---

ROCKWELL VENTURES INC.

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED

MAY 31, 2004, 2003 and 2002

(Expressed in Canadian Dollars)

---

|**DAVIDSON
      &COMPANY** |                       |  | A Partnership of Incorporated Professionals
|--------------------------- | --------------------- |  | -------------------------------------------
|                            | Chartered Accountants | 



REPORT OF INDEPENDENT REGISTERED 
  PUBLIC ACCOUNTING FIRM

To the Shareholders of 
  Rockwell Ventures Inc.

We have audited the consolidated balance sheets of Rockwell
  Ventures Inc. as at May 31, 2004 and 2003 and the consolidated statements of
  operations and deficit and cash flows for the years ended May 31, 2004, 2003
  and 2002. 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 Canadian generally
  accepted auditing standards and with the standards of the Public Company Accounting
  Oversight Board (United States). Those standards require that we plan and perform
  an audit to obtain reasonable assurance about whether the financial statements
  are free of material misstatement. An audit included examining, on a test basis,
  evidence supporting the amounts and disclosures in the financial statements.
  An audit also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial statement
  presentation.

In our opinion, these consolidated financial statements present
  fairly, in all material respects, the financial position of the Company as at
  May 31, 2004 and 2003 and the results of its operations and cash flows for the
  years ended May 31, 2004, 2003 and 2002 in accordance with Canadian generally
  accepted accounting principles.

|                  | "DAVIDSON & COMPANY" 
|----------------- | ---------------------
|                  |                      
|Vancouver, Canada | Chartered Accountants
|                  |                      
|July 23, 2004     |                      

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


In the United States, reporting standards for auditors require
  the addition of an explanatory paragraph (following the opinion paragraph) when
  the financial statements are affected by conditions and events that cast substantial
  doubt on the Company's ability to continue as a going concern, such as those
  described in Note 1 to the financial statements. Our report to the shareholders
  dated July 23, 2004 is expressed in accordance with Canadian reporting standards
  which do not permit a reference to such events and conditions in the auditors'
  report when these are adequately disclosed in the financial statements.

|                  | "DAVIDSON & COMPANY" 
|----------------- | ---------------------
|                  |                      
|Vancouver, Canada | Chartered Accountants
|                  |                      
|July 23, 2004     |                      

|                                                                                                                                                     | A
      Member of SCINTERNATIONAL | 
|---------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | 
|                                                                                                                                                     |                                   | 
|1200 - 609 Granville Street, P.O. Box 10372,
      Pacific Centre, Vancouver, BC, Canada, V7Y 1G6 
      Telephone (604) 687-0947 Fax (604) 687-6172

---

ROCKWELL VENTURES INC.Consolidated Balance Sheets
  (Expressed in Canadian Dollars)

|                                                  |   | As at May
      31 |  
|------------------------------------------------- | - | ------------------ | -
|                                                  |   | 2004               |  
|                                                  |   |                    |  
|ASSETS                                            |   |                    |  
|                                                  |   |                    |  
|Current assets                                    |   |                    |  
|Cash
      and equivalents                        | $ | 1,535,639          |  
|Marketable
      securities (note 5)              |   | 30,425             |  
|Amounts
      receivable and prepaids (note 6(c)) |   | 286,527            |  
|Reclamation
      deposit (note 11)               |   |                   |  
|Due
      from related parties (note 9)           |   | 42,550             |  
|                                                  |   | 1,895,141          |  
|                                                  |   |                    |  
|Security deposit(note 6(a))                       |   | 32,190             |  
|Mineral property interests(note
      6)          |   | 46,857             |  
|                                                  |   |                    |  
|                                                  | $ | 1,974,188          |  
|                                                  |   |                    |  
|LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) |   |                    |  
|                                                  |   |                    |  
|Current liabilities                               |   |                    |  
|Accounts
      payable and accrued liabilities    | $ | 33,406             |  
|Due
      to related parties (note 9)             |   |                   |  
|                                                  |   | 33,406             |  
|                                                  |   |                    |  
|Shareholders' equity (deficiency)                 |   |                    |  
|Share
      capital (note 8)                      |   | 11,647,887         |  
|Contributed
      surplus (note 8(e))             |   | 445,020            |  
|Deficit                                           |   | (10,152,125        | )
|                                                  |   | 1,940,782          |  
|Nature and continuance of operations (note 1)     |   |                    |  
|Commitments (note 14)                             |   |                    |  
|Subsequent events (note 16)                       |   |                    |  
|                                                  |   |                    |  
|                                                  | $ | 1,974,188          |  

The accompanying notes are an integral part of these consolidated financial statements

Approved by the Board of Directors

|/s/ Ronald W. Thiessen | /s/ Jeffrey R. Mason
|---------------------- | --------------------
|                       |                     
|Ronald W. Thiessen     | Jeffrey R. Mason    
|Director               | Director            

---

ROCKWELL VENTURES INC.Consolidated Statements of Operations
  (Expressed in Canadian Dollars)

|                                                         |   | Years ended
      May 31 |  
|-------------------------------------------------------- | - | ------------------------ | -
|                                                         |   | 2004                     |  
|                                                         |   |                          |  
|Expenses                                                 |   |                          |  
|Exploration
      (notes 7)                              | $ | 525,619                  |  
|Exploration
      - stock-based compensation (note 8(c)) |   | 144,208                  |  
|Legal,
      accounting and audit                        |   | 48,402                   |  
|Office
      and administration                          |   | 325,178                  |  
|Shareholder
      communications                         |   | 16,987                   |  
|Stock-based
      compensation (note 8(c))               |   | 300,812                  |  
|Trust
      and filing                                   |   | 33,139                   |  
|Travel
      and conferences                             |   | 49,325                   |  
|                                                         |   | 1,443,670                |  
|                                                         |   |                          |  
|Other items                                              |   |                          |  
|Foreign
      exchange loss (gain)                       |   | (34,856                  | )
|Gain
      on sale of subsidiaries (note 2)              |   |                         |  
|Interest
      income                                    |   | (28,151                  | )
|Loss
      (gain) on sale of marketable securities       |   | (9,645                   | )
|Write-down
      of marketable securities                |   | 25,000                   |  
|                                                         |   | (47,652                  | )
|                                                         |   |                          |  
|                                                         |   |                          |  
|Loss for the year                                        | $ | (1,396,018               | )
|                                                         |   |                          |  
|Basic and diluted loss                                   |   |                          |  
|per common share                                         | $ | (0.02                    | )
|                                                         |   |                          |  
|Weighted average number of                               |   |                          |  
|common
      shares outstanding                          |   | 70,978,179               |  
|                                                         |   |                          |  
|                                                         |   |                          |  
|Consolidated Statements of Deficit                       |   |                          |  
|(Expressed in Canadian Dollars)                          |   |                          |  
|                                                         |   |                          |  
|                                                         |   | Years ended
      May 31 |  
|                                                         |   | 2004                     |  
|Deficit, beginning of year                               | $ | (8,756,107               | )
|Loss for the year                                        |   | (1,396,018               | )
|Deficit, end of year                                     | $ | (10,152,125              | )

The accompanying notes are an integral part of these consolidated financial statements

---

ROCKWELL VENTURES INC.Consolidated Statements of Cash Flows
  (Expressed in Canadian Dollars)

|                                                                                       |   | Years ended May 31 |  
|-------------------------------------------------------------------------------------- | - | ------------------ | -
|Cash provided by (applied to):                                                         |   | 2004               |  
|                                                                                       |   |                    |  
|Operating activities                                                                   |   |                    |  
|Loss
      for the year                                                                | $ | (1,396,018         | )
|Items
      not affecting cash:                                                        |   |                    |  
|Gain
      on sale of subsidiaries                                                     |   |                   |  
|Loss
      (gain) on sale of marketable securities                                     |   | (9,645             | )
|Disposition
      of Gibraltar exploration property interest                           |   | (220,000           | )
|Write-down
      of marketable securities                                              |   | 25,000             |  
|Stock-based
      compensation                                                         |   | 445,020            |  
|Changes
      in non-cash working capital items:                                       |   |                    |  
|Amounts
      receivable and prepaids                                                  |   | (41,707            | )
|Accounts
      payable and accrued liabilities                                         |   | 22,317             |  
|Cash used
      in operating activities                                                |   | (1,175,033         | )
|                                                                                       |   |                    |  
|Investing activities                                                                   |   |                    |  
|Purchase
      of marketable securities                                                |   | (50,000            | )
|Proceeds
      from sale of marketable securities                                      |   | 12,620             |  
|Reclamation
      deposit                                                              |   | 70,000             |  
|Security
      deposit                                                                 |   | (3,255             | )
|Cash provided
      by (used in) investing activities                                  |   | 29,365             |  
|                                                                                       |   |                    |  
|Financing activities                                                                   |   |                    |  
|Issuance
      of share capital                                                        |   | 3,024,980          |  
|Issue
      costs                                                                      |   | (74,745            | )
|Amounts
      due from and payable to related parties                                  |   | (287,464           | )
|Cash provided
      by financing activities                                            |   | 2,662,771          |  
|                                                                                       |   |                    |  
|Increase (decrease) in cash and equivalents                                            |   |                    |  
|during
      the year                                                                  |   | 1,517,103          |  
|Cash and equivalents, beginning of year                                                |   | 18,536             |  
|                                                                                       |   |                    |  
|Cash and equivalents, end of year                                                      | $ | 1,535,639          |  
|                                                                                       |   |                    |  
|Supplemental disclosure of non-cash investing
      and financing activities (note 10) |   |                    |  
|                                                                                       |   |                    |  
|Supplemental disclosure:                                                               |   |                    |  
|Interest
      paid during the period                                                  | $ | -                  |  
|Income
      taxes paid during the period                                              | $ | -                  |  

The accompanying notes are an integral part of these consolidated financial statements

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

|1. | NATURE AND CONTINUANCE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Rockwell Ventures Inc. (the "Company") is incorporated
        under the Company Act of British Columbia, and its principal business
        activity is the exploration of mineral properties. Its principal mineral
        property interests are located in Chile and Canada and have also been
        in Brazil.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | These consolidated financial statements have been
        prepared using Canadian generally accepted accounting principles assuming
        a going concern. The Company has incurred operating losses since its inception.
        The ability of the Company to continue as a going concern depends upon
        its ability to develop profitable operations, and to continue to raise
        adequate financing. However, there can be no assurance that the Company
        will be able to secure additional financial resources nor achieve profitability
        or positive cash flows. If the Company is unable to obtain adequate additional
        financing, the Company will be required to curtail operations and exploration
        activities. Furthermore, failure to continue as a going concern would
        require that the Company's assets and liabilities be restated on a basis
        which could differ significantly from the going concern basis.
|  
|  
|2. | BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   | These consolidated financial statements have been
        prepared in accordance with Canadian generally accepted accounting principles.
        These consolidated financial statements include the accounts of the Company
        and its wholly-owned subsidiaries 549949 BC Ltd., 639154 BC Ltd. and Minera
        Ricardo Resources Inc. S.A. All material intercompany balances and transactions
        have been eliminated upon consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   | The Company's subsidiary Minera Ricardo Resources
        Inc. S.A. ("Ricardo") was incorporated on August 5, 1997 under the laws
        of Chile and commenced active business on January 1, 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | In March 2000, the Company incorporated two subsidiaries,
        N3C Resources Inc. ("N3C") and N4C Resources Inc. ("N4C") under the laws
        of the Cayman Islands. Rockwell Mineracao Limitada ("Mineracao"), a subsidiary
        of N4C, was incorporated on March 23, 2000 under the laws of Brazil. N4C
        held 99.90% of the shares of Mineracao and N3C held the remaining 0.10%
        of the shares. In January 2002, the Company sold its interests in N3C,
        N4C and Mineracao for 120,000 free trading common shares of Geostar Metals
        Inc. at a then-fair-value of $0.25 per share, or net proceeds of $30,000
        (note 5).                                                                                                                                                                                                                                                                                                             
|  
|  
|3. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  

|(a) | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | The preparation of consolidated financial statements
        in conformity with Canadian generally accepted accounting principles requires
        management to make estimates and assumptions that affect the reported
        amounts of assets and liabilities and the disclosure of contingent assets
        and liabilities as at the balance sheet date, and the reported amounts
        of revenues and expenses during the reporting period. Significant areas
        requiring the use of management estimates relate to the impairment of
        mineral property interests, determination of reclamation obligations and
        the assumptions used in determining stock-based compensation expense.
        Actual results could differ from those estimates.

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

|(b) | Cash and equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Cash and equivalents consist of cash and highly
        liquid investments, having maturity dates of three months or less from
        the date of purchase, that are readily convertible to known amounts of
        cash.                                                                                                                                                                                                                                                                                                                                                                         
|   
|(c) | Allowance for receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    | The Company establishes an allowance for receivables
        on a specific account basis. No allowance for receivables were recorded
        by the Company as at May 31, 2004 and 2003.                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(d) | Marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    | Marketable securities are recorded at the lower
        of cost and quoted market value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(e) | Reclamation deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    | Reclamation deposits are recorded at cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(f) | Mineral property interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    | The acquisition costs of mineral properties are
        deferred until the property is placed into production, sold or abandoned
        or management has determined there to have been an impairment in value.
        These deferred acquisition costs will be amortized on a unit-of-production
        basis over the estimated useful life of the related properties following
        the commencement of production, or written off if the property is sold,
        allowed to lapse or abandoned.                                                                                         
|   
|    | Mineral property acquisition costs include the cash
        consideration and the fair market value of common shares, based on the
        trading price of the shares, on the date of issue or as otherwise provided
        under the agreed terms for the mineral property interest. Costs for properties
        to which the Company does not possess unrestricted ownership and exploration
        rights, such as option agreements, are expensed in the period incurred,
        or until a feasibility study has determined that the property is capable
        of commercial production.
|   
|    | Revenues from the sale of mineral properties which
        are sold before that property reaches the production stage are credited
        against the cost of the property.                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    | Exploration costs and option payments are expensed
        in the period incurred. Recoveries are recorded in the period received.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | Administrative expenditures are expensed in the
        period incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(g) | Values                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    | The amounts shown for the mineral property interests
        represent costs accumulated to date, and do not necessarily represent
        present or future values, as they are entirely dependent upon the economic
        recoverability of current and future ore reserves, of which the Company
        currently has none.                                                                                                                                                                                                                                                                   
|   
|(h) | Environmental and reclamation costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    | Environmental, reclamation and site restoration
        costs are charged to operations in the period incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

|(i) | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | All of the Company's foreign operations are integrated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    | Monetary assets and liabilities of the Company's
        integrated foreign subsidiaries are translated into Canadian dollars at
        exchange rates in effect at the balance sheet date. Non-monetary assets
        and liabilities are translated at historical estimated exchange rates
        unless such items are carried at market, in which case they are translated
        at the exchange rates in effect on the balance sheet date. Revenues and
        expenses, except depreciation, are translated at the average exchange
        rates for the period. Depreciation is translated at the same exchange
        rates as the assets to which it relates.
|   
|    | Foreign exchange gains and losses are recorded in
        the statement of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(j) | Share capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    | Common shares issued for mineral property interests
        are recorded at the fair market value based upon the trading price of
        the shares on the TSX Venture Exchange ("TSXV") on the date of issue or
        as otherwise provided under the agreement terms to issue the shares.                                                                                                                                                                                                                                                                                                                                                                                
|   
|    | Proceeds from the sale of flow-through shares are
        credited to capital stock. The resource expenditure deductions for income
        tax purposes related to exploration and development activities funded
        by flow-through shares arrangements are renounced to investors in accordance
        with Canadian income tax legislation. Future income taxes related to temporary
        differences arising on renunciation of expenditures to subscribers are
        offset against future income tax assets.                                                                                                                                                 
|   
|    | Share issue costs are deducted from share capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(k) | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | The Company has a share option plan which is described
        in note 8(c). Effective June 1, 2002, the Company adopted the amended
        recommendations of the Canadian Institute of Chartered Accountants ("CICA")
        with respect to employee stock-based compensation. As allowed under the
        transitional provisions, the amended recommendations have been applied
        prospectively to option grants after that date.                                                                                                                                                                                                                               
|   
|    | Under the intrinsic value based method, compensation
        cost or awards to employees is recognized only when the market price exceeds
        the exercise price at the date of grant and pro-forma disclosure of earnings
        and earnings per share as if the fair value method had been adopted is
        presented separately.                                                                                                                                                                                                                                                                                                                                   
|   
|    | Under the fair value method, stock-based payments
        are measured at the fair value of the consideration received or the fair
        value of the equity instruments issued, whichever is more reliably measurable
        and are charged to operations over the vesting period. The offset to the
        recorded costs is to contributed surplus. Consideration received on the
        exercise of stock options is recorded as share capital and the related
        contributed surplus is transferred to share capital.                                                                                                                                         
|   
|    | During the fiscal year ended May 31, 2003, no stock-based
        compensation to employees was recorded for options granted, when options
        were granted at the quoted market value. During the fiscal year ended
        May 31, 2004, options granted to employees have been accounted for using
        the fair value method.                                                                                                                                                                                                                                                                                                                                      

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

|(l) | Future income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | The Company uses the asset and liability method
        of accounting for income taxes. Under this method, future income tax assets
        and liabilities are computed based on differences between the carrying
        amount of assets and liabilities on the balance sheet and their corresponding
        tax values, generally using the enacted or substantively enacted income
        tax rates expected to apply to taxable income in the years in which those
        temporary differences are expected to be recovered or settled.
|   
|    | Future income tax assets also result from unused
        loss carryforwards and other deductions. Future tax assets are recognized
        to the extent that they are considered more likely than not to be realized.
        The valuation of future income tax assets is adjusted, if necessary, by
        the use of a valuation allowance to reflect the estimated realizable amount.                                                                                                                                                      
|   
|(m) | Loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    | Basic loss per share is calculated by dividing the
        loss for the period by the weighted average number of common shares outstanding
        during the period.                                                                                                                                                                                                                                                                                                                                                                            
|   
|    | Diluted loss per share is calculated using the treasury
        stock method. Under the treasury stock method, the weighted average number
        of common shares outstanding used for the calculation of diluted loss
        per share assumes that the proceeds to be received on the exercise of
        dilutive share purchase options and warrants are used to repurchase common
        shares at the average market price during the period.                                                                                          
|   
|    | Diluted loss per share has not been presented as
        the effect of outstanding options and warrants would be anti-dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | At May 31, 2004, a total of 42,640,500 (20033,921,625;
        200213,556,925) potentially dilutive shares were excluded from the
        determination of diluted loss per share.                                                                                                                                                                                                                                                                                                                                                             
|   
|(n) | Comparative figures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    | Certain of the prior years' comparative figures
        have been reclassified to conform to the financial statement presentation
        adopted for the current year.                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.  | CHANGE IN ACCOUNTING POLICYDuring the
        fiscal year ended May 31, 2002, the Company changed its method of accounting
        for mineral property exploration costs from deferring expenditures, pending
        a decision as to the commercial viability of a property, to expensing
        such costs until the completion of a feasibility study. This change was
        applied retroactively with restatement of all prior periods presented.                                                                                      

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| | As a result of the change in accounting policy, adjustments were made
      to the Consolidated Statements of Operations and Deficit as follows:
| | ------------------------------------------------------------------------------------------------------------------------------------------------

| | Consolidated Statements of Operations and Deficit |   | Year ended   | 
| | ------------------------------------------------- | - | ------------ | 
| |                                                   |   | May 31, 2002 | 
| |                                                   |   |              | 
| | Deficit, beginning of year as previously reported | $ | 5,245,773    | 
| | Exploration costs expensed                        |   | 902,662      | 
| | Deficit, beginning of year as restated            |   | 6,148,435    | 
| |                                                   |   |              | 
| | Loss for the year as previously reported          |   | 1,753,364    | 
| | Exploration costs expensed                        |   |             | 
| | Loss for the year as restated                     |   | 1,753,364    | 
| |                                                   |   |              | 
| | Deficit, end of year as restated                  | $ | 7,901,799    | 

|5. | MARKETABLE SECURITIES                                
|-- | -----------------------------------------------------
|   |                                                      
|   | Marketable securities are comprised of the following:

| |                                              |   | May 31, |  |   | May 31,
| | -------------------------------------------- | - | ------- |  | - | -------
| |                                              |   | 2004    |  |   | 2003   
| | Geostar Metals Inc.,                         |   |         |  |   |        
| | 77,500 ( 2003  120,000) common
      shares |   |         |  |   |        
| | Market value $10,075
      (2003 - $8,400)   | $ | 5,425   |  | $ | 8,400  
| | GMD Resource Corp., (note 6(b))              |   |         |  |   |        
| | 500,000 (2003 
      nil) common shares     |   |         |  |   |        
| | Market value $25,000
      (2003  nil)      |   | 25,000  |  |   |       
| | Total marketable
      securities            | $ | 30,425  |  | $ | 8,400  

|6. | MINERAL PROPERTY INTERESTS
|-- | --------------------------

| |                                  |   | Royce    |  |   | Ricardo  |  |   | Haut Plateau |  |   |       
| | -------------------------------- | - | -------- |  | - | -------- |  | - | ------------ |  | - | ------
| | Acquisition Costs                |   | Property |  |   | Property |  |   | Property     |  |   | Total 
| |                                  |   |          |  |   |          |  |   |              |  |   |       
| | Balance at May 31, 2004 and 2003 | $ |         |  | $ | 46,857   |  | $ |             |  | $ | 46,857

| | Title to mining properties involves certain inherent
        risks due to the difficulties in determining the validity of certain claims
        as well as the potential for problems arising from the often complicated
        conveyancing history characteristic of many mining properties. The Company
        does not have title insurance but has investigated title to all of its
        mineral properties and, to the best of its knowledge and belief, titles
        to all of its properties are in good standing.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

|(a) | Ricardo Property, Chile                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | The Company holds a 100% interest in certain mineral
        exploration and exploitation concessions totaling approximately 16,400
        hectares in the Calama Mining District in Chile. The Corporación
        Nacional del Cobre de Chile ("Codelco"), the Chilean national copper company,
        is currently erecting housing and other infrastructure in certain areas
        of the Ricardo Property, as part of a relocation project of its workers
        at Chuquicamata. The Company believes this construction usurps the Company's
        constitutional mining rights. Accordingly, in order to preserve access
        to its mineral concessions, in November 2002 the Company applied for several
        easements on its Ricardo Property, and an injunction to prevent Codelco
        from further developing its construction project over the Company's mining
        rights. These matters are before the law courts of Chile. Pursuant to
        the terms of the easement application, a refundable deposit of 15 million
        Chilean pesos ($32,190) was lodged with the authorities.
|   
|    | The Company continues to maintain the Ricardo Property
        in good standing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    | On January 30, 2004, the Company signed a Letter
        of Understanding with Rio Tinto Mining and Exploration Ltd. ("Rio Tinto"),
        whereby Rio Tinto can acquire a 100% interest in a majority of the claims
        which make up the Ricardo property. Rio Tinto can earn its interest under
        the Letter of Understanding by making annual options payments over a four
        year period, totaling US$6 million, as well as paying all property taxes
        and property maintenance costs for the duration of the agreement. To keep
        the option in good standing, Rio Tinto must also spend US$4 million on
        exploration on the property during the four years, of which Rio Tinto
        has committed to an option payment of US$150,000 and exploration expenditures
        of US$250,000 including 2,000 meters of drilling in the first year. The
        Company will retain a 1% net smelter royalty ("NSR"), with Rio Tinto also
        having the option to purchase the first 0.5% of the NSR for US$5 million
        and the remaining 0.5% of the NSR for US$7 million. 
|   
|(b) | Royce Diamond Property, Canada                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    | On February 10, 2004, the Company received approval
        from the TSXV, for its property option agreement (the "GMD Agreement")
        with GMD Resource Corp. ("GMD"), a company listed on the TSXV, to acquire
        up to a 60% interest in the Royce Diamond Claims ("the Royce Claims").
        The Royce Claims, aggregating in excess of 63,900 hectares, are located
        within the Slave Geological Province, near Yellowknife, Northwest Territories.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    | Under the GMD Agreement, the Company could earn
        a 60% interest in the Royce Claims through payments of cash, private placements
        into GMD, and project expenditures totaling $10 million over a maximum
        of five years. The Company paid GMD $50,000 cash and also subscribed to
        a $50,000 private placement into GMD which consisted of 500,000 common
        shares of GMD. The Company was required to expend $250,000 for drill target
        refinement and to carry out a $500,000 core drilling program by November
        16, 2004, followed by certain option payments and project expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | On April 6, 2004, the Company terminated its option
        to earn an interest in the Royce Claims.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(c) | Farmout Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    | In December 2003, the Company entered into a Farmout
        Agreement (the "Agreement") with Taseko Mines Limited, ("Taseko"), a public
        company with certain directors in common with the Company. Under the terms
        of the Agreement, Taseko granted to the Company rights to earn joint                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

|    | venture working interests, subject to a maximum
        of $200,000, on certain exploration properties located in the vicinity
        of the Gibraltar mine property. For a period of 150 days after the Company
        had earned its working interest, Taseko had the right to purchase, at
        its option, the Company's earned interests for cash or common shares consideration
        aggregating 110% of the Company's earn-in amount (at Taseko's option).
        If Taseko elects to issue common shares, the common shares to be issued
        upon exercise will be valued at the weighted average ten-day trading price
        as traded on the TSXV.                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | In December 2003, the Company had earned an interest
        in these properties to the extent of $200,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    | During the year ended May 31, 2004, Taseko exercised
        its right to purchase the Company's interest, by issuing, subject to regulatory
        approvals, 78,853 common shares of Taseko for total consideration of $220,000.
        Regulatory approval was received subsequent to May 31, 2004, and the Taseko
        common shares were issued to the Company on June 15, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(d) | Haut Plateau Property, Canada                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    | On November 15, 2001, the Company entered into an
        assignment agreement with Hunter Dickinson Group Inc. ("HDGI"), a private
        company with certain directors in common with the Company, whereby HDGI
        agreed to assign to the Company for nominal consideration its earn-in
        option from Falconbridge Limited on a nickel-copper-cobalt discovery located
        in eastern Canada. The Company had the right to operate and, at its option,
        acquire a 60% participating joint venture interest in the property by
        incurring $10 million in staged exploration expenditures by April 30,
        2006. The first $1 million of expenditures, inclusive of a $70,000 reclamation
        deposit, was to be expended by May 31, 2002, which date was extended and
        the Company subsequently fulfilled the first year earn-in requirements.
|   
|    | In November 2002 the Company decided to terminate
        its option to earn a 60% participating joint venture interest from Falconbridge
        Limited. The $70,000 reclamation deposit was returned to the Company in
        June 2003 (note 11).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

|**7.** | EXPLORATION EXPENSES
|------ | --------------------

| |                                   |   |           |   |   |           |  |   |           |   |   | Year ended |   |   | Year ended |  
| | --------------------------------- | - | --------- | - | - | --------- |  | - | --------- | - | - | ---------- | - | - | ---------- | -
| |                                   |   | Royce     |   |   | Ricardo   |  |   |           |   |   | May 31,    |   |   | May 31,    |  
| |                                   |   | Property  |   |   | Property  |  |   | Other     |   |   | 2004       |   |   | 2003       |  
| |                                   |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| | Assay and analysis                | $ | 2,950     |   | $ | 236       |  | $ |          |   | $ | 3,186      |   | $ | 9,875      |  
| | Drilling                          |   | 202,056   |   |   |          |  |   | 200,000   |   |   | 402,056    |   |   |           |  
| | Disposition of Gibraltar          |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| | exploration interest              |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| | (note 6(c))                       |   |          |   |   |          |  |   | (220,000  | ) |   | (220,000   | ) |   |           |  
| | Engineering                       |   |          |   |   |          |  |   |          |   |   |           |   |   | 8,963      |  
| | Freight                           |   | 10,161    |   |   |          |  |   |          |   |   | 10,161     |   |   |           |  
| | Geological                        |   | 182,316   |   |   | 19,160    |  |   |          |   |   | 201,476    |   |   | 145,200    |  
| | Graphics                          |   | 2,717     |   |   | 1,252     |  |   |          |   |   | 3,969      |   |   | 21,500     |  
| | Helicopter                        |   | 151,524   |   |   |          |  |   |          |   |   | 151,524    |   |   |           |  
| | Property fees/assessments         |   | 50,000    |   |   | 39,672    |  |   |          |   |   | 89,672     |   |   | 124,225    |  
| | Recoveries related to prior       |   |          |   |   |          |  |   | (480,500  | ) |   | (480,500   | ) |   |           |  
| | years'
      exploration programs |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| | Right of way income               |   |          |   |   |          |  |   |          |   |   |           |   |   | (40,104    | )
| | Site activities                   |   | 140,788   |   |   | 207,816   |  |   | 752       |   |   | 349,356    |   |   | 212,398    |  
| | Travel and accommodation          |   | 10,385    |   |   | 4,334     |  |   |          |   |   | 14,719     |   |   | 199        |  
| | Incurred during the year          |   | 752,897   |   |   | 272,470   |  |   | (499,748  | ) |   | 525,619    |   |   | 482,256    |  
| | Cumulative exploration            |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| | expenses, beginning of year       |   |          |   |   | 1,492,283 |  |   | 4,465,700 |   |   | 5,957,983  |   |   | 5,475,727  |  
| |                                   |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| | Cumulative exploration            |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| | expenses,
      end of year       | $ | 752,897   |   | $ | 1,764,753 |  | $ | 3,965,952 |   | $ | 6,483,602  |   | $ | 5,957,983  |  
| |                                   |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| |                                   |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| |                                   |   |           |   |   | Haut      |  |   | Pedra     |   |   | Total      |   |   | Total      |  
| |                                   |   | Ricardo   |   |   | Plateau   |  |   | Branca    |   |   | May 31,    |   |   | May 31,    |  
| |                                   |   | Property  |   |   | Property  |  |   | Property  |   |   | 2003       |   |   | 2002       |  
| |                                   |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| | Assay and analysis                | $ |          |   | $ | 9,875     |  | $ |          |   | $ | 9,875      |   | $ | 40,112     |  
| | Drilling                          |   |          |   |   |          |  |   |          |   |   |           |   |   | 292,046    |  
| | Engineering                       |   |          |   |   | 8,963     |  |   |          |   |   | 8,963      |   |   | 26,705     |  
| | Geological                        |   | 5,760     |   |   | 139,440   |  |   |          |   |   | 145,200    |   |   | 313,427    |  
| | Graphics                          |   |          |   |   | 21,500    |  |   |          |   |   | 21,500     |   |   | 18,223     |  
| | Helicopter/fixed wing             |   |          |   |   |          |  |   |          |   |   |           |   |   | 97,783     |  
| | Property fees/assessments         |   | 115,987   |   |   | 8,238     |  |   |          |   |   | 124,225    |   |   | 186,433    |  
| | Right of way income               |   | (40,104   | ) |   |          |  |   |          |   |   | (40,104    | ) |   |           |  
| | Site activities                   |   | 180,074   |   |   | 32,324    |  |   |          |   |   | 212,398    |   |   | 204,215    |  
| | Travel and accommodation          |   | 199       |   |   |          |  |   |          |   |   | 199        |   |   | 42,327     |  
| | Incurred during the year          |   | 261,916   |   |   | 220,340   |  |   |           |   |   | 482,256    |   |   | 1,221,271  |  
| | Cumulative exploration            |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| | expenses, beginning of year       |   | 1,230,367 |   |   | 902,291   |  |   | 3,343,069 |   |   | 5,475,727  |   |   | 4,254,456  |  
| |                                   |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| | Cumulative exploration            |   |           |   |   |           |  |   |           |   |   |            |   |   |            |  
| | expenses,
      end of year       | $ | 1,492,283 |   | $ | 1,122,631 |  | $ | 3,343,069 |   | $ | 5,957,983  |   | $ | 5,475,727  |  

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| |                             |   |           |  |   |              |  |   |              |  |   | Total     |  |   | Total     | 
| | --------------------------- | - | --------- |  | - | ------------ |  | - | ------------ |  | - | --------- |  | - | --------- | 
| |                             |   | Ricardo   |  |   | Haut Plateau |  |   | Pedra Branca |  |   | May 31,   |  |   | May 31,   | 
| |                             |   | Property  |  |   | Property     |  |   | Property     |  |   | 2002      |  |   | 2001      | 
| |                             |   |           |  |   |              |  |   |              |  |   |           |  |   |           | 
| | Assay and analysis          | $ |          |  | $ | 36,137       |  | $ | 3,975        |  | $ | 40,112    |  | $ | 331,760   | 
| | Drilling                    |   |          |  |   | 292,046      |  |   |             |  |   | 292,046   |  |   | 206,611   | 
| | Engineering                 |   | 23,502    |  |   | 2,778        |  |   | 425          |  |   | 26,705    |  |   | 48,349    | 
| | Geological                  |   | 5,676     |  |   | 304,734      |  |   | 3,017        |  |   | 313,427   |  |   | 1,394,594 | 
| | Graphics                    |   |          |  |   | 18,223       |  |   |             |  |   | 18,223    |  |   | 179,507   | 
| | Helicopter/fixed wing       |   |          |  |   | 97,783       |  |   |             |  |   | 97,783    |  |   |          | 
| | Option payments             |   |          |  |   |             |  |   |             |  |   |          |  |   | 148,893   | 
| | Property fees/assessments   |   | 110,066   |  |   | 76,367       |  |   |             |  |   | 186,433   |  |   | 170,250   | 
| | Site activities             |   | 105,388   |  |   | 49,499       |  |   | 49,328       |  |   | 204,215   |  |   | 375,642   | 
| | Travel and accommodation    |   | 220       |  |   | 24,724       |  |   | 17,383       |  |   | 42,327    |  |   | 261,906   | 
| | Incurred during the year    |   | 244,852   |  |   | 902,291      |  |   | 74,128       |  |   | 1,221,271 |  |   | 3,117,512 | 
| | Cumulative exploration      |   |           |  |   |              |  |   |              |  |   |           |  |   |           | 
| | expenses, beginning of year |   | 985,515   |  |   |             |  |   | 3,268,941    |  |   | 4,254,456 |  |   | 1,136,944 | 
| |                             |   |           |  |   |              |  |   |              |  |   |           |  |   |           | 
| | Cumulative exploration      |   |           |  |   |              |  |   |              |  |   |           |  |   |           | 
| | expenses,
      end of year | $ | 1,230,367 |  | $ | 902,291      |  | $ | 3,343,069    |  | $ | 5,475,727 |  | $ | 4,254,456 | 

|8.  | SHARE CAPITAL                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                            
|(a) | Authorized share capital                                                                                                   
|   
|    | The Company's authorized share capital consists of 200,000,000 (2003
       200,000,000) common shares, without par value.
|   
|(b) | Issued and outstanding common shares                                                                                       

| |                                                                |         |  | Number     |  |   |            | 
| | -------------------------------------------------------------- | ------- |  | ---------- |  | - | ---------- | 
| | Common shares issued:                                          | Price   |  | of Shares  |  |   | Amount     | 
| | Balance May 31, 2001                                           |         |  | 43,772,900 |  | $ | 6,983,234  | 
| | Private
      placement January 2002 (net of issue costs)      | $  0.16 |  | 6,545,500  |  |   | 979,407    | 
| | Private
      placement April 2002 (net of issue costs)        | $  0.16 |  | 3,843,750  |  |   | 550,117    | 
| | Balance May 31, 2002                                           |         |  | 54,162,150 |  |   | 8,512,758  | 
| | Private placement
      August 2002 (net of issue costs) (i)   | $  0.20 |  | 1,037,125  |  |   | 184,894    | 
| | Balance May 31, 2003                                           |         |  | 55,199,275 |  |   | 8,697,652  | 
| | Warrants
      exercised                                       | $  0.22 |  | 96,500     |  |   | 21,230     | 
| | Private
      placement December 2003 (net of issue costs)(ii) | $  0.08 |  | 37,500,000 |  |   | 2,925,255  | 
| | Options
      exercised                                        | $  0.10 |  | 15,000     |  |   | 1,500      | 
| | Options
      exercised                                        | $  0.15 |  | 15,000     |  |   | 2,250      | 
| | Balance May 31, 2004                                           |         |  | 92,825,775 |  | $ | 11,647,887 | 

| | (i) | On August 27, 2002, the Company completed a private
        placement of 1,037,125 units at a price of $0.20 per unit for gross proceeds
        of $207,425. Each unit was comprised of one common share and one share
        purchase warrant. Each share purchase warrant entitles the holder to purchase
        an additional common share at a price of $0.22 until December 27, 2003.
        The share purchase warrants are subject to an accelerated expiry of 45
        days, at the Company's option, if the closing price of the Company's shares,
        as traded on the TSXV over
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | ten consecutive trading days is at least $0.33. On December 27, 2003,
      940,625 warrants expired unexercised.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | On December 31, 2003, the Company completed a private
        placement of 37,500,000 units at a price of $0.08 per unit for gross proceeds
        of $3,000,000. Of these, 17,250,000 were flow- through units. Each unit
        consisted of one common share and one share purchase warrant exercisable
        to purchase an additional common share at a price of $0.10 until December
        31, 2005. The warrants are subject to a 45 day accelerated expiry provision,
        at the Company's option, if the closing price of the common shares of
        the Company is at least $0.18 for ten consecutive trading days.
|   
|(c) | Share purchase options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | At its Annual and Extraordinary General
        Meeting held in November 2003, shareholders of the Company approved a
        Share Purchase Option Plan in accordance with the policies of the TSXV.
        Under this plan, the Company is authorized to grant options for up to
        10% of its outstanding shares to officers, directors, employees and consultants.
        The exercise price of each option normally equals or exceeds the market
        price of the Company's shares as calculated on the date of grant. Options
        granted are for a term of no greater than five years.
|   
|    | The continuity of share purchase options
        for the year ended May 31, 2004 is:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |                                                                | Exercise |              | May 31  |              |           |              |           |              | Cancelled/ |              | May 31    | 
| | -------------------------------------------------------------- | -------- | ------------ | ------- | ------------ | --------- | ------------ | --------- | ------------ | ---------- | ------------ | --------- | 
| | Expiry date                                                    | Price    |              | 2003    |              | Granted   |              | Exercised |              | Expired    |              | 2004      | 
| | June 11, 2003                                                  | $0.16    |              | 27,000  |              |          |              |          |              | (27,000    | )            |          | 
| | November 21, 2003                                              | $0.16    |              | 100,000 |              |          |              |          |              | (100,000   | )            |          | 
| | April 6, 2005                                                  | $0.16    |              | 50,000  |              |          |              |          |              |           |              | 50,000    | 
| | May 9, 2005                                                    | $0.10    |              | 15,000  |              |          |              | (15,000   | )            |           |              |          | 
| | May 20, 2005 (i)                                               | $0.10    |              | 45,000  |              |          |              |          |              |           |              | 45,000    | 
| | May 20, 2005                                                   | $0.12    |              |        |              | 25,500    |              |          |              |           |              | 25,500    | 
| | May 20, 2005                                                   | $0.15    |              |        |              | 4,965,000 |              | (15,000   | )            | (5,000     | )            | 4,945,000 | 
| | May 20, 2005                                                   | $0.16    |              |        |              | 45,000    |              |          |              |           |              | 45,000    | 
| | July 29, 2005                                                  | $0.10    |              |        |              | 30,000    |              |          |              |           |              | 30,000    | 
| |                                                                |          |              | 237,000 |              | 5,065,500 |              | (30,000   | )            | (132,000   | )            | 5,140,500 | 
| |                                                                |          |              |         |              |           |              |           |              |            |              |           | 
| | Weighted average exercise price                                |          | $       0.14 |         | $       0.15 |           | $       0.13 |           | $       0.16 |            | $       0.15 |          
| |                                                                |          |              |         |              |           |              |           |              |            |              |           | 
| | Weighted average fair value of options granted during the year |          |              |         |              |           | $       0.10 |          

| | (i)                                                                                                                                                                                                                                              | The Company extended the expiry from the original
        date of December 20, 2004 to May 20, 2005
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                  |                                                                                                    
| | As at May 31, 2004, 5,055,250 of these
        options had vested with employees and consultants.                                                                                                                                               
| |                                                                                                                                                                                                                                                 
| | Stock-based compensation
      Using a Black-Scholes option pricing model with the
        assumptions noted below, the estimated fair value of all options have
        been reflected in the Consolidated Statements of Operations as follows:

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| |                                                         |   | 2004    |  |   | 2003 |  |   | 2002 | 
| | ------------------------------------------------------- | - | ------- |  | - | ---- |  | - | ---- | 
| | Exploration                                             |   |         |  |   |      |  |   |      | 
| | Engineering                                             | $ | 41,175  |  | $ |     |  | $ |     | 
| | Environmental, socioeconomic
      and land             |   | 2,218   |  |   |     |  |   |     | 
| | Geological                                              |   | 100,815 |  |   |     |  |   |     | 
| |                                                         |   | 144,208 |  |   |     |  |   |     | 
| | Operations and administration                           |   | 300,812 |  |   |     |  |   |     | 
| | Total compensation cost recognized
      in operations, |   |         |  |   |      |  |   |      | 
| | credited to contributed surplus                         | $ | 445,020 |  | $ |     |  | $ |     | 

| | The weighted-average assumptions used to estimate the fair value of options
      granted during the year were:
| | ---------------------------------------------------------------------------------------------------------------

|                        | 2004      |  | 2003      | 
|----------------------- | --------- |  | --------- | 
|Risk free interest rate | 3%        |  | 3%        | 
|Expected life           | 1.5 years |  | 2.0 years | 
|Expected volatility     | 163%      |  | 50%       | 
|Expected dividends      | nil       |  | nil       | 

| | The continuity of share purchase options for the year ended May 31, 2003
      is:
| | ----------------------------------------------------------------------------------

| |                                                                      | Exercise |  | May 31       |  |              |              |           |  | Cancelled/   |   | May 31       | 
| | -------------------------------------------------------------------- | -------- |  | ------------ |  | ------------ | ------------ | --------- |  | ------------ | - | ------------ | 
| | Expiry date                                                          | Price    |  | 2002         |  | Granted      |              | Exercised |  | Expired      |   | 2003         | 
| | February 20, 2003                                                    | $0.60    |  | 15,000       |  |             |              |          |  | (15,000      | ) |             | 
| | May 30, 2003                                                         | $0.16    |  | 1,113,000    |  |             |              |          |  | (1,113,000   | ) |             | 
| | June 11, 2003                                                        | $0.16    |  | 27,000       |  |             |              |          |  |             |   | 27,000       | 
| | November 21, 2003                                                    | $0.16    |  | 100,000      |  |             |              |          |  |             |   | 100,000      | 
| | December 20, 2004                                                    | $0.10    |  |             |  | 45,000       |              |          |  |             |   | 45,000       | 
| | April 6, 2005                                                        | $0.16    |  | 50,000       |  |             |              |          |  |             |   | 50,000       | 
| | May 9, 2005                                                          | $0.10    |  |             |  | 15,000       |              |          |  |             |   | 15,000       | 
| |                                                                      |          |  | 1,305,000    |  | 60,000       |              |          |  | (1,128,000   | ) | 237,000      | 
| |                                                                      |          |  |              |  |              |              |           |  |              |   |              | 
| | Weighted average exercise price                                      |          |  | $       0.17 |  | $       0.10 |              | $        |  | $       0.17 |   | $       0.14 | 
| |                                                                      |          |  |              |  |              |              |           |  |              |   |              | 
| | Weighted average fair value
      of options granted during the year |          |  |              |  |              | $       0.00 |          

| | During the year ended May 31, 2003, the Company granted
        60,000 share purchase options to employees at $0.10 per share. The stock-based
        compensation expense based on the fair value method at the date of grant
        using an option pricing model was immaterial and, accordingly, no stock-based
        compensation expense was presented.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| | The continuity of share purchase options for the year ended May 31, 2002
      is as follows:
| | ---------------------------------------------------------------------------------------------

| |                                                                | Exercise |  | May 31,      |  |              |  |              |  | Expired/     |   | May 31,      | 
| | -------------------------------------------------------------- | -------- |  | ------------ |  | ------------ |  | ------------ |  | ------------ | - | ------------ | 
| | Expiry date                                                    | Price    |  | 2001         |  | Granted      |  | Exercised    |  | Cancelled    |   | 2002         | 
| | November 15, 2001                                              | $0.32    |  | 200,000      |  |             |  |             |  | (200,000     | ) |             | 
| | May 30, 2003                                                   | $0.16    |  | 300,000      |  |             |  |             |  |             |   | 300,000      | 
| | April 6, 2005                                                  | $0.16    |  | 35,000       |  | 15,000       |  |             |  |             |   | 50,000       | 
| | May 30, 2002                                                   | $0.60    |  | 25,000       |  |             |  |             |  | (25,000      | ) |             | 
| | May 30, 2003                                                   | $0.16    |  | 837,000      |  |             |  |             |  | (154,000     | ) | 683,000      | 
| | May 30, 2003                                                   | $0.16    |  | 135,000      |  |             |  |             |  | (60,000      | ) | 75,000       | 
| | February 20, 2003                                              | $0.60    |  | 15,000       |  |             |  |             |  |             |   | 15,000       | 
| | May 30, 2003                                                   | $0.16    |  | 52,000       |  |             |  |             |  | (12,000      | ) | 40,000       | 
| | May 30, 2003                                                   | $0.16    |  | 15,000       |  |             |  |             |  |             |   | 15,000       | 
| | June 11, 2003                                                  | $0.16    |  |             |  | 27,000       |  |             |  |             |   | 27,000       | 
| | November 21, 2003                                              | $0.16    |  |             |  | 100,000      |  |             |  |             |   | 100,000      | 
| |                                                                |          |  | 1,614,000    |  | 142,000      |  |             |  | (451,000     | ) | 1,305,000    | 
| |                                                                |          |  |              |  |              |  |              |  |              |   |              | 
| | Weighted average exercise price                                |          |  | $       0.19 |  | $       0.16 |  | $           |  | $       0.26 |   | $       0.17 | 
| | Weighted average fair value of options granted during the year |          |  |              |  |              |  | $       0.12 | 

|(d) | Share purchase warrants                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|   
|    | The continuity of share purchase warrants (each warrant exercisable into
      one common share) for the year ended May 31, 2004 is:

| |                                 | Exercise |              | May 31,   |              |            |              |           |              |            |              | May 31,    | 
| | ------------------------------- | -------- | ------------ | --------- | ------------ | ---------- | ------------ | --------- | ------------ | ---------- | ------------ | ---------- | 
| | Expiry date                     | Price    |              | 2003      |              | Issued     |              | Exercised |              | Expired    |              | 2004       | 
| | July 4, 2003                    | $0.16    |              | 147,500   |              |           |              |          |              | (147,500   | )            |           | 
| | October 19, 2003                | $0.16    |              | 2,500,000 |              |           |              |          |              | (2,500,000 | )            |           | 
| | December 27, 2003 8(b)(i)       | $0.22    |              | 1,037,125 |              |           |              | (96,500   | )            | (940,625   | )            |           | 
| | December 31, 2005 8(b)(ii)      | $0.10    |              |          |              | 37,500,000 |              |          |              |           |              | 37,500,000 | 
| |                                 |          |              | 3,684,625 |              | 37,500,000 |              | (96,500   | )            | (3,588,125 | )            | 37,500,000 | 
| |                                 |          |              |           |              |            |              |           |              |            |              |            | 
| | Weighted average exercise price |          | $       0.18 |           | $       0.10 |            | $       0.22 |           | $       0.18 |            | $       0.10 |           

| | The continuity of share purchase warrants (each warrant exercisable into
      one common share) for the year ended May 31, 2003 is:
| | ------------------------------------------------------------------------------------------------------------------------------------

| |                                 | Exercise |              | May 31,    |              |           |           |           |              |            |              | May 31,   | 
| | ------------------------------- | -------- | ------------ | ---------- | ------------ | --------- | --------- | --------- | ------------ | ---------- | ------------ | --------- | 
| | Expiry date                     | Price    |              | 2002       |              | Issued    |           | Exercised |              | Expired    |              | 2003      | 
| | January 4, 2003                 | $0.16    |              | 6,398,000  |              |          |           |          |              | (6,398,000 | )            |          | 
| | March 9, 2003                   | $0.35    |              | 1,123,600  |              |          |           |          |              | (1,123,600 | )            |          | 
| | March 9, 2003                   | $0.80    |              | 604,700    |              |          |           |          |              | (604,700   | )            |          | 
| | April 19, 2003                  | $0.16    |              | 1,478,125  |              |          |           |          |              | (1,478,125 | )            |          | 
| | July 4, 2003                    | $0.16    |              | 147,500    |              |          |           |          |              |           |              | 147,500   | 
| | October 19, 2003                | $0.16    |              | 2,500,000  |              |          |           |          |              |           |              | 2,500,000 | 
| | December 27, 2003               | $0.22    |              |           |              | 1,037,125 |           |          |              |           |              | 1,037,125 | 
| |                                 |          |              | 12,251,925 |              | 1,037,125 |           |          |              | (9,604,425 | )            | 3,684,625 | 
| |                                 |          |              |            |              |           |           |           |              |            |              |           | 
| | Weighted average exercise price |          | $       0.21 |            | $       0.22 |           | $        |           | $       0.22 |            | $       0.18 |          

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| | The continuity of share purchase warrants (each warrant exercisable into
      one common share) for the year ended May 31, 2002 is:
| | ------------------------------------------------------------------------------------------------------------------------------------

| |                                 | Exercise |  | May 31,      |  |              |  |           |  |              |   | May 31,      | 
| | ------------------------------- | -------- |  | ------------ |  | ------------ |  | --------- |  | ------------ | - | ------------ | 
| | Expiry date                     | Price    |  | 2001         |  | Issued       |  | Exercised |  | Expired      |   | 2002         | 
| | April 22, 2002                  | $0.35    |  | 1,872,500    |  |             |  |          |  | (1,872,500   | ) |             | 
| | April 22, 2002                  | $0.65    |  | 827,500      |  |             |  |          |  | (827,500     | ) |             | 
| | January 4, 2003                 | $0.16    |  |             |  | 6,398,000    |  |          |  |             |   | 6,398,000    | 
| | March 9, 2003                   | $0.35    |  | 1,123,600    |  |             |  |          |  |             |   | 1,123,600    | 
| | March 9, 2003                   | $0.80    |  | 604,700      |  |             |  |          |  |             |   | 604,700      | 
| | April 19, 2003                  | $0.16    |  |             |  | 1,478,125    |  |          |  |             |   | 1,478,125    | 
| | July 4, 2003                    | $0.16    |  |             |  | 147,500      |  |          |  |             |   | 147,500      | 
| | October 19, 2003                | $0.16    |  |             |  | 2,500,000    |  |          |  |             |   | 2,500,000    | 
| |                                 |          |  | 4,428,300    |  | 10,523,625   |  |          |  | (2,700,000   | ) | 12,251,925   | 
| |                                 |          |  |              |  |              |  |           |  |              |   |              | 
| | Weighted average exercise price |          |  | $       0.47 |  | $       0.16 |  | $        |  | $       0.44 |   | $       0.21 | 

|(e) | Contributed surplus
|--- | -------------------

|   | Balance, May 31, 2003 and 2002                | $ |       
|-- | --------------------------------------------- | - | -------
|   | Changes during 2004:                          |   |        
|   | Non-cash stock-based compensation (note 8(c)) |   | 445,020
|   | Contributed surplus, May 31, 2004             | $ | 445,020
|   |                                               |   |        
|   |                                               |   |        
|9. | RELATED PARTY BALANCES AND TRANSACTIONS       |   |        

| |                                             |   | Years ended May 31 | 
| | ------------------------------------------- | - | ------------------ | 
| | Balances receivable (payable)               |   |                    | 
| | Exploration advance balances receivable     |   |                    | 
| | from (payable to) a related party:          |   |                    | 
| | Hunter Dickinson
      Inc. (a)             |   |                    | 
| |                                             |   |                    | 
| |                                             |   |                    | 
| |                                             |   | Years ended May 31 | 
| | Transactions                                |   | 2004               | 
| | Services rendered and expenses reimbursed   |   |                    | 
| | Hunter Dickinson Inc. (a)                   | $ | 362,377            | 
| | Hunter Dickinson Group Inc. (b)             |   |                   | 
| | Gordon J. Fretwell Law Corporation (c)      |   | 9,957              | 
| | Euro-American
      Capital Corporation (d) |   | 26,083             | 

| | (a) | Hunter Dickinson Inc. ("HDI") and its wholly-owned subsidiaries are private
      companies with certain directors in common with the Company that provide
      geological, technical, corporate development, administrative and management
      services to, and incur third party costs on behalf of, the Company on a
      full cost recovery basis pursuant to an agreement dated January 1, 2001.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| |     | Exploration advances to and from Hunter Dickinson
        Inc. have arisen in the normal course, due to in-progress and near-term
        planned exploration work, primarily on the Company's exploration properties.
        There are no specific terms of repayment.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) | Hunter Dickinson Group Inc. ("HDGI") is a private
        company with certain directors in common that provides consulting services
        to the Company on a full cost recovery basis.                                                                              
|
| | (c) | Gordon J. Fretwell Law Corporation is a private
        company controlled by a director that provides legal services to the Company
        based on the fair market value of those services.                                                                          
|
| | (d) | Euro-American Capital Corporation is a private company
        controlled by a director that provides management services to the Company
        based on the fair market value of those services                                                                       
|
|

|10. | SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
        AND FINANCING ACTIVITIES                                                                                                                                                                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | There were no significant non-cash transactions
        during the years ended May 31, 2004 and May 31, 2003.                                                                                                                                                                                                                              
|   
|    | Significant non-cash transaction during the year
        ended May 31, 2002 consisted of the Company receiving 120,000 common shares
        from Geostar Metals Inc., at a value of $30,000, as consideration for
        the sale of its subsidiaries as described in note 2.                                                            
|   
|   
|11. | RECLAMATION DEPOSIT                                                                                                                                                                                                                                                                                                                        
|   
|    | In May 2002, the Company deposited $70,000 in trust
        as a reclamation deposit related to the Haut Plateau Property (note 6(c)).
        In November 2002, the Company terminated its option on the Haut Plateau
        property. Consequently, the reclamation deposit of $70,000 was returned
        to the Company in June 2003.
|   
|   
|12. | INCOME TAXES                                                                                                                                                                                                                                                                                                                               
|   
|    | A reconciliation of income taxes calculated at applicable
        statutory rates is as follows:                                                                                                                                                                                                                                           

| |                                                    |   |                    |  
| | -------------------------------------------------- | - | ------------------ | -
| |                                                    |   | Years ended May 31 |  
| |                                                    |   | 2004               |  
| |                                                    |   |                    |  
| | Loss for the year                                  | $ | (1,396,018         | )
| |                                                    |   |                    |  
| | Expected income tax recovery                       | $ | (500,318           | )
| | Difference in foreign tax rates                    |   | 3,336              |  
| | Non-deductible amounts                             |   | 350,594            |  
| | Deductible expenses                                |   | (35,875            | )
| | Unrecognized benefit of net operating
      losses |   |                    |  
| | carried
      forward                              |   | 182,263            |  
| |                                                    |   |                    |  
| | Net income tax recovery                            | $ |                   |  

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| | The significant component of the Company's future tax assets are as follows:
| | ----------------------------------------------------------------------------

| |                                                 |   | 2004       |   |   | 2003       |   |   | 2002       |  
| | ----------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                                 |   |            |   |   |            |   |   |            |  
| | Net operating loss carry forwards               | $ | 1,174,000  |   | $ | 1,000,000  |   | $ | 938,200    |  
| | Cumulative exploration and development expenses |   | 2,121,000  |   |   | 1,345,700  |   |   | 1,226,300  |  
| | Other                                           |   | 149,000    |   |   | 77,900     |   |   | 123,300    |  
| |                                                 |   | 3,444,000  |   |   | 2,423,600  |   |   | 2,287,800  |  
| | Less: valuation allowance                       |   | (3,444,000 | ) |   | (2,423,600 | ) |   | (2,287,800 | )
| |                                                 |   |            |   |   |            |   |   |            |  
| | Net future tax assets                           | $ |           |   | $ |           |   | $ |           |  

|    | The Company has available for deduction against
        future taxable income non-capital losses of approximately $3,300,000 (2003
         $2,785,000; 2002  $2,369,000). These losses, if not utilized,
        will expire in various years ranging from 2005 to 2011. Subject to certain
        restrictions, the Company also has Canadian resource expenditures, net
        of flow-through financing renounced to shareholders, of approximately
        $4,450,000 (of which approximately $1,130,000 are successored and are,
        consequently, subject to further restrictions) available to reduce taxable
        income in future years.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|13. | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    | The Company's financial instruments consist of cash
        and equivalents, marketable securities, amounts receivable, reclamation
        deposit, security deposit, accounts payable and accrued liabilities and
        due to and from related parties. It is management's opinion the Company
        is not exposed to significant interest, currency or credit risk arising
        from these financial instruments. The fair values of these financial instruments
        approximate their carrying values, unless otherwise noted.                                                                                                              
|   
|   
|14. | COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | The Company fulfilled its commitment to incur prior
        to December 31, 2003, on a best-efforts basis, approximately $197,000
        in qualifying Canadian Exploration Expenses pursuant to a flow- through
        private equity placement.                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    | On December 31, 2003, the Company completed a private
        placement (note 8(b)) which included $1,380,000 in flow-through financing.
        At May 31, 2004, the Company was committed to incur prior to December
        31, 2004, on a best-efforts basis, approximately $610,000 in qualifying
        Canadian exploration expenditures pursuant to this flow-through private
        equity placement.                                                                                                                                                                                                                                             
|   
|   
|15. | SEGMENTED INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    | Operating segments are defined as components of
        an enterprise about which separate financial information is available
        that is evaluated regularly by the chief operation decision maker, or
        decision-making group, in deciding how to allocate resources and in assessing
        performance. All of the Company's operations are within the mineral exploration
        sector. The Company's mining operations are centralized whereby the Company's
        head office is responsible for the exploration results and to provide
        support in addressing local and regional issues. The Company's operations              

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| | are therefore segmented on a geographic basis. The Company's resource
      properties are significantly located in Canada and in Chile and formerly
      in Brazil.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                     |   | 2004      |  |   | 2003    |  |   | 2002      | 
| | ------------------- | - | --------- |  | - | ------- |  | - | --------- | 
| |                     |   |           |  |   |         |  |   |           | 
| | Loss for the year   |   |           |  |   |         |  |   |           | 
| | Canada              | $ | 1,157,753 |  | $ | 605,570 |  | $ | 1,434,384 | 
| | Chile               |   | 238,265   |  |   | 248,738 |  |   | 244,852   | 
| | Brazil              |   |          |  |   |        |  |   | 74,128    | 
| |                     | $ | 1,396,018 |  | $ | 854,308 |  | $ | 1,753,364 | 
| |                     |   |           |  |   |         |  |   |           | 
| | Identifiable assets |   |           |  |   |         |  |   |           | 
| | Canada              | $ | 1,870,357 |  | $ | 97,014  |  | $ | 646,746   | 
| | Chile               |   | 103,831   |  |   | 100,534 |  |   | 68,000    | 
| |                     | $ | 1,974,188 |  | $ | 197,548 |  | $ | 714,746   | 

|16. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Subsequent to May 31, 2004, the Company granted
        120,000 share purchase options to employees and consultants at $0.10 per
        share exercisable until May 19, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|   
|17. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
        GENERALLY ACCEPTED ACCOUNTING PRINCIPLES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | These consolidated financial statements have been prepared
        in accordance with generally accepted accounts principles in Canada ("Canadian
        GAAP"). Material variations in the accounting principles, practices and
        methods used in preparing these financial statements from principles,
        practices and methods accepted in the United States ("United States GAAP")
        are described and quantified below.
      The impact of the differences between Canadian GAAP
        and United States GAAP on the consolidated balance sheets would be as
        follows:

| |                     |   | 2004      |  |   |             | 2003 |  
| | ------------------- | - | --------- |  | - | ----------- | ---- | -
| |                     |   | Balance,  |  |   |             |      |  
| |                     |   | Canadian  |  |   |             |      |  
| |                     |   | GAAP      |  |   | Adjustments |      |  
| |                     |   |           |  |   |             |      |  
| | Current assets      | $ | 1,895,141 |  | $ | 4,650       |      | $
| | Security deposit    |   | 32,190    |  |   |            |      |  
| | Mineral property    |   | 46,857    |  |   | (46,857     | )    |  
| |                     |   |           |  |   |             |      |  
| |                     | $ | 1,974,188 |  | $ | (42,207     | )    | $
| |                     |   |           |  |   |             |      |  
| | Current liabilities | $ | 33,406    |  | $ |            |      | $
| | Stockholders'       |   |           |  |   |             |      |  
| | equity (deficiency) |   | 1,940,782 |  |   | (42,207     | )    |  
| |                     | $ | 1,974,188 |  | $ | (42,207     | )    | $

---

|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| | The impact of the differences between Canadian GAAP and United States
      GAAP on the statements of operations would be as follows:
| | -------------------------------------------------------------------------------------------------------------------------------------

| |                                                       |   | 2004       |   |   | 2003       |   |   | 2002       |  
| | ----------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| | Loss for the year, Canadian GAAP                      | $ | (1,396,018 | ) | $ | (854,308   | ) | $ | (1,753,364 | )
| | Adjustments:                                          |   |            |   |   |            |   |   |            |  
| | Compensation
      expense on granting stock options  |   |           |   |   |           |   |   | (205,540   | )
| | Unrealized
      gain (loss) in marketable securities |   | 4,650      |   |   | (7,200     | ) |   | 7,200      |  
| |                                                       |   |            |   |   |            |   |   |            |  
| | Loss for the year, United States GAAP                 | $ | (1,391,368 | ) | $ | (861,508   | ) | $ | (1,951,704 | )
| |                                                       |   |            |   |   |            |   |   |            |  
| | Basic and diluted loss per share, United States GAAP  | $ | (0.02      | ) | $ | (0.02      | ) | $ | (0.04      | )
| |                                                       |   |            |   |   |            |   |   |            |  
| | Weighted average number of common shares outstanding, |   |            |   |   |            |   |   |            |  
| | United
      States GAAP                              |   | 70,978,179 |   |   | 54,949,229 |   |   | 46,862,339 |  

| | The adjustments recorded under United States GAAP on
        the Consolidated Balance Sheets and Consolidated Statements of Operations
        and Deficit have no effect on the cash flows under United States GAAP.
      Mineral properties and deferred exploration costs
      Under Canadian GAAP, mineral properties, including exploration,
        development and acquisition costs, may be carried at cost and written
        down if the properties are abandoned, sold or if management decides not
        to pursue the properties or deems there to have been an impairment in
        value. The Company has chosen to expense its exploration and option costs.
        Under United States GAAP, mineral property expenditures are expensed as
        incurred. Once a final feasibility study has been completed, additional
        costs incurred to bring the mine into production are capitalized as development
        costs. Costs incurred to access ore bodies identified in the current mining
        plan after production has commenced are considered production costs and
        are expensed as incurred. Costs incurred to extend production beyond those
        areas identified in the mining plan where additional reserves have been
        established are deferred as development costs until the incremental reserves
        are produced. Capitalized costs are amortized using the unit-of-production
        method over the estimated life of the ore body based on proven and probable
        reserves.
      Asset retirement obligations
      Under United States GAAP, Statement of Financial Accounting
        Standards No. 143, "Accounting for Asset Retirement Obligations"
        ("SFAS 143") requires companies to record the fair value of the liability
        for closure and removal costs associated with the legal obligations upon
        retirement or removal of any tangible long-lived assets. Under this standard,
        the initial recognition of the liability is capitalized as part of the
        asset cost and depreciated over its estimated useful life.
      Under Canadian GAAP, the Company was not required to
        record asset retirement obligations as at May 31, 2004.
      The Company has determined that there are no asset retirement
        obligations as at May 31, 2004.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| | Stock-based compensation
      Under United States GAAP, Statement of Financial Accounting
        Standard No. 123, "Accounting for Stock-Based Compensation" ("SFAS
        123") encourages companies to establish a fair market value based method
        of accounting for stock-based compensation plans. Accounting Principles
        Board Opinion No. 25 "Accounting for Stock Issued to Employees"
        ("APB 25") permits the measurement of compensation cost for stock options
        as the excess, if any, of the quoted market price of the Company's stock
        at the date of grant over the option price. The Company has chosen to
        account for stock-based compensation under SFAS 123.
      Under Canadian GAAP, the reporting of stock-based compensation
        expense in the Company's financial statements was not required for the
        year ended May 31, 2002. New accounting and disclosure standards were
        introduced under Canadian GAAP (note 3 and note 8) for the fiscal year
        ending May 31, 2003. Accordingly, there were differences in the treatment
        by the Company with respect to stock-based compensation under United States
        GAAP and Canadian GAAP for the year ended May 31, 2003; however, no stock-based
        compensation was recorded as the fair value of stock options issued during
        the year was immaterial.
      In calculating compensation expense on granting stock
        options for the year ended May 31, 2002, the Company has utilized an option
        pricing model to estimate the fair value of the options granted in the
        year using the following key assumptions:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                         | 2002    | 
| | ----------------------- | ------- | 
| | Risk free interest rate | 4.700%  | 
| | Expected life           | 2 years | 
| | Expected volatility     | 139%    | 
| | Expected dividends      |        | 

| | Marketable securities
      Under Canadian GAAP, short term marketable securities
        are carried at the lower of aggregate cost or current market value, with
        any unrealized loss included in the statements of operations. Long-term
        investments are carried on the cost or equity basis and are only written
        down when there is evidence of a decline in value that is other than temporary.
      Under United States GAAP, Statement of Financial Accounting
        Standard No. 115, "Accounting for Certain Investments in Debt and Equity
        Securities" ("SFAS 115") requires that certain equity investments
        must be classified into available-for-sale or trading securities and stated
        at fair market values. Any unrealized holding gains or losses are reported
        as a separate component of shareholders' equity until realized for available-for-sale
        securities, and included in earnings for trading securities. For United
        States GAAP purposes the Company's investment in marketable securities
        have been classified as trading securities. Under SFAS 115, for the year
        ended May 31, 2004 there would have been an unrealized gain of $4,650
        (2003  unrealized loss of $7,200; 2002  unrealized gain of
        $7,200) in the Company's investment in marketable securities.
      Flow-through shares
      Under Canadian income tax legislation, the Company is
        permitted to issue shares whereby the Company agrees to incur qualifying
        expenditures (as defined under the Income Tax Act of
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| | Canada) and renounce the related income tax deductions
        to the investors. Under Canadian GAAP flow-through shares are accounted
        for as part of the issuance of capital stock at the price paid for the
        shares, net of any future income tax liability. Under United States GAAP,
        any difference between the market price of the Company's stock and the
        fair value of the flow-through shares must be recorded as a liability,
        if a premium is paid by investors, or as an asset if investors are purchasing
        the shares at a discount. The asset or liability is charged to income
        as the flow-through share proceeds are expended on qualifying expenditures.
      During the year ended May 31, 2004, the Company issued
        flow-through shares for total proceeds of $1,362,750 (2003  $nil).
        As the market price of the Company's stock equaled the fair value of the
        flow-through shares issued, no asset or liability was recorded.
      New accounting pronouncements
      In April 2003, the United States Financial Accounting
        Standards Board ("FASB") issued Statements of Financial Accounting Standards
        No. 149 "Amendment of Statement 133 on Derivative Instruments and Hedging
        Activities" ("SFAS 149"). SFAS 149 amends and clarifies financial
        accounting and reporting for derivative instruments, including certain
        derivative instruments embedded in other contracts and for hedging activities
        under FASB Statement No. 133 "Accounting for Derivative Instruments
        and Hedging Activities". SFAS 149 is generally effective for contracts
        entered into or modified after June 30, 2003.
      In May 2003, FASB issued Statements of Financial Accounting
        Standards No. 150 "Accounting for Certain Financial Instruments with
        Characteristics of both Liabilities and Equity" ("SFAS 150"). SFAS
        150 establishes standards for how an issuer classifies and measures certain
        financial instruments with characteristics of both liabilities and equity.
        SFAS 150 is effective for financial instruments entered into or modified
        after May 31, 2003.
      The adoption of these new pronouncements is not expected
        to have a material effect on the Company's consolidated financial position
        or results of operations.
      In 2002, the CICA issued Handbook Section 3063, "Impairment
        of Long-Lived Assets", which is effective for fiscal years commencing
        September 1, 2003. Under this section, an impairment loss is measured
        as the difference between the carrying value of an asset and its fair
        value.
      In June 2003, the CICA revised Accounting Guideline
        13, "Hedging Relationships", which is effective for fiscal years
        beginning on and after July 1, 2003. The guideline addresses the identification,
        designation, documentation and effectiveness of hedging relationships,
        for the purpose of applying hedge accounting. The guideline establishes
        certain conditions for applying hedge accounting and also deals with the
        discontinuance of hedge accounting.
      In June 2003, the CICA issued Accounting Guideline 15,
        "Consolidation of Variable Interest Entities", which will be effective
        for annual and interim periods beginning on or after November 1, 2004.
        This guideline addresses the application of consolidation principles to
        entities that are subject to control on a basis other than ownership of
        voting interests.
      The CICA has issued CICA Handbook Section 3110 "Asset
        Retirement Obligations" which is effective for years beginning on
        or after January 1, 2004. This standard requires recognition of a liability
        at its fair value for the obligation associated with the retirement of
        a tangible long-lived
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|ROCKWELL VENTURES INC.
      Notes to the Consolidated Financial Statements 
      For the year ended May 31, 2004 
      (Expressed in Canadian Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                         

| | asset. A corresponding asset retirement cost would
        be added to the carrying amount of the related asset and amortized to
        expense over the useful life of the asset.
      The CICA has issued CICA Handbook Section 3475 "Disposal
        of Long-Lived Assets and Discontinued Operations" which is effective
        for years beginning on or after May 1, 2003. The standard requires the
        recognition, measurement, and presentation and disclosure of the disposal
        of long-lived assets by a company. It also establishes standards for the
        presentation and disclosure of discontinued operations, whether or not
        they include long-lived assets.
      The adoption of these new pronouncements is not expected
        to have a material effect on the Company's consolidated financial position
        or results of operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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