<PAGE>

===============================================================================
                   U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                 Form 10-KSB
(Mark One)
   [X]       Annual report under section 13 or 15(d) of the Securities
                              Exchange Act of 1934
                  for the fiscal year ended December 31, 2001

   [ ]     Transition report under section 13 or 15(d) of the Securities
                              Exchange Act of 1934
                  for the transition period  from____________ to ___________

                       Commission file number 000-22731

                              MINERA ANDES INC.
                (Name of small business issuer in its charter)

                               Alberta, Canada
        (State or other jurisdiction of incorporation or organization)

                                    None
                     ( I.R.S. Employer Identification No.)

               3303 N. Sullivan Road, Spokane, Washington 99216
                   (Address of principal executive offices)

                                (509) 921-7322
                          (Issuer's telephone number)


Securities registered under Section 12(b)
of the Act:                                      Name of each exchange on which
Title of each class                              registered:
Common shares without par value                  The Canadian Venture Exchange


Securities registered under Section 12(g) of the Act:
None

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes [X]
No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[X]

State issuer's revenues for its most recent fiscal year:  Nil

The aggregate market value of the voting stock held by non-affiliates as of
March 15, 2002 was $1,963,714.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of March 15, 2002, the Registrant
had 30,046,030 common shares outstanding.

Transitional Small Business Disclosure Format (Check one:) Yes [ ]  No [X]
===============================================================================

<PAGE>


                                TABLE OF CONTENTS
                                -----------------

PART I                                                                    Page
                                                                          ----
     Item 1       Description of Business                                    3

     Item 2       Description of Properties                                 10

     Item 3       Legal Proceedings                                         26

     Item 4       Submission of Matters to a Vote
                  of Security Holders                                       26

PART II

     Item 5       Market for Common Equity and Related
                  Shareholder Matters                                       27

     Item 6       Management's Discussion and Analysis
                  of Financial Condition and Plan of Operations             28

     Item 7       Financial Statements                                      32

     Item 8       Changes in and Disagreements With Accountants
                  on Accounting and Financial Disclosure                    51

PART III

     Item 9       Directors, Executive Officers, Promoters and
                  Control Persons; Compliance with Section 16(a)
                  of the Exchange Act                                       51

     Item 10      Executive Compensation                                    53

     Item 11      Security Ownership of Certain Beneficial Owners
                  and Management                                            55

     Item 12      Certain Relationships and Related Transactions            57

     Item 13      Exhibits and Reports on Form 8-K                          57

                                     2

<PAGE>

                                    PART I

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS; CURRENCY DISCLOSURE

This report contains both historical and prospective statements concerning the
Corporation and its operations. Historical statements are based on events that
have already happened; examples include the reported financial and operating
results, descriptions of pending and completed transactions, and management and
compensation matters. Prospective statements, on the other hand, are based on
events that are reasonably expected to happen in the future; examples include
the timing of projected operations, the likely effect or resolution of known
contingencies or other foreseeable events, and projected operating results.

Prospective statements (which are known as "forward-looking statements" under
the Private Securities Litigation Reform Act of 1995) may or may not prove true
with the passage of time because of future risks and uncertainties.

All currency amounts in this report are stated in U.S. dollars unless otherwise
indicated. On March 15, 2002, the late New York trading rate of exchange, as
reported by The Wall Street Journal for conversion of United States dollars into
Canadian dollars was U.S. $1.00 = Cdn $1.58 or Cdn $1.00 = U.S. $0.63.

ITEM 1.           DESCRIPTION OF BUSINESS

Minera Andes Inc. ("Minera Andes" or the "Corporation") is engaged in the
exploration and development of mineral properties located in the Republic of
Argentina. The Corporation's objective is to identify and acquire properties
with promising mineral potential, explore them to an advanced stage or to the
feasibility study stage, and then, if warranted, to pursue development of the
properties, typically through joint ventures or other collaborative arrangements
with partners that have expertise in mining operations.

The Corporation's business grew out of a program begun by N.A. Degerstrom, Inc.,
a contract mining company based in Spokane, Washington ("Degerstrom"), to
identify properties in Argentina that possessed promising mineral potential.
Based on the study of available remote sensing satellite data and experience
gained from drilling work performed by Degerstrom, beginning in 1991 Degerstrom
identified a number of areas which it believed had exploration potential and
began the process of filing applications for exploration concessions with the
provincial governments in Argentina and negotiating option agreements with
private landowners. Degerstrom conveyed these property interests to the
Corporation in 1995. See "Description of Properties - The Degerstrom Agreement"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

The Corporation's current properties and projects consist of mineral rights and
applications for mineral rights covering approximately 163,000 hectares in three
Argentine provinces. The lands comprise option to purchase contracts,
exploration and mining agreements and direct interests through the Corporation's
filings for exploration concessions. The Corporation's properties are all early
stage exploration prospects except for the El Pluma/Cerro Saavedra property
package, which is an advanced stage exploration project. No proven or probable
reserves have yet been identified. See "Description of Properties." The
Corporation has no employees, as it is staffed by N.A. Degerstrom, Inc.
personnel (three persons) under the Operating Agreement.

OPERATING STRUCTURE

The Corporation is the product of an amalgamation in November 1995 of Minera
Andes and Scotia Prime Minerals, Incorporated, a then inactive Alberta
corporation which had previously had its Common Shares listed for trading on The
Alberta Stock Exchange (presently, the Canadian Venture Exchange ("CDNX")). The

                                     3

<PAGE>

Corporation's interests in its Argentina properties were held through two
Argentinean subsidiaries: Minera Andes S.A. ("MASA") and NAD S.A. ("NADSA").
MASA was incorporated under the laws of the Republic of Argentina in September
1994. NADSA was incorporated under the laws of the Republic of Argentina in July
1994. The Corporation sold its shares of NADSA to Degerstrom in 2001. The
Corporation's interest in its Colombian properties was held through Minera
Providencia Inc. ("MPI"), which was incorporated in December 1998 under the
Business Corporations Act (Alberta). The Corporation held 71.11% of the issued
and outstanding shares of MPI and the remaining shares were held by Jon Lehmann,
the President of MPI. MPI's Colombian properties were held through Minera
Providencia S.A. ("MPSA"), incorporated in April 1998. MPI owned 92% of the
issued and outstanding shares of MPSA and had entered into option agreements to
acquire the remaining shares for $400. MPI's properties were written off in 2000
and MPI was dissolved in 2001. Transylvania Gold S.R.L. ("TGS") was incorporated
under the laws of Romania in October 1999, to hold the Corporation's Romanian
property interests. The Corporation held 100% of the issued and outstanding
share of TGS. The Corporation wrote off TGS properties in 2000 and dissolved the
subsidiary. In April 2001, the Corporation transferred some of its Argentina
properties to Minera Santa Cruz S.A. (MSC), a MASA subsidiary.

The corporate structure of Minera Andes is as follows:

-------------------------  ------------------------  -------------------------
                                     95%                      99.99%
     MINERA ANDES INC.   --   MINERA ANDES S.A.    -- MINERA SANTA CRUZ S.A.
         (ALBERTA)               (ARGENTINA)               (ARGENTINA)
-------------------------  ------------------------  -------------------------

The Corporation holds 19 of the 20 issued and outstanding shares of MASA and
held 11 of the 12 issued and outstanding shares of NADSA as well as an
irrevocable transferable option to purchase the one remaining MASA share and an
irrevocable transferable option to purchase the one remaining NADSA share. Each
of those single shares is held by a natural person shareholder as required by
local law. In 2001, all of the Corporation's shares in NADSA were sold to N.A.
Degerstrom, Inc. for $10,000. NADSA had only de minimus activity and net assets.
MASA holds 11,990 shares of the 12,000 shares issued and outstanding of Minera
Santa Cruz S.A.

Degerstrom provides management services to the Corporation and acts as operator
of the Corporation's properties and projects pursuant to an operating agreement
entered into in March 1995 ("Operating Agreement"). Under the Operating
Agreement, Degerstrom operates and manages the exploration program on all
properties and provides related offsite administrative assistance as required.
This agreement allows the Corporation to minimize its overhead by providing for
reimbursement to Degerstrom of direct out of pocket and certain allocated
indirect costs and expenses and the payment of a management fee of 15% of total
costs. See "Description of Properties - the Degerstrom Agreement" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Degerstrom is principally involved in contract mining and road and bridge
construction. Degerstrom provides a full range of contract services including
geological studies, site drilling, metallurgical analysis, and engineering of
pit, process and recovery systems.

The Corporation's management office is 3303 North Sullivan Road, Spokane,
Washington, 99216, while the principal business address of the Corporation is
Coronel Moldes 837, (5500) Mendoza, Argentina. The registered address of the
Corporation is 350 - 7TH Ave. S.W., Calgary, Alberta, T2P 3N9 Canada.

RISKS RELATED TO MINERA ANDES' BUSINESS

Ownership of our Common Shares involves a high degree of risk. Shareholders
should consider, among other things, the following factors relating to the
Corporation's business and properties and its present stage of development:

                                     4

<PAGE>

Risks Inherent in Minerals Exploration. There are a number of uncertainties
inherent in any exploration or development program, including location of
economic ore bodies, the development of appropriate metallurgical processes, and
the receipt of necessary governmental permits. Substantial expenditures may be
required to pursue such exploration and, if warranted, development activities.
Assuming discovery of an economic ore body and depending on the type of mining
operation involved, several years may elapse from the initial stages of
development until commercial production is commenced. New projects frequently
experience unexpected problems during exploration and development stages and
frequently result in abandonment of the properties as potential development
projects. Most exploration projects do not result in the discovery of minable
deposits of ore. There can be no assurance that our exploration efforts will
yield reserves or result in any commercial mining operations.

Many of the properties that we intend to explore in Argentina are the subject of
applications for concessions and licenses, many of which have not yet been
granted. The filing of an application for a concession grants the holder the
exclusive right to obtain the concession conditioned on the outcome of the
approval process. In Argentina, the approval process is an administrative
procedure under the authority of the province in which the property is located.
The process includes a public notice and approval procedure allowing third
parties to give notice of opposition or prior claim, if any, before the title to
the concession is granted. Although we believe that we have taken all necessary
steps with respect to the application, approval and registration process for the
property concessions and licenses it has currently applied for and property
transactions to which it is a party, there is no assurance that any or all
applications will result in issued concessions or that the public registrations
will be timely approved.

Risks Inherent in the Mining Industry. Exploration, development and mining
operations are subject to a variety of laws and regulations relating to
exploration, development, employee safety and environmental protection; mining
activities are subject to substantial operating hazards including rock bursts,
cave-ins, fires and flooding, some of which are not insurable or may not be
insured for economic reasons. We currently have no insurance against such risks.
We may also incur liability as a result of pollution and other casualties
involved in the drilling and mining of ore. There may be limited availability of
water and power, which are essential to mining operations; and interruptions may
be caused by adverse weather conditions.

We or joint venture or investment partners must obtain necessary governmental
approvals and make necessary capital expenditures before production may commence
on most of its projects. Significant capital expenditures will also be required
to bring them into production. We may obtain funds for a portion of these
capital expenditures from joint venture or investment partners. However, there
can be no assurance that such joint venture or investment partners will provide
such funds or that such project financing will be available to us on acceptable
terms. The number of potential sources of third-party project financing for
mining projects is limited.

Minera Andes is subject to additional risks, including that a large number of
companies, many of which are significantly larger and have greater financial and
technical resources than Minera Andes, compete in the acquisition, exploration
and development of mining properties; mining projects are highly speculative and
involve substantial risks, even when conducted on properties known to contain
significant quantities of mineralization.

Need for Additional Capital. The exploration and, if warranted, development of
Minera Andes' properties would require substantial financing. Our ability to
obtain additional financing will depend, among other things, on the price of
gold, silver, copper and other metals and the industry's perception of their
future price. Therefore, availability of funding depends largely on factors
outside of our control, and cannot be accurately predicted, and may not be
available when needed or on terms satisfactory to us and may be dilutive to our
shareholders. Failure to obtain sufficient financing could result in delay or
indefinite postponement of exploration, development or

                                     5

<PAGE>

production on any or all of Minera Andes' projects or loss of properties. For
example, certain of the agreements pursuant to which we have the right to
conduct exploration activities carry work commitments which, if not met, could
result in losing our right to acquire an interest in the subject property.
There can be no assurance that additional capital or other types of financing
will be available when needed or that, if available, the terms of such
financing will be favorable to Minera Andes.

Competitive Business Conditions. The exploration and development of mineral
properties in the Republic of Argentina is a highly competitive business. A
large number of companies compete with us in the acquisition, exploration and
development of mining properties. Many of these competing companies are
significantly larger than the Corporation and have substantially greater
economic and technical resources than us. While we seek to compete by
identifying properties for exploration, acquiring exclusive rights to conduct
such exploration and carrying out exploration and development of the properties
with joint venture or investment partners, there can be no assurance that we
will be successful in any of these efforts.

Foreign Operations. Minera Andes' properties are located in Argentina. In the
early 1990s Argentina emerged from periods of political and economic instability
but has recently shown signs of returning instability. Foreign properties,
operations and investments may be adversely affected by local political and
economic developments, including nationalization, exchange controls, currency
fluctuations, taxation and laws or policies as well as by laws and policies of
the United States and Canada affecting foreign trade, investment and taxation.
It is important that we maintain good relationships with the governments in
Argentina. We may not be able to maintain such relationships if the governments
change. Argentina has and is developing new bodies of law that will impact the
conduct of business generally and mining operations in particular. Future laws
(including tax laws) could adversely affect the conduct of business and mining
operations.

Difficulties in Developing Remote Areas. Many of the areas in which we conduct
exploration and, if warranted, development activities are in particularly remote
and mountainous regions, with limited infrastructure and limited access to
essential resources. Exploration or development projects in these areas may
require us or our joint venture partners to develop power sources,
transportation systems and communications systems, and to secure adequate
supplies of fuel, machinery, equipment and spare parts. Consequently,
exploration and development in these areas is particularly difficult, requiring
significant capital expenditures, and may be subject to cost over-runs or
unanticipated delays.

Fluctuation in the Price of Minerals. The market price of minerals is volatile
and beyond the control of the Corporation. If the price of a mineral should drop
dramatically, the value of our properties which are being explored or developed
for that mineral could also drop dramatically and we might not be able to
recover its investment in those properties. The decision to put a mine into
production, and the commitment of the funds necessary for that purpose, must be
made long before the first revenues from production will be received. Price
fluctuations between the time that such a decision is made and the commencement
of production can change completely the economics of the mine. Although it is
possible to protect against price fluctuations by hedging in certain
circumstances, the volatility of mineral prices represents a substantial risk in
the mining industry generally which no amount of planning or technical expertise
can eliminate.

Environmental and Other Laws and Regulations. Mining operations and exploration
activities in Argentina are subject to various federal, provincial and local
laws and regulations governing mineral rights, exploration, development and
mining, exports, taxes, labor, protection of the environment and other matters.
Compliance with such laws and regulations may necessitate significant capital
outlays, materially affect the economics of a given project, or cause material
changes or delays in our intended activities. Minera Andes has obtained or is in
the process of obtaining authorizations currently required to conduct its
operations. New or different standards imposed by governmental authorities in
the future or amendments to current laws and regulations governing

                                     6

<PAGE>

operations and activities of mining companies or more stringent implementation
thereof could have an adverse impact on Minera Andes' activities.

Control by Single Shareholder; Conflicts of Interest. At December 31, 2001,
Degerstrom beneficially owns approximately 23% of our outstanding voting
securities and therefore can exert significant influence in the election of our
directors and have substantial voting power with respect to other matters
submitted to a vote of the shareholders. The interests of Degerstrom with
respect to any transaction involving actual or potential change in control of us
or other transactions may differ from those of our other shareholders.

Certain of our directors and officers are also employees of our majority
shareholder, Degerstrom, and of other natural resource and mining companies. As
a result, conflicts may arise between the obligations of these directors to us
and to these other entities. Certain of our directors and officers have other
full time employment or other business or time restrictions placed on them and
accordingly, these directors and officers may not be able to devote full time to
our affairs.

Transactions with Degerstrom; Dependence on Key Personnel. We have entered into
an Operating Agreement with Degerstrom. See "Description of Properties - The
Degerstrom Agreement." This agreement is not the result of arm's-length
negotiations between independent parties. There can be no assurance that the
Operating Agreement or any future agreements will be effected on terms
comparable to those that would have resulted from negotiations between
unaffiliated parties. Such agreements may be amended by us and Degerstrom, by
mutual agreement. Degerstrom is not required to devote its personnel and
resources exclusively to, or for the benefit of us. There can be no assurance
that the services to be provided by Degerstrom will be available to us at all
times. Moreover, our success will be dependent upon the services of certain
executive officers, including Allen Ambrose and Brian Gavin, who are also
employees of Degerstrom. Degerstrom pays compensation and provides other
benefits to these individuals. Minera Andes does not have employment contracts
with nor does it maintain key person life insurance for Mr. Ambrose or Mr.
Gavin.

Liquidity; Limited Trading Market. There currently is a limited trading market
for our securities. There is no assurance that an active trading market will
ever develop. Investment in us is not suitable for any investor who may have to
liquidate such investment on a timely basis and should only be considered by
investors who are able to make a long-term investment in us.

GLOSSARY OF GEOLOGIC AND MINING TERMS; STATEMENT OF ABBREVIATIONS AND CONVERSION
FACTORS

"anomalous" means either a geophysical response that is higher or lower than the
average background or rock samples that return assay values greater than the
average background;

"Bankable Feasibility Study" means the study, prepared to industry standards,
based upon which a bank or other lending institution may loan the Corporation or
MASA funds for production development on the Claims;

"breccia" means a course grained rock, composed of angular broken rock fragments
held together by a finer grained matrix;

"Cateo" means an exploration concession for mineral rights granted to an
individual or company in the Republic of Argentina, as defined by the Republic
of Argentina Mining Code, as amended;

"Claims" means the Cateos, Manifestaci[oacute]n de Descubrimiento, Mina, Estaca
Mina (as defined by the Republic of Argentina Mining Code, as amended) described
herein issued to MASA, MSC or the Corporation by the government of Argentina or
any provincial government;

                                     7

<PAGE>

"Estaca Mina" means areas granted to extend the area covered by existing Minas;

"grab sample" means one or more pieces of rock collected from a mineralized
zone that when analyzed do not represent a particular width of  mineralization
nor necessarily the true mineral  concentration of any larger portion of a
mineralized area;

"igneous rock" means a rock formed by the cooling of molten rock either
underground or at the surface of the earth;

"intrusive rock" means an igneous rock that, when in the molten or partially
molten state, penetrated into or between other rocks, but cooled beneath the
surface;

"Manifestacion de Descubrimiento" (literally, manifestation of discovery) means
the intermediate stage between the exploration phase and exploitation phase of
development;

"metamorphic rock" means an igneous or sedimentary rock that has been altered by
exposure to heat and pressure (resulting from deep burial, contact with igneous
rocks, compression in mountain building zones or a combination of these factors)
but without complete melting. Metamorphosis typically results in partial
recrystallization and the growth of new minerals. "Metasediment" refers to
metamorphosed sedimentary rock. "Metavolcanics" refers to metamorphosed volcanic
rock;

"Mina" means an exploitation grant based on Manifestacion de Descubrimiento;

"net smelter return royalty" is a form of royalty payable as a percentage of the
value of the final product of a mine, after deducting the costs of transporting
ore or concentrate to a smelter, insurance charges for such transportation, and
all charges or costs related to smelting the ore. Normally, exploration,
development and mining costs are not deducted in calculating a net smelter
return royalty. However, such royalties are established by contract or statute
(in the case of property owned by governments), and the specific terms of such
contracts or statutes govern the calculation of the royalty;

"net profits royalty" is a form of royalty payable as a percentage of the net
profits of a mining operation. In contrast to net smelter return royalties,
costs relating to exploration, development and mining may be deducted from the
net proceeds of the operation in calculating the royalty. However, such
royalties are established by contract or statute (in the case of property owned
by governments), and the specific terms of such contracts or statutes govern the
calculation of the royalty;

"porphyry" means an igneous rock of any composition that contains conspicuous
large mineral crystals in a fine-grained ground mass;

"Underlying Royalty" means any royalties on the Claims that are part of the
lease, purchase or option of said Claim from the owner or any royalties that may
be imposed by the provincial government;

"vein" means a mineral filling of a fault or fracture in the host rock,
typically in tabular or sheet-like form;

"VLF-EM" means a very low frequency electromagnetic geophysical instrument used
in exploration to measure variances of conductivity in surficial sediments and
bedrock;

"volcanic rock" (basalt, pillowed-flows, rhyolite) means an igneous rock that
has been poured out or ejected at or near the earth's surface;

                                     8

<PAGE>

"volcanoclastic rock" (wacke, tuff, turbidite) means a sedimentary rock derived
from the transportation and deposition of volcanic rock fragments by air (tuff)
or water (wacke or turbidite).

The following is a list of abbreviations used throughout this Report for
technical terms:

Ag                silver
Au                gold
As                arsenic
Cu                copper
g/t Au            grams per tonne gold
g/t Ag            grams per tonne silver
g/t               grams per tonne
ha                hectare(s)
Hg                mercury
IP/RES            induced polarization and resistivity (survey)
kg                kilogram(s)
km                kilometer(s)
m                 meter(s)
Mo                molybdenum
NSR               Net Smelter Return
oz                ounce
Pb                lead
ppb               parts per billion
ppm               parts per million
Sb                antimony
sq.               square
VLF-EM            very low frequency electromagnetic (survey)
Zn                zinc

The following table sets forth certain standard conversions from Standard
Imperial units to the International System of Units (or metric units).

To Convert From Imperial            To Metric                     Multiply by
acres                                hectares                       0.404686
feet                                 meters                          0.30480
miles                                kilometers                     1.609344
tons                                 tonnes                         0.907185
ounces (troy)/ton                    grams/tonne                     34.2857
1 mile = 1.609 kilometers
1 yard = 0.9144 meters
1 acre = 0.405 hectares
2,204.62 pounds = 1 metric ton = 1 tonne
2,000 pounds (1 short ton) = 0.907 tonnes
1 ounce (troy) = 31.103 grams
1 ounce (troy)/ton = 34.2857 grams/tonne

                                     9

<PAGE>

ITEM 2.       DESCRIPTION OF PROPERTIES

The principal business of the Corporation is the exploration and development of
mineral properties ("Claims") located in the Republic of Argentina. The
Corporation's interests in the Argentinean Claims are held through MASA and MSC,
which is a subsidiary of MASA. MASA holds properties and is the company in which
the daily business operations in Argentina are conducted. MASA was formed and
registered as a mining company in order for the Corporation to receive the
benefits of the new mining laws in Argentina. The principal properties of the
Corporation are described under the heading "Principal Properties" below.

THE DEGERSTROM AGREEMENT

A number of the Claims were originally held by Degerstrom. Pursuant to the March
1995 Asset and Share Acquisition Agreement to which the Corporation, MASA, NADSA
and Degerstrom are parties (the "Degerstrom Agreement"), Degerstrom transferred
its interest in those Claims to NADSA and MASA in consideration for a royalty.
Degerstrom also conveyed the MASA and NADSA capital stock it held to the
Corporation. In consideration for those shares, Minera Andes (i) issued to
Degerstrom 4,000,000 Common Shares and the right to acquire an additional
1,213,409 Common Shares if any of the properties comprising the Claims became
the subject of a Bankable Feasibility Study, (ii) agreed to pay a royalty on any
existing or future properties held by the Corporation or its affiliates as
described below, and (iii) agreed to pay the aggregate amount of the cost and
expenses incurred by Degerstrom on behalf of the Corporation from July 1, 1994
through March 15, 1995. Minera Andes also acquired from Brian Gavin, an officer
of the Corporation, the shares he held in MASA. In 2001 the Corporation sold its
interest in NADSA to Degerstrom.

The royalty payable to Degerstrom by MASA will be a percentage of the net
smelter return earned on those Claims or any future Claims acquired. The Claims
are subject to a royalty equal to the difference between 3% and the Underlying
Royalty, subject to a maximum royalty of 2%. If MASA acquires all or part of the
Underlying Royalty, the royalty payable, if any, to Degerstrom will not
increase. If Degerstrom collects a royalty on any of the Claims held, MASA shall
at any time have the option, upon giving notice to Degerstrom, to repurchase up
to one-half of the royalty payable to Degerstrom upon payment of $1,500,000, for
each 1% of the royalty repurchased.

NADSA, MASA, Degerstrom and the Corporation also entered into an Operating
Agreement, appointing Degerstrom as operator of the Claims and any future Claims
acquired in Argentina. Under the terms of the Operating Agreement, Degerstrom
operates and manages the exploration program on all properties and provides
related offsite administrative assistance as required. In consideration for
these operating services, Degerstrom is entitled to reimbursement for its costs
of labor, materials and supplies incurred in connection with its services plus
an additional 15% of such costs as a management fee. Included in the Operating
Agreement are fixed usage rates for the equipment owned by Degerstrom.
Degerstrom has the right to terminate the Operating Agreement if the Corporation
does not maintain a program and budget in excess of Cdn$300,000 per year. If the
Corporation elects to develop a property and contract with a third party for
development or production, the Corporation must give notice to Degerstrom of the
terms and conditions of the proposed arrangement. Degerstrom has the right for a
period of 30 days to meet the contract bid by a third party.

                                     10

<PAGE>


PRINCIPAL PROPERTIES

1.        ARGENTINA

     RECENT MINING AND ECONOMIC HISTORY IN ARGENTINA

Argentina is the second largest country in South America, over 2.7 million sq.
km in area. In 1983, Argentina returned to a multiparty democracy, which brought
to an end nearly a half century of military intervention and political
instability. The country then began to stabilize; however, it was not until
1989, with the election of the government under President Carlos Menem, that
Argentina's economy began to improve. Menem initiated serious economic reforms
that included the privatization of many state companies and the implementation
of the Convertibility Plan, which fixed the Argentine peso to the U.S. dollar at
par, fully backed by reserves of foreign exchange, gold and dollar-denominated
bonds of the Central Bank of Argentina. Results of the reforms were positive;
Argentina's gross domestic product grew at up to 8% per annum in the early 1990s
and inflation dropped to between 1% and 3% per annum. However, following a
serious recession in 1999 and 2000, a severe political and economic crisis
occurred in late 2001. In early 2002, with five presidents in less than five
weeks, the current president, Eduardo Duhalde, chose to devalue the peso, first
to U.S.$1.00 to Peso$1.40, before allowing the Peso to float in February 2002.
The economic reforms associated with the devaluation of the Peso included the
conversion of all US dollar denominated contracts into pesos on a one-to-one
basis and all US dollar bank accounts into Pesos. At the beginning of March 2002
the Peso stands at Peso$2.15 to US$1.00. Transfers of money out of the country
were prohibited.

In 1993, the Mining Investments Act instituted a new system for mining
investment to encourage mineral exploration and foreign investment in Argentina.
Key incentives provided by the Act include: guaranteed tax stability for a
30-year period, 100% income tax deductions on exploration costs, accelerated
amortization of investments in infrastructure, machinery and equipment, and the
exemption from import duties on capital goods, equipment and raw materials used
in mining and exploration. Repatriation of capital or transfer of profits is
unrestricted. Argentina's mineral resources, administered by its 23 provinces,
are subject to a provincial royalty capped at 3% of the "mouth of mine" value of
production, although provinces may opt to waive this royalty.

Argentina's mineral potential is largely unexplored, particularly in comparison
to that of its immediate neighbors and, as a consequence, there is a lack of
information pertaining to the country's resource base. Copper and gold
mineralization discovered to date occurs predominantly in the southern Andean
copper belt which extends over 1,000 km through northwestern Argentina. The Bajo
de la Alumbrera porphyry copper deposit has been brought onstream. Other copper
deposits currently under development include the Agua Rica and El Pachon
deposits. In addition, gold deposits are concentrated in the Argentine portion
of the Central Andes' Maricunga-El Indio gold belts and in the newly discovered
Santa Cruz gold belt in southern Patagonia.

In 1989, fewer than a dozen foreign exploration companies had offices in
Argentina; by 1996 there were approximately 60 such companies. Exploration
expenditures grew from $5 million in 1991 to over $90 million in 1995, but have
shrunk since with the prolonged low gold price market. Currently, there are no
more than a handful of exploration companies active in Argentina.

The Corporation initiated gold exploration in Argentina in 1991, in conjunction
with Degerstrom. As of December 2001, the Corporation had Argentine land
holdings totaling 163,009 ha in three Argentine provinces (Figure 1). The
Corporation's exploration efforts initially focused on evaluating prospects
generated by 1960's United Nations development exploration programs and on
targets generated by satellite image analysis. The Corporation developed
techniques of processing and interpreting satellite imagery to assist in
identifying promising exploration targets. Currently, the Corporation is
completing exploration work that includes geophysical surveys, mechanical

                                     11

<PAGE>

trenching and reverse-circulation drilling on the most advanced targets in its
property portfolio, and conducting grassroots exploration to evaluate its other
properties and to generate new targets.

     PROPERTY AND TITLE IN ARGENTINA

The laws, procedures and terminology regarding mineral title in Argentina differ
considerably from those in the United States and in Canada. Mineral rights in
Argentina are separate from surface ownership and are owned by the federal
government. Mineral rights are administered by the provinces. The following
summarizes some of the Argentinean mining law terminology in order to aid in
understanding the Corporation's land holdings in Argentina.

  1.  Cateo: A cateo is an exploration concession which does not permit
      mining but gives the owner a preferential right to a mining concession
      for the same area. Cateos are measured in 500 ha unit areas. A cateo
      cannot exceed 20 units (10,000 ha). No person may hold more than 400
      units in a single province. The term of a cateo is based on its area:
      150 days for the first unit (500 ha) and an additional 50 days for
      each unit thereafter. After a period of 300 days, 50% of the area over
      four units (2,000 ha) must be dropped. At 700 days, 50% of the area
      remaining must be dropped. Time extensions may be granted to allow for
      bad weather, difficult access, etc. Cateos are identified by a file
      number or "expediente" number.

      Cateos are awarded by the following process:

      a)  Application for a cateo covering a designated area. The application
          describes a minimum work program for exploration;
      b)  Approval by the province and formal placement on the official map or
          graphic register;
      c)  Publication in the provincial official bulletin;
      d)  A period following publication for third parties to oppose the claim;
      e)  Awarding of the cateo.

      The length of this process varies depending on the province, and
      commonly takes up to two years. Accordingly, cateo status is divided
      into those that are in the application process and those that have
      been awarded. If two companies apply for cateos on the same land, the
      first to apply has the superior right. During the application period,
      the first applicant has rights to any mineral discoveries made by
      third parties in the cateo without its prior consent. While it is
      theoretically possible for a junior applicant to be awarded a cateo,
      because applications can be denied, the Corporation knows of no
      instances where this has happened.

      Applicants for cateos may be allowed to explore on the land pending
      formal award of the cateo, with the approval of the surface owner of
      the land. The time periods after which the owner of a cateo must
      reduce the quantity of land held does not begin to run until 30 days
      after a cateo is formally awarded. The Corporation's goal is to
      determine whether its cateos contain commercial grade ore deposits
      before portions of the cateos must be relinquished. The Corporation's
      ability to do so is dependent upon adequate financing for exploration
      activities. It is likely that several of the Corporation's cateos will
      be relinquished after preliminary exploration because no promising
      mineral deposits have been discovered.

      Until August 1995, a "canon fee", or tax, of Pesos$400 per unit was
      payable upon the awarding of a cateo. A recent amendment to the mining
      act requires that this canon fee be paid upon application for the
      cateo.

                                     12

<PAGE>

  2.  Mina: To convert an exploration concession to a mining concession,
      some or all of the area of a cateo must be converted to a "mina".
      Minas are mining concessions which permit mining on a commercial
      basis. The area of a mina is measured in "pertenencias". Each mina may
      consist of two or more pertenencias. "Common pertenencias" are six
      hectares in size and "disseminated pertenencias", 100 ha (relating to
      disseminated deposits of metals rather than discrete veins). The
      mining authority may determine the number of pertenencias required to
      cover the geologic extent of the mineral deposit in question. Once
      granted, minas have an indefinite term assuming exploration
      development or mining is in progress. An annual canon fee of Pesos$80
      per pertenencia is payable to the province.

      Minas are obtained by the following process:

      a)  Declaration of manifestation of discovery in which a point
          within a cateo is nominated as a discovery point. The
          manifestation of discovery is used as a basis for location of
          pertenencias of the sizes described above. Manifestations of
          discovery do not have a definite area until pertenencias are
          proposed. Within a period following designation of a
          manifestation of discovery, the claimant may do further
          exploration, if necessary, to determine the size and shape of
          the orebody.

      b)  Survey ("mensura") of the mina. Following a publication and
          opposition period and approval by the province, a formal survey
          of the pertenencias (together forming the mina) is completed
          before the granting of a mina. The status of a surveyed mina
          provides the highest degree of mineral land tenure and rights in
          Argentina.

  3.  Estaca Minas:  These are six-hectare  extensions to existing  surveyed
      minas that were granted under previous versions of the mining code.
      Estaca minas are equivalent to minas.  New Estaca minas were eliminated
      from the mining code in August 1996.

  4.  Provincial  Reserve Areas:  Provinces are allowed to withdraw areas from
      the normal  cateo/mina  process.  These lands may be held directly by the
      province or assigned to provincial companies for study or exploration and
      development.

All mineral rights described above are considered forms of real property and can
be sold, leased or assigned to third parties on a commercial basis. Cateos and
minas can be forfeited if minimum work requirements are not performed or if
annual payments are not made. Generally, notice and an opportunity to cure
defaults is provided to the owner of such rights.

Grants of mining rights including water rights, are subject to the rights of
prior users. Further, the mining code contains environmental and safety
provisions, administered by the provinces. Prior to conducting operations,
miners must submit an environmental impact report to the provincial government,
describing the proposed operation and the methods to be used to prevent undue
environmental damage. The environmental impact report must be updated
biennially, with a report on the results of the protection measures taken. If
protection measures are deemed inadequate, additional environmental protection
may be required. Mine operators are liable for environmental damage. Violators
of environmental standards may be caused to shut down mining operations.

     Minera Andes Properties

The sections that follow discuss certain properties that are or have been the
subject of joint venture agreements with third parties or which have been more
intensively explored by the Corporation.

                                     13

<PAGE>

                                   FIGURE 1


[LAND HOLDING MAP]


                                     14

<PAGE>

 A.  SAN JUAN PROJECT SUMMARY
     ------------------------

     1.   SAN JUAN PROJECT LOCATION

     The San Juan Province Project comprises six properties totaling 36,070 ha
     in southwestern San Juan province. Elevation ranges from 2,500 m to 5,500 m
     and moderate to high relief.

     2.   SAN JUAN AREA PROJECT GEOLOGY

     The project area extends from the western margin of the Cordillera Frontal
     to the Cordillera Principal. The area is principally underlain by
     Permo-Triassic Choiyo Group volcanic rocks, a multi-phase igneous sequence
     comprising volcanic breccias, ignimbrites, tuffs and rhyolites, intruded by
     granites and overlain by extrusive acidic volcanic rocks. Jurassic
     continental, marine and volcanic derived sedimentary rocks unconformably
     overly Permo-Triassic rocks. The youngest rocks in the project area
     comprise Tertiary volcanic and intrusive rocks, which are common hosts of
     epithermal gold mineralization as evidenced by deposits in the Chilean
     Andes.

     3.   SAN JUAN PROJECT EXPLORATION

     No formal records of previous exploration in the project area exist.
     Evidence of prospecting (small trenches or pits) exists on some of the
     cateos. The area is currently active with pre-development work at the El
     Pach[oacute]n copper deposit

     The San Juan Province Project is a regional reconnaissance program, focused
     on epithermal gold and gold-copper porphyry targets in the eastern
     cordillera. All of the lands were acquired based on the results of
     satellite image analysis. Preliminary field examination, including rock
     chip sampling and property-wide stream sediment sampling, has been
     completed on all properties.

     Detailed work at Los Chonchones included reconnaissance scale geologic
     mapping and geochemical surveys. Results returned a number of anomalous
     gold and/or copper values in all sample types, scattered throughout the
     color anomalies and concentrating in the center of the southwest anomaly.
     Lands are held pending possible joint ventures.

     In April 1999, the Corporation signed an agreement with Battle Mountain
     Gold Corporation regarding a joint venture on Minera Andes' Los Azules
     cateo application in Calingasta Department, San Juan. Battle Mountain
     controlled land contiguous to the Los Azules property. Battle Mountain
     failed to meet their exploration obligations and subsequently withdrew from
     the agreement in April of 2000.

     Through December 31, 2001, the Corporation has spent $327,810 on the San
     Juan Project (net of write-offs for properties abandoned).

     4.  SAN JUAN AREA PROJECT OWNERSHIP

     The Corporation's lands in San Juan consist of six applications for cateos
     and 11 manifestations of discovery and total 36,070 ha. At present, these
     lands are not subject to a royalty, however, the government of San Juan has
     not waived its rights to retain up to a 3% "mouth of mine" royalty from
     production. Property canon fees for the properties in 2002 are estimated at
     $29,560.

                                     15

<PAGE>


B.   SANTA CRUZ PROJECT SUMMARY
     --------------------------

     1.  EL PLUMA/CERRO SAAVEDRA PROJECT LOCATION

     The El Pluma/Cerro Saavedra property package is located in the Santa Cruz
     province of Argentina, 230 km southwest of the city of Comodoro Rivadavia,
     near latitude 46[degree]41'S and longitude 70[degree]17'W. The property
     consists of one cateo and 104 manifestations of discovery covering a total
     of 88,519 ha (approximately 880 km2), 100% owned by Minera Andes.

     Road access to the property is good and consists of paved highways to
     within 80 km and then via a well-maintained gravel road. Topography varies
     from gently rolling to locally rugged; elevations range from 300 to 700 m
     above sea level. The Deseado Massif is a cold desert. Most day-to-day
     supply requirements can be met by the settlements of Las Heras (130 km from
     the property), Caleta Olivia (250 km from the property) or Comodoro
     Rivadavia; specialized supplies and equipment must be procured from Buenos
     Aires, Mendoza, or abroad. Major hydroelectric transmission lines pass
     within 50 km of the property.

     2.  EL PLUMA/CERRO SAAVEDRA PROJECT GEOLOGY

     The project area occurs in the Deseado Massif, a package of Middle to Upper
     Jurassic volcanic rocks locally overlain by Cretaceous sediments and
     Tertiary to Quaternary basalts. The Jurassic rocks are divided into the
     Bajo Pobre Formation, of intermediate composition, and the felsic Bahia
     Laura Group. The Bahia Laura Group is in turn subdivided into the Chon Aike
     Formation (dominantly ignimbrites) and the La Matilde Formation (dominantly
     volcaniclastic rocks). Several potentially important, low sulfidation
     epithermal deposits have recently been discovered in the massif, including
     the Cerro Vanguardia deposit which has a reserve of greater than 3.2 Moz Au
     equivalent. Exploration by a number of companies is ongoing in the massif.

     On the El Pluma/Cerro Saavedra property the prospective Jurassic
     stratigraphy is exposed in erosional windows through the overlying
     sediments and basalts. The Bajo Pobre Formation, the oldest unit, consists
     of massive andesitic flows, volcaniclastic material and minor dacite.
     Ignimbrites and lesser sediments tentatively correlated with the La Matilde
     Formation occur in a synvolcanic subsidence graben known as the Saavedra
     West basin. Pebble dikes, varying in thickness from one centimeter to ten
     meters, are common in the southwest part of the Saavedra West basin.
     Ignimbrites and minor rhyolites of the Chon Aike Formation, younger than
     the La Matilde basin-fill material, occur as a complicated series of dikes
     along the bounding faults of the west part of the Saavedra West basin, as a
     sequence of extrusive ignimbrites at Cerro Celular and in isolated pockets
     elsewhere in the northern third of the property. In the southern two-thirds
     of the project area (southern cateos), ignimbrites and rhyolite domes of
     the Chon Aike Formation crop out extensively, and the La Matilde Formation
     may be present locally.

     Cretaceous sediments locally overlie the Jurassic volcanics. Poorly exposed
     over most of the property, these sediments are up to 50 m thick in the
     northern part of the project area. The youngest rocks are Tertiary to
     Quaternary basalts which form cliffs up to ten meters high and extensive
     plateaus. Approximately 60% of the property is covered by five to 50 meters
     of post-mineralization, Cretaceous to Quaternary rocks.

     3.  EL PLUMA/CERRO SAAVEDRA PROJECT EXPLORATION

     Santa Cruz is one of Argentina's least well-explored provinces. The area
     was explored under the Argentine government-United Nations regional
     exploration Plan Patagonia-Comahue in the 1970s. In the 1980s,

                                      16

<PAGE>

     FOMICRUZ, S.E., a state owned company, completed reconnaissance surveys in
     the province to delineate areas of interest for mineral reserves.

     The El Pluma/Cerro Saavedra property has not previously been staked. There
     is no record of any previous sustained exploration, although portions of
     the area may have been sampled during at least one regional reconnaissance
     program.

     WORK ON THE PROPERTY BY MINERA ANDES FROM 1997 TO 2001:

     A structural study was carried out over the entire project area and
     prospecting/geological reconnaissance done on the southern cateos and the
     bulk of the work has been on the northern third of the property. In this
     area, a 1:50,000 mapping/satellite interpretation and extensive prospecting
     has been done. This work led to the recognition of nine target areas. Rock
     samples from the entire property have been assayed (2,536 rock and trench
     samples), with particular attention to the target areas. Soil sampling has
     been undertaken on grids at La Sorpresa, El Pluma West, Cerro Celular,
     Saavedra West and Cerro Saavedra (total of 2,302 samples) and an enzyme
     leach soil survey was completed over part of the Huevos Verdes target. Some
     368 stream sediment samples were taken. Approximately 42 line km of CSAMT
     (deep penetration resistivity) were run, and 8.76 km2 (74 line km) gradient
     array IP surveying was completed in the Huevos Verdes, Cerro Celular and
     Saavedra West areas. This was supplemented by three kilometers of
     RealSection IP surveying along selected lines. Some 186 line km of magnetic
     data was collected at Huevos Verdes, Saavedra West, Cerro Celular and Cerro
     Saavedra. Detailed mapping was done at Huevos Verdes, Saavedra West and
     Cerro Saavedra. Twenty-five trenches, totaling 2,550 m, were excavated at
     Saavedra West, and another 30 trenches (2,125 m) at Huevos Verdes. Most of
     these trenches were sampled at one to two meter intervals. All drilling was
     reverse circulation drilling, using a MPD-1000 track rig. Three holes,
     totaling 270 m, were drilled at La Sorpresa and nine at El Pluma West (941
     m). Two holes (201 m) were drilled at Cerro Saavedra and 24 holes, totaling
     2,550 m, were drilled at Saavedra West. The above holes were drilled in
     1998; PIMA analysis, petrographic examination and fluid inclusion work were
     undertaken on selected samples. Drilling in 1999 concentrated on the Huevos
     Verdes prospect, where 21 holes were completed, for a total of 1,643 m.

     Reconnaissance work in the southern two-thirds of the property (Southern
     Cateos) focused on areas of alteration inferred from Landsat images. Stream
     sediment sampling defined three anomalous zones, each with at least four
     samples containing greater than 25 ppb Au, with a maximum value of 158 ppb
     Au.

     In the northern third of the property, nine areas have been designated for
     follow-up work, based on surface indications of alteration and/or
     mineralization. Huevos Verdes, El Pluma West and Saavedra West are the most
     advanced targets.

     Huevos Verdes is a system of en echelon, variably mineralized,
     north-northwest trending quartz veins with associated strong argillic
     alteration, cutting Bajo Pobre Formation. In this area, the Bajo Pobre
     Formation consists of massive and fragmental andesite. Preliminary
     indications are that the massive andesite constitutes a more favorable host
     rock for the veins and that stockwork mineralization develops at
     north-northwest and west-northwest structural intersections. The vein
     system occurs over a strike length of at least 2.2 km and possibly as much
     as 3.5 km. The central and northwest parts of the system are covered by
     Cretaceous tuffs and sediments and locally by Tertiary basalt; geophysical
     work has confirmed the continuity of the system below cover.

     Mineralized quartz veins with true thicknesses up to 11 meters (36.1') have
     been intersected in drill holes and trenches over the entire length of the
     Huevos Verdes vein system. The best trench results were 4.0 m (13.1')

                                      17

<PAGE>

     @ 18.6 g/t Au and 498.8 g/t Ag and 6.5 m (21.3') @ 12.06 g/t Au and
     330.3 g/t Ag. Prior to 2000 nineteen holes were drilled on the main vein
     system, of which twelve intersected significant precious metal
     mineralization. Best drill intersections were 7.4 m (24.3') @ 2.19 g/t Au
     and 170.0 g/t Ag in hole EP-38, 6.3 m (20.7') @ 9.74 g/t Au and 630.3 g/t
     Ag in EP-39, 4.1 m (13.45') @ 3.85 g/t Au and 249.8 g/t Ag in EP-40, and
     11.3 m (37.17') @ 2.01 g/t Au and 102.6 g/t Ag in EP-54 (true thicknesses).

     Subsequently, drill programs completed in 2000 consisted of 24
     reverse-circulation holes (EP-60 to EP 83), totaling about 8825 feet (2690
     m), drilled on the Huevos Verdes gold-silver vein system. The majority of
     these holes intersected the vein structure. Significant intercepts are
     summarized in the table. Vein thickness for these holes ranged from an
     estimated true width of less than one meter (3.28 feet) to up to 11.3 m
     (37.1 feet).

<TABLE>
<CAPTION>

                            SIGNIFICANT GOLD/SILVER INTERCEPTS, HUEVOS VERDES, ARGENTINA
---------------------------------------------------------------------------------------------------------------------
                                                                       True                                 Gold
                                         Intersection     Drilled    Thickness    Gold      Silver          Equiv.
 Drill       TD                          From      To     Interval       m         g/t        g/t          g/t (opt)
 Hole         m      Azim     Angle       m         m        m         (ft)       (opt)     (opt)         Au+(Ag/50)
---------------------------------------------------------------------------------------------------------------------
<S>         <C>      <C>      <C>      <C>       <C>        <C>       <C>         <C>      <C>               <C>
EP-38        64      N240     -50        27        36        9          8.1        2.19      170.0            5.59
                                                                      (26.6)      (0.06)      (5.0)          (0.16)

Includes:                                34        36        2          1.8        6.24      617.2           18.58
                                                                       (5.9)      (0.18)     (18.0)          (0.54)
---------------------------------------------------------------------------------------------------------------------

EP-39        63      N240     -50        36        43        7          6.3        9.74      630.3           22.35
                                                                      (20.7)      (0.28)     (18.4)          (0.65)

Includes:                                36        40        4          3.6       15.17    1,068.8           36.55
                                                                      (11.8)      (0.44)     (31.2)          (1.07)
---------------------------------------------------------------------------------------------------------------------
EP-40        117     N240     -50        46        51        5          4.1        3.85      249.8            8.85
                                                                      (13.5)      (0.11)      (7.3)          (0.26)
---------------------------------------------------------------------------------------------------------------------
EP-41        98      N240     -50        32        35        3          2.9        2.18      175.1            5.68
                                                                       (9.5)      (0.06)      (5.1)          (0.17)
--------------------------------------------------------------------------------------------------------------------
EP-42        90      N240     -50        80        83        3          2.7        2.17       99.8            4.17
                                                                       (8.9)      (0.06)      (2.9)          (0.12)
---------------------------------------------------------------------------------------------------------------------
EP-43        130     N240     -50        99       100        1          0.8        7.37      769.0           22.75
                                                                       (2.6)      (0.21)     (22.4)          (0.66)
---------------------------------------------------------------------------------------------------------------------
EP-46        51      N060     -50        33        35        2          1.9        1.26      105.8            3.38
                                                                       (6.2)      (0.04)      (3.1)          (0.10)
---------------------------------------------------------------------------------------------------------------------
EP-47        75      N240     -50        32        36        4          3.6        1.70      196.3            5.86
                                                                      (11.8)      (0.05)      (5.7)          (0.17)

Includes:                                34        36        2          1.8        2.66      324.5            9.60
                                                                       (5.9)      (0.08)      (9.5)          (0.28)
---------------------------------------------------------------------------------------------------------------------
EP-48        66      N240     -50        42        45        3          2.6        0.69      114.0            2.97
                                                                       (8.5)      (0.02)      (3.3)          (0.09)

---------------------------------------------------------------------------------------------------------------------
EP-49        60      N210     -50        24        27        3          3.0        1.11      131.4            3.74
                                                                       (9.8)      (0.03)      (3.8)          (0.11)
---------------------------------------------------------------------------------------------------------------------
EP-54        66      N240     -50        44        56       12         11.3        2.01      102.6            4.06
                                                                      (37.1)      (0.06)      (3.0)          (0.12)

Includes:                                54        56        2          1.9        8.94      269.5           14.33
                                                                       (6.2)      (0.26)      (7.9)          (0.42)
---------------------------------------------------------------------------------------------------------------------
EP-58        60      N060     -50        49        50        1          1.0        1.00      106.0            3.12
                                                                       (3.3)      (0.03)      (3.1)          (0.09)
---------------------------------------------------------------------------------------------------------------------
EP-61       151.5    N240     -60      135.5     136.5       1          0.9        7.41       99.5            9.40
                                                                       (2.9)      (0.22)      (2.9)          (0.27)
---------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      18

<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                        True                                 Gold
                                         Intersection     Drilled    Thickness     Gold      Silver         Equiv.
 Drill        TD                         From      To     Interval       m         g/t        g/t          g/t (opt)
 Hole          m     Azim     Angle       m         m        m         (ft)       (opt)      (opt)         Au+(Ag/50)
---------------------------------------------------------------------------------------------------------------------
<S>          <C>     <C>      <C>        <C>      <C>        <C>      <C>         <C>        <C>             <C>
EP-62        81.5    N240     -60         68       72        4          3.8        2.93       88.4            4.70
                                                                      (12.5)      (0.09)      (2.6)          (0.14)
----------------------------------------------------------------------------------------------------------------------
EP-64        111     N240     -50         89       93        4          3.9        7.79      568.5           19.16
                                                                      (12.8)      (0.23)     (16.6)          (0.56)
----------------------------------------------------------------------------------------------------------------------
EP-65        153      --      -90        124      126        2          1.0        9.31      286.4           15.04
                                                                       (3.3)      (0.27)      (8.4)          (0.44)
----------------------------------------------------------------------------------------------------------------------
EP-69        115     240      -60         64       65        1          0.8        2.16      201.6            6.05
                                                                       (2.6)      (0.06)      (5.9)          (0.18)

and                                      100      103        3          2.5        4.10      479.0           13.68
                                                                       (8.2)      (0.12)     (14.0)          (0.40)
----------------------------------------------------------------------------------------------------------------------
EP-70        135     240      -70        117      124        7          5.4       15.92     1634.1           48.60
                                                                      (17.7)      (0.46)     (47.7)          (1.42)

Includes:                                120      123        3          2.3       30.73     3166.3           94.01
                                                                       (7.6)      (0.90)     (92.3)          (2.74)
----------------------------------------------------------------------------------------------------------------------
EP-74        144     240      -70        126      132        6          4.2        3.34      315.9            9.66
                                                                      (13.8)      (0.10)      (9.2)          (0.28)

Includes:                                126      128        2          1.4        2.90      299.0            8.88
                                                                       (4.6)      (0.08)      (8.7)          (0.26)

and                                      129      132        3          2.1        4.32      414.7           12.61
                                                                       (6.9)      (0.13)     (12.1)          (0.37)

Includes:                                131      132        1          0.7        7.58      938.5           26.40
                                                                       (2.3)      (0.22)     (27.4)          (0.77)
----------------------------------------------------------------------------------------------------------------------
EP-76        102     240      -50         75       76        1          0.8        1.61      204.0            5.69
                                                                       (2.6)      (0.05)      (5.9)          (0.17)

and                                       80       84        4          3.0        3.47      352.8           10.53
                                                                       (9.8)      (0.10)     (10.3)          (0.31)

and                                       88       91        3          2.3        7.89      764.5           23.18
                                                                       (7.5)      (0.23)     (22.3)          (0.68)
----------------------------------------------------------------------------------------------------------------------
EP-77        93      240      -50         64       66        2          1.5        3.75      380.5           11.36
                                                                       (4.9)      (0.11)     (11.1)          (0.33)
----------------------------------------------------------------------------------------------------------------------
EP-79       102      240      -50         83       84        1          0.9        1.20      120.0            3.60
                                                                       (3.0)      (0.03)      (3.5)          (0.10)
----------------------------------------------------------------------------------------------------------------------
EP-80       108      240      -50         73       74        1          0.9        4.32      583.0           15.98
                                                                       (3.0)      (0.13)     (17.0)          (0.47)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

Samples from all holes were prepared by Bondar-Clegg in Argentina and assayed by
N.A. Degerstrom, Inc. of Spokane, Washington. Gold and silver values were
obtained by fire assay. An independent laboratory conducted check assays on
separate sample splits of the significant drill intersections. Holes EP-66 to
68, EP-71 to 73 and EP-81- to 83 failed to intersect the vein or contained assay
values from nil to anomalous.
--------------------------------------------------------------------------------

     The assay results and the width of the vein intersected in the remaining
     holes confirm the relatively strong continuity of the vein along strike and
     down-dip and its well-mineralized nature.

     Saavedra West is interpreted as a synvolcanic graben developed within the
     Bajo Pobre Formation, and infilled by pyroclastic and lesser sedimentary
     rocks correlated with the La Matilde Formation. Pebble dikes are abundant
     within the graben and ignimbrites that may be correlative with the Chon
     Aike Formation occur as dikes along one edge. Grab samples with up to 22
     g/t Au and 10,000 g/t Ag occur, as well as numerous trench and 1.52 m (5')
     drill sample intervals with *1 g/t Au and/or 500 g/t Ag, generally within
     north-northwest trending structures. Illite-silica alteration, typical of
     low sulfidation epithermal systems, surrounds

* represents greater than

                                      19

<PAGE>

     the structures. Significant mineralization is located at Sinter Flats and
     on Discovery Hill, the latter of which appears to have been a locus for
     magmatic and hydrothermal explosive activity. The easternmost
     graben-bounding fault, which has not been drill tested, contains anomalous
     Au (176 to 599 ppb) and Hg (360 to 2,000 ppb).

     Drill intersections on Discovery Hill include 3.0 m (10') @ 115.04 g/t Au
     and 3,509 g/t Ag in hole EP-21, 16.8 m (55') @ 8.05 g/t Au and 1,163 g/t Ag
     (includes 1.52 m (5') @ 50.3 g/t Au) in EP-12, 15.2 m (50') @ 13.48 g/t Au
     and 719.9 g/t Ag (includes 1.52 m (5') @ 70.8 g/t Au) in EP-20, and 3.0 m
     (10') @ 1.88 g/t Au in EP-18. Gradient array IP surveying shows several
     [ligathre]600 m (1,968') long resistors within the graben, and a strong,
     subhorizontal chargeability/apparent resistivity anomaly beneath Discovery
     Hill thought to be caused by a siliceous, sulfide-bearing zone of
     mineralization within a permeable stratigraphic unit, possibly an avalanche
     deposit on the floor of the graben. Such a zone, if economic, might be
     bulk-mineable. Previous drilling in Sinter Flats intersected quartz-bearing
     structures with 3.0 m (10') @ 2.19 g/t Au and 209 g/t Ag in EP-15 and 1.52
     m (5') @ 2.9 g/t Au and 36.1 g/t Ag in EP-35. This drilling was undertaken
     prior to the acquisition of geophysical information.

     In January 2000, three deep diamond drill holes tested a geophysical
     anomaly beginning about 100 m (328 feet) beneath the surface at Discovery
     Hill. Sulfide-bearing rocks and silicification, which can be indicators of
     precious metal mineralization, were encountered in all three holes. Assay
     results ranged from nil to anomalous.

     El Pluma West is an area with parallel stockwork quartz veins in the Bajo
     Pobre Formation. Prior to 2000, work at El Pluma West focused on its
     potential for disseminated mineralization. Sampling in 2000 was done to
     evaluate the high grade vein potential. This sampling included 300 rock
     chip channel samples collected from several exposed quartz veins. The
     results indicate excellent potential for the discovery of more high-grade
     gold/silver mineralization at depth and along strike, and identified a
     number of drill-ready targets.

     The sample results define two gold/silver veins with values up to 0.40 oz/t
     (13.58 g/t) gold and 14.1 oz/t (483.5 g/t) silver and 0.36 oz/t (12.20 g/t)
     gold and 11.1 oz/t (382.2 g/t) silver over a 3.3 ft (1 m) and 6.6 ft (2 m)
     width. Of the samples taken, 85 percent contained greater than 0.03 oz/t (1
     g/t) gold and/or 1.46 oz/t (50 g/t) silver on the best two exposed quartz
     veins. Sampling of the veins was taken over a vertical range of 200 ft (61
     m). The mineralized areas are approximately 150 m (500 ft) and 250 m (820
     ft) in length, respectively. The veins are open to the north and south,
     where they are covered, and at depth. In addition, other veins remain to be
     sampled.

     La Sorpresa is a zone of stockwork and northwest-trending quartz veins
     which cut Bajo Pobre andesite in a small window through Cretaceous
     sediments. The best surface sample assayed 15.4 g/t Au, and one drill hole
     intersected 5' (1.52m) @ 10.2 g/t Au, and 5' m (1.52) @ 5.2 g/t Au. Two of
     three holes contained elevated Hg (up to 750 ppb in a background of <20).
     The mineralized zone is open to the northwest under a cover of Cretaceous
     sediments.

     Cerro Saavedra is a 1.5 km wide, 100 m high hill, rising from a plain of
     Bajo Pobre andesite and Quaternary basalt. The bulk of the hill is altered
     to soft white clay with a number of elongate, one to 20 m wide zones of
     siliceous rock. Alteration minerals belong to the advanced argillic
     assemblage, with hydrothermal kaolinite and dickite predominating. This
     widespread advanced argillic alteration is interpreted as a partially
     eroded lithocap. The deep erosion level within the lithocap means that any
     epithermal mineralization should outcrop. The prospectivity at Cerro
     Saavedra is thus considered low. There is some potential for low
     sulfidation epithermal mineralization adjacent to Cerro Saavedra.

                                      20

<PAGE>

     Cerro Celular is a 70 m high hill of Chon Aike ignimbrites overlying a
     plateau of Bajo Pobre andesite. A structure with associated dickite,
     kaolinite and possible diaspore passes through the hill and accounts for
     its resistance to erosion. A hill 800 m south of Cerro Celular has a
     similar lithology and alteration, and several outcrops nearby are
     silicified. The target here would be high sulfidation epithermal
     mineralization.

     Roadside, West Portuguese and Breccia Hills, received only minimal
     attention. Roadside and West Portuguese are north-northwest striking vein
     systems cutting andesite of the Bajo Pobre Formation. The Roadside system
     can be traced for 200 m, and the best assay to date is 48 ppb Au and 0.77
     g/t Ag; the West Portuguese system can be traced for almost two kilometers
     and has a best assay of 917 ppb Au and 57.4 g/t Ag. The interest in these
     two prospects comes not from any single feature noted to date, but rather
     from their overall at least superficial similarity with the highly
     prospective Huevos Verdes area. Breccia Hills hosts a rhyolite breccia; as
     a possible volcanic center it is prospective.

     WORK ON THE PROPERTY BY MAURICIO HOCHSCHILD & CIA. LTDA. ("MHC") FROM 2001
     ONWARD:

     In 2001, subsequent to the signing of an option and joint venture
     agreement, MHC, as operator of the venture (see property ownership section
     below), completed an extensive exploration program included surveying,
     geophysics, geology and 30 core drill holes for 5,111 meters. Twenty-two
     core holes were drilled on the Huevos Verdes North and South veins and two
     holes were drilled to test a geophysical anomaly close to the Huevos Verdes
     South vein. Four additional holes (HVD-27 through HVD-30) were drilled to
     test for a northern extension of the vein system beneath basalt cover,
     based on the results of the geophysical survey.

     A total of 1,286 diamond drill samples were assayed for gold by Geolab in
     Argentina and other elements by Geolab Chile. Check assays were completed
     by Bondar Clegg and Alex Stewart Labs.

     Of the 22 holes which targeted the vein, all successfully intersected the
     mineralized vein structure, and 12 intercepted significant values in gold
     and silver (up to 7.49 g/t Au and 822 g/t Ag over 3.0 m true thickness in
     hole HVD-11, see table below). Significantly, hole HVD-13 shows the vein to
     extend to at least 250 m beneath the post-Jurassic paleosurface. The
     overall drill pattern shows the two vein segments (Huevos Verdes North and
     Huevos Verdes South) to have a minimum combined strike length of 2.25km.
     Drill holes HVD-2, -5, -8 and -18 successfully expanded known extent of the
     Huevos Verdes South ore shoot to the north and south. Drill holes HVD-7 and
     -23 and HVD-11, -12, -20 and -22 similarly expand the known extent of the
     Central ore shoot and North ore shoot, respectively, on the Huevos Verdes
     North vein segment.

        SIGNIFICANT GOLD AND SILVER INTERCEPTS IN CORE DRILLING AT THE HUEVOS
                 VERDES ZONE, EL PLUMA/CERRO SAAVEDRA, ARGENTINA

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                                                            Gold
                                          Intersection      Drilled     True                                Equiv.
Drill          T.D.                       From       To     Interval  Thickness    Gold        Silver       (g/t)
Hole*          (m)      AZ     Angle       (m)       (m)       (m)      (m)        (g/t)       (g/t)       Au+(Ag/50)
---------------------------------------------------------------------------------------------------------------------
<S>           <C>       <C>     <C>       <C>     <C>          <C>      <C>        <C>          <C>           <C>
HVD-1#         68.62    240     -50        37.7    41.0        3.3      3.02        4.33         408          12.49

includes                                   39.1    40.0        0.9      0.82        5.90         950          24.90
---------------------------------------------------------------------------------------------------------------------
HVD-2         183.61    240     -80       162.8   163.8        1.0      0.79        8.32          10           8.52
---------------------------------------------------------------------------------------------------------------------
HVD-5         151.58    240     -70       135.5   136.3        0.8      0.66       13.77         545          24.67
---------------------------------------------------------------------------------------------------------------------
HVD-7         163.17    240     -70       107.6   108.2        0.6      0.46        1.18         462          10.42
---------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      21

<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                                                            Gold
                                          Intersection      Drilled     True                                Equiv.
Drill          T.D.                       From       To     Interval  Thickness    Gold        Silver       (g/t)
Hole*          (m)      AZ     Angle       (m)       (m)       (m)      (m)        (g/t)       (g/t)       Au+(Ag/50)
---------------------------------------------------------------------------------------------------------------------
<S>           <C>       <C>     <C>      <C>      <C>         <C>       <C>        <C>         <C>            <C>
HVD-8         245.52    240     -50       187.1   187.6        0.5      0.50       16.10       1400           44.10
---------------------------------------------------------------------------------------------------------------------
HVD-11        160.12    240     -70       106.2   106.6        0.4      0.24        5.52         838          22.28

and                                       117.1   122.1        5.0      3.00        7.49         822          23.93

and                                       133.1   133.9        0.8      0.48       11.20        1040          32.00
---------------------------------------------------------------------------------------------------------------------
HVD-12        251.93    240     -70        88.7    89.1        0.4      0.27        4.26         805          16.10

and                                        92.1    92.7        0.6      0.41        3.06         502          13.10

and                                       207.3   208.8        1.5      1.03        9.09        1331          35.71
---------------------------------------------------------------------------------------------------------------------
HVD-18        142.74    240     -60      120.35   121.3       0.95      0.94        6.49         845          23.39
---------------------------------------------------------------------------------------------------------------------
HVD-19        120.17    240     -60      100.65   101.7       1.05      0.8         7.26        1413          35.52
---------------------------------------------------------------------------------------------------------------------
HVD-20        209.23    240     -70       193.0   193.4        0.4      0.24        4.57         273          10.03
---------------------------------------------------------------------------------------------------------------------
HVD-22        169.58    240     -70       111.8   112.5        0.7      0.49        2.51         342           9.35
---------------------------------------------------------------------------------------------------------------------
HDV-23        129.62    240     -60        97.8   101.1        3.3      2.74        6.78        1099          28.76
---------------------------------------------------------------------------------------------------------------------
* Holes HVD-6, 9, 10, 13, 14, 16, 17, 21, 24, 25, and 26 contain non-significant
to anomalous results.
--------------------------------------------------------------------------------------------------------------------
# Approximate twin of reverse-circulation hole EP-39.
--------------------------------------------------------------------------------------------------------------------
</TABLE>

     The following is quoted from MHC's program report to Minera Andes Inc.:

     "The Huevos Verdes vein system has sufficient drilling density to be
     confidently defined as an open-ended, 2.25 kilometer long structure. It
     consists of two principal vein segments, Huevos Verdes North (1.7
     kilometers long) and Huevos Verdes South (0.55 kilometers long) separated
     by a west-northwest trending dilation zone.

     Diamond drilling has proven an additional 150 meters of strike length to
     the Huevos Verdes South ore shoot and increased the known depth to
     mineralization in the southeast. Drill holes at 140 to 200 meters depth
     indicate that the central sector of the shoot pinches with depth and is
     below the lower limit of the precious metals horizon.

     In the Huevos Verdes North vein, diamond drilling has defined two ore
     shoots, the larger Huevos Verdes North and more restricted Huevos Verdes
     Central. At the northwestern end of the Huevos Verdes North shoot the limit
     between precious metal and base metal horizons is seen between 180 and 250
     meters below the palaeosurface".

     Additionally, forty-five line kilometers of Gradient Array I.P. and 20.25
     km of RealSection I.P. were run over an area of basalt cover to the
     northwest of the main vein at Huevos Verdes. Two strong resistivity
     anomalies at Pluma South and Pluma West are interpreted as possible
     subcropping vein. On one of the I.P. anomalies, which extends for 1.6
     kilometers directly on strike of Huevos Verdes vein at Pluma South, four
     holes were drilled through the basalts. Two of these holes intersected
     quartz veining. Although the vein returned low

                                      22

<PAGE>

     precious metal values, MHC was encouraged by the apparent continuity of
     the vein system to the north. Further exploration is required in this
     area to determine if the main vein was in fact intersected. In addition,
     a second, 750 meter long geophysical target to the north of Huevos Verdes
     at Pluma West remains to be tested. This anomaly may reflect a subsurface
     extension of the high-grade surface veins sampled by Minera Andes in
     2000, north of the basalt cover at Pluma West.


     Additionally, MHC completed an exploration program on six areas 15 to 40 km
     south and west of Huevos Verdes. The program included prospecting, mapping
     and sampling on six primary target areas recognized from Minera Andes'
     previous work, as well as work on previously unsampled areas.

     In February 2002 MHC announced a program to develop underground access at
     Huevos Verdes by constructing two 45-degree decline shafts. Drifts will be
     developed on the mineralized structure at four levels: 50, 75, 100, and 125
     meters of depth (160, 246, 320 and 410 feet, respectively). These
     horizontal galleries or drifts will then allow underground drilling and
     exploration to follow the trend of the mineralized structure. Vertical
     two-compartment shafts will also be built as required for material
     transport and ventilation. Environmental permitting and engineering studies
     are underway. MHC has scheduled construction to begin in late summer 2002.

     As part of the ongoing exploration program MHC plans to spend approximately
     $1.3 million this year on nine targets around the Huevos Verdes high-grade
     vein discovery. This program will include 3,000 meters (9,840 feet) of
     drilling, 3,600 meters (11,800 feet) of trenching, as well as geologic
     mapping, geochemical sampling and detailed topographical work. Geophysical
     work at the La Rosalia target, south of Huevos Verdes, is also planned.

     4.  EL PLUMA/CERRO SAAVEDRA PROJECT OWNERSHIP

     The El Pluma/Cerro Saavedra Project area is made up of one cateo and 104
     manifestations of discovery totaling 88,519 ha. The cateos are located in
     the western half of the province of Santa Cruz. All of the cateos are
     controlled 100% by Minera Santa Cruz S.A., a holding and operating company
     set up under the terms of the agreement with MHC. Any production from these
     lands may be subject to a provincial royalty. Holding costs for 2002 are
     estimated to be $50,000.

     In October of 2000, following completion of a 30-day due diligence period
     under a memorandum of understanding, Mauricio Hochschild & Cia. Ltda.
     ("MHC") of Lima, Peru exercised an option to enter into a joint venture on
     the project.

     On March 15, 2001, Minera Andes Inc. signed an option and joint venture
     agreement with MHC for the exploration and possible development of Minera
     Andes' 217,000-acre (88,000 hectares) epithermal gold-silver exploration
     land package at El Pluma/Cerro Saavedra, including Huevos Verdes.

     Under the agreement, MHC can earn a 51 percent ownership in El Pluma/Cerro
     Saavedra by spending a total of $3 million in three years, and a minimum of
     $100,000 per year on exploration targets within El Pluma/Cerro Saavedra
     other than Huevos Verdes, the most advanced prospect. In addition, MHC will
     make semiannual payments totaling $400,000 per year until pilot plant
     production is achieved. Lands will be transferred to, and held by a holding
     and operating company, MSC, which is owned 100 percent by MASA.

     Once MHC vests at 51 percent ownership, Minera Andes will have the option
     of participating in the development of a pilot production plant that would
     process a minimum of 50 tons per day (tpd). Minera Andes may participate on
     either a pro-rata basis, or by choosing to retain a 35 percent "carried"
     ownership interest.

                                       23

<PAGE>

     Upon the successful completion and operation of the 50 tpd plant, Minera
     Andes would have the option of participating on a pro-rata basis, or
     choosing a 15% interest in return to being "carried" to first production
     of 500 tpd.

     MHC has currently spent $1.4 million of its $3.0 million commitment. It is
     expected that MHC will complete its $3.0 million investment and vest at 51%
     in the second half of 2002.

     Total expenditure on the total property package by MHC and the Corporation
     to December 31, 2001 is $4,552,306, net of the $400,000 in payment received
     per the joint venture between MHC and the Corporation.

D.   CHUBUT PROJECT PROPERTY SUMMARY
     -------------------------------

     1.  CHUBUT PROJECT LOCATION

     Minera Andes currently holds four cateos and 15 manifestations of discovery
     in the Precordilleran region of Chubut. These properties are located at
     moderate elevations (500 to 1500 m above sea level) in western Chubut
     province in a belt 60 km north and 100 km south of the city of Esquel.
     Access to the properties is by dirt road and trail.

     2.  CHUBUT PROJECT GEOLOGY

     Jurassic-Cretaceous volcanic terranes have been the focus of exploration in
     the southern Chilean Cordillera over the past decade. These rocks are
     potential hosts of epithermal gold and gold rich replacement deposits
     attested to by the discoveries, in Chile, at Fachinal (epithermal Au-Ag),
     El Toque (base metal, stratabound replacement deposit with a minor precious
     metal credit) and, in Argentina, Brancote's recent discovery, the Esquel
     Project. This high-grade vein system contains an announced resource of plus
     4.2 million ounces of gold, and 7.8 million ounces of silver. In Argentina,
     rocks of the same age and type occur in both Andean and extra-Andean
     Patagonia which are relatively unexplored.

     3.  CHUBUT PROJECT EXPLORATION

     Chubut was included in the United Nations and Argentina government's Plan
     Patagonia-Comahue exploration program in the 1960s and 1970s. This campaign
     delineated several prospects with weak to moderate base metal anomalies.
     The samples were not analyzed for their precious metal content.

     In 1997, Minera completed reconnaissance surface sampling and mapping on
     five properties in the western Chubut province, Argentina. This work
     indicates the potential for mineralized epithermal and porphyry or
     intrusive-related systems.

     At the El Valle property, the initial exploration located a north-northeast
     trending zone of illitic alteration and mineralization about 1.5 km wide
     and three km long. Numerous northwest and northeast trending veins, some up
     to five meters wide and more than 500 m long, have also been located in
     tuffaceous rocks within the zone of alteration. The zone is open to the
     west and south under Quaternary alluvium in valleys, and open-ended to the
     north and east under Quaternary alluvium and post-mineral Tertiary basalt.

     Results from the 40-sample reconnaissance program on this property show
     gold values ranging from below detection limit to 7.9 g/t. Several high
     values, above 3 g/t gold, are from outcrops and float from multistage
     epithermal quartz veins. Some of the samples with low gold values show
     strongly anomalous pathfinder

                                       24

<PAGE>

     elements such as mercury (in the low 2,000 to 13,000 ppb range) that may
     indicate higher levels in the gold system. No exploration was done at El
     Valle in 2001.

     Under an option to purchase agreement (see below) Brancote Holdings PLC has
     been exploring the Leon, Leleque and Willimanco properties. At Willimanco,
     restricted outcrops of veins yielded assays of less than 1 g/ton. A
     Brancote news release from April 25, 2001 commented on their work at Leon
     and Cordon Leleque as follows: "Field exploration in the Cordon Leleque
     area, located 50 to 70 kilometers north of the Esquel Gold Project, has
     resulted in encouraging findings. A broad zone, anomalous in gold and base
     metals, extends over ten square kilometers. Within Cordon Leleque a number
     of outcropping epithermal veins have been identified, including one of
     greater than15 meters width and 300 meters long. These veins show a similar
     style to those in the Cordon Esquel, with "first pass" grab samples
     reporting up to 2 g/t gold. Exploration is ongoing in this highly
     prospective northern area."

     The Corporation had spent $32,823 through December 31, 2001, on the Chubut
     Project, net of $200,000 in payment received under the option-to-purchase
     agreement on the properties as discussed below.

     4.  CHUBUT PROJECT OWNERSHIP

     The Corporation currently controls four cateos and 15 manifestations of
     discovery (totaling 38,420 ha) in Chubut province.


     In August 2000, Minera Andes Inc. and Brancote Holdings PLC subsidiaries
     signed an agreement to purchase two of Minera Andes' gold exploration
     properties in Chubut province, southern Argentina.The agreements cover the
     Willimanco, Leleque and Leon properties. Brancote's Argentine subsidiaries,
     Minera El Desquite S.A. and Cordon Leleque S.A., have a four-year option to
     purchase Willimanco and Leleque (and adjoining Leon properties) for a
     combined total of $1.25 million and a 2% net smelter return royalty.
     Combined payments are $50,000 upon signing the agreements, and $50,000
     after six months. Payments increase to $100,000 every six months until year
     three, at which time payments increase to $150,000 every six months. Fourth
     year payments total $450,000 for a total of $1.25 million at the end of
     four years.

II.  COLOMBIA

Minera Andes Colombia Project consisted of the California Vetas and Mocoa
Projects.

The California-Vetas Project comprised a total of 4,739 ha in five exploration
licenses located in eastern Santander Department, approximately 55 km northeast
of the city of Bucaramanga. Two of the five licenses were purchased by the
Corporation and three were held under option-to-purchase agreements.

In 1997, the Corporation conducted an initial reconnaissance visit to the area
taking rock-chip geochemical samples and confirming the overall characteristics
described in the Geological Survey reports.

The Mocoa Project comprised a 4,800 ha application for an exploration license
located in western Putumayo Department approximately 10 km north of the town of
Mocoa.

Due to adverse conditions both in Colombia and the exploration industry as a
whole, the Corporation terminated its exploration program and all land
agreements in Colombia in 2000 with a write-off of deferred expenditures of
$177,434.

                                       25

<PAGE>

III.     ROMANIA

The Corporation's Romanian gold exploration program consisted principally of the
Voia and Ostoros projects.

On March 12, 1999, the Corporation and National Agency for Mineral Resources
(NAMR) representatives signed an exclusive License of Concession For Exploration
No. 153 (Voia).The Voia project is located in the Metaliferi Mountains (South
Apuseni Mountains) of the Transylvania region of Romania. Through December 31,
2000, the Corporation spent $75,831 on the Voia project.

On March 12, 1999, the Corporation and NAMR signed an Exploration License on the
Ostoros concession (License of Concession for Exploration No 152). The Ostoros
project (181 sq. km) is located in Harghita County, Romania in the Eastern
Carpathian mountains.

The Ostoros property was 18,100 hectares in area. Through December 31, 2000, the
Corporation spent $45,260 on the Ostoros project.

Due to adverse conditions both in Romania and the exploration industry as a
whole, the Corporation terminated its exploration program and all land
agreements in Romania in 2000 with a write-off of deferred expenditures of
$333,584.

ITEM 3.  LEGAL PROCEEDINGS

The Corporation is not currently aware of any material legal proceeding, actual,
contemplated or threatened, to which the Corporation is party or of which any of
its property interests is subject.

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

There were no matters submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 2001.

                                       26

<PAGE>

                                    PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The Corporation's Common Shares are listed on the Canadian Venture Exchange
("CDNX") under the trading symbol MAI and, since November 5, 1997, the Common
Shares have also been traded on the NASD over-the-counter market under the
trading symbol MNEAF.

The high and low prices for the Common Shares reported by the CDNX for each of
the quarters during the years ended December 31, 2001 and 2000 are set forth in
the table below:

                                         High ($Cdn)       Low ($Cdn)

2001     January - March                    0.12             0.06
         April - June                       0.15             0.09
         July - September                   0.13             0.07
         October - December                 0.12             0.06

2000     January - March                    1.00             0.16
         April - June                       0.25             0.15
         July - September                   0.20             0.13
         October - December                 0.15             0.09

The high and low prices for the Common Shares reported for the NASD
over-the-counter market for each of the quarters during the years ended December
31, 2001 and December 31, 2000 are set forth in the table below:

                                         High ($US)         Low ($US)

2001     January - March                    0.15             0.05
         April - June                       0.10             0.06
         July - September                   0.09             0.05
         October - December                 0.08             0.03

2000     January - March                    0.75             0.13
         April - June                       0.18             0.11
         July - September                   0.14             0.09
         October - December                 0.11             0.06

These quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission, and may not represent actual transactions.

As of December 31, 2001, there were approximately 359 holders of Common Shares
of the Corporation. No dividends have ever been paid on the Common Shares of the
Corporation, and the Corporation intends to retain its earnings for use in the
business and does not expect to pay dividends in the foreseeable future.

On November 30, 2000, Degerstrom acquired 1,175,000 special warrants of the
Corporation at a price of Cdn$0.20 per special warrant for gross proceeds of
Cdn$235,000. Each special warrant entitles the holder to acquire one unit

                                       27

<PAGE>

comprising one common share of the Corporation and one non-transferable common
share purchase warrant at no additional cost during the period commencing on the
closing date, and ending at 4:30 p.m. (Calgary time) on the earlier of: (i) five
(5) business days after the day upon receipt of a notice from the Corporation
requesting the exercise of the special warrants; and (ii) November 30, 2002.
Each purchase warrant is exercisable into one common share at the price of
Cdn$0.20 if exercised on or before 4:30 p.m. (Calgary time) on the first year
anniversary of the issuance date or at a price of Cdn$0.25 if exercised on or
before 4:30 (Calgary time) on the second year anniversary of the issuance date.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
        OPERATIONS

The following discussion should be read in conjunction with the Corporation's
audited consolidated financial statements and notes thereto for the years ended
December 31, 2001 and 2000 which have been prepared in accordance with generally
accepted accounting principles ("GAAP") in Canada. Differences from U.S. GAAP
are described in Note 12 to the audited consolidated financial statements. The
Corporation's financial condition and results of operations are not necessarily
indicative of what may be expected in future years.

OVERVIEW

The principal business of the Corporation is locating, acquiring, exploring,
and, if warranted, developing mineral properties located in the Republic of
Argentina. From 1997 through 2000, the Corporation was also active in Colombia
and Romania but elected to abandon the properties in these countries at the end
of 2000. The Corporation carries out its business by acquiring, exploring, and
evaluating mineral properties through its ongoing exploration program, and
either joint-venturing or developing these properties further, or disposing of
them if the properties do not meet the Corporation's requirements.

The Corporation's current properties and projects consist of mineral rights and
applications for mineral rights covering approximately 163,000 hectares in three
Argentine provinces. The lands comprise option-to-purchase contracts,
exploration, and mining agreements and direct interests through the
Corporation's filings for exploration concessions. The Corporation's properties
are all early stage exploration prospects, except for the El Pluma/Cerro
Saavedra property, which is an advanced-stage exploration project. No proven or
probable reserves have yet been identified. See "Description of Properties."

The Corporation was incorporated in Alberta in July 1994. In November 1995, the
Corporation effected an amalgamation with Scotia Prime Minerals, Incorporated,
also an Alberta corporation, which at that time was an inactive corporation and
was a reporting issuer under the Securities Act (Alberta) (Scotia was a
reporting issuer in several other jurisdictions), and its Common Shares traded
on The Alberta Stock Exchange (presently, the Canadian Venture Exchange). The
business combination between Minera Andes and Scotia Prime Minerals was
accounted for using the purchase method of accounting, whereby Minera Andes is
identified as the acquiror. See "Note 2 to Notes to Consolidated Financial
Statements."

PLAN OF OPERATIONS

The Corporation has budgeted and plans to spend approximately $0.6 million on
its mineral property and exploration activities and general and administrative
expenses through 2002, with most properties being kept on care and maintenance.
See "Description of Properties." In addition, the Corporation's joint venture
partner on the El Pluma/Cerro Saavedra and Chubut projects will be spending in
excess of $1 million for exploration over the next 12 months. The Corporation's
existing funds plus funds from the joint ventures on the El Pluma/Cerro

                                       28

<PAGE>

Saavedra and Chubut projects are estimated by management to be sufficient to
finance these activities through 2002. If additional funds are raised during
2002 through the exercise of warrants or options, through a further equity
financing, by the sale of property interests or by joint venture financing,
additional exploration could be planned and carried out on the Corporation's
properties before year-end. If the Corporation were to develop a property or a
group of properties beyond the exploration stage, substantial additional
financing would be necessary. Such financing would likely be in the form of
equity, debt, or a combination of equity and debt. The Corporation has no
current plan to seek such financing and there is no assurance that such
financing, if necessary, would be available to the Corporation on favorable
terms.

RESULTS OF OPERATIONS

2001 COMPARED TO 2000

In 2001, the Corporation's net loss was $0.4 million (1 cent per share),
compared with a net loss of $1.15 million (4 cents per share) in 2000. The net
loss decreased mainly as a result of there being no property write-offs in 2001
versus write-offs in 2000 of $0.5 million. The Corporation also continued the
cost cutting program begun in 1999, and further reduced its general and
administrative costs from $0.7 million in 2000 to $0.5 million in 2001.
Significant savings were achieved in consulting fees, legal and insurance costs,
office overhead, telephone and travel costs.

While the Corporation would like to increase its programs in the future,
continuing the prospecting, acquisition, exploration and evaluation of property
interests that have been its hallmark since its inception, the plans for 2002
will focus on the Santa Cruz, Chubut and San Juan properties. The Corporation
expects that both the Chubut projects and the Santa Cruz projects will be
further explored by its joint venture partners during 2002. As in the past, if a
property or program does not meet the Corporation's requirements in the future,
costs associated with abandonment of the property or program will result in a
charge to operations. For this reason, the Corporation may incur additional
write-offs in future periods, although the amounts of such write-offs are
difficult to predict, as they will be determined by the results of future
exploration activities.

Mineral property and deferred exploration costs in 2001 amounted to $0.2 million
compared to $0.8 million in 2000. The Corporation focused all its available
exploration resources on the El Pluma/Cerro Saavedra properties in Santa Cruz
province during 2001, and the success of the exploration carried out on these
properties over the last few years resulted in the joint venture arrangement
which was signed March 15, 2001. The Corporation received mineral property
option proceeds of $400,000 from the El Pluma/Cerro Saavedra joint venture in
2001 (zero in 2000) and $150,000 which was the payment from the purchase and
sales agreement on the Chubut projects in 2001 (compared with $50,000 in 2000).

2000 COMPARED TO 1999

In 2000, the Corporation's net loss was $1.15 million (4 cents per share),
compared with a net loss of $1.8 million (9 cents per share) in 1999. The net
loss decreased mainly as a result of reduced property write-offs in 2000 of $0.5
million compared with $0.9 million in 1999. The Corporation also continued the
cost cutting program begun in 1999, and further reduced its general and
administrative costs from $0.9 million in 1999 to $0.7 million in 2000.
Significant savings were achieved in wages and benefits, consulting fees, office
overhead, telephone and travel costs, although these savings were partially
offset by foreign exchange losses.

The Corporation again undertook a review of its exploration properties in 2000,
as in prior years, and elected to write-off a total of $0.5 million in deferred
costs for the Colombian and Romanian projects. Because of adverse

                                       29

<PAGE>

conditions in both these countries, and in the precious mineral exploration
industry as a whole, the Corporation terminated its Colombian and Romanian
exploration programs and all land agreements at the end of 2000. While the
Corporation would like to increase its programs in the future, continuing the
prospecting, acquisition, exploration and evaluation of property interests that
have been its hallmark since its inception, the plans for 2002 will focus on
the Santa Cruz, Chubut and San Juan properties. The Corporation expects that
both the Chubut projects and the Santa Cruz projects are to be explored by its
joint venture partners during 2002. As in the past, if a property or program
does not meet the Corporation's requirements in the future, costs associated
with abandonment of the property or program will result in a charge to
operations. For this reason, the Corporation may incur additional write-offs in
future periods, although the amounts of such write-offs are difficult to
predict, as they will be determined by the results of future exploration
activities.

Mineral property and deferred exploration costs in 2000 amounted to $0.8
million, down from $1.2 million in 1999. The Corporation focused all its
available exploration resources on the El Pluma/Cerro Saavedra properties in
Santa Cruz province during 2000, and the success of the exploration carried out
on these properties over the last few years resulted in the joint venture
arrangement which was signed March 15, 2001. In addition, the Corporation
received mineral property option proceeds of $50,000 in 2000 (compared to zero
in 1999) which was the initial payment from the purchase sales agreement on the
Chubut projects.

LIQUIDITY AND CAPITAL RESOURCES

Due to the nature of the mining business, the acquisition, exploration, and
development of mineral properties require significant expenditures prior to the
commencement of production. To date, the Corporation has financed its activities
through the sale of equity securities and joint venture arrangements. The
Corporation expects to use similar financing techniques in the future, however,
there can be no assurance that the Corporation will be successful in its
financing activities in the future. The Corporation's ability to continue in
operation is dependent on its ability to secure additional financing, and while
it has been successful in doing so in the past (including the property and
financing transactions in "Plan of Operations and Results of Operations" above),
there can be no assurance it will be able to do so in the future. Management is
actively pursuing such additional sources of financing; however, in the event
this does not occur, there is doubt about the ability of the Corporation to
continue as a going concern. These financial statements do not include the
adjustments that would be necessary should the Corporation be unable to continue
as a going concern.

The Corporation's exploration and development activities and funding
opportunities, as well as those of its joint venture partners, may be materially
affected by precious and base metal price levels and changes in those levels.
The market prices of precious and base metals are determined in world markets
and are affected by numerous factors which are beyond the Corporation's control.

At December 31, 2001, the Corporation had cash and cash equivalents of $0.1
million, compared to cash and cash equivalents of $0.1 million as of December
31, 2000. Working capital at December 31, 2001 was $30,000 compared with $35,000
at the end of 2000. Net cash used in operating activities during 2001 was $0.4
million compared with $0.8 million in 2000. Investing activities in 2001
provided $0.4 million, compared with $0.7 million used in 2000. This savings is
a result of the increase in mineral property proceeds in 2001, coupled with
management's decision to conserve the Corporation's resources in this period of
low metals prices, and minimizing exploration activities.

The principal financing activity during 2001 was the receipt of net proceeds of
$45,800 from the sale of all shares in NADSA and certain unused assets in
Argentina to N.A. Degerstrom, Inc.

                                       30

<PAGE>

SUBSEQUENT EVENTS

In early January of 2002 Argentina devalued its currency, which was previously
tied to the U.S. dollar at the ratio of one peso equals one U.S. dollar. By
February of 2002, the peso was allowed to float freely and in early March of
2002 had reached a ratio of 2.5 pesos to the dollar.

In January 2002, Argentine laws went into effect on all dollar contracts,
whereby they were converted to pesos at a ratio of one peso equals one dollar.
The Argentina government also put into place laws that prohibit Argentina
companies from transferring money out of the country.

The new laws also provide that the parties to an agreement affected by these
changes will negotiate a restructuring of their respective obligations,
attempting to share in an equitable manner the effects of change in exchange
rate within 180 days. If an agreement cannot be reached, the parties can follow
mediation procedures in the appropriate tribunals. During the restructuring or
mediation procedure the debtor party cannot refuse to make payments and the
creditor cannot refuse to accept payment.

The agreements on the Chubut properties are between Argentine subsidiaries of
Minera Andes Inc. and Brancote Holdings PLC and are affected by these laws. The
agreements are in U.S. dollars and the payment was specified to be made to an
account outside the country. The Corporation is currently seeking legal advice
inside and out of Argentina, and is not able to ascertain the impact that the
law and currency changes in Argentina will have on the Corporation.

                                       31

<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<S>                                                                                      <C>
                                                                                          PAGE

         Reports of Independent Auditors                                                 33-34

         Consolidated Balance Sheets at December 31, 2001 and 2000                          35

         Consolidated Statements of Operations and Accumulated Deficit
         for the years ended December 31, 2001 and 2000 and for the
         period from July 1, 1994 (commencement) through December 31, 2001                  36

         Consolidated Statements of Mineral Properties and Deferred Exploration
         Costs for the years ended December 31, 2001 and 2000 and for the
         period from July 1, 1994 (commencement) through December 31, 2001                  37

         Consolidated Statements of Cash Flows for the years ended December 31,
         2001 and 2000 and for the period from July 1, 1994
         (commencement) through December 31, 2001                                           38

         Notes to Consolidated Financial Statements                                         39
</TABLE>

                                       32

<PAGE>

                                BDO DUNWOODY LLP

AUDITOR'S REPORT

To the Shareholders of Minera Andes Inc.:

We have audited the consolidated balance sheet of Minera Andes Inc. as at
December 31, 2001 and the consolidated statements of operations and accumulated
deficit, mineral properties and deferred exploration costs and cash flows for
the year then ended. We have also audited the consolidated statements of
operations and accumulated deficit, mineral properties and deferred exploration
costs and cash flows for the period from commencement (July 1, 1994) through
December 31, 2001. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of Minera Andes Inc. as at December
31, 2001 and the results of its operations and its cash flows for the year then
ended and for the period from commencement (July 1, 1994) through December 31,
2001 in accordance with Canadian generally accepted accounting principles.

The comparative figures were reported upon by other auditors. Their report
covered the year ended December 31, 2000, contained no reservation and was dated
March 15, 2001.

                                                       By:/s/  BDO Dunwoody, LLP
                                                           Chartered Accountants
                                                          Vancouver, B.C. CANADA
                                                                   March 6, 2002

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

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 Corporation's ability to continue as a going concern such as those described
in Note 1 of the consolidated financial statements. Our report to the
shareholders dated March 6, 2002, is expressed in accordance with Canadian
reporting standards, which do not permit a reference to such conditions and
events in the auditors' report when these are adequately disclosed in the
financial statements.

                                                        By:/s/ BDO Dunwoody, LLP
                                                           Chartered Accountants
                                                          Vancouver, B.C. CANADA
                                                                   March 6, 2002

                                       33

<PAGE>


                           PRICEWATERHOUSECOOPERS LLP

Auditor's Report

To the Shareholders of Minera Andes Inc.:

We have audited the consolidated balance sheet of Minera Andes Inc. and
subsidiaries, as at December 31, 2000 and the consolidated statements of
operations and accumulated deficit, mineral properties and deferred exploration
costs and cash flows for the year then ended and cumulative from July 1, 1994
(commencement) through December 31, 2000. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of Minera Andes Inc. and subsidiaries
as at December 31, 2000 and the results of their operations and their cash flows
for the year then ended and cumulative from July 1, 1994 (commencement) through
December 31, 2000 in accordance with Canadian generally accepted accounting
principles.

We did not audit the financial statements for the period from July 1, 1994
(commencement) through December 31, 1996. These statements were audited by other
auditors whose reports have been furnished to us and which expressed opinions
without reservations. Our opinion, insofar as it relates to amounts included for
the company for the period from July 1, 1994 (commencement) through December 31,
1996, is based solely on the reports of other auditors.

                                           By:  /s/ "PricewaterhouseCoopers LLP"
                                                --------------------------------
Vancouver, B.C., Canada                         PricewaterhouseCoopers LLP
March 15, 2001                                  Chartered Accountants

Comments by the Auditors for U.S. Readers on Canada - U.S. Reporting Differences

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 Corporation's ability to continue as a going concern such as those described
in Note 1 of the consolidated financial statements. Our report to the
shareholders dated March 15, 2001, is expressed in accordance with Canadian
reporting standards which do not permit a reference to such conditions and
events in the auditors' report when these are adequately disclosed in the
financial statements.

                                           By:  /s/ "PricewaterhouseCoopers LLP"
                                                --------------------------------
Vancouver, B.C., Canada                         PricewaterhouseCoopers LLP
March 15, 2001                                  Chartered Accountants

                                       34

<PAGE>

                                                  MINERA ANDES INC.
                                         "An Exploration Stage Corporation"
                                             CONSOLIDATED BALANCE SHEETS
                                                   (U.S. Dollars)

<TABLE>
<CAPTION>
                                                                             December 31,   December 31,
                                                                                 2001          2000
                                                                            -------------- --------------
<S>                                                                          <C>            <C>
                                               ASSETS

  Current:

        Cash and cash equivalents                                            $     120,985  $   101,818

        Receivables and prepaid expenses                                            17,547       32,439
                                                                            -------------- --------------
                  Total current assets                                             138,532      134,257

  Mineral properties and deferred exploration costs (Note 3)                     3,520,389    3,859,297

  Capital assets, net (Note 4)                                                       9,148       41,063
                                                                            -------------- --------------
                  Total assets                                               $   3,668,069  $ 4,034,617
                                                                            ============== ==============
                                            LIABILITIES
 Current:
        Accounts payable and accruals                                        $       5,269  $    48,512

        Due to related parties (Note 7)                                            103,133       50,307
                                                                            -------------- --------------
                  Total current liabilities                                        108,402       98,819
                                                                            -------------- --------------
  Commitments and contingencies (Notes 1 and 6)

                                        SHAREHOLDERS' EQUITY

  Share capital (Note 5):

        Preferred shares, no par value, unlimited number authorized,
        none issued

        Common shares, no par value, unlimited number authorized

             Issued 2001--30,046,030 shares
             Issued 2000--30,000,030 shares                                    18,197,422    18,189,864

  Accumulated deficit                                                         (14,637,755)  (14,254,066)
                                                                            -------------- --------------
                  Total shareholders' equity                                    3,559,667     3,935,798
                                                                            -------------- --------------
                  Total liabilities and shareholders' equity                 $  3,668,069   $ 4,034,617
                                                                            ============== ==============
</TABLE>

  Approved by the Board of Directors:

        /s/ "Allen V. Ambrose"                       /s/ "Bonnie L. Kuhn"
  ---------------------------------           ---------------------------------
      Allen V. Ambrose, Director                   Bonnie L. Kuhn, Director


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

                                       35

<PAGE>


                                      MINERA ANDES INC.
                            "An Exploration Stage Corporation"
                 CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
                                      (U.S. Dollars)

<TABLE>
<CAPTION>
                                                                          Year Ended                Period from
                                                            -------------------------------------   July 1, 1994
                                                                                                   (commencement)
                                                                December 31,         December 31,      through
                                                                   2001                 2000     December 31, 2001
                                                            ------------------   -----------------   ---------------
<S>                                                         <C>                    <C>                <C>
Administration fees                                         $       25,943         $      24,248      $    230,955

Audit and accounting                                                44,610                61,079           332,832

Consulting fees                                                     43,410                93,760           919,960

Depreciation                                                         4,278                 4,128            58,335

Equipment rental                                                        --                 2,510            21,522

Foreign exchange loss                                                  597                12,340           407,012

Insurance                                                           20,260                56,138           229,974

Legal                                                               66,070               112,074           640,256

Maintenance                                                             --                   549               892

Materials and supplies                                                  --                    --            45,512

Office overhead                                                     65,689                93,543         1,368,278

Telephone                                                           17,418                33,446           355,816

Transfer agent                                                       5,517                13,369            92,480

Travel                                                               4,822                10,472           312,413

Wages and benefits                                                 155,333               143,033         1,200,225

Write-off of deferred costs                                             --               511,018         8,118,123
                                                            ------------------   -----------------   ---------------
Total expenses                                                     453,947             1,171,707        14,334,585

Gain on sale of capital assets                                     (69,584)                   --          (104,588)

Interest income                                                       (674)              (21,062)         (452,471)
                                                            ------------------   -----------------   ---------------
Net loss                                                           383,689             1,150,645        13,777,526

Accumulated deficit, beginning of the period                    14,254,066            12,999,237                --

Share issue costs                                                       --               104,184           843,014

Deficiency on acquisition of subsidiary                                 --                    --            17,215
                                                            ------------------   -----------------   ---------------
Accumulated deficit, end of the period                      $   14,637,755         $  14,254,066      $ 14,637,755
                                                            ==================   =================   ===============
Basic and diluted net loss per common share                 $         0.01         $        0.04
                                                            ==================   =================
Weighted average shares outstanding                             30,038,972            29,467,070
                                                            ==================   =================
</TABLE>


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

                                       36

<PAGE>

                                                MINERA ANDES INC.
                                       "An Exploration Stage Corporation"
                                  CONSOLIDATED STATEMENTS OF MINERAL PROPERTIES
                                         AND DEFERRED EXPLORATION COSTS
                                                 (U.S. Dollars)

<TABLE>
<CAPTION>
                                                                 Year Ended
                                                    ----------------------------------------        Period from
                                                                                                    July 1, 1994
                                                                                                    (commencement)
                                                       December 31,          December 31,              through
                                                          2001                   2000             December 31, 2001
                                                    ----------------       ----------------         ------------------
<S>                                                  <C>                     <C>                      <C>
  Administration fees                                $      14,976           $     18,522             $   357,999

  Assays and analytical                                         --                 51,466                 938,822

  Construction and trenching                                    --                     --                 507,957

  Consulting fees                                           20,675                 55,256                 913,549

  Depreciation                                               7,426                 18,721                 168,867

  Drilling                                                      --                198,448                 928,833

  Equipment rental                                              --                    696                 244,068

  Geology                                                    2,328                109,885               2,903,443

  Geophysics                                                    --                     --                 309,902

  Insurance                                                  9,136                 22,406                 238,244

  Legal                                                     28,620                 43,402                 648,405

  Maintenance                                                2,253                  9,473                 159,065

  Materials and supplies                                     2,154                 23,547                 433,478

  Project overhead                                           3,853                  8,345                 295,829

  Property and mineral rights                                4,929                 18,785               1,283,154

  Telephone                                                    311                 22,275                  81,393

  Travel                                                     7,285                 72,756               1,004,395

  Wages and benefits                                       107,146                123,430                 944,970
                                                    ----------------       ----------------         ------------------
  Costs incurred during the period                         211,092                797,413              12,362,373

  Deferred costs, beginning of the period                3,859,297              3,622,902                      --

  Deferred costs, acquired                                      --                     --                 576,139

  Deferred costs written off                                    --               (511,018)             (8,118,123)

  Mineral property option proceeds                        (550,000)               (50,000)             (1,300,000)
                                                    ----------------       ----------------         ------------------
  Deferred costs, end of the period                  $   3,520,389           $  3,859,297             $ 3,520,389
                                                    ================       ================         ==================
</TABLE>


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

                                       37

<PAGE>

                               MINERA ANDES INC.
                      "An Exploration Stage Corporation"
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (U.S. Dollars)

<TABLE>
<CAPTION>
                                                                                                                Period from
                                                                 Year Ended                                     July 1, 1994
----------------------------------------------------------- --------------------------------------------       (commencement)
                                                                December 31,            December 31,               through
                                                                    2001                    2000              December 31, 2001
                                                            ---------------------    -------------------    ----------------------
<S>                                                                   <C>                  <C>                      <C>
Operating Activities:

        Net loss for the period                                       $(383,689)           $(1,150,645)             $(13,777,526)

        Adjustments to reconcile net loss to net cash

        used in operating activities:

           Write-off of incorporation costs                                  --                     --                       665

           Write-off of deferred expenditures                                --                511,018                 8,118,123

           Depreciation                                                   4,278                  4,128                    58,335

           Gain on sale of capital assets                               (69,584)                    --                  (104,588)

           Change in:

               Receivables and prepaid expense                           14,892                   (408)                  (15,561)

               Accounts payable and accruals                            (43,243)              (107,236)                  (13,932)

               Due to related parties                                    52,826                (33,105)                  103,133
                                                            ---------------------    -------------------    ----------------------
        Cash used in operating activities                              (424,520)              (776,248)               (5,631,351)
                                                            ---------------------    -------------------    ----------------------
Investing Activities:

        Incorporation costs                                                   --                     --                     (665)

        Proceeds from sale (purchase) of capital assets                   79,796                (1,853)                 (141,762)

        Mineral properties and deferred exploration                    (203,667)              (778,692)              (12,193,506)

        Proceeds from sale of subsidiaries                                10,000                     --                     9,398

        Mineral property option proceeds                                 550,000                 50,000                 1,300,000
                                                            ---------------------    -------------------    ----------------------
        Cash provided by (used in) investing activities                  436,129              (730,545)              (11,026,535)
                                                            ---------------------    -------------------    ----------------------
Financing Activities:

        Shares and subscriptions issued for cash, less
        issue costs                                                        7,558              1,125,140                16,778,871
                                                            ---------------------    -------------------    ----------------------
        Cash provided by financing activities                              7,558              1,125,140                16,778,871
                                                            ---------------------    -------------------    ----------------------
Increase (decrease) in cash and cash equivalents                          19,167              (381,653)                   120,985

Cash and cash equivalents, beginning of period                           101,818                483,471                        --
                                                            ---------------------    -------------------    ----------------------
Cash and cash equivalents, end of period                              $  120,985           $    101,818             $     120,985
                                                            =====================    ===================    ======================
</TABLE>


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

                                      38

<PAGE>

                               MINERA ANDES INC.
                      "An Exploration Stage Corporation"
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                (U.S. Dollars)

1.   NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN

The Corporation is in the business of acquiring, exploring and evaluating
mineral properties, and either joint venturing or developing these properties
further or disposing of them when the evaluation is completed. At December 31,
2001, the Corporation was in the exploration stage and had interests in
properties in three provinces in the Republic of Argentina.

The recoverability of amounts shown as mineral properties and deferred
exploration costs is dependent upon the existence of economically recoverable
reserves, the ability of the Corporation to obtain necessary financing to
complete their development, and future profitable production or disposition
thereof. The accompanying consolidated financial statements have been prepared
using Canadian generally accepted accounting principles applicable to a going
concern. The use of such principles may not be appropriate because, as of
December 31, 2001, there was significant doubt that the Corporation would be
able to continue as a going concern.

For the year ended December 31, 2001, the Corporation had a loss of $0.4 million
and an accumulated deficit of $14.6 million. In addition, due to the nature of
the mining business, the acquisition, exploration and development of mineral
properties requires significant expenditures prior to the commencement of
production. To date, the Corporation has financed its activities through the
sale of equity securities and joint venture arrangements. The Corporation
expects to use similar financing techniques in the future and is actively
pursuing such additional sources of financing.

Although there is no assurance that the Corporation will be successful in these
actions, management believes that they will be able to secure the necessary
financing to enable it to continue as a going concern. Accordingly, these
financial statements do not reflect adjustments to the carrying value of assets
and liabilities, the reported revenues and expenses and balance sheet
classifications used that would be necessary if the going concern assumption
were not appropriate. Such adjustments could be material.

Although the Corporation has taken steps to verify title to mineral properties
in which it has an interest, in accordance with industry standards for the
current stage of exploration of such properties, these procedures do not
guarantee the Corporation's title. Property title may be subject to unregistered
prior agreements and noncompliance with regulatory requirements.

2.   SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements are prepared in accordance with Canadian
generally accepted accounting principles. The statements are expressed in United
States dollars because the majority of the Corporation's exploration activities
are incurred in U.S. dollars.

     a)  Consolidation/Reporting

         These consolidated financial statements include the accounts of Minera
         Andes Inc., an Alberta Corporation, its wholly-owned subsidiaries,
         Minera Andes S.A. (MASA) and MASA's 99.99% owned subsidiary, Minera
         Santa Cruz S.A. (MSC) and NAD S.A. (NADSA), Argentine corporations; and
         Transylvania Gold S.R.L., (TGS) a Romanian corporation; its 71% owned
         subsidiary, Minera Providencia

                                      39

<PAGE>

         Inc. (MPI), an Alberta corporation; and MPI's 92% owned Colombian
         subsidiary, Minera Providencia S.A. All significant intercompany
         transactions and balances have been eliminated from the consolidated
         financial statements. No minority interest is reflected for the de
         minimus 0.01% of MSC owned by an unrelated third party.

     b)  Foreign Currency Translation
         The Corporation's consolidated operations are integrated and balances
         denominated in currencies other than U.S. dollars are translated into
         U.S. dollars using the temporal method. This method translates monetary
         balances at the rate of exchange at the balance sheet date,
         non-monetary balances at historic exchange rates and revenues and
         expense items at average exchange rates. The resulting gains and losses
         are included in the statement of operations in the reporting period.

     c)  Cash Equivalents
         The Corporation considers cash equivalents to consist of highly liquid
         investments with a remaining maturity of three months or less when
         purchased.

     d)  Mineral Properties and Deferred Exploration Costs
         Mineral properties consist of exploration and mining concessions,
         options and contracts. Acquisition and leasehold costs and exploration
         costs are capitalized and deferred until such time as the property is
         put into production or the properties are disposed of either through
         sale or abandonment. If put into production, the costs of acquisition
         and exploration will be depreciated over the life of the property,
         based on estimated economic reserves. Proceeds received from the sale
         of any interest in a property will first be credited against the
         carrying value of the property, with any excess included in operations
         for the period. If a property is abandoned, the property and deferred
         exploration costs will be written off to operations.

     e)  Capital Assets and Depreciation
         Capital assets are recorded at cost, and depreciation is provided on a
         declining balance basis over their estimated useful lives of up to five
         years at an annual rate of up to 40% to a residual value of 10%.

     f)  Share Issue Costs
         Commissions paid to underwriters on the issuance of the Corporation's
         shares are charged directly to share capital. Other share issue costs,
         such as legal, accounting, auditing and printing costs, are charged to
         accumulated deficit.

     g)  Basic and Diluted Loss Per Common Share
         Basic earnings per share (EPS) is calculated by dividing loss
         applicable to common shareholders by the weighted-average number of
         common shares outstanding for the year. Diluted EPS reflects the
         potential dilution that could occur if potentially dilutive securities
         were exercised or converted to common stock. Due to the losses in 2001
         and 2000, potentially dilutive securities were excluded from the
         calculation of diluted EPS, as they were anti-dilutive.  Therefore,
         there was no difference in the calculation of basic and diluted EPS in
         2001 and 2000.

     h)  Estimates
         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amount of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements, and the reported amounts of revenues
         and expenditures during the reporting period. Actual results could
         differ from those reported.

                                      40

<PAGE>

     i)  Fair Value of Financial Instruments
         The carrying values of cash and cash equivalents, receivables and
         prepaid expenses, accounts payable and accruals and due to related
         parties, approximate their fair values. Unless otherwise noted, it is
         management's opinion that the Corporation is not exposed to significant
         foreign currency or other risks arising from these financial
         instruments.

     j)  Accounting for Stock Options
         The Corporation provides the disclosure only requirements for stock
         options in accordance with the Emerging Issues Committee Abstract 98,
         "Stock-Based Compensation Plans - Disclosures."

     k)  New Accounting Pronouncement
         Effective January 1, 2000, the Corporation adopted the liability method
         of accounting for income taxes, following new standards adopted by the
         Canadian Institute of Chartered Accountants ("CICA"). The adoption of
         the new standards resulted in no adjustments to opening retained
         earnings. Under the new standards, future income tax assets and
         liabilities are determined based on the differences between the tax
         basis of assets and liabilities and those reported in the financial
         statements. The future tax assets or liabilities are calculated using
         the tax rates for the periods in which the differences are expected to
         be settled. Future tax assets are recognized to the extent that they
         are considered more likely than not to be realized.

3.   MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS

At December 31, 2001, the Corporation, through its subsidiaries, held interests
in a total of approximately 163,000 hectares of mineral rights and mining lands
in three Argentine provinces. Under its present acquisition and exploration
programs, the Corporation is continually acquiring additional mineral property
interests and exploring and evaluating its properties. If, after evaluation, a
property does not meet the Corporation's requirements, then the property and
deferred exploration costs are written off to operations. All properties in
Argentina are subject to a royalty agreement as disclosed in Note 6. Mineral
property costs and deferred exploration costs are as follows:

<TABLE>
<CAPTION>
================ =============== ================= ============== ================= ============== =================

                                                                    Exploration
                                  Carrying Value    Acquisition         and                         Carrying Value
   Province/                       December 31,        Costs          Overhead       Write-Offs      December 31,
    Region          Property           2000            2001             2001            2001             2001
================ =============== ================= ============== ================= ============== =================

                                                 ARGENTINA
---------------- --------------- ----------------- -------------- ----------------- -------------- -----------------
<S>              <C>                   <C>            <C>               <C>                   <C>        <C>
San Juan         Cateos                $  327,235                       $      575             $0        $  327,810
---------------- --------------- ----------------- -------------- ----------------- -------------- -----------------

                 El Pluma               1,670,774            250          (210,839)             0         1,460,185
Santa Cruz
                 --------------- ----------------- -------------- ----------------- -------------- -----------------

                 Cerro Saavedra         1,199,037                            2,927              0         1,201,964
                 --------------- ----------------- -------------- ----------------- -------------- -----------------

                 Cateos                   492,431          1,201             3,975              0           497,607
---------------- --------------- ----------------- -------------- ----------------- -------------- -----------------

Chubut           Cateos                   169,820      (146,522)             9,525              0            32,823
---------------- --------------- ----------------- -------------- ----------------- -------------- -----------------

TOTAL                                  $3,859,297     $(145,071)        $ (193,837)            $0        $3,520,389
================ =============== ================= ============== ================= ============== =================
</TABLE>

                                      41

<PAGE>

<TABLE>
<CAPTION>
================ =============== ================= ============== ================= ============== =================
                                                                    Exploration
                                  Carrying Value    Acquisition         and                         Carrying Value
   Province/                       December 31,        Costs          Overhead       Write-Offs      December 31,
    Region          Property           1999            2000             2000            2000             2000
================ =============== ================= ============== ================= ============== =================
                                                     ARGENTINA
<S>              <C>                   <C>             <C>                <C>          <C>             <C>
---------------- --------------- ----------------- -------------- ----------------- -------------- -----------------
San Juan         Cateos                $  314,661      $   7,007          $  5,567             $0        $  327,235
---------------- --------------- ----------------- -------------- ----------------- -------------- -----------------
                 El Pluma               1,150,159            474           520,141              0         1,670,774
Santa Cruz       --------------- ----------------- -------------- ----------------- -------------- -----------------
                 Cerro Saavedra         1,000,447          3,706           194,884              0         1,199,037
                 --------------- ----------------- -------------- ----------------- -------------- -----------------
                 Cateos                   471,539          7,298            13,594              0           492,431
---------------- --------------- ----------------- -------------- ----------------- -------------- -----------------
Chubut           Cateos                   211,664       (50,000)             8,156              0           169,820
---------------- --------------- ----------------- -------------- ----------------- -------------- -----------------
                                                    COLOMBIA
---------------- --------------- ----------------- -------------- ----------------- -------------- -----------------

Santander and    California-Vetas
Putumayo         Mocoa                    175,137            301             1,996      (177,434)                 0
---------------- --------------- ----------------- -------------- ----------------- -------------- -----------------
                                                      ROMANIA
--------------------------------------------------------------------------------------------------------------------
Hunedoara        Voia
Harghita         Ostoros                  299,295              0            34,289      (333,584)                 0
---------------- --------------- ----------------- -------------- ----------------- -------------- -----------------
TOTAL                                  $3,622,902      $(31,214)          $778,627     $(511,018)        $3,859,297
================ =============== ================= ============== ================= ============== =================
</TABLE>

     a)  El Pluma/Cerro Saavedra Projects
         The El Pluma/Cerro Saavedra Project area is made up of one cateo and
         104 manifestations of discovery totaling 88,519 ha. The cateos are
         located in the western half of the province of Santa Cruz. All of the
         cateos are controlled 100% by Minera Santa Cruz S.A., a holding and
         operating company set up under the terms of the agreement with MHC. Any
         production from these lands may be subject to a provincial royalty.
         Holding costs for 2002 are estimated to be $50,000.

         In October of 2000, following completion of a 30-day due diligence
         period under a memorandum of understanding, Mauricio Hochschild & Cia.
         Ltda. ("MHC") of Lima, Peru exercised an option to enter into a joint
         venture on the project.

         On March 15, 2001, Minera Andes Inc. signed an option and joint venture
         agreement with MHC for the exploration and possible development of
         Minera Andes' 217,000-acre (88,000 hectares) epithermal gold-silver
         exploration land package at El Pluma/Cerro Saavedra, including Huevos
         Verdes.

         Under the agreement, MHC can earn a 51 percent ownership in El
         Pluma/Cerro Saavedra by spending a total of $3 million in three years,
         and a minimum of $100,000 per year on exploration targets within El
         Pluma/Cerro Saavedra other than Huevos Verdes, the most advanced
         prospect. In addition, MHC will make semiannual payments totaling
         $400,000 per year until pilot plant production is achieved. Lands will
         be transferred to MSC.

         Once MHC vests at 51 percent ownership, Minera Andes will have the
         option of participating in the development of a pilot production plant
         that would process a minimum of 50 tons per day (tpd). Minera Andes may
         participate on either a pro-rata basis, or by choosing to retain a 35
         percent "carried" ownership interest. Upon the successful completion
         and operation of the 50 tpd plant, Minera Andes would have the option
         of participating on a pro-rata basis, or choosing a 15% interest in
         return to being "carried" to first production of 500 tpd.

     b)  Chubut Projects

         Minera Andes currently holds four cateos and 15 manifestations of
         discovery in the Precordilleran region of Chubut. In August 2000,
         Minera Andes Inc. and Brancote Holdings PLC subsidiaries signed an

                                      42

<PAGE>

         agreement to purchase two of Minera Andes' Chubut gold exploration
         properties. The agreements cover the Willimanco, Leleque and Leon
         properties. Brancote's Argentine subsidiaries have a four-year option
         to purchase Willimanco and Leleque (and adjoining Leon properties) for
         a combined total of $1.25 million and a 2% net smelter return royalty.
         Combined payments are $50,000 upon signing the agreements, and $50,000
         after six months. Payments increase to $100,000 every six months until
         year three, at which time payments increase to $150,000 every six
         months. Fourth year payments total $450,000 for a total of $1.25
         million at the end of four years. All required payments to December 31,
         2001 have been received.

     c)  Colombian Projects
         Following a review of the projects in 2000, the Corporation abandoned
         the Colombian projects with a write-off to operations of $177,434 in
         2000.

     d)  Romanian Projects
         Following a review of the projects in 2000, the Corporation abandoned
         the projects with a write-off to operations of $333,584 in 2000.

     e)  Write-Off of Mineral Property and Deferred Exploration Costs
         The Corporation has acquired exploration concessions, entered into
         option agreements and contracts, and carried out exploration on certain
         properties where it has determined that it would be unlikely that
         additional work would result in the discovery of economic reserves.
         Accordingly, any acquisition payments and the accumulated cost of
         exploration on those properties have been written off to operations.
         These write-offs totaled $511,018 in 2000 (Romania and Colombia).

4.   CAPITAL ASSETS

                            December 31, 2001             December 31, 2000
                            -----------------             -----------------
                               Accumulated                   Accumulated
                     Cost     Depreciation    Net     Cost   Depreciation   Net
                     ----     ------------    ---     ----   ------------    ---

Vehicles           $29,296      $24,541     $4,755  $163,151   $130,758  $32,393
Office Equipment    27,724       23,331      4,393    27,722     19,052    8,670
                   -------      -------     ------  --------   --------  -------
                   $57,020      $47,872     $9,148  $190,873   $149,810  $41,063
                   =======      =======     ======  ========   ========  =======

5.   SHARE CAPITAL

     a)  Authorized
         The Corporation has authorized capital of an unlimited number of common
         shares, with no par value, and an unlimited number of preferred shares,
         with no par value.

         At December 31, 2001, the Corporation has one stock option plan. The
         aggregate number of shares to be delivered upon the exercise of all
         options granted under the plan shall not exceed 10% of the
         Corporation's issued and outstanding Common Shares, up to a maximum of
         6,000,000 shares. The options vest immediately and are exercisable over
         terms of up to a maximum of five years.

                                      43

<PAGE>

     b)  Issued, Allotted and/or Subscribed:

<TABLE>
<CAPTION>
                                                                                    Number
                                                                                  of Shares               Amount
                                                                                  ---------               -------
<S>                                                                                <C>                  <C>
Common shares issued:
  Issued for cash on incorporation                                                          1           $         1
  Issued for acquisition of subsidiaries                                            4,000,000               575,537
  Subscriptions received for private placement                                              0                57,069
                                                                                   ----------           -----------
Balance, December 31, 1994                                                          4,000,001               632,607
  Issued for cash (Cdn$0.10 each)                                                   1,000,000                70,850
  Issued for cash (Cdn$0.40 each)                                                   2,345,094               669,058
  Issued for cash (Cdn$1.00 each)                                                   3,031,000             2,237,071
  Issued for finder's fee                                                             150,000                     0
  Issued for services                                                                 168,000                     0
  Issued for subsidiary                                                               336,814                     0
  Subscriptions applied                                                                     0               (57,069)
                                                                                   ----------           -----------
Balance, December 31, 1995                                                         11,030,909             3,552,517
  Issued for cash (Cdn$1.50 each)                                                   1,433,333             1,535,553
  Issued for broker special warrants                                                   90,400                     0
  Issued for cash (Cdn$3.42 each)                                                     877,194             2,174,388
  Issued to N.A. Degerstrom, Inc.:
    For cash (Cdn$1.44 each)                                                          500,000               514,608
    For cash on exercise of warrants (Cdn$1.75 each)                                  500,000               625,392
  Issued for cash on exercise of warrants (Cdn$1.80 each)                              67,500                89,220
  Subscriptions received for private placement                                              0             4,873,336
                                                                                   ----------           -----------
Balance, December 31, 1996                                                         14,499,336            13,365,014
  Issued for cash on exercise of warrants (Cdn$1.80 each)                           1,271,233             1,689,102
  Issued for cash (private placement-Cdn$2.10 each)                                 3,370,481             4,873,336
  Subscriptions applied                                                                     0           (4,873,336)
  Issued for cash on exercise of options (Cdn$1.44 each)                               75,000                78,146
                                                                                   ----------           -----------
Balance, December 31, 1997                                                         19,216,050            15,132,262
  Issued for cash on exercise of warrants (Cdn$1.60 each)                             720,383               806,136
  Issued for cash on exercise of options (Cdn$1.15 each)                               15,000                11,936
  Issued for cash on exercise of warrants (Cdn$1.53 each)                             438,597               464,332
                                                                                   ----------           -----------
Balance, December 31, 1998                                                         20,390,030            16,414,666
 Issued for cash (by prospectus Cdn$0.25)                                           3,214,540               545,874
  Issued for broker's fees                                                            128,582                     0
                                                                                   ----------           -----------
Balance, December 31, 1999                                                         23,733,152            16,960,540
  Issued for cash (by prospectus Cdn$0.25)                                          5,985,460             1,032,973
  Issued for broker's fees                                                            191,418                     0
</TABLE>

                                      44

<PAGE>

<TABLE>
<CAPTION>
                                                                                    Number
                                                                                  of Shares                Amount
                                                                                  ---------                -------
<S>                                                                                <C>                  <C>
  Issued for cash on exercise of options (Cdn$0.55)                                    90,000                34,109
  Subscriptions received for private placement                                              0               162,242
                                                                                   ----------           -----------
Balance, December 31, 2000                                                         30,000,030            18,189,864
  Issued for cash on exercise of options (Cdn $0.25 each)                              46,000                 7,558
                                                                                   ----------           -----------
Balance, December 31, 2001                                                         30,046,030           $18,197,422
                                                                                   ==========           ===========
</TABLE>

         i)   On January 31, 2000, the Corporation raised gross proceeds of
              Cdn$1,496,365 (US$1,032,973) through a unit offering by way of a
              Canadian offering with the issuance of 5,985,460 units at a price
              of Cdn$0.25 per unit. Each unit comprised one common share and one
              share purchase warrant, which entitled the holder to purchase one
              further common share at an exercise price of Cdn$0.35 on or before
              January 31, 2001. In connection with the financing, the
              Corporation paid a 7.5 percent commission on the gross proceeds
              and issued Common Shares equal to 4 percent of the units sold
              (191,418 shares) as additional commission.

         ii)  On November 30, 2000, Degerstrom acquired 1,175,000 special
              warrants of the Corporation at a price of Cdn$0.20 per special
              warrant for gross proceeds of Cdn$235,000 (US$162,242). Each
              special warrant entitles the holder to acquire one unit comprised
              of one common share of the Corporation and one non-transferable
              common share purchase warrant at no additional cost during the
              period commencing on the closing date, and ending at 4:30 p.m.
              (Calgary time) on the earlier of: (i) five (5) business days after
              the day upon receipt of a notice from the Corporation requesting
              the exercise of the special warrants; and (ii) November 30, 2002.
              Each warrant is exercisable into one common share at the price of
              Cdn$0.20 if exercised on or before 4:30 p.m. (Calgary time) on the
              first year anniversary of the issuance date or at a price of
              Cdn$0.25 if exercised on or before 4:30 (Calgary time) on the
              second year anniversary of the issuance date.

     c)  Stock Options
         A summary of the status of the Corporation's stock option plan as of
         December 31, 2001 and 2000, and changes during the years ended on those
         dates is:

<TABLE>
<CAPTION>

                                             2001                               2000
                                             ----                               ----

                                                              (Cdn)                              (Cdn)
                                                            Weighted                           Weighted
                                                               Ave.                               Ave.
                                              Options       Exercise.           Options        Exercise
                                              -------       --------            -------        --------
<S>                                           <C>             <C>             <C>               <C>
Outstanding and exercisable at
beginning of year                             2,445,000       $0.44             1,840,000       $0.58

Granted                                           --           --                 870,000       $0.19

Exercised                                      (46,000)       $0.25              (90,000)       $0.55

Forfeited                                     (185,000)       $0.68             (175,000)       $0.59
                                              ---------       -----             ---------       -----

Outstanding and exercisable at end
of year                                       2,214,000       $0.43             2,445,000       $0.44
                                              =========       =====             =========       =====

Weighted average fair value of
options granted during the year                                N/A                              $0.19
                                                                                                =====

</TABLE>

                                      45

<PAGE>


         The range of exercise prices is from Cdn$0.16 to Cdn$0.68 with a
         weighted average remaining contractual life of 2.43 years at December
         31, 2001.

         At December 31, 2001, there were options held by directors, officers
         and employees of the Corporation for the purchase of Common Shares as
         follows:

         Number of Shares        Exercise Price              Expiry Date
         ----------------        --------------              -----------
              204,000               Cdn$0.25                January 10, 2002
              215,000               Cdn$0.68                March 2, 2003
            1,146,000               Cdn$0.55                June 3, 2004
               29,000               Cdn$0.59                June 3, 2004
              620,000               Cdn$0.16                August 28, 2005
           ----------
            2,214,000
           ==========

     d)  Warrants
         On January 31, 2001 9,200,000 Common Shares at an exercise price of
         Cdn$0.35 per share expired without being exercised.

         On November 30, 2000, Degerstrom acquired 1,175,000 special warrants of
         the Corporation at a price of Cdn$0.20 per special warrant for gross
         proceeds of Cdn$235,000. Each special warrant entitles the holder to
         acquire one unit comprised of one common share of the Corporation and
         one non-transferable common share purchase warrant at no additional
         cost during the period commencing on the closing date, and ending at
         4:30 p.m. (Calgary time) on the earlier of: (i) five (5) business days
         after the day upon receipt of a notice from the Corporation requesting
         the exercise of the special warrants; and (ii) November 30, 2002. Each
         purchase warrant is exercisable into one common share at the price of
         Cdn$0.20 if exercised on or before 4:30 p.m. (Calgary time) on the
         first year anniversary of the issuance date or at a price of Cdn$0.25
         if exercised on or before 4:30 (Calgary time) on the second year
         anniversary of the issuance date. At December 31, 2001, the 1,175,000
         special warrants were outstanding.

6.   AGREEMENTS, COMMITMENTS AND CONTINGENCIES

     a)  Mineral rights in Argentina are owned by the federal government and
         administered by the provinces. The provinces can levy a maximum 3%
         "mouth of mine" (gross proceeds) royalty. The provinces of Mendoza and
         Neuqu[eacute]n have waived their right to a royalty. The provinces of
         Rio Negro, San Juan, Santa Clara and Chubut have not yet established a
         policy regarding the royalty.

     b)  While the operating agreement between the Corporation and N.A.
         Degerstrom, Inc. (NAD) is in effect (see Note 7a), a net smelter
         royalty on all existing and future properties is payable to NAD equal
         to the difference between 3% and any underlying royalties, subject to a
         maximum of 2% payable to NAD. The Corporation may purchase up to one
         half of the royalty upon payment of $1,500,000 per percent purchased.

     c)  Under the terms of an acquisition agreement dated March 8, 1995, the
         Corporation may be obligated to issue additional Common Shares as
         consideration for the acquisition of its subsidiaries. The number of
         shares that would be issued to NAD upon a property reaching bankable
         feasibility would be 1,213,409 Common Shares of the Corporation.

     d) The Corporation rents office space in Argentina for US$1,100 per month
        with a commitment through August 2003.

                                      46

<PAGE>

7.   RELATED PARTY TRANSACTIONS

     a)  NAD is the controlling shareholder of the Corporation. Under the terms
         of an operating agreement between the Corporation and NAD, NAD will
         operate and manage the exploration program on all properties and
         provide related off-site administrative assistance, as required.
         Consideration will be 15% of the costs incurred by NAD on behalf of the
         Corporation. Costs paid directly by the Corporation are not subject to
         the fee. Included in the agreement are fixed rental rates for equipment
         owned by NAD.
         During the years ended December 31, 2001 and 2000 , administrative fees
         were paid to NAD of $40,918 and $42,770 on total costs incurred by the
         Corporation of $305,298 and $460,043, respectively. Equipment rentals
         of $0 and $3,206 were included in the total costs for 2001 and 2000,
         respectively.

     b)  On November 30, 2000, Degerstrom acquired 1,175,000 special warrants of
         the Corporation at a price of Cdn$0.20 per special warrant for gross
         proceeds of Cdn$235,000 (US$162,242) as discussed in footnote 5(d).

     c)  During 2001 and 2000, the Corporation incurred the following
         transactions with related parties: financial consulting to a director
         and officer totaling $2,100 and $8,155, and legal fees to a firm in
         which a director and officer is an associate, totaling $11,624 and
         $44,675, respectively. The above noted transactions were in the normal
         course of operations and were measured at the exchange amount, which is
         the amount of consideration established and agreed to by the related
         parties.

     d)  During 2001 the Corporation sold all shares of NADSA and certain unused
         assets in Argentina to NAD for $45,800. The value of the shares sold to
         NAD ($10,000) was based on the approximate capital required to set up
         the NADSA corporation. Of the $69,584 gain on sale of capital assets,
         $27,648 arose on the sale of assets at exchange value to NAD.

8.       INCOME TAXES

Due to the losses incurred by the Corporation, there is no income tax provision
or benefit recorded for all periods presented. The net deferred tax asset at
December 31, 2001 and 2000 of $1,886,220 and $1,687,000 is comprised only of net
operating loss carryforwards which is totally offset by an identical valuation
allowance. No deferred tax asset has been recognized due to the uncertainty of
future realization.

The Corporation has Canadian non-capital losses available to carry forward to
apply against future taxable income of approximately Cdn$4.5 million expiring as
follows:

2002  Cdn     $   77,000
2003  Cdn        660,000
2004  Cdn        782,000
2005  Cdn        716,000
2006  Cdn        860,000
2007  Cdn        923,000
2008  Cdn        473,000
              $4,491,000
              ==========

                                      47

<PAGE>

Major items causing the Corporation's effective tax rate to differ from the
statutory rate is as follows:

<TABLE>
<CAPTION>
                                                   December 31, 2001                    December 31, 2000
                                                   -----------------                    -----------------


                                            <c>                 <c>             <c>                <c>
Income tax or benefit at statutory rate        ($161,149)          (42%)           ($483,271)         (42%)

Changes in valuation allowance                   161,149            42%              483,271           42%
                                             --------------    -------------      --------------    -----------

                                                $     --            --%             $     --           --%
                                             ==============    =============      ==============    ===========
</TABLE>

9.   COMPARATIVE FIGURES

Certain financial statement line items from prior years have been reclassified
to conform with the current year's presentation. These reclassifications had no
effect on the net loss and accumulated deficit as previously presented.

10.  DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
     ACCOUNTING PRINCIPLES

As discussed in Note 2, these financial statements are prepared in accordance
with Canadian generally accepted accounting principles between Canada and the
United States as they apply to these financial statements as follows:

     a)  Under Canadian generally accepted accounting principles, no
         compensation expense is recorded for stock options issued to employees.
         However, U.S. generally accepted accounting principles require
         disclosure of compensation expense for the stock option plan as if it
         had been determined based on the fair market value-based method. The
         Corporation's net loss for the year and net loss per common share would
         have been increased to the pro forma amounts below had the market value
         based method been followed:

                                               2001                2000
                                               ----                ----
         Net loss for the year
         As reported:                        $383,684           $1,150,645
         Pro forma:                          $383,684           $1,238,380

         Net loss per common share
         As reported:                           $0.01                $0.04
         Pro forma:                             $0.01                $0.04

         The fair value of each option grant is estimated on the date of grant
         using the Black-Scholes option-pricing model with the following
         weighted average assumptions used for grants in 2000:

                                                                       2000
                                                                       ----
         Dividend yield (%)                                              --
         Expected volatility (%)                                        204
         Risk-free interest rates (%)                                  6.08
         Expected lives (years)                                        4.20

     b)  New Accounting Pronouncements

         In June 2001, the Financial  Accounting  Standards Board approved for
         issuance, Statement of Financial Accounting Standards No. 141 ("SFAS
         no. 141), "Business Combinations."  This standard eliminates the
         pooling method of accounting for business combinations initiated after
         June 30, 2001. In addition, SFAS

                                      48

<PAGE>

         No. 141 addresses the accounting  for  intangible  assets and goodwill
         acquired in a business combination.  The Corporation does not expect
         the adoption of SFAS No.141 to have a material effect on the
         Corporation.

         In June 2001, the Financial Accounting Standards Board approved for
         issuance, Statement of Financial Accounting Standards No. 143 ("SFAS
         No. 143), "Accounting for Asset Retirement Obligations", which
         addresses the accounting for legal obligations associated with the
         retirement of tangible long-lived assets. Under SFAS No. 143, the fair
         value of a liability for an asset retirement obligation shall be
         recognized in the period in which the obligation is incurred. SFAS No.
         143 is effective for fiscal years beginning after June 15, 2002, with
         early adoption permitted. The Corporation does not expect adoption of
         SFAS No. 143 on January 1, 2003 to have a material effect on its
         financial position or results of operations.

         In August 2001, the Financial  Accounting  Standards Board approved for
         issuance, Statement of Financial Accounting Standards No. 144 ("SFAS
         No. 144), "Accounting for the Impairment and Disposal of Long-lived
         Assets."  SFAS No. 144 was issued to resolve implementation issues
         that have been created under Statement of Financial Accounting
         Standards No. 121. Under SFAS No. 144 one accounting model is required
         to be used for long-lived assets to be disposed of by sale, whether
         previously held and used or newly acquired, and certain additional
         disclosures are required.  SFAS No. 144 is effective for financial
         statements issued for fiscal years beginning after December 31, 2001.
         The Corporation does not expect adoption of SFAS No.  144 on January
         1, 2002 to have a material effect on the financial position or results
         of operations.

     c)  Compensation Expense Associated with Release of Shares from Escrow
         Under U.S. GAAP, stock compensation expense is recorded as shares held
         in escrow become eligible for release based upon the number of shares
         eligible for release and the market value of the shares at that time.
         Under Canadian GAAP, no value is attributed to such shares released and
         no compensation expense is recorded. Shares become eligible for release
         from escrow based on deferred exploration expenditure in accordance
         with the Escrow Agreement and with the consent of The Canadian Venture
         Exchange. During the years ended December 31, 2001 and 2000 and for the
         period from July 1, 1994 (commencement) through December 31, 2001, the
         Corporation would have recorded compensation expense of $0, $0 and
         $6,324,914, respectively, under U.S. GAAP.

     d)  Mineral Properties and Deferred Exploration Costs
         The U.S. Securities and Exchange Commission staff has taken the
         position that a U.S. registrant without proven and probable economic
         reserves, in most cases, could not support the recovery of the carrying
         value of deferred exploration costs. Therefore, the Corporation has
         presented the effect of expensing all deferred exploration costs as a
         reconciling item between U.S. and Canadian GAAP.

     e)  Impact on Consolidated Financial Statements
         The impact of the above on the consolidated financial statements is as
         follows:

                                              Dec. 31, 2001     Dec. 31, 2000
                                              -------------    -----------------
Shareholders' equity, end of period,
per Canadian GAAP                             $   3,559,667      $   3,933,798

Adjustment for acquisition and
deferred exploration costs                       (3,520,389)        (3,708,509)
                                              -------------    -----------------

Shareholders' equity, end of period,
per U.S. GAAP                                 $      39,278      $     225,289
                                         ====================  =================

                                      49

<PAGE>

<TABLE>
<CAPTION>
                                                                                          Period from
                                                                                          July 1, 1994
                                                               Year Ended                (commencement)
                                                               ----------                    through
                                                          Dec. 31,    Dec. 31,              December 31,
                                                           2001         2000                   2001
                                                    ---------------  ------------  -----------------------
<S>                                                  <C>             <C>                   <C>
Net loss for the period, per Canadian GAAP           $   383,689     $1,150,645            $13,777,526

Adjustment for acquisition of Scotia                          --             --                248,590

Adjustment for compensation expense                           --             --              6,324,914

Adjustment for deferred exploration costs, net          (188,120)       226,441              3,520,389
                                                    -------------    -----------

Net loss for the period, per U.S. GAAP               $   195,569     $1,377,086            $23,871,419
                                                    =============    ===========           ============

Basic and diluted net loss per common share, per
U.S. GAAP                                            $      0.01     $     0.05
                                                    =============    ===========
</TABLE>

         During 1995, the Corporation issued 336,814 Common Shares for the
         acquisition of Scotia. Under U.S. GAAP, these shares would be valued at
         $248,590, the fair market value of the shares issued. This value, plus
         the $17,215 of net liabilities of Scotia assumed by the Corporation,
         would have been recorded as property rights at the acquisition date
         under U.S. GAAP.


11.      SUBSEQUENT EVENTS

In early January of 2002 Argentina devalued its currency, which was previously
tied to the U.S.  dollar at the ratio of one peso equals one U.S.  dollar.  By
February of 2002, the peso was allowed to float freely and in early March of
2002 had reached a ratio of 2.5 pesos to the U.S. dollar.

In January 2002, Argentine laws went into effect on all dollar contracts,
whereby they were converted to pesos at a ratio of one peso equals one dollar.
The Argentina government also put into place laws that prohibit Argentina
companies from transferring money out of the country.

The new laws also provide that the parties to an agreement affected by these
changes will negotiate a restructuring of their respective obligations,
attempting to share in an equitable manner the effects of change in exchange
rate within 180 days. If an agreement cannot be reached, the parties can follow
mediation procedures in the appropriate tribunals. During the restructuring or
mediation procedure the debtor party cannot refuse to make payments and the
creditor cannot refuse to accept payment.

The agreements on the Chubut properties are between Argentine subsidiaries of
Minera Andes Inc. and Brancote Holdings PLC and are affected by these laws. The
agreements are in U.S. dollars and the payment was specified to be made to an
account outside the country. The Corporation is currently seeking legal advice
inside and out of Argentina, and is not able to ascertain the impact that the
law and currency changes in Argentina will have on the Corporation.

                                      50

<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

On July 24, 2001, PricewaterhouseCoopers LLP, as independent accountants,
notified the Corporation it had resigned as the Corporation's independent
accountants, following the closure of its Spokane office. The Corporation
engaged BDO Dunwoody LLP as its new principal independent accountants effective
July 24, 2001.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Information with respect to the directors, executive officers and significant
employees of the Corporation is set forth below.

Name                     Age     Positions Held

Allen Ambrose            45      President and Director

Brian Gavin              48      Vice-President of Exploration, Director of MASA

Allan J. Marter          54      Director

Jorge Vargas             60      Director and President of MASA & MSC

Armand Hansen            66      Director

John Johnson Crabb       76      Director

A.D. (Darryl) Drummond   65      Director

Bonnie L. Kuhn           36      Secretary, CFO and Director

Allen Ambrose, President and Director, has 22 years of experience in the mining
industry including his position as Exploration Manager with Degerstrom and has
been a director of the Corporation since November 1995. Prior to joining
Degerstrom in 1988, Mr. Ambrose was a geologist for Cyprus Minerals, Kidd Creek
Mines, Molycorp, Boise Cascade and Dennison Mines. Mr. Ambrose has extensive
experience in all phases of exploration, project evaluation and project
management and has worked as a geologist consultant in the U.S., Venezuela and
most recently Argentina. He holds a B. Sc. degree in Geology from Eastern
Washington University (EWU). While consulting for Gold Reserve Corporation, he
was a co-discoverer of the auriferous massive sulfide exposure that led to
their acquisition of the Brisas project in Venezuela. Mr. Ambrose sits on the
board of directors of Cadre Resources Ltd. (1994 to present), a company listed
on the CDNX with mining interests in Venezuela. Mr. Ambrose sits on the board
of trustees for the Northwest Mining Association, a mining industry association
of approximately 3,000 members.

Brian Gavin, Vice President of Exploration, Director of MASA, has 22 years of
experience in exploration geology. Mr. Gavin has extensive experience in all
phases of exploration, project evaluation and project management in the search
for precious and base metals, industrial minerals and has worked in the field
as project manager and consultant in the U.S., Mexico, Nigeria, Argentina and
most recently, in Romania. He holds a B.

                                       51

<PAGE>

Sc. (Honours) degree in Geology from the University of London and M. S. degree
in Geology and Geophysics from the University of Missouri. From 1981 to 1993,
he was a consultant with Ernest K. Lehman & Associates, which is a geological
mining consulting firm. From 1993, he has been employed by Degerstrom. Mr.
Gavin also serves as an officer and director of Franconia Minerals Corporation
since June 2001.

Allan J. Marter, Director, was Chief Financial Officer of the Corporation from
June 1997 to March 2000 and a director of the Corporation since June 1997. On
November 9, 1999, he was appointed Vice President and Chief Financial Officer
of Golden Star Resources Ltd. Mr. Marter was a financial advisor in the mining
industry and Principal of Waiata Resources, from April 1996 to November 9, 1999
and has provided financial advisory services to the Corporation since April 30,
1996. Mr. Marter is a finance professional with 24 years experience in the
mining industry. From 1992 through 1996, he was employed as a director of
Endeavor Financial Inc., a mining financial advisory firm. Mr. Marter also
serves as a director of Addwest Minerals International, Ltd. and Golden Phoenix
Minerals Inc.

Jorge Vargas, President and Director of MASA and MSC, received his law degree
in 1967 from the National University of Buenos Aires, Argentina. He has been in
private practice since 1967. Dr. Vargas also studied mining law at the Law
Faculty of the University of Mendoza and was on the organizing committee of the
First International Water Rights Conference in Mendoza in 1968. Dr. Vargas is a
registered attorney in the provinces of Mendoza and San Juan, and at the Federal
level.

Armand Hansen, Director, is currently retired from the position of Vice
President of Operations for Degerstrom. He held that position for 19 years and
has been a director of the Corporation since November 1995. His
responsibilities for Degerstrom included managing 350 employees at various job
sites throughout the U.S. and Latin America. Mr. Hansen has 30 years of
experience in the mining industry. Mr. Hansen also served as Vice-President and
director to Aresco Inc. from 1989 through January 2001, a private company with
approximately 35 employees. Aresco is a manufacturing company conducting
speciality fabrication of mining equipment.

John Johnson Crabb, Director,graduated from the University of British Columbia
in 1951 with a Masters Degree in Geology and has been a director of the
Corporation since November 1995. He was a director of Inland Resources, Inc.
from 1985 to November 1995. Mr. Crabb was the director of Pegasus Gold Inc. and
Vice President of Exploration for Crowsnest Resources Ltd., a wholly owned
subsidiary of Shell Canada.

A.D. (Darryl) Drummond, Director, is a Ph.D. and a professional engineer and has
been a director of the Corporation since June 1996. He graduated from the
University of British Columbia with a B.A.Sc. in Geological Engineering in 1959
and with a M.A.Sc. in 1961. He obtained his Doctorate degree in 1966 from the
University of California at Berkeley. As an undergraduate and graduate, he
worked with Kennco Explorations (Western) Ltd. during the period 1958 to 1961.
He has been associated with the Placer Development Group of Companies since
1963, first with Craigmont Mines Ltd., then Endako Mines and Gibraltar Mines. At
the Placer head office since 1967, he initially was a Research Geologist and
then Assistant Exploration Manager, Western Canada, for Canex Placer Ltd. During
1977 to 1979, he was Manager of Placer Development y Cia. Ltda. in Santiago,
Chile, then returned to the position of Research Geologist with the Technical
Services Advisory Group for the Placer Group of Companies in Vancouver. On March
1, 1981, he and David Howard became principals in a mineral exploration
management firm called D.D.H. Geomanagement Ltd. with offices in Vancouver,
British Columbia. Since 1981, consulting tasks have concentrated on all aspects
of mineral deposit evaluation covering precious metal, base metal and industrial
mineral types in such countries as Argentina, Canada, Chile, China, Costa Rica,
Ecuador, Guyana, Mexico, Philippines, United States of America and Venezuela. He
is a member of the Society of Economic Geology and a member of the Geology
Section of the Canadian Institute of Mining and Metallurgy. He is the President
of D.D.H. Geomanagement from 1981 to the present; director of Cadre Resources
Ltd. from November

                                       52

<PAGE>

1994 to February 1995; director of All North Resources Ltd. from May 1995 to
July 9, 1996; and director of International All-North Resources Ltd. from July
10, 1996 to December 23, 1998; director of The Quinto Mining Corporation from
September 11, 1996 to August 10, 1997; director of Riverdance Resources
Corporation from January 1998 to December 15, 1998; director of Kaieteur
Resources Corporation from December 23, 1998 to present; director of Saxony
Explorations Ltd. from February 2000 to present; and director of Valerie Gold
Resources from November 6, 1998 to present.

Bonnie L. Kuhn, Secretary, Chief Financial Officer and Director, has been the
Secretary and a director of the Corporation since June 1997. Since July 2001,
Ms. Kuhn has been an associate of Field Atkinson Perraton LLP, Barristers and
Solicitors. She has been a solicitor with the firm Ogilvie and Company,
Barristers and Solicitors, Calgary, Alberta, from January 1994 to December 31,
1998. Ogilvie and Company of Calgary changed its name to Armstrong Perkins
Hudson LLP in 1999. From January 1, 1999 to June 2001, Ms. Kuhn was a partner
with Armstrong Perkins Hudson. From August 1993 to December 1994, Ms. Kuhn was
a Crown prosecutor with the Government of Alberta, Department of Justice. Ms.
Kuhn is a member of the Law Society of Alberta and the Canadian Bar
Association. She obtained her LLB from the University of Manitoba in 1989. Ms.
Kuhn was a director of Talon Petroleums Ltd., an oil and gas exploration
company, from September 1997 to September 1999. Ms. Kuhn is currently a
director of Tajzha Ventures Ltd., an oil and gas exploration company, and is an
officer and director of Franconia Minerals Corporation.

The Corporation has six directors, two of whom are executive officers. Directors
serve terms of one year or until their successors are elected or appointed. No
remuneration of any kind has been paid to any director, in his capacity as such,
and there is no intention that they will be remunerated in that capacity in the
immediate future. Expenses incurred by directors in connection with their
activities on behalf of the Corporation are reimbursed by the Corporation.

ITEM 10.  EXECUTIVE COMPENSATION

Summary of Executive Compensation. The following table sets forth compensation
paid, directly or indirectly, by Minera Andes during the last fiscal year for
services rendered by Allen Ambrose, President, and Brian Gavin, Vice President
of Exploration ("Named Executive Officers").

                               SUMMARY COMPENSATION TABLE

                               Annual Compensation        Long Term Compensation
                               -------------------        ----------------------

                                         Other Annual
                               Salary    Compensation
                    Fiscal     ------    ------------      Securities Underlying
                     Year        ($)          ($)            Options/SARs (#)
                     ----        ---          ---            ----------------

Allen Ambrose (1)    2001        87,444       9,767                   --
President            2000        87,404       9,164 (2)             100,000
                     1999        92,302       8,960                 210,000 (4)

Brian Gavin (1)      2001        87,444       9 767                   --
Vice President of    2000        87,404       9,164 (3)             100,000
Exploration          1999       105,502       9,620                 210,000 (4)

                                      53

<PAGE>

Notes:

(1)  Allen Ambrose and Brian Gavin, as employees of Degerstrom, provided
     services under the Operating Agreement (See "Description of the Business")
     which services were invoiced to the Corporation under the Operating
     Agreement.

(2)  During the 2001 fiscal year, the following benefits were provided to Mr.
     Ambrose by Degerstrom and invoiced to the Corporation:
        401K Base                $2,616
        401K Match               $1,744
        Medical Insurance        $5,407

(3)  During the 2001 fiscal year, the following benefits were provided to Mr.
     Gavin by Degerstrom and invoiced to the Corporation:
        401K Base                $2,616
        401K Match               $1,744
        Medical Insurance        $5,407

(4)  During 1999, 190,000 of these options granted in prior years were canceled.

Stock Options Granted in 2001. There were no stock options granted to the Named
Executives during the year ended December 31, 2001.

Aggregated Option Exercises. The following table sets forth certain information
concerning the number of shares covered by both exercisable and unexercisable
stock options as of December 31, 2001. Also reported are values of
"in-the-money" options that represent the positive spread between the respective
exercise prices of outstanding stock options and the fair market value of the
Corporation's Common Shares as of December 31, 2001.

                          FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                                    Value of Unexercised
                 Shares               Number of Unexercised        In-the-Money Options at
                acquired   Value     Options at Fiscal Year       Fiscal Year-End ($)(1)(2)
                  on                 ----------------------       -------------------------
               Exercise   Realized   Exercisable  Unexercisable   Exercisable  Unexercisable
               --------   --------   -----------  -------------   -----------  -------------
<S>               <C>        <C>        <C>            <C>             <C>         <C>

Allen Ambrose     0          $0         340,000        0               $0          $0

Brian Gavin       0          $0         340,000        0               $0          $0
</TABLE>

Notes:

(1)   None of the options were in-the-money as of December 31, 2001. On December
      31, 2001 the closing price of the Common Shares on The Canadian Venture
      Exchange was Cdn$0.12.

(2)   The currency exchange rate applied in calculating the value of unexercised
      in-the-money options was the late New York trading rate of exchange for
      December 31, 2001 as reported by the Wall Street Journal for conversion of
      United States dollars into Canadian dollars was U.S. $1.00 = Cdn$1.59 or
      Cdn$1.00 = U.S. $0.63.

                                       54

<PAGE>

Stock Option Plan
The Board of Directors adopted a stock option plan (the "Plan") which was
approved with amendments by the shareholders of the Corporation at the Annual
and Special Meeting of Shareholders held on June 26, 1996, which was
subsequently amended at the Corporation's Annual and Special Meeting of
Shareholders held on June 26, 1998, and June 23, 1999. The purpose of the Plan
is to afford the persons who provide services to the Corporation or any of its
subsidiaries or affiliates, whether directors, officers or employees of the
Corporation or its subsidiaries or affiliates, an opportunity to obtain a
proprietary interest in the Corporation by permitting them to purchase Common
Shares of the Corporation and to aid in attracting, as well as retaining and
encouraging the continued involvement of such persons with the Corporation.
Under the terms of the Plan, the board of directors has full authority to
administer the Plan in accordance with the terms of the Plan and at any time
amend or revise the terms of the Plan provided, however, that no amendment or
revision shall alter the terms of options already granted. The aggregate number
of shares to be delivered upon exercise of all options granted under the Plan
shall not exceed 10% of the Corporation's issued and outstanding Common Shares
up to a maximum of 6,000,000 shares. No participant may be granted an option
under the Plan which exceeds the number of shares permitted to be granted
pursuant to rules or policies of any stock exchange on which the Common Shares
is then listed.

Under the Plan, the exercise price of the shares covered by each option shall be
determined by the directors and shall be not less than the closing price of the
Corporation's shares on the stock exchange or stock exchanges on which the
shares are listed on the last trading day immediately preceding the day on which
the stock exchange is notified of the proposed issuance of option, less any
discounts permitted by the policy or policies of such stock exchange or stock
exchanges. If an option is granted within six months of a public distribution of
the Corporation's shares by way of prospectus, then the minimum exercise price
of such option shall, if the policy of such stock exchange or stock exchanges
requires, be the greater of the price determined pursuant to the provisions of
the Plan and the price per share paid by the investing public for shares of the
Corporation acquired by the public during such public distribution, determined
in accordance with the policy of such stock exchange or stock exchanges. Options
granted under the Plan will not be transferable and, if they are not exercised,
will expire one (1) year following the date the optionee ceases to be director,
officer, employee or consultant of the Corporation by reason of death, or ninety
(90) days after ceasing to be a director, officer, employee or consultant of the
Corporation for any reason other than death.

At December 31, 2001, 3,560,000 options were available for grant under the Plan.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership, as of March 15, 2002, of the Common Shares by (i) each person known
by the Corporation to own beneficially more than 5% of the Common Shares, (ii)
each director of the Corporation, (iii) the Named Executive Officers (iv) all
directors and executive officers as a group. Except as otherwise noted, the
Corporation believes the persons listed below have sole investment and voting
power with respect to the Common Shares owned by them.

                                            Shares
                                          Beneficially        Percentage of
Name and Address                            Owned (1)         Common Shares (1)
----------------                            ---------         -----------------

Named Executive Officers and Directors
Allen Ambrose                              457,200 (2)             1.50%
3303 North Sullivan Road
Spokane, WA 99216

                                       55

<PAGE>

Armand Hansen                              311,000 (3)             1.03%
3303 North Sullivan Road
Spokane, WA 99216

John Johnson Crabb                         210,000 (3)             0.69%
3303 North Sullivan Road
Spokane, WA 99216

Brian Gavin                                460,400 (2)             1.52%
3303 North Sullivan Road
Spokane, WA 99216

A.D. (Darryl) Drummond                     180,000 (3)             0.60%
3303 North Sullivan Road
Spokane, WA 99216

Bonnie L. Kuhn                             131,000 (4)             0.43%
1900, 350 7th Ave. S.W.
Calgary, Alberta T2P 2Y3

Allan J. Marter                            180,000 (3)             0.60%
7721-D S. Curtice Way
Littleton, CO 80120

5% or Greater Shareholders
Neal A. and Joan L. Degerstrom        7,450,000 (5)(6)             23.0%
3303 North Sullivan Road
Spokane, WA 99216

All directors and
executive officers
as a group (7 persons)                   1,929,600 (7)             6.11%

Notes:

(1)  Shares which the person or group has the right to acquire within 60 days
     after March 15, 2002 are deemed to be outstanding in determining the
     beneficial ownership of the person or group and in calculating the
     percentage ownership of the person or group, but are not deemed to be
     outstanding as to any other person or group.

(2)  Includes stock options entitling the holder to acquire 30,000 shares upon
     payment of Cdn$0.68, 210,000 shares upon payment of Cdn$0.55, and 100,000
     shares upon payment of Cdn$0.16.

(3)  Includes stock options entitling the holder to acquire 20,000 shares upon
     payment of Cdn$0.68, 120,000 shares upon payment of Cdn$0.55, and 40,000
     shares upon payment of Cdn$0.16.

(4)  Includes stock options entitling the holder to acquire 10,000 shares upon
     payment of Cdn$0.68, 80,000 shares upon payment of Cdn$0.55, and 40,000
     shares upon payment of Cdn$0.16.

                                       56

<PAGE>

(5)  The Common Shares are owned beneficially by Mr. and Mrs. Degerstrom by
     virtue of their combined majority control of the record owner, N.A.
     Degerstrom, Inc.

(6)  Does not include 1,213,409 Common Shares reserved for issuance to
     Degerstrom upon the satisfaction of certain performance criteria. See
     "Description of Properties - the Degerstrom Agreement."

(7)  Includes stock options to acquire 150,000 shares upon payment of Cdn$0.68,
     980,000 shares upon payment of Cdn$0.55 and 400,000 shares upon payment of
     Cdn$0.16.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Corporation, MASA, NADSA and Degerstrom are party to an Operating Agreement
whereby Degerstrom operates and manages the exploration program relating to the
Corporation Claims in return for a management fee and certain other
consideration. See "Description of Properties--The Degerstrom Agreement."

Allen Ambrose and Brian Gavin both serve as employees of Degerstrom and receive
all of their compensation for management services provided to the Corporation
under the Operating Agreement from Degerstrom. Neither Mr. Ambrose nor Mr. Gavin
performs any services as employees of Degerstrom other than in their capacities
as President and Vice President of Exploration of the Corporation respectively.
All of the compensation paid to Messrs. Ambrose and Gavin has been invoiced back
to the Corporation by Degerstrom.See "Description of the Business-- Operating
Structure" and "Executive Compensation."

During the years ended December 31, 2001 and 2000 , administrative fees were
paid to NAD of $40,918 and $42,770 on total costs incurred by the Corporation of
$305,298 and $460,043, respectively. Equipment rentals of $0 and $3,206 were
included in the total costs for 2001 and 2000, respectively.

During 2001 and 2000, the Corporation incurred the following transactions with
related parties: financial consulting to a director and officer totaling $2,100
and $8,155, and legal fees to a firm in which a director and officer is an
associate, totaling $11,624 and $44,675, respectively.

During 2001 the Corporation sold all shares of NADSA and certain unused assets
in Argentina to NAD for $45,800.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

     a) Exhibits
        The Exhibits as indexed on pages 58 through 59 of this report are
        included as part of this Form 10-KSB.

     b) Reports on Form 8-K
        Report dated July 24, 2001 was filed with the Securities and Exchange
        Commission regarding a change of auditors.

                                       57

<PAGE>

                                INDEX TO EXHIBITS

Exhibit
Number  Description
------  -----------

2.1     Asset and Share Acquisition Agreement between MASA, NADSA, the
        Corporation Degerstrom, Brian Gavin, Jorge Vargas, and Enrique
        Rufino Marzari Elizalde, dated March 8, 1995, as amended on April
        19, 1996 (incorporated by reference to Exhibit 2.1 to the
        Corporation's Registration Statement on Form 10-SB, Commission File No.
        000-22731 (the "Form 10-SB")).

2.2     Arrangement between the Corporation and Scotia Prime Minerals, Inc.
        (incorporated by reference to Exhibit 2.2 to the  Form 10-SB).

3.1     Articles of Incorporation (incorporated by reference to Exhibit 3.1 to
        the Form 10-SB).

3.2     Bylaws (incorporated by reference to Exhibit 3.2 to the Form 10-SB).

4.1     Warrant Certificate describing the rights of Broker Special Warrants
        (incorporated by reference to Exhibit 4.1 to the  Form 10-SB).

4.2     Warrant Certificate describing the rights of Cominco Warrants
        (incorporated by reference to Exhibit 4.2 to the Form  10-SB).

4.3     Subscription Agreement between the Corporation and N.A. Degerstrom,
        Inc. dated November 30, 2000 (incorporated by  reference to Exhibit 7.1
        on Schedule 13D/A filed on December 11, 2000).

4.4     Special Warrant Certificate issued by the Corporation to N.A.
        Degerstrom, Inc. dated November 30, 2000 (incorporated by reference to
        Exhibit 4.4 to the Form 10-KSB for the fiscal year ended December 31,
        2000).

10.1    Conveyance Agreement between NADSA and N.A. Degerstrom, Inc., dated
        July 1, 1994 (incorporated by reference to Exhibit 10.1 to the
        Form 10-SB).

10.2    Conveyance Agreement between NADSA and N.A. Degerstrom, Inc., dated
        July 1, 1994 (incorporated by reference to Exhibit 10.2  to the Form
        10-SB).

10.3    Operating Agreement between the Corporation and N.A. Degerstrom, Inc.
        dated March 15, 1995 (incorporated by reference to Exhibit 10.3 to the
        Form 10-SB).

10.4    Share Option Agreement between the Corporation and Jorge Vargas, dated
        March 15, 1995 (incorporated by the reference to Exhibit 10.4 to the
        Form 10-SB).

10.5    Share Option Agreement between the Corporation and Enrique Rufino
        Marzari Elizalde, dated March 15, 1995 (incorporated by reference to
        Exhibit 10.5 to the Form 10-SB).

10.6    Option to Purchase (Santa Clara) between the N.A. Degerstrom, Inc. and
        Martin Antonio Carotti and Carlos Giustozzi, dated May 12, 1994, as
        amended on June 30, 1995 and again on December 13, 1995 (incorporated
        by reference to Exhibit 10.7 to the Form 10-SB).

10.7    Letter Agreement(Agua Blanca) between the Corporation and Newcrest
        Minera Argentina S.A., dated April 4, 1996 (incorporated by reference
        to Exhibit 10.9 to the Form 10-SB).

                                       58

<PAGE>

10.8    Option to Purchase (Agua Blanca) between MASA and Adonis Cantoni, dated
        June 21, 1995 (incorporated by reference to Exhibit 10.10 to the Form
        10-SB).

10.9    Debt Restructuring Agreement between the Corporation and N.A.
        Degerstrom, Inc., dated January 11, 1996, as amended May 13, 1996
        (incorporated by reference to Exhibit 10.15 to the Form 10-SB).

10.10   Escrow Agreement between the Corporation, N.A. Degerstrom, Inc. and
        Montreal Trust Company of Canada, dated November 30, 1995 (incorporated
        by reference to Exhibit 10.16 to the Form 10-SB).

10.11   Agency Agreement between the Corporation, C.M. Oliver & Company Limited
        and Majendie Charlton Securities Ltd., dated November 22, 1996
        (incorporated by reference to Exhibit 10.17 to the Form 10-SB).

10.12   Special Warrant Indenture between the Corporation and Montreal Trust
        Company of Canada, dated December 13, 1996 (incorporated by reference
        to Exhibit 10.18 to the Form 10-SB).

10.13   Purchase Warrant Indenture between the Corporation and Montreal Trust
        Company of Canada, dated December 13, 1996(incorporated by reference to
        Exhibit 10.19 to the Form 10-SB).

10.14   Agreement dated April 30, 1996 between the Corporation and Waiata
        Resources for the provision of financial advisory services
        (incorporated by reference to Exhibit 10.20 to the Form 10-SB).

10.15   Amended Stock Option Plan, dated June 26, 1996, as amended June 26,
        1998, as amended June 23, 2000 (incorporated by reference to Exhibit
        10.15 to the Form 10-KSB for the fiscal year ended December 31,
        2000).

10.16   Limited Liability Company Agreement (Arroyo Verde) dated October 23,
        1997 between the Corporation and Pegasus Gold International, Inc.
        (incorporated by reference to Exhibit 10.16 to Form 10-KSB for fiscal
        year ended December 31, 1997).

10.17   Purchase and Sales Agreement (Chubut cateos, Mina Leon I, Mina Leon II
        and Leleque) dated August 28, 2000 between Minera Andes S.A. and Cordon
        Leleque S.A.(incorporated by reference to Exhibit 10.17 to the Form
        10-KSB for the fiscal year ended December 31, 2000).

10.18   Purchase and Sales Agreement (Chubut cateos, Willimanco) dated August
        28, 2000 between Minera Andes S.A. and Minera El Desquite
        S.A.(incorporated by reference to Exhibit 10.18 to the Form 10-KSB for
        the fiscal year ended December 31, 2000).

10.19   Option and Joint Venture Agreement (El Pluma/Cerro Saavedra properties)
        between the Corporation and Mauricio Hochschild & Cia. Ltda. dated
        March 15, 2001.(incorporated by reference to Exhibit 10.19 to the Form
        10-KSB for the fiscal year ended December 31, 2000).

11.1    Statement regarding the computation of per share loss.*

21.1    List of subsidiaries.*

23.1    Consent of PricewaterhouseCoopers LLP*

23.2    Consent of BDO Dunwoody LLP.*

* Exhibits filed herewith

                                       59

<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf be the undersigned, thereunto
duly authorized, effective March 29, 2002.

   MINERA ANDES INC.
   Registrant

By: /s/ Allen V. Ambrose
    -------------------------------
    Allen V. Ambrose, President

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Date: March 29, 2002                  By: /s/ Allen V. Ambrose
      -----------------------------       --------------------------------------
                                          Allen V. Ambrose, Director

Date: March 29, 2002                  By: /s/ John Johnson Crabb
      -----------------------------       --------------------------------------
                                          John Johnson (Jack) Crabb, Director

Date: March 29, 2002                  By: /s/ A.D. Drummond
      -----------------------------       --------------------------------------
                                          A.D. (Darryl) Drummond, Director

Date: March 29, 2002                  By: /s/ Armand G. Hansen
      -----------------------------       --------------------------------------
                                          Armand G. Hansen, Director

Date: March 29, 2002                  By: /s/ Bonnie L. Kuhn
      -----------------------------       --------------------------------------
                                          Bonnie L. Kuhn, Director, CFO

Date: March 29, 2002                  By: /s/ Allan J. Marter
      -----------------------------       --------------------------------------
                                          Allan J. Marter, Director

                                       60