          25       6,375         -         -            -             -        6,400 
  April 3, 1996           2.560          500           5       1,275         -         -            -             -        1,280 
  April 18, 1996          1.500       19,400         194      28,906         -         -            -             -       29,100 
  April 24, 1996          2.560          500           5       1,275         -         -            -             -        1,280 
  April 30, 1996      1.50-4.91       41,080         411        (411)        -         -            -             -            - 
  May 22, 1996            2.560        1,000          10       2,550         -         -            -             -        2,560 
  May 24, 1996            2.560        1,500          15       3,825         -         -            -             -        3,840 
  June 10, 1996           1.500       50,000         500      74,500         -         -            -             -       75,000 

Warrants exercised:
  December 3, 1995        3.625       10,237         102      37,007         -         -            -             -       37,109 
  June 11, 1996           3.625        9,633          96      34,823         -         -            -             -       34,920 

Net (loss)                    -            -           -           -         -         -            -    (6,202,177)  (6,202,177)
                                  ----------    -------- -----------    ------     -----     --------  ------------  ----------- 
    Balance at 
     June 30, 1996                22,846,649    $228,466 $67,556,328    $    -     $   -     $      -  $(25,267,928) $42,516,866 
                                  ----------    -------- -----------    ------     -----     --------  ------------  ----------- 
                                  ----------    -------- -----------    ------     -----     --------  ------------  ----------- 
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -42- 
<PAGE>


                      SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        
                    YEARS ENDED JUNE 30, 1996, 1995 AND 1994
                  AND CUMULATIVE FROM JULY 2, 1980 (INCEPTION)

<TABLE>
                                                         YEARS ENDED JUNE 30              CUMULATIVE     
                                             ---------------------------------------   FROM JULY 2, 1980 
                                                 1996          1995          1994         (INCEPTION)    
                                             ------------   -----------   ----------   ----------------- 
<S>                                          <C>            <C>           <C>          <C>         
Cash flows from operating activities:
  Net loss                                   $ (6,202,177)  $(1,079,600)  (2,439,471)    (25,267,928)
  Adjustments to reconcile net loss to 
   net cash used by operating activities:
    Depreciation and amortization                 249,516       152,935       71,172       1,369,577 
    Write-off of mineral lease and other                -        58,088            -       1,505,541 
    Gain on sale of equipment                           -        (1,157)         (35)        (15,078)
    Issuance of stock, warrants, and 
     options for services performed               185,815       107,444      266,835       2,416,417 
    Minority interest in loss of subsidiary             -             -            -        (113,920)
    Changes in certain assets 
     and liabilities:
      Receivables and other assets             (7,044,111)       94,298       (9,803)     (7,122,971)
      Accounts payable and accrued expenses     3,941,896       443,140     (146,798)      4,459,385 
      Accrued deferred interest                         -             -            -         167,260 
      Deferred compensation                             -             -       33,000         370,250 
                                             ------------   -----------   ----------    ------------ 
        Net cash used by operating activities   8,869,061      (224,852)  (2,225,100)    (22,231,467)
                                             ------------   -----------   ----------    ------------ 

Cash flows from investing activities:
  Proceeds from short-term investments                  -             -            -       2,296,745 
  Additions to property, plant and equipment  (21,937,924)   (1,767,815)    (163,220)    (27,119,747)
  Proceeds from sale of equipment                       -         1,157           35          15,078 
  Expenditures for short-term investments               -             -            -      (2,100,000)
  Cash acquired in excess of payment for 
   the purchase of a majority interest in
   Can-Amera Oil Sands, Inc.                            -             -            -          97,976 
  Expenditures for patents                        (31,833)     (145,076)     (14,851)       (405,886)
  Expenditures for other                         (367,110)          (27)           -        (256,569)
                                             ------------   -----------   ----------    ------------ 
        Net cash provided by (used for) 
         investing activities                 (22,336,867)   (1,911,761)    (178,036)    (27,472,403)
                                             ------------   -----------   ----------    ------------ 

Cash flows from financing activities:
  Proceeds from issuance of short and 
   long-term debt                              34,187,093             -            -      34,515,282 
  Proceeds from issuance of common stock       43,858,521     1,598,654    2,515,612      63,227,522 
  Principal payments on short and 
   long-term debt                              (1,181,154)      (12,414)     (11,207)     (1,416,016)
  Payment of costs associated with 
   proposed financing                          (2,610,684)      (48,064)     (79,978)     (2,738,726)
  Other                                                               -            -          18,375 
                                             ------------   -----------   ----------    ------------ 
        Net cash provided by financing 
         activities                            74,253,776     1,538,176    2,424,427      93,606,437 
                                             ------------   -----------   ----------    ------------ 

Change in cash and cash equivalents          $ 43,047,848      (598,437)      21,291      43,902,567 
                                             ------------   -----------   ----------    ------------ 
                                             ------------   -----------   ----------    ------------ 
                                                                                         (continued) 
</TABLE>

                                       -43- 
<PAGE>


                      SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        
                    YEARS ENDED JUNE 30, 1996, 1995 AND 1994
                  AND CUMULATIVE FROM JULY 2, 1980 (INCEPTION)

<TABLE>
                                                         YEARS ENDED JUNE 30              CUMULATIVE     
                                             ---------------------------------------   FROM JULY 2, 1980 
                                                 1996          1995          1994         (INCEPTION)    
                                             ------------   -----------   ----------   ----------------- 
<S>                                          <C>            <C>           <C>          <C>         
Change in cash and cash equivalents, 
 forwarded                                   $ 43,047,848      (598,437)      21,291       43,902,567 

Cash and cash equivalents at beginning 
 of period                                        854,719     1,453,156    1,431,865                - 
                                             ------------   -----------   ----------     ------------ 

Cash and cash equivalents at end of period   $ 43,902,567   $   854,719    1,453,156       43,902,567 
                                             ------------   -----------   ----------     ------------ 
                                             ------------   -----------   ----------     ------------ 

Supplemental disclosure of cash 
 flow information:
  Interest paid (net of amounts capitalized) $  4,011,450   $     8,799        8,558        4,221,176 
                                             ------------   -----------   ----------     ------------ 
                                             ------------   -----------   ----------     ------------ 

Noncash investing and financing activities:
  Issuance of stock for minerals lease       $          -   $         -            -          281,000 
                                             ------------   -----------   ----------     ------------ 
                                             ------------   -----------   ----------     ------------ 

Acquisition of controlling interest in
  Can-Amera Oil Sands, Inc. for cash of 
   $150,000 and 75,000 shares of common 
   stock valued at $122,250. In conjunction
   with the acquisition, liabilities were 
   assumed as follows:
    Fair value of assets acquired            $          -   $         -            -        1,659,211 
    Cash and stock paid for capital stock    $          -   $         -            -         (272,250)
    Minority interest                        $          -   $         -            -         (113,920)
                                             ------------   -----------   ----------     ------------ 
    Liabilities assumed                      $          -   $         -            -        1,273,041 
                                             ------------   -----------   ----------     ------------ 
                                             ------------   -----------   ----------     ------------ 

Issuance of stock for deferred compensation  $          -   $         -            -          271,250 
                                             ------------   -----------   ----------     ------------ 
                                             ------------   -----------   ----------     ------------ 

Issuance of subsidiary stock for redemption
  of Can-Amera notes                         $          -   $         -            -        1,447,980 
                                             ------------   -----------   ----------     ------------ 
                                             ------------   -----------   ----------     ------------ 
</TABLE>

See accompanying notes to consolidated financial statements.

                                       -44- 

<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

                          June 30, 1996, 1995, and 1994

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  OPERATIONS AND ORGANIZATION

          Since its inception on July 2, 1980, Solv-Ex Corporation (the Company)
            has devoted its resources primarily to the development of a process 
            for the extraction of bitumen, a semi-solid hydrocarbon compound 
            which can be converted into synthetic crude oil, from oil sands. In
            recent years, it has advanced the patented processes to include 
            recovery of metals and minerals from the fine clays contained in the
            oil sands, either from (i) waste tailings generated by others from
            primary production of bitumen from oil sands or (ii) from fine clays
            associated with the oil sands which can be recovered in connection
            with the Company's production of bitumen from oil sands on its own 
            leases.

          The Company is currently developing and constructing an initial stage
            oil extraction plant on one of the two oil sands leases which it 
            owns in northern Alberta.

          In May 1996, Solv-Ex incorporated Solv-Ex Canada Limited in Alberta,
            Canada, as a wholly owned subsidiary expected to be the operating 
            entity for Canadian operations.

          In addition, the Company's wholly owned subsidiary, Duo-Ex Corporation
            (Duo-Ex), and Duo-Ex's wholly owned subsidiary, Shale Research, Inc.
            (Shale), were engaged in the research and development of a process 
            to extract oil from oil shale.  The two companies are currently 
            inactive.

          The Company formed a wholly-owned subsidiary, Applied Remedial 
            Technology, Inc., in January, 1993 to operate its pilot plant and to
            pursue commercial applications of its process toward environmental
            clean up, primarily in the field of hydrocarbon 
            contamination.

          The Company has a controlling interest in Can-Amera Oil Sands, Inc.,
            ("Can-Amera") a Canadian company. Historically, Can-Amera was 
            principally involved in the exploration and development of oil sands
            deposits in Canada and now holds a royalty of C$.07 per barrel in 
            production which may be obtained from the oil sands lease which the
            Company acquired from Can-Amera.

          Although the Company in prior years has generated revenues from a 
          contract for the use of its pilot plant 

                                       -47-

<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     (a)  OPERATIONS AND ORGANIZATION (CONTINUED)

            and engineering services and from Government subcontracts, the 
            Company has not, as of June 30, 1996, generated revenues from the
            sale or the operation of its principal product, the oil sand 
            extraction process. Therefore, the accompanying consolidated 
            financial statements have been presented as those of development 
            stage enterprises in accordance with Financial Accounting Standards
            Board STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 7.

     (b)  PRINCIPLES OF CONSOLIDATION

          The consolidated financial statements include the accounts of the 
            Company, and all of its subsidiaries.  Intercompany balances and 
            transactions have been eliminated in consolidation.

     (c)  MINERAL EXPLORATION AND DEVELOPMENT COSTS

          Costs incurred to explore mineral properties are charged to operations
            in the year incurred. Costs incurred to develop mineral leases for
            mining are capitalized. In the event the capitalized costs are 
            determined by management not to be economically recoverable, such 
            costs are charged to operations in the period in which that 
            determination is made.

     (d)  CONSTRUCTION IN PROCESS

          Construction in process consists of preliminary engineering, detailed
            engineering, preparation of permit applications and an Environmental
            Impact Assessment and other direct costs associated with 
            construction of an initial commercial-scale plant in Canada.

     (e)  DEPRECIATION AND AMORTIZATION

          Pilot plant building, field and laboratory equipment, and furniture 
            and fixtures are depreciated using the straight-line method over
            the estimated useful lives of the assets, approximately three to 
            fifteen years.

          Amortization of leasehold improvements is computed using the 
            straight-line method over the terms of the lease or estimated useful
            lives of the assets, whichever is shorter, approximately three to 
            fifteen years.

                                       -48-

<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     (e)  DEPRECIATION AND AMORTIZATION (CONTINUED)

          The Company's policy is to capitalize interest cost on long-term 
            construction projects. Interest costs capitalized is approximately 
            $256,000 during 1996 and none during each of the two fiscal years 
            ended June 30, 1995 and 1994.

     (f)  RESEARCH AND DEVELOPMENT

          The costs associated with research and development, including 
            modification of the pilot plant for development or improvement of
            technology, are expensed as incurred. During the fiscal year ended 
            June 30, 1995, $2,032,956 in funds received from United Tri-Star 
            Resources Ltd. under an agreement to perform work in contemplation
            of development of the Company's oil sands lease were recorded as an
            offset to expense under "Research and development funded by others."
            No research and development funds were received from others during 
            the fiscal years ended June 30, 1996 or 1994. 

     (g)  STOCK OPTIONS AND WARRANTS

          The Company accrues the excess, if any, of the quoted market price 
            over the exercise price of options and warrants at the measurement
            date (generally the date of issue) as expense over the period earned
            by the holder. The expense is recorded as a charge to earnings and 
            as a credit to additional paid-in capital. At time of exercise, the 
            excess of cash received from the holder over the par value is 
            credited to additional paid-in capital.

          In October 1995, the FASB issued Financial Accounting Standard No. 123
            ("FAS 123"), "Accounting for Stock Based Compensation."  Under the 
            provisions of FAS 123, companies may elect to account for 
            stock-based compensation plans using a fair-value-based method or 
            may continue measuring compensation expense for those plans using 
            the intrinsic-value-based method. Companies electing to continue 
            using the intrinsic-value-based method must provide pro forma 
            disclosures of net income and earning per share as if the 
            fair-value-based method had been applied.  The Company intends to
            continue to account for stock-based compensation using the 
            intrinsic-value-based method and, as such, FAS 123 will not have an
            impact on the Company's results of operations or financial position.
            FAS 123 becomes effective in fiscal year 1997.

                                       -49-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     (h)  INCOME TAXES

          The Company accounts for income taxes using the asset and liability 
            method. Using this method, deferred tax assets and liabilities are
            provided on differences between the financial statement and income 
            tax bases of assets and liabilities using estimated income tax rates
            for the year in which the differences are expected to reverse.

     (i)  LOSS PER COMMON SHARE

          Loss per common share is based on the weighted average shares 
            outstanding during the period. Stock options, warrants and common 
            stock held as security for indebtedness are excluded from loss per
            share calculations because of their anti-dilutive effect.

     (j)  STATEMENT OF CASH FLOWS

          For purposes of the statements of cash flows, cash equivalents
            include amounts invested in interest-bearing deposits with 
            maturities of 90 days or less.

     (k)  FOREIGN CURRENCY TRANSLATION

          All foreign currencies are translated into U.S. dollars using the 
            translation procedures specified in STATEMENT OF FINANCIAL 
            ACCOUNTING STANDARDS NO. 52. For application of such procedures, 
            the U.S. dollar is the functional currency. All amounts herein are
            stated in U.S. dollars except amounts preceded by a "C" denoting 
            Canadian dollars.

     (l)  INTANGIBLES

          Patent costs are amortized over their remaining life.

          The Company is in the process of efforts to complete financing 
            arrangements for additional capital to add further capacity to the
            initial commercial plant currently under construction. Costs paid 
            for origination fees associated with such financings have been 
            deferred and will be deducted from the proceeds if the financings 
            are completed or will be charged to the results of operations when 
            it is determined that they no longer have future value.

                                       -50-

<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements


(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     (m)  CARRYING VALUE OF ASSETS

          The Company reviews the carrying value of its assets on a regular 
            basis to determine whether any changes have occurred which may 
            impair such value or which otherwise may affect the classification
            of such assets in its financial statements. Any impairments to asset
            carrying values will be charged to results of operations in the 
            period in which a determination of impairment has been made.

     (n)  FINANCIAL INSTRUMENTS

          Statement of Financial Accounting Standards No. 107, "Disclosures 
            about Fair Values of Financial Instruments", requires the fair value
            of financial instruments be disclosed.  The Company's financial
            instruments are accounts and notes receivable, accounts payable, and
            long-term debt.  The carrying amounts of accounts receivable, 
            accounts payable, and long-term debt, because of their terms and 
            nature, approximate fair value.

     (o)  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 reporting period.  Actual results 
            could differ from those estimates.

(2)  ACQUISITION OF MINERAL LEASE

     In 1988, the Company acquired an oil sands lease in the Athabasca region 
       of Alberta, Canada. Additional payments are to be made to Can-Amera, a
       subsidiary of the Company, at a rate of C$.07 per barrel when production
       begins. The lease provides for successive 21 year renewal terms if the
       property is in production at the end of the preceding term. Under the 
       lease terms, construction and operation of a plant having a minimum 
       processing capacity of 10,000 tons per day of bituminous sands or 10,000
       barrels of bitumen per day by December 14, 1997 will satisfy the 
       requirements for renewal. As a practical matter, the Company does not 
       anticipate any difficulty in proceeding with third 

                                       -51-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

(2)  ACQUISITION OF MINERAL LEASE (CONTINUED)

       term renewal. Moreover, government regulations allow for third term 
       renewal without production on terms which the Company could easily meet 
       in any event, and recent proposed regulations offer the probability that 
       requirements for third term renewal will be further liberalized in an 
       effort to encourage additional oil sands development. The Company does 
       not believe there is a material risk that the lease will be terminated at
       the expiration of the second term and will take such action as may be 
       necessary or advisable to extend the lease.  

     The production royalty is established by the Alberta Provincial government
       and expected to be 1% of gross revenues  until invested capital 
       (including imputed interest and including capital which may be spent for
       plant expansion) is recovered, at which time the royalty is expected to 
       be based upon a percentage of net operating revenues. The Company has 
       held several discussions with the government regarding computation of 
       royalty for an operation co-producing minerals and metals with the oil 
       and it has not yet been determined how this will affect computation of 
       royalties. Payment of royalties to the government is not expected to have
       a significant impact on operation of the initial stage oil plant and, 
       depending upon the ability of the Company to expand initial operations,
       may not have a significant impact until commercial operations have been 
       fully established at ultimate rates of production.  

     On July 20, 1995, the Company acquired the Fort Hills oil sands lease from
       Petro-Canada for a cash consideration of approximately US$440,000, of 
       which 10% was paid by United Tri-Star Resources Ltd. which acquired an
       undivided 10% working interest in the lease from the Company pursuant to
       its agreement with the Company.  The lease  adjoins  the  Company's  
       Bitumount oil sands lease to the north, east and south, is much larger in
       acreage and is known to contain a substantially larger resource base on 
       the basis of work performed by Petro-Canada and reviewed by the Company's
       consultants. In the event production is obtained from the lease, 
       Petro-Canada will also receive certain payments out of production to a 
       maximum amount of C$20 million, which is approximately US$14.6 million at
       current exchange rates. The terms of the Fort Hills Lease are the same as
       for the Bitumount Lease, except that the second term does not expire 
       until February 18, 2002 and the production

                                       -52-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

       requirement to extend the lease beyond the second term is 25,000 barrels
       per day. 





                                       -53-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

(3)  LONG-TERM DEBT

     Long-term debt is as follows:

                                                      June 30         
                                               ---------------------
                                                 1996         1995   
                                               --------     --------

     Convertible note payable at 12%;
       matures April 30, 1999' first 
       year's interest prepaid; interest 
       payable quarterly in each of the
       second and third years; principal 
       is convertible into the Company's 
       common stock at the option of the 
       lender at a conversion price of 
       $32.50 per share; secured 
       by 1,016,000 shares of the 
       Company's common stock issued
       in the name of the Company           $33,000,000         - 


     Mortgage note payable to bank at
       prime rate plus 1.5% (9.75% at
       June 30, 1996); payable in
       monthly installments of $792
       plus interest; matures
       June 30, 1998; secured by
       pilot plant land and buildings
       with a depreciated cost at
       June 30, 1996 of $332,425               $ 66,500       76,000

     Other                                       15,867          427
                                            -----------   ----------
     Total long-term debt                    33,082,367       76,427
     Less current installments                   25,367        9,927
                                            -----------   ----------
     Long-term debt,
       excluding current installments      $ 33,057,000   $   66,500
                                           ------------   ----------
                                           ------------   ----------

     Principal maturities of long-term debt as of June 30, 1996 are as follows:

            1997                           $  25,367

                                       -54-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

            1998                                   57,000
            1999                               33,000,000
                                             ------------
                                             $ 33,082,367
                                             ------------
                                             ------------



                                       -55-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

(4)  STOCKHOLDERS' EQUITY

     The following describes certain activity affecting stockholders' equity:

     (a)  DIRECTORS COMPENSATION-STOCK PURCHASE

          In July, 1992, the Board of Directors granted to its members the 
            right to purchase  600,000  shares of restricted common stock at a
            purchase price of $.50 per share in cash. The difference
            between the exercise price of $.50 and the market price at the date
            of exercise, $.75 for restricted non-registered shares, was
            recorded as compensation. All shares were purchased by four
            directors in August and October, 1992, and compensation of $150,000
            was recorded.

    (b)   STOCK FOR SERVICES AND EXPENSES

          In September, 1993, an officer of the Company received 25,000 shares 
            of non-registered, forfeitable common stock as compensation. The 
            stock had a fair market value of $5.20 and compensation of $78,000 
            was recorded for the year ended June 30, 1994. Unearned compensation
            of $52,000 at June 30, 1994 was recognized through January, 1995, 
            the date that forfeitability ceased.

          In March, 1994, an employee of the Company received 10,000 shares of 
            non-registered, forfeitable common stock as compensation. The stock
            had a fair market value of $5.20, and compensation of $8,744 was 
            recorded for the year ended June 30, 1994. Unearned compensation of 
            $43,256 at June 30, 1994 will be recognized through January, 1996, 
            the date that forfeitability ceases.

          During June, 1994, the Company issued to an employee 22,200 shares of 
            non-registered common stock at $5.00 to $5.70 per share in exchange 
            for employment services rendered during the fiscal year. At such 
            time, the same employee was also issued 7,800 shares of such stock 
            at $2.69 per share in exchange for employment services rendered 
            during the prior year. The issuance price of the common stock 
            represents the market value of the common stock when the services 
            were rendered.

          During June, 1994, the Company also issued to two employees 10,000 and
            5,000 shares, respectively, of non-registered common stock at $.75 
            and $1.50 per share, respectively, in exchange for employment


                                     -56-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

(4) STOCKHOLDERS' EQUITY (CONTINUED)

    (b)   STOCK FOR SERVICES AND EXPENSES (CONTINUED)

            services rendered during the prior fiscal year. The issuance price 
            of the common stock represents the market value of the common stock 
            when the services were rendered.

    (c)   STOCK OPTIONS

          The Company had adopted a non-qualified stock option plan in 
            which options were granted to certain officers, directors, and key 
            employees of the Company at a price determined at the time the 
            options were granted. The options are exercisable for a period of 
            not more than five years from the date of grant. The plan terminated
            July 2, 1990, and, as a result no additional options may be granted 
            under the plan and options that were granted under this Plan have 
            been exercised or have expired.

          The following table summarizes certain information relative to the
          non-qualified stock option plan:

                                                            Years ended June 30
                                                            -------------------
                                                              1996       1995  
                                                            --------   --------
          Options outstanding at beginning of year               -       59,240
          Expired                                                -       20,000
          Exercised                                              -       39,240
                                                            --------   --------
          Options Outstanding at end of year                     -            -
          Option price range at end of year                    n/a        $1.84



          The Company has also adopted an incentive stock option plan
            under which options are granted to certain officers and employees of
            the Company and its subsidiaries to purchase common shares at a 
            price equal to the fair market value at the date of grant, and the 
            options are exercisable within five years from the date of grant. 
            The option price for individuals owning more than 10 percent of the 
            Company's common stock must be equal to 110 percent of the fair 
            market value of the common stock at the date of grant. The incentive
            stock option plan will terminate October 8, 2002.


                                     -57-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements



(4) STOCKHOLDERS' EQUITY (CONTINUED)

    (c)   STOCK OPTIONS (CONTINUED)

          The following summarizes certain information relative to the 
            incentive stock option plan:
<TABLE>
<CAPTION>
                                                               Years ended June 30     
                                                          -----------------------------
                                                              1996             1995    
                                                          ------------     ------------
          <S>                                             <C>              <C>
          Options outstanding at beginning of year             861,500          549,000
          Granted                                              308,000          353,500
          Expired                                                8,000           58,000
          Exercised                                            203,400             -   
                                                          ------------     ------------
          Options outstanding at end of year                   958,100          861,500
                                                          ------------     ------------
                                                          ------------     ------------
          Option price range at end of year                $1.50-21.50      $1.50-$5.75
          Price range for exercised options                $1.50-$5.75            n/a  
          Options exercisable at end of year                   525,850          540,000
          Options available for grant at end of year            26,500          155,500

</TABLE>

          The shares available under the incentive option plan are 
            registered under the Securities Act of 1933.

          The Company has no registered shares available for exercise under an 
            incentive stock option plan which was terminated in October, 1992. 
            During the fiscal year ended June 30, 1996, options to purchase 
            35,832 shares at prices ranging from $1.50 to $2.60 per share were
            exercised under the plan.

          In October, 1992, the Company established a non-qualified stock option
            plan for directors who are not employees of the Company. Options are
            to be granted to purchase common shares at a price equal to the fair
            market value at the date of grant. The options are exercisable 
            within 5 years from the date of grant. The plan provides for 500,000
            shares to be awarded to nonemployee directors through non-qualified 
            stock options.  The plan will terminate October 8, 2002 and provides
            at a minimum that each eligible director receive an option to 
            purchase 10,000 shares of common stock on each annual meeting date.


                                     -58-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements



(4) STOCKHOLDERS' EQUITY (CONTINUED)

    (c)   STOCK OPTIONS (CONTINUED)

          The following summarizes certain information relative to the 
            non-qualified stock option plan for directors which are not 
            employees of the Company:
<TABLE>
<CAPTION>
                                                               Years ended June 30     
                                                          -----------------------------
                                                              1996             1995    
                                                          ------------     ------------
          <S>                                             <C>              <C>
          Options outstanding at end of year                   150,000           95,000
          Granted                                               50,000           55,000
          Expired                                                 -                -   
          Exercised                                             45,000             -   
                                                          ------------     ------------
          Options outstanding at end of year                   155,000          150,000
                                                          ------------     ------------
                                                          ------------     ------------
          Option price range at end of year               $1.50-$13.81      $1.50-$4.91
          Price range for exercised options                $1.50-$4.91            n/a  
          Options exercisable at end of year                   155,000          125,000
          Options available for grant at end of year           300,000          325,000

</TABLE>

          The shares available under this non-qualified stock option plan for 
           directors are registered under the Securities Act of 1933.

(5) GRANT AND CONTRACT OBLIGATIONS

    On October 29, 1982, the Company entered into a professional services 
      agreement with an agency of the State of New Mexico.  The agreement
      provided that allowable expenditures for certain research and development
      activities conducted through November 30, 1983, would be funded by the
      agency. On June 30, 1984, the allowable research activities had been
      completed and $407,760 had been funded by the agency. The agreement 
      provided that if a commercial plant was not constructed in New Mexico, 
      and was subsequently constructed outside the State, the Company would be 
      required to repay all grant funds at the rate of 2 percent of the gross 
      proceeds received from operation of the plant.

    In November, 1992, the Company entered into an agreement with and received a
      funding commitment from Alberta Oil Sands Technology and Research 
      Authority (AOSTRA) for up to $300,000 for continued research and 
      development of the extraction process. At June 30, 1993, the allowable 
      research activities had been completed. In exchange for funding, AOSTRA is
      entitled to recover up to three times the 


                                     -59-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

(5) GRANT AND CONTRACT OBLIGATIONS (CONTINUED)

      amount of its funding from certain defined future commercial operations 
      which use the technology.

    In August, 1994, effective as of July 1, 1994, the Company entered into an 
      agreement with and is to receive funding to complete a feasibility report 
      and related pre-construction activities on the Company's oil sands lease 
      in Northern Alberta from United Tri-Star Ltd., Calgary ("UTS"). Pursuant 
      to the agreement, UTS also acquired an undivided 10% working interest in 
      the Bitumount Lease and has the option to acquire 10% of any working 
      interest acquired by Solv-Ex (on the same terms and conditions as Solv-Ex)
      in other projects for oil sands development in the Athabasca Region using 
      the Solv-Ex technology. The Company is currently in the process of 
      finalizing a limited partnership agreement with UTS pursuant to which UTS
      will pay its 10% share of projects costs, $500,000 of which has already 
      been paid by UTS pursuant to an informal understanding pending completion 
      of financing arrangements for the project.

(6) INCOME TAXES

    At June 30, 1996, the Company and its subsidiaries, excluding amounts for 
      foreign taxes, had net operating loss carryforwards, and research and 
      experimentation tax credit and investment tax  credit carryforwards for
      income tax and financial reporting purposes as follows:

                    Net                                Tax Credits
    Year of      Operating            Research &
  Expiration       Loss             Experimentation                   Investment
  ----------    ----------          ---------------                   ----------
     1997       $  251,000               44,000                            1,000
     1998          875,000               61,000                            3,000
     1999        3,708,000              213,000                           14,000
     2000        1,896,000               23,000                            1,000
     2001        1,121,000                  -                                 - 
     2002          154,000                  -                                 - 
     2003          582,000                  -                                 - 
     2004          990,000                  -                                 - 
     2005          708,000                  -                                 - 
     2006          456,000                  -                                 - 
     2007          402,000                  -                                 - 


                                     -60-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements


     2008        2,596,000                  -                                 - 
     2009        2,556,000                  -                                 - 
     2010        1,101,000                  -                                 - 
     2011        6,220,000                  -                                 - 
               -----------              -------                           ------
               $23,616,000              341,000                           19,000
               -----------              -------                           ------
               -----------              -------                           ------

    The Company's Canadian subsidiary, Can-Amera, which is subject to Canadian 
      taxation, has net operating loss carryforwards for income tax and 
      financial reporting purposes of approximately $C20,000 which expire 
      ratably for income tax purposes through December of 2001.

(7) INCOME TAXES (CONTINUED)

    Significant components of deferred tax assets and liabilities were as 
      follows:
                                                               June 30
                                                               -------
                                                          1996         1995    
                                                          ----         ----    
    Deferred tax assets:
       Deferred compensation                         $    38,000        38,000 
       Tax credits and carryforwards                   9,806,000     7,350,000 
                                                     -----------    ---------- 
          Total Deferred tax assets                    9,844,000     7,388,000 

          Less valuation allowance                    (9,734,000)   (7,278,000)
                                                     -----------    ---------- 

            Net deferred tax assets                      110,000       110,000 
                                                     -----------    ---------- 

    Deferred tax liabilities:
       Patents                                          (109,000)     (109,000)
       Other                                              (1,000)       (1,000)
                                                     -----------    ---------- 
          Total deferred tax liabilities                (110,000)     (110,000)
                                                     -----------    ---------- 
          Net deferred taxes                         $     -             -     
                                                     -----------    ---------- 
                                                     -----------    ---------- 

    In assessing the realizability of deferred tax assets, management considered
      whether it is more likely than not that some portion or all of the 
      deferred tax assets will not be realized. The ultimate realization of
      deferred tax assets is dependent upon the generation of future taxable 
      income during the periods in which those temporary differences become 
      deductible. Management considers the scheduled reversal of deferred tax 
      liabilities, projected future taxable income, and tax planning strategies 
      in making this assessment. Based upon the Company's history of operating 
      losses, management believes the ultimate realization of the deferred tax 
      assets is not assured. Therefore, the Company has provided a valuation 
      allowance to fully reserve the net deferred taxes.


                                     -61-
<PAGE>

                       SOLV-EX CORPORATION AND SUBSIDIARIES
                         (DEVELOPMENT STAGE ENTERPRISES)

                    Notes to Consolidated Financial Statements

(7) LIQUIDITY

    Historically, the Company has principally met its obligations and its 
      working capital requirements through the sale of common stock. During the
      fiscal year ended June 30, 1996, the Company sold common stock and issued
      convertible debt, which generated a total of approximately $73,000,000 in
      additional funding.

    This significant increase in funding, relative to any prior activity, 
      allowed the Company to continue construction of the initial stage 
      commercial plant on leased property in Alberta, Canada. With the 
      availability of these significant funds and its 10% partner UTS, the 
      Company now believes that it will be able to successfully complete
      construction of the initial stage commercial plant and initiate commercial
      production and sale of bitumen in the first quarter of calendar year 1997.

    As a result of the capital raised during the year and the other events and 
circumstances herein described, the Company believes that its current capital 
position is sufficient to conduct normal operations, meet its obligations when 
due and to construct and operate the Company's initial stage commercial plant 
with minimal modifications.

(8) RELATED PARTY TRANSACTIONS

    The Company's Chairman and Chief Executive Officer has a note payable to the
      Company in the principal amount of approximately $1,500,000, which is 
      payable upon demand and bears interest at 5.87% per annum.

    A Vice President in charge of the Company's Calgary operations, is the owner
      of Alcoss Enterprises, Ltd., an engineering firm which provides services 
      to the Company in connection with the plant being constructed on the 
      Bitumount Lease. Alcoss retained contractors and subcontractors on behalf 
      of the Company and has passed these costs through to the Company with a 
      small allowance to cover general and administrative expenses. Payments 
      made to Alcoss for the years ended 1996, 1995 and 1994 were $2,249,522, 
      $295,585 and $54,127 respectively. 


                                     -62-
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a) and (b) IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

     The table below sets forth the name, age and all positions held with the
Company (including length of service) by each director and executive officer of
the Company.

<TABLE>
<CAPTION>

        NAME                   Age               Offices Held              Length of 
                                                                            Service 
---------------------------------------------------------------------------------------
<S>                            <C>         <C>                             <C>         
   John S. Rendall              62          Chairman, Chief Executive      Since 1980 
                                              Officer, and Director            (1) 
 
    W. Jack Butler              77            President and Director       Since 1991
                                                                               (2) 

Herbert M. Campbell II          52            Senior Vice President,       Since 1992 
                                              General Counsel, and             (3) 
                                                    Director 

      J.E. Czaja                65           Vice President - Canada       Since 1993 

  Julius D. Heldman             77                  Director               Since 1980 
                                                                               (4) 

 M. Norman Anderson             65                  Director               Since 1986 
                                                                               (5) 

 Thompson MacDonald             49                  Director               Since 1993 
                                                                               (6)
 
  M.E. (Pat) Davey              70                  Director               Since 1995 
                                                                               (7) 
 
Annette L. Cottrell             36                  Secretary              Since 1995 

   Stephen Lane                 50               Vice President            Since 1995 
 
    Aldo Corti                  50               Vice President            Since 1995 
</TABLE>

(1)  Mr. Rendall was President of the Company from July 2, 1980 to October 1,
     1983, and from January 1, 1989 until July 1, 1992. Since November 1989, he
     has also served as President and a director of Can-Amera Oil Sands, Inc., a
     subsidiary of the Company.

(2)  Mr. Butler became Executive Vice President of the Company on February 22,
     1991 and became President on July 1, 1992.

(3)  Mr. Campbell became Vice President, Secretary and General Counsel of the
     Company on June 1, 1992. He was appointed as a Director on October 15,
     1992, became Senior Vice President in September, 1994 and also serves as
     Corporate Secretary for Can-Amera Oil Sands, Inc., a subsidiary of the
     Company.

                                      -63-
<PAGE>

(4)  Dr. Heldman served as Senior Vice President of the Company from September
     15, 1988 until October 9, 1992 and is Chairman of the Company's Audit and
     Compensation Committee.

(5)  Mr. Anderson is a member of the Company's Audit and Compensation Committee.

(6)  Mr. MacDonald has also served since March, 1994 as a director of Can-Amera
     Oil Sands, Inc., a subsidiary of the Company, and also serves as a paid
     consultant to the Company.

(7)  Mr. Davey serves as a paid consultant to the Company.

     No arrangement exists between any of the above officers and directors
pursuant to which any of those persons was elected to such office or position.

(c)  IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES

     There are no significant employees who are not also directors or executive
officers of the Company.

(d)  FAMILY RELATIONSHIPS

     There are no family relationships among persons who are directors or
executive officers of the Company.

(e)  BUSINESS EXPERIENCE

     The following sets forth the business experience of the directors and
executive officers of the Company named above.  No director of the Company is a
director of any other company which is subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended, except as described below.

     JOHN S. RENDALL was associated with RTL Contractor Holdings, S.A. from 1977
through 1979 as plant manager of RTR Oil Sands (Alberta) Ltd. (a subsidiary of
Rio-Tinto, Inc.), an oil sands extraction pilot plant at Fort McMurray in
Canada. From June 1979 through December 1979, he was also a part-time sales
representative for RTL and RTR in the United States, responsible for the
licensing of certain patents which he had sold to these companies. 

     W. JACK BUTLER was associated with Mobil Oil Corporation and its affiliated
companies in Europe, Africa and the Middle East since 1951 until his retirement
in 1985. Mr. Butler retired as the Middle East Regional Director - London for
Mobil Oil Corporation and as Chairman and Director of several of Mobil Oil
Corporation's Middle East and African companies, including Mobil Saudi Arabia,
Inc..

     HERBERT M. CAMPBELL II was previously employed from 1967 through 1984 by
Ranchers Exploration and Development Corporation, a diversified mining company
which merged into Hecla Mining Company in 1984. He was Senior Vice President and
Chief Counsel at the time of the merger, and, from 1985 until 1989, served as
President and a Director of Olympic Mining Corporation, which controls a silica
sand mining and processing operation in Southern California. From 1989 until he
was employed by the Company, Mr. Campbell was associated 

                                      -64-
<PAGE>

with Mains & McConnell, Inc., a commercial insurance brokerage firm. He is a 
member of the New Mexico State Bar.

     J.E. CZAJA served as Executive Vice President and a Director of Shell
Canada Limited from 1983 until his retirement in 1991. At the time of his
retirement, he was responsible for its oil (including oil sands), gas and coal
exploration and production activities.

     JULIUS D. HELDMAN served as Vice President of Shell Development Company and
as Vice President of Shell Oil Company from April 1969 to his retirement in
October 1980, and was extensively involved in its patenting and licensing
activities and research and development programs. Since his retirement, Dr.
Heldman has been president of Heldman Associates, petroleum consultants. 

     M. NORMAN ANDERSON is president of his own consulting firm, Anderson &
Associates in Vancouver, a natural resources management consulting firm with
major international clients. From January, 1987 until December, 1992, he was a
principal and managing director of Anderson Genssler & Schwab, Inc., management
consultants. From February, 1991 until August, 1992 he was also Chairman of
International Corona Corporation, a mining and exploration company. From 1980
until 1986, Mr. Anderson was Chairman and Chief Executive Officer of Cominco
Ltd., a mining, refining and manufacturing company. Mr. Anderson is also a
director of Homestake Mining Company, the Toronto Dominion Bank, Finning Ltd.,
Western Star Trucking and Prime Resources. 

     THOMPSON MACDONALD is the president of his own communications consulting
firm in Calgary, Alberta (Canada), which provides strategies for media and
government relations to a wide variety of public and private sector clients,
including the Company. Prior to forming his consulting firm in January, 1988,
Mr. MacDonald was Vice President, News and Public Affairs, for CFCN Television
Calgary for more than 10 years. Mr. MacDonald is also a director of the Canadian
Broadcasting Corporation and Multi-corp Inc., which is engaged in
telecommunications and language translation technologies.

     M.E. ("PAT") DAVEY holds B.S. degree in Mechanical Engineering from the
Washington State University and is currently acting as a consultant to manage
the Solv-Ex program for production of aluminum from alumina in a new
electrolytic cell. Mr. Davey has more than 40 years of experience in the
aluminum smelting industry in both management and consulting positions. He
worked on a wide variety of plant development and management assignments for
Kaiser Aluminum & Chemical Corporation in the U.S. and several foreign
countries. Mr. Davey retired from Kaiser as International Engineering and
Maintenance Manager in 1982 and has been active as a consultant to the aluminum
smelting industry since his retirement.

     ANNETTE L. COTTRELL has been Secretary of the Company since 1995.  She has
been employed by the Company as its Controller since July 1995. Prior to then,
she was Chief Financial Officer and Corporate Secretary with Vivigen, Inc., a
publicly-traded medical laboratory, from 1987 to 1993, and was controller for a
law firm during 1994.  Ms. Cottrell received a Bachelor of Science degree from
Colorado State University in 1982 and is a Certified Public Accountant in New
Mexico and Colorado.

     STEPHEN LANE has been Vice President of the Company since 1995 and manages
construction activities for the Bitumount oil sands project.  He and has been
employed by the Company since 1994. He holds a Bachelor of Science degree from
Carleton University 

                                      -65-
<PAGE>

(Ottawa), a Master of Chemical Engineering degree from McMaster University 
(Hamilton) and an MBA degree in finance from the University of Alberta. From 
1981, he was involved with his own natural resource companies (including oil 
sands-related work) and has previous experience with Dome Petroleum Ltd. and 
Syncrude Canada Limited.

     ALDO CORTI has been Vice President of the Company since 1995 and manages
the offices of the Company in Calgary, Alberta. He has been employed by the
Company since 1993.  Until 1993 Dr. Corti was vice president of RTR Oil Sands
(Alberta) Ltd. and RTR Oil Sands (Canada) Ltd.  He has also participated in
several mineable and IN SITU oil sands projects with Gulf Canada, Petro Canada,
and Suncor, and has been involved in the oil sands industry since 1977. Dr.
Corti holds a PhD. in Chemical Engineering from Polytechnic University, Milano.

(f)  INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

     None of the directors or executive officers of the Company have been
involved in any legal proceedings of the nature described in Item 401(f) of
Regulation S-K.

(g)  PROMOTERS AND CONTROL PERSONS

     This item is not applicable inasmuch as the Company has been subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, for
more than the past twelve months.

(h)  SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Based upon the Company's review of copies of forms it receives from
officers and directors and upon representations it receives from certain of such
persons, the Company believes that during the fiscal year ended June 30, 1996,
all filing requirements under Section 16(a) of the Securities Exchange Act of
1934 were made by such persons on a timely basis.

ITEM 11.  EXECUTIVE COMPENSATION

(a) and (b) SUMMARY COMPENSATION TABLE

     The table which follows sets forth information concerning the compensation
to the Chief Executive Officer of the Company for the 1993, 1994 and 1995 fiscal
years. During the periods, the Company had no other executive officer whose
annual salary and bonus exceeded $100,000.

                                      -66-
<PAGE>

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                       ANNUAL     COMPENSATION (CONTINUED)      LONG TERM    COMPENSATION  (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                  AWARDS        AWARDS       PAYOUTS
------------------------------------------------------------------------------------------------------------------------------------
NAME                        YEAR     SALARY ($)     BONUS ($)    OTHER ANNUAL   RESTRICTED   OPTIONS/SARS  LTIP PAYOUTS  ALL OTHER
                                                                 COMPENSATION  STOCK AWARDS     (#) (1)      ($) (1)    COMPENSATION
                                                                      ($)           ($)
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>      <C>            <C>          <C>           <C>           <C>           <C>          <C>         
John S. Rendall,            1996       120,000          -0-          6,000          -0-           -0-          -0-          -0- 

Chairman and CEO            1995       120,000          -0-          6,000          -0-         100,000        -0-          -0- 

                            1994        89,372          -0-           -0-           -0-           -0-          -0-        33,000(2)

Herbert M. Campbell, II     1996        90,000        200,000         -0-           -0-           -0-          -0-          -0- 

Sr. VP and                  1995        90,000          -0-           -0-           -0-         60,000         -0-          -0- 

General Counsel             1994        72,000          -0-           -0-           -0-         75,000         -0-          -0- 

</TABLE>

(1)  The Company does not have in effect either a plan of Stock Appreciation
     Rights ("SAR's") or a Long-Term Incentive Plan.

(2)  Effective January 1, 1989, Mr. Rendall agreed to a salary deferment of
     approximately 50% (including automobile allowance) until such time as the
     operations and financial condition of the Company permit resumption of full
     salary payments. As of June 30, 1996, the aggregate of such deferred
     compensation was $99,000 (for years 1993 and 1994), which Mr. Rendall
     exchanged for 33,243 shares of Common Stock valued at the fair market value
     of such shares at the time the services were performed (average value was
     $2.98 per share).  There were no salary deferrals during the fiscal years
     ended June 30, 1995 or 1996.

(c)  OPTION/SAR GRANTS TABLE

     No stock options were granted to either of the executive officers named in
the Summary Compensation Table during the fiscal year ended June 30, 1996 under
the Incentive Stock Option Plan approved by the shareholders of the Company on
October 7, 1993. 

(d)  AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END OPTION/SAR VALUE TABLE

     The following table sets forth information concerning exercises of stock
options during the fiscal year ended June 30, 1996 by the executive officers
named in the Summary Compensation Table, and the value of their unexercised
stock options as of June 30, 1996, based upon a price of $19.50 per share, which
was the price of the closing trade for the Company's Common Stock as reported by
the Nasdaq Small Cap Market on such date.

<TABLE>
<CAPTION>

Name                       Shares         Value       Number of Options     Value of Unexercised
                        Acquired on      Realized    Unexercised at June        In-the-Money
                        Exercise (#)       ($)             30, 1996          Options at June 30,
                                                         Exercisable/               1996  
                                                         Unexercisable          Exercisable/
                                                                                Unexercisable
------------------------------------------------------------------------------------------------
<S>                     <C>              <C>         <C>                    <C>     
John S. Rendall             -0-            -0-            200,000/-0-           $3,900,000/-0-

Herbert M. Campbell II                                    135,000/-0-           $2,366,400/-0-

</TABLE>


     Employees of the Company, including officers, are also eligible to receive
options to purchase Common Stock of the Company pursuant to the Incentive Stock
Option Plan approved by the shareholders of the Company on October 7, 1993.
During the fiscal year 

                                      -67-
<PAGE>

ended June 30, 1996, options were granted to employees (including officers) 
to purchase a total of 120,000 shares of Common Stock at option prices 
ranging between $7.09 and $21.50 per share.  No options were granted to the 
executive officers named in the Summary Compensation Table during the fiscal 
year ended June 30, 1996.

     Options to purchase Common Stock under the Incentive Stock Option Plan are
granted at an option price equal to the fair market value of such stock on the
date of grant except in the case of the holder of 10% of more of the Company's
outstanding Common Stock, in which the option price must be at least 110% of the
fair market value on the date of grant. Option grants for executive officers of
the Company are determined by the Compensation Committee of the Board of
Directors and option grants for employees who are not executive officers are
determined by the Chairman and Chief Executive Officer of the Company in
accordance with the terms of the Plan.

(e)  LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS TABLE

     The Company does not have a long-term incentive awards plan and, therefore,
this table is inapplicable.

(f)  DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE

     The Company does not have a defined benefit or actuarial plan and,
therefore, this table is inapplicable.

(g)  COMPENSATION OF DIRECTORS

     At present, the Company does not provide any cash compensation to directors
who are not employees, but does reimburse such directors for necessary travel
expenses incurred in attending meetings or otherwise acting on the Company's
behalf. Such directors have in the past been given the opportunity to purchase
restricted shares of Common Stock at prices below market value, primarily for
the purpose of raising funds for the Company, and have also been granted options
to purchase shares of Common Stock pursuant to the Company's Stock Option Plan
for Directors ratified by the shareholders of the Company on October 7, 1993.
Under the Plan, a director is granted an option to purchase 25,000 shares of the
Company's Common Stock on the date such person is first elected or appointed as
a director at a purchase price equal to the fair market value of such stock on
the date of grant. On each annual meeting date thereafter at which such person
is elected as a director, he shall be granted an additional option to purchase
10,000 shares of Common Stock at a price equal to the fair market value on the
date of grant. Each option granted under the Plan becomes fully exercisable
after six months of continuous service as a director following the date of
grant. 

     As of June 30, 1996, options to purchase a total of 155,000 shares at
option prices ranging between $1.50 and $13.81 were outstanding under the Stock
Option Plan for Directors.

(h)  EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
     ARRANGEMENTS

     There are no employment contracts, termination of employment arrangements,
or change-in-control arrangements between the Company and any executive officer.

                                      -68-
<PAGE>

(i)  REPORT ON REPRICING OF OPTIONS

     No options were repriced during the fiscal year ended June 30, 1996, and,
therefore, this item is inapplicable.

(j)  COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
     DECISIONS

     The Compensation Committee of the Board of Directors is composed of Dr.
Julius D. Heldman (Chairman) and Mr. M. Norman Anderson.  Neither Dr. Heldman
nor Mr. Anderson were, during the fiscal year ended June 30, 1996, previously or
subsequently, an officer or employee of the Company or any of its subsidiaries,
or has had any relationship with the Company (other than as a director) which
requires disclosure herein, except that from September 1988 until October 1992
Dr. Heldman was Senior Vice President of the Company.

     No executive officer of the Company served as a director of, or member of
the compensation committee (or other board committee performing an equivalent
function) in, any other entity of which Dr. Heldman or Mr. Anderson, or any
other director of the Company, was an executive officer.

(k)  BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     The Compensation Committee consists of Dr. Julius D. Heldman, who serves as
its Chairman, and Mr. M. Norman Anderson, neither of whom are presently officers
of the Company.  With respect to executive compensation, the function of the
Committee and the Board of Directors has been somewhat limited in recent years
because the Company did not have the funds to employ executive officers at
levels of compensation comparable to operating companies in the natural
resources industry. In this regard, Mr. Butler, President of the Company,
currently receives no cash compensation for his services, nor did Dr. Heldman
during his four year tenure as Senior Vice President.

     The Company is actively engaged in efforts to become an operating company
during the current fiscal year. This also includes efforts to obtain project
financing and adequate funding for the Company's general and administrative
expenses, which has increased significantly since the Company has begun
construction of its first commercial project.  As a result, the responsibilities
of the Compensation Committee can be expected to be expanded to (i) align the
Company's compensation policies with its long-term business strategy; (ii)
reward executives for performance and enhancement of shareholder value; and
(iii) attract and retain executives whose abilities and dedication are
considered essential to optimum operating efficiency and the long-term growth
and success of the Company.  The Committee also has exclusive authority to
administer the Company's Incentive Stock Option Plan as applied to executive
officers.

     The Committee does not believe that the compensation (including deferred
compensation as hereinafter described) to Mr. Rendall, as Chief Executive
Officer, adequately reflects the contribution of Mr. Rendall in developing the
Company's technology and maintaining the Company's existence during recent
years.  In this regard, however, the Committee believes that the primary measure
of success for the Company will be its ability to establish profitable,
commercial operations through implementation of its technology, and will
determine Mr. Rendall's future compensation based upon the Company's performance
in 

                                      -69-
<PAGE>

achieving this objective, as well as consultation with one or more 
independent consultants having expertise in the field of executive 
compensation.


     COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
     -Julius D. Heldman, Chairman
     -M. Norman Anderson

(l)  PERFORMANCE GRAPH

     The following graph compares the total annual return on the Company's
Common Stock with the annual return of the CRSP Total Return Index for the
NASDAQ Stock Market (U.S. and Foreign Companies) for the period July 1, 1991 to
June 30, 1996, and with the CRSP Index for NASDAQ stock with SIC codes 1000-1099
(metal mining companies).  Although the Company has not previously engaged in
mining operations and has been classified as a development stage company for
accounting purposes, its research and development activities during the period
have primarily related to metals extraction from crude ores or residues created
by mining and processing oil sands crude ores.  Accordingly, the stock price
performance shown on the graph is not necessarily indicative of future price
performance.

SUMMARY

<TABLE>
<CAPTION>

CRSP Total Returns Index for:           06/28/91      06/30/92    06/30/93     06/30/94     06/30/95     06/30/96
-----------------------------           --------      --------    --------     --------     --------     --------
<S>                                     <C>           <C>         <C>          <C>          <C>          <C>     
Solv-Ex Corporation                       100.0         84.4        373.3        151.1        577.8       1386.7
Nasdaq Stock Market (US & Foreign)        100.0        119.9        151.3        152.1        201.7        257.3
NASDAQ Stocks (SIC 1000-1099 US +         100.0         82.1        122.0        140.3        140.6        170.3
  Foreign) Metal Mining

</TABLE>


ITEM 12  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     The following table sets forth the only person known by the Board of
Directors to be the beneficial owner of more than 5% of the outstanding shares
of the Company as of September 17, 1996:
                                        NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER         BENEFICIALLY OWNED PERCENT OF CLASS
John S. Rendall                                 3,701,860(1)         16.2%      
500 Marquette N.W., Suite 300
Albuquerque, New Mexico 87102
                                                       
(1)  Includes 39,000 shares held of record by Mr. Rendall's wife and 300,000
     shares held in trust for Mr. Rendall's children, together with currently
     exercisable options to purchase a total of 200,000 shares of Common Stock
     under the Company's Incentive Stock Option Plan.  Of these, 3,000,000
     shares are currently pledged to secure Mr. Rendall's margin account at
     Smith Barney & Co.

(b)  SECURITY OWNERSHIP OF MANAGEMENT

     The following table sets forth information, as of September 18, 1996
regarding the number of shares of the Common Stock of the Company beneficially
owned by each of the directors and by all directors and executive officers as a
group.  Except as otherwise noted, the directors and the executive officers each
have sole voting and investment power with respect to the shares listed. The
ownership and percentage information is computed for each named individual (and
the group) by including all shares which are subject to stock options held by

                                      -70-
<PAGE>

the individual (and members of the group for purposes of that computation) which
are exercisable within 60 days.

NAME OF INDIVIDUAL OR         AMOUNT OF BENEFICIAL          PERCENT OF 
IDENTITY OF GROUP                  OWNERSHIP                   CLASS
-----------------------------------------------------------------------

M. Norman Anderson                  176,934    (1)                *

W. Jack Butler                       872,500   (2)               3.8%

Herbert M. Campbell II               173,000   (3)                *

J.E. Czaja                           110,000   (4)                *

M.E. (Pat) Davey                      54,453   (5)                *

Julius D. Heldman                    290,000   (6)               1.3%

Thompson MacDonald                    59,730   (7)                *

John S. Rendall                    3,701,860   (8)              16.2%

All directors and                  4,804,477   (9)              21.0%
executive officers 
as a group (11 persons)


*    Less than one percent.

(1)  Total includes fully exercisable options to purchase 55,000 shares.
(2)  Total includes a fully exercisable option to purchase 90,000 shares.
(3)  Total includes  fully exercisable options to purchase 115,000 shares.
(4)  Total includes a fully exercisable option to purchase 85,000 shares.
(5)  Total includes fully exercisable option to purchase 35,000 shares.
(6)  Total includes a fully exercisable option to purchase 10,000 shares.
(7)  Total includes 39,000 shares held of record by Mr. Rendall's wife, 300,000
     shares held in trust for Mr. Rendall's children and fully exercisable
     options to purchase 200,000 shares.  Of these, 3,000,000 shares are
     currently pledged to secure Mr. Rendall's margin account at Smith Barney &
     Co.
(8)  Total includes fully exercisable options to purchase 45,000 shares.
(9)  Total includes fully exercisable options to purchase 717,500 shares,
     including those options described in notes 1-8, above.

(c)  CHANGES IN CONTROL

     Except for the pledge by Mr. Rendall of certain securities as described
above, there are no arrangements known to the Company, the operation of which
may at a subsequent date result in a change of control of the Company.

ITEM 13   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a)  TRANSACTIONS WITH MANAGEMENT AND OTHERS

     See Item 13(c), below. In addition, a Vice President in charge of the
Company's Calgary operations, is the owner of Alcoss Enterprises, Ltd., an
engineering firm which provides services to the Company in connection with the
plant being constructed on the Bitumount Lease. Alcoss retained contractors and
subcontractors on behalf of the Company and has passed these costs through to
the Company with a small allowance to cover general and 

                                      -71-
<PAGE>

administrative expenses. Payments made to Alcoss for the years ended 1996, 
1995 and 1994 were $2,249,522, $295,585 and $54,127 respectively. 

(b)  CERTAIN BUSINESS RELATIONSHIPS

     Not Applicable.

(c)  INDEBTEDNESS OF MANAGEMENT

     During the period between December 8 and December 31, 1995, John S. Rendall
the Company's Chairman and Chief Executive Officer, advanced the Company
$1,000,000 in the form of a loan in order to provide working capital.  Mr.
Rendall obtained the funds through a margin loan at an unaffiliated broker-
dealer against 3,000,000 shares of his personal holdings of common stock in the
Company.  At the same time, Mr. Rendall borrowed an additional $1.5 million for
use by the Company in connection with the Company's planned debt financing for
the balance of its capital requirements (which transaction was not completed). 
The loan from Mr. Rendall to the Company was interest bearing at 10% per annum
and was to be repaid as of March 31, 1996.

     On March 25, 1996, the price of Solv-Ex Common Stock dropped from $22 to
$7.375 following media reports concerning alleged government investigations into
manipulation of trading in such stock.  Although the value of Mr. Rendall's
personal stock held by the broker-dealer was sufficient to negate the likelihood
that a margin call would have been made against Mr. Rendall, Solv-Ex stock had
been removed from the list of stock eligible for margining on March 25, 1996 by
at least one other broker-dealer.  Because of the precipitous decline in the
price of the Company's stock and the risk that the broker-dealer holding Mr.
Rendall's stock could have made a margin call or sell the underlying shares
(which would likely have exacerbated the market situation for the Company's
common stock at that time), the General Counsel for the Company caused the
Company to repay the entire margin balance on Mr. Rendall's behalf.  By reason
of this action, and after netting the amounts owed by the Company to Mr.
Rendall, Mr. Rendall owed the Company $1,534,950 at March 31, 1996.  Based on
his agreement with the Company, this amount is payable on demand and accrues
interest at 5.87% per annum.  The loan was ratified by the disinterested
directors of the Company.

     At June 30, 1996, the amount due to the Company from Mr. Rendall was
$1,557,414, including the principal and accrued interest of $22,464.  Mr.
Rendall has provided the Company with sufficient documentation to assure the
disinterested directors of the Company that he has sufficient cash readily
available to repay the loan at any time. The Company has not demanded payment
because: (i) the rate of interest being earned by the Company is in excess of
that which could be obtained by the Company through short-term investments; and
(ii) the Company believes that repayment of the loan will be made promptly upon
demand as determined by its cash requirements in connection with construction of
the plant for co-production of oil and minerals from the Bitumount Lease.

(d)  TRANSACTIONS WITH PROMOTERS

     Not Applicable.

                                      -72-
<PAGE>

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     The following financial statements are filed as a part of this report under
Item 8:

               Independent Auditors' Report
               Consolidated Balance Sheets
               Consolidated Statements of Operations
               Consolidated Statements of Stockholders' Equity
               Consolidated Statements of Cash Flows
               Notes to Consolidated Financial Statements
     
     The following exhibits are either incorporated by reference into this
report as indicated below or are filed as part of this report immediately
following the signature pages:

  2.1     Agreement between Registrant and Petrosearch International Company,
          dated August 14, 1989 and as amended(1)

  3.1     Articles of Incorporation(2)
     
  3.2     Bylaws, as amended October 9, 1992(3)

 10.1     Stock Option Plan for Directors Ratified October 7, 1993(10)

 10.2     Incentive Stock Option Plan Ratified October 7, 1993(10)

 10.3     Agreement dated as of September 21, 1994 between the Company and
          Suncor Inc.(10)

 10.4     Agreement dated as of July 1, 1994 between the Company and United Tri-
          Star Resources Limited.(10)

 10.5     Incentive Stock Option Plan Adopted April 24, 1984(4)

 10.6     Employees' Non-Qualified Stock Option Plan
          as Amended January 25, 1984 and April 24, 1984(5)

 10.7     Agreement between the Company and Can-Amera Oil Sands, Inc.  dated
          June 29, 1987  (Portions of the document have been excluded pursuant
          to the granting of a confidential treatment request by the Securities
          and Exchange Commission.)(6)  
      
 10.8     Form of Indemnity Agreement entered into between the Company and each
          of its Officers and Directors.(7)

 10.9     Management Agreement between the Company and Can-Amera Oil Sands, Inc.
          dated February 8, 1990.(8)

10.10     Agreement entered into in November, 1992 between the Company and the
          Alberta Oil Sands Technology and Research Authority.(9)

                                      -73-
<PAGE>

10.11     Agreement dated as of May 9, 1995 (executed on July 20, 1995) between
          the Company and Petro-Canada, including Conveyance and Royalty
          Agreement, both dated and executed on July 20, 1995.(12)  
     
10.12     Letter Agreement dated June 12, 1995 between the Company and Gibson
          Petroleum Company Limited.(12)

10.13     Marketing and Sales Representation Agreement dated June 6, 1995
          between the Company and ITC., Inc.(12)

10.14     Convertible Loan Agreement dated April 18, 1996 between the Company
          and PheMex Establishment 

   21     Subsidiaries of registrant

   23     Consent of KPMG Peat Marwick LLP (Certified Public Accountants) as
          Independent Auditors
______________________________________________
  (1)     Incorporated by reference from the same numbered exhibit filed with
          the Company's Report on Form 10-K dated December 18, 1989.
  (2)     Incorporated by reference from the same numbered exhibit filed with
          the Company's Registration Statement on Form S-3, No.  33-76504,
          effective April 5, 1994.  
  (3)     Incorporated by reference from the same numbered exhibit filed with
          the Company's Annual Report on Form 10-K for the fiscal year ended
          June 30, 1993.
  (4)     Incorporated by reference from Exhibit 10.4 filed with the Company's
          Annual Report on Form 10-K for the fiscal year ended June 30, 1984.
  (5)     Incorporated by reference from Exhibit 10.5 filed with the Company's
          Annual Report on Form 10-K for the fiscal year ended June 30, 1984.
  (6)     Incorporated by reference from Exhibit 10.9 filed with the Company's
          Annual Report on Form 10-K for the fiscal year ended June 30, 1987.
  (7)     Incorporated by reference from Exhibit 10.10 filed with the Company's
          Annual Report on Form 10-K for the fiscal year ended June 30, 1990.
  (8)     Incorporated by reference from Exhibit 10.11 filed with the Company's
          Annual Report on Form 10-K for the fiscal year ended June 30, 1990.
  (9)     Incorporated by reference from Exhibit 10.12 filed with the Company's
          Annual Report on Form 10-K for the fiscal year ended June 30, 1993.
 (10)     Incorporated by reference from the same numbered exhibit filed with
          the Company's Annual Report on Form 10-K for the fiscal year ended
          June 30, 1994.
 (11)     Incorporated by reference from Exhibit 22 filed with the Company's
          Annual Report on Form 10-K for the fiscal year ended June 30, 1993.
 (12)     Incorporated by reference from the same numbered exhibit filed with
          the Company's Annual Report on Form 10-K for the fiscal year ended
          June 30, 1995.

The registrant did not file any reports on Form 8-K during quarter ended 
June 30, 1996.

The exhibits required in this report as listed above are either incorporated by
reference into this report or are filed as part of this report immediately
following the signature pages.

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are inapplicable or the
information required is included in the consolidated financial statements or
related notes and, therefore, have been omitted. 

                                      -74-
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of  1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly  authorized.

                              SOLV-EX CORPORATION
                                 (Registrant)


September 27, 1996        By /s/ John S. Rendall
                          -----------------------------------------------------
                          John S. Rendall, Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

September 27, 1996        /s/ John S. Rendall
                          -----------------------------------------------------
                          John S. Rendall, Chief Executive Officer and Director



September 27, 1996        /s/ W. Jack Butler
                          -----------------------------------------------------
                          W. Jack Butler, President, Chief Financial 
                          Officer and Director (Principal Financial Officer)


September 27, 1996        /s/ Herbert M. Campbell II
                          -----------------------------------------------------
                          Herbert M. Campbell II, Senior Vice President, 
                          and Director (Principal Accounting Officer)


September 27, 1996        /s/ J.E. Czaja
                          -----------------------------------------------------
                          J.E. Czaja, Vice President and Director


September 27, 1996        /s/ M. Norman Anderson
                          -----------------------------------------------------
                          M. Norman Anderson, Director


September 27, 1996        /s/ M.E. Davey
                          -----------------------------------------------------
                          M.E. Davey, Director


September 27, 1996        /s/ Julius D. Heldman
                          -----------------------------------------------------
                          Julius D. Heldman, Director


September 27, 1996        /s/ Thompson MacDonald
                          -----------------------------------------------------
                          Thompson MacDonald, Director

                                      -75-
<PAGE>

                                INDEX TO EXHIBITS
                                                                  PAGE NUMBER
                                                                 IN SEQUENTIAL
EXHIBIT NUMBER AND DESCRIPTION                                  NUMBERING SYSTEM
------------------------------                                  ----------------

  2.1     Agreement between Registrant and Petrosearch 
          International Company, dated August 14, 1989 and 
          as amended                                                       *

  3.1     Articles of Incorporation                                        *
     
  3.2     Bylaws, as amended October 9, 1992                               *

 10.1     Stock Option Plan for Directors Ratified October 7, 1993         *

 10.2     Incentive Stock Option Plan Ratified October 7, 1993             *

 10.3     Agreement dated as of September 21, 1994 between the 
          Company and Suncor Inc.                                          *

 10.4     Agreement dated as of July 1, 1994 between the Company 
          and United Tri-Star Resources Limited.                           *

 10.5     Incentive Stock Option Plan                                      *

 10.6     Employees' Non-Qualified Stock Option Plan 
          as Amended January 25, 1984 and April 24, 1984                   *

 10.7     Agreement between the Company and Can-Amera Oil 
          Sands, Inc. dated June 29, 1987  (Portions of the 
          document have been excluded pursuant to the granting 
          of a confidential treatment request by the Securities 
          and Exchange Commission.)                                        *

 10.8     Form of Indemnity Agreement entered into between 
          the Company and each of its Officers and Directors.              *

 10.9     Management Agreement between the Company and Can-Amera 
          Oil Sands, Inc. dated February 8, 1990.                          *

10.10     Agreement entered into in November, 1992 between 
          the Company and the Alberta Oil Sands Technology 
          and Research Authority.                                          *

10.11     Agreement dated as of May 9, 1995 (executed on 
          July 20, 1995) between the Company and Petro-Canada, 
          including Conveyance and Royalty Agreement, both 
          dated and executed on July 20, 1995.                             *
     
10.12     Letter Agreement dated June 12, 1995 between the 
          Company and Gibson Petroleum Company Limited.                    *

10.13     Marketing and Sales Representation Agreement dated 
          June 6, 1995 between the Company and ITC., Inc.                  *

10.14     Convertible Loan Agreement dated April 18, 1996 between 
          the Company and PheMex Establishment

   21     Subsidiaries of the registrant                                   

   23     Consent of KPMG Peat Marwick LLP (Certified Public 
          Accountants) as Independent Auditors                             
                                                

*    These exhibits are incorporated by reference from the like numbered
     exhibits filed with the documents described under Item 14.


                                      -76-