===============================================================================

                     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, 1998

     [ ]  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:
Title of each class                  Name of each exchange on which registered:
Common shares without par value                     The Alberta Stock 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.

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 22, 1999 was $5,425,191.

(Issuers involved in bankruptcy proceedings during the past five years) Check
whether the issuer has filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes [ ] No [ ]

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 22, 1999, 20,390,030
common shares of the Registrant were outstanding.

Documents incorporated by reference. If the following documents are incorporated
by reference, briefly describe them and identify the part of the Form 10-KSB
(e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any
annual report to security holders; (2) any proxy or information statement; and
(3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of
1933 ("Securities Act").

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

================================================================================
<PAGE>
                                TABLE OF CONTENTS
                                -----------------


PART I                                                                     Page
                                                                           ----

     Item 1         Description of Business                                  2

     Item 2         Description of Properties                                9

     Item 3         Legal Proceedings                                       31

     Item 4         Submission of Matters to a Vote
                    of Security Holders                                     31

PART II

     Item 5         Market for Common Equity and Related
                    Shareholder Matters                                     32

     Item 6         Management's Discussion and Analysis
                    of Financial Condition and Results of Operations        32

     Item 7         Financial Statements                                    36

     Item 8         Changes in and Disagreements With Accountants
                    on Accounting and Financial Disclosure                  57

PART III

     Item 9         Directors, Executive Officers, Promoters and
                    Control Persons; Compliance with Section 16(a)
                    of the Exchange Act                                     57

     Item 10        Executive Compensation                                  59

     Item 11        Security Ownership of Certain Beneficial Owners
                    and Management                                          61

     Item 12        Certain Relationships and Related Transactions          63

     Item 13        Exhibits and Reports on Form 8-K                        64


                                        1
<PAGE>
                                     PART I

Preliminary Note Regarding Forward-Looking Statements; Currency Disclosure

The information set forth in this report in Item 1 - "Description of Business"
and in Item 6 - "Management's Discussion and Analysis of Financial Condition and
Results of Operations" includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Certain factors that realistically could cause results to
differ materially from those projected in the forward-looking statements are set
forth in Item 1 - "Description of Business-Considerations Related to Minera
Andes' Business."

All currency amounts in this report are stated in U.S. dollars unless otherwise
indicated. On March 22, 1998, 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 $1.52 or Cdn $1.00 = U.S. $0.66.

ITEM 1. DESCRIPTION OF BUSINESS

Minera Andes Inc. ("Minera Andes" or the "Corporation") is engaged in the
exploration and development of mineral properties located primarily 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 198,414 hectares in six
Argentine provinces and 9,539 hectares in two departments in Colombia. 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. 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 (4 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 ("ASE"). The Corporation's interests in its Argentina
properties are 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's interests in its
Colombian properties are held through Minera Providencia S.A. ("MPSA"),
incorporated in April 1998.

                                       2
<PAGE>
The corporate structure of Minera Andes is as follows:

                         ------------------------------
                         |      Minera Andes Inc.     |
                         |        Alberta, Canada     |
                         ------------------------------
                                        |
         -------------------------------------------------------------
         |                              |                            |
-------------------                -----------         -------------------------
|Minera Andes S.A.|                | NAD S.A.|         |Minera Providencia S.A.|
|    Argentina    |                |Argentina|         |       Colombia        |
|       95%       |                |  91.6%  |         |          94%          |
-------------------                -----------         -------------------------

The Corporation holds 19 of the 20 issued and outstanding shares of MASA and 11
of the 12 issued and outstanding shares of NADSA as well as an irrevocable
transferrable option to purchase the one remaining MASA share and an irrevocable
transferrable option to purchase the one remaining NADSA share. Each of those
single shares are held by a natural person shareholder as required by local law.
The Corporation holds 94% of the issued and outstanding shares of MPSA and has
entered into option agreements to acquire the remaining shares.

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 operates its own
independently owned mines and mines in joint venture with other mining
companies. 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 Corporation's business
address in Colombia is Carrera 9 #74-08, Oficina 504, Bogota, Colombia. The
registered address of the Corporation is 1600, 407 2nd Street S.W., Calgary,
Alberta, T2P 2Y3 Canada.

Considerations Related to Minera Andes' Business

Ownership of the Corporation's 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:

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

                                       3
<PAGE>
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 the Corporation's exploration
efforts will yield reserves or result in any commercial mining operations.

Many of the properties that the Corporation intends to explore in Argentina and
Colombia 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. The application for an
exploration license in Colombia is handled by the Ministry of Mines and Energy,
plus the Ministry of the Environment. The approval process may take many months
to complete. Although the Corporation believes that it has 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. The Corporation currently has no insurance against
such risks. The Corporation 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.

The Corporation 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. The Corporation 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 the Corporation 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 will require substantial financing. The Corporation's
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 the Corporation's control, and cannot be accurately
predicted. Failure to obtain sufficient financing could result in delay or
indefinite postponement of exploration, development or production on any or all
of Minera Andes' projects or loss of properties. For example, certain of the
agreements pursuant to which the Corporation has the right to conduct
exploration activities carry work commitments which, if not met, could result in
the Corporation losing its right to acquire an interest in the 

                                       4
<PAGE>
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 and also in Colombia, is a highly
competitive business. A large number of companies compete with the Corporation
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 the Corporation.
While the Corporation seeks 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 the Corporation will be
successful in any of these efforts.

Foreign Operations. The majority of Minera Andes' properties are located in
Argentina. Argentina has recently emerged from periods of political and economic
instability. While current indications are that such instability is diminishing,
there are no guarantees that this will continue. 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 the Corporation maintain good relationships with the
governments in Argentina. The Corporation 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. Similar conditions and
uncertainties pertain to the conduct of operations in Colombia, although the
country is regarded as economically stable, compared with other countries in the
region.

Difficulties in Developing Remote Areas. Many of the areas in which the
Corporation is conducting 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 the Corporation or its 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 the Corporation's properties which are being explored
or developed for that mineral could also drop dramatically and the Corporation
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 the Corporation's intended activities. Minera Andes has
obtained or is in the process of obtaining authorizations currently required to
conduct its operations. New or different 

                                       5
<PAGE>
standards imposed by governmental authorities in the future or amendments to
current laws and regulations governing 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. Degerstrom beneficially
owns approximately 25% of the outstanding voting securities of the Corporation
and therefore can exert significant influence in the election of the
Corporation's 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 the Corporation or other transactions may differ from those of the
Corporation's other shareholders.

Certain directors and officers of the Corporation are also directors, officers
or employees of the Corporation's majority shareholder, Degerstrom and of other
natural resource and mining companies. As a result, conflicts may arise between
the obligations of these directors to the Corporation and to these other
entities. Certain directors and officers of the Corporation 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
the affairs of the Corporation.

Transactions With Degerstrom; Dependence on Key Personnel. The Corporation has
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 the Corporation and
Degerstrom, by mutual agreement. Degerstrom is not required to devote its
personnel and resources exclusively to, or for the benefit of, the Corporation.
There can be no assurance that the services to be provided by Degerstrom will be
available to the Corporation at all times. Moreover, the Corporation's 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 the Corporation's securities. There is no assurance that an active trading
market will ever develop. Investment in the Corporation 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
the Corporation.

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,
MASA or NADSA 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;

                                       6
<PAGE>
"Claims" means the Cateos, Manifestacion de Descubrimiento, Mina, Estaca Mina
(as defined by the Republic of Argentina Mining Code, as amended) described
herein issued to NADSA, MASA or the Corporation by the government of Argentina
or any provincial government;

"Colombian Claims" means the exploration licenses, both granted and applied for
in Colombia;

"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;

                                       7
<PAGE>
"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;

"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

                                       8
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTIES

The principal business of the Corporation is the exploration and development of
mineral properties ("Claims") located primarily in the Republic of Argentina
plus two properties in Colombia. The Corporation's interests in the Claims are
held through MASA and NADSA, while the Colombian Claims are held through MPSA.
MASA holds properties and is the company in which the daily business operations
are conducted. NADSA holds properties and drilling equipment under a temporary
importation permit. MASA and NADSA were formed and registered as mining
companies 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.

The royalty payable to Degerstrom by both NADSA and MASA will be a percentage of
the net smelter return earned on those Claims or any future Claims acquired by
those parties. 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
any party 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 by the parties, each party 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 one 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.

                                       9
<PAGE>
PRINCIPAL PROPERTIES

Recent Mining and Economic History in Argentina

Argentina is the second largest country in South America, over 2.7 million
square km in area. In 1983, Argentina returned to a multi-party 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 current 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
US 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 have been positive; Argentina's gross domestic product grew at up to 8%
per annum in the early 1990s and inflation has dropped to between 1 and 3% per
annum. However, Argentina is currently recovering from a recession. The
government is focused on diversifying the economy to increase exports and
decrease Argentina's dependency on imports. The country is encouraging foreign
investment.

The government is actively revitalizing the mineral sector. 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 are unrestricted. Argentina's
mineral resources, owned 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 their royalties.

Argentina's mineral potential is largely unknown, particularly in comparison to
that of its immediate neighbors. Until recently, Argentina has been relatively
under-explored 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. Deposits that are currently under
development include the Bajo de la Alumbrera, 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; currently there are approximately 60 such companies. Exploration
expenditures have grown from $5 million in 1991 to over $90 million in 1995.

The Corporation initiated gold exploration in Argentina in 1991, in conjunction
with Degerstrom. As of December 1998, the Corporation had Argentine land
holdings totaling 198,414 ha in six 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
trenching and reverse-circulation drilling on the most advanced targets in their
property portfolio, and conducting grassroots exploration to evaluate its other
properties and to generate new targets.

                                       10
<PAGE>
Recent Mining and Economic History in Colombia

Colombia is the fourth largest country in South America, over 1.4 million square
km in area. It is the second most populous country with approximately 40 million
inhabitants. Apart from the four year period 1953-1957, when the country was
under military rule, Colombia has had a democratic form of government since 1849
which continues to this day.

The country endured a civil war during the period 1948-1953 which spawned the
emergence of separatist guerilla movements which endure today in the form of
several leftist guerilla organizations which operate and/or exercise control in
remote rural areas where there is minimal state presence.

The constitution was reformed in 1991, affirming a more open, pluralistic
concept of democracy, incorporating minority ethnic and religious groups and
providing the citizens with a legal resource to protect their constitutional and
civil rights.

Colombia has enjoyed a pattern of sustained economic growth since the 1950s.
During the last 20 years, the gross domestic product ("GDP") has more than
doubled while growing at an average rate of 5%. Colombia is currently suffering
from a recession which has lowered GDP growth to the 1%-3% range in the last few
years.

The Colombian economy has changed dramatically since the launching of the
economic liberalization known as "apertura" in 1991. Along with the loosening of
import and other controls and the privatization of state-owned enterprises has
come economic expansion and new domestic and foreign investment. Colombia has
signed free trade agreements with many of its neighbors and has stated its wish
to be an early entrant into a hemispheric free trade agreement.

The government is in the process of revitalizing the mineral sector to encourage
foreign investment. A new mining code is pending in congress which offers a more
streamlined and transparent bureaucratic process in the regulation of mining
activities and possibly additional tax incentives. Currently in-place incentives
include 100% foreign ownership, unrestricted repatriation of capital and
profits, accelerated depreciation and amortization, exclusion from the
value-added tax and the ability to lock-in tax rates for periods up to 10 years.
There are no restrictions on gold or other metal sales subject to a 4% NSR
royalty on precious metals and 3% NSR royalty on base metals.

Colombia's mining history until recently had been dominated by the production of
gold and platinum in which it was the leading producer worldwide during the
mid-1800s. Current mineral production is dominated by coal, emeralds, nickel,
gold, and platinum. Coal production is dominated by large, modern mines which
include Exxon's Cerrejon Norte, the largest open-pit coal mine in the world.
Colombia is the world's largest producer of gem quality emeralds. Nickel
production comes exclusively from Billiton's Cerro Matoso mine. Gold production,
averaging 955,000 ounces/yr and platinum production, averaging 30,000 ounces/yr
are predominantly produced by numerous small, inefficient operations run by
local miners.

Other than some copper exploration programs executed during the 1970s and 1980s
by the United Nations and various multinational mining companies, very little
modern systematic exploration has been conducted in the country.

The Corporation initiated exploration in Colombia in 1996. As of December 1998,
the Corporation had Colombian land holdings totaling 4,739 hectares in one
prospect area and an application-in-process for an exploration licence of 4,800
hectares on another prospect area. The Corporation's exploration efforts
consisted of an in-depth review of available published and private geologic
information, initial site visits with preliminary sampling of outcrops and
acquiring mining rights to the prospects.

                                       11
<PAGE>
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 or the provinces, depending on the territory in which they are
located. 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
          4 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 2 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 $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.

     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 

                                       12
<PAGE>
          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 $80 per pertenencia is payable to the
          province.

          Minas are obtained by the following process:

          a)   Declaration of manifestation of discovery ("MD"), in which a
               point within a cateo is nominated as a discovery point. The MD is
               used as a basis for location of pertenencias of the sizes
               described above. MD's do not have a definite area until
               pertenencias are proposed. Within a period following designation
               of an MD, 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. 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 include water rights, 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.

Property and Title in Colombia

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

                                       13
<PAGE>
     Exploration Licence: An exploration licence is a concession which does not
     permit mining but gives the owner the right to determine the quantity and
     quality of mineral rights deposits present and a preferential right to a
     mining concession for the same area. Exploration licences are divided into
     three categories depending on the size of the area. Small Mining (up to 100
     ha), Medium Mining (100 to 1,000 ha) and Large Mining (1,000 to a maximum
     of 5,000 ha). The term of an exploration licence is based on its size
     category. Small licences are 1 year, Medium licences are 3 years, and Large
     licences are 5 years. The Ministry of Mines and Energy is empowered to
     grant one or two year extensions to these periods if so petitioned by the
     owner.

     Exploration licences are awarded by the following process:

     a)   Application for a licence covering a designated area. The application
          must be signed by a Colombian geologist or engineer registered with
          the Ministry of Mines and Energy.

     b)   A resolution is decreed by the regional office of the Ministry of
          Mines and Energy which grants the exploration licence over the area
          requested, minus any area covered by valid pre-existing licences.

     c)   The applicant must submit an Environmental Management Plan to the
          Ministry of the Environment (in the case of large mining category
          licences) or the Regional Autonomous Environmental Agency (for small
          and medium category licences) describing exploration work planned,
          potential environmental impacts and measures to minimize or mitigate
          those impacts.

     d)   Once the Environmental Management Plan is approved, the licence is
          forwarded to the Ministry of Mines and Energy for inscription in the
          Official Mining Registry.

     The length of this process varies depending on the areas and bureaucratic
     offices involved and commonly takes one or more years. Non-invasive surface
     exploration (mapping, geochemistry, geophysics) can commence upon the
     granting of the licence by the Regional Ministry of Mines office. If two
     companies apply for exploration licences on the same land, the first to
     apply has the superior right.

     The duration period of the Exploration licence does not begin until it is
     inscribed in the Official Mining Registry. Payment of an annual "canon fee"
     or tax, of one minimum legal daily salary per hectare (roughly U.S.$4.50)
     must be paid within 10 days after the licence is inscribed in the Official
     Mining Registry and annually thereafter.

     An application to convert an Exploration licence to an Exploitation licence
     must include work plans, mine plans, an economic feasibility study, and in
     the case of the large mines, an environmental and socio-economic impact
     study. If no objections are raised by the Ministry of Mines and Energy or
     the Ministry of the Environment within 60 days, the plan is deemed approved
     and the licence is converted to an Exploitation licence. An exploitation
     licence has a duration of 10 years which can be extended twice for an
     additional twenty years.

General Discussion of Andean Geology as it Relates to Mineral Deposits

The Andes Mountain Range running along the western edge of South America,
including the western portions of Argentina, is a dynamic portion of the earth's
crust. Conditions there have been favorable for the formation of metal ore
deposits for the past 100 million years. Since the late 1960s geologists around
the world have realized that the continents and ocean floors of the earth's
crust consist of many individual plates which move against each other, more or
less "floating" on the next deeper layer of the earth, referred to as the
mantle. Where these crustal plates rub against each other, earthquakes are
common. Where one plate is overridden by another (referred to as a "subduction
zone"), the lower plate may partially melt, causing liquid rock to rise through
the plates.

                                       14
<PAGE>
In particular, along the western edge of South America, the Pacific Ocean floor
is being overridden by South America, creating many folds and faults in the edge
of the continent, with attendant earthquakes. As the ocean floor is pushed under
the continent, parts of the slab (up to 70 km thick) are melted and rise upward,
intruding into the crust of South America. Some of this melted rock cools
underground, creating bodies of granite. The granite may later be exposed by
erosion of the mountain ranges. Other portions of the molten rock reach the
surface and form the volcanoes of the Andes. With the molten rock come
superheated fluids that carry sulphur and metals such as copper and gold. These
minerals are deposited in and around the intrusive and volcanic rocks.
Persistent hot springs, as in Yellowstone National Park, may concentrate
deposits of metals. Weathering of ore deposits can cause metals in the rock and
soil to dissolve and be concentrated at lower levels.

There has been relatively continuous intrusive and volcanic activity along the
Andean chain for over 100 million years, creating a very good environment for
metal deposits. As explained above, while numerous gold and copper deposits have
been developed in the Andes Mountains in neighboring Chile, the similar terrain
in Argentina has only recently been opened to exploration. Minera Andes was one
of the first companies to obtain valuable exploration rights in Argentina, and
has a substantial number of properties which it is systematically exploring for
metal deposits.

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.

                                    Figure 1
           [Graphic omitted - Map of exploration projects in Argentina]


                                       15
<PAGE>
A.   Santa Clara Project Summary
     ---------------------------

     1. Santa Clara Project Location

     The Santa Clara Project area is located in northwest Mendoza Province,
     approximately 63 km west of the city of Tupungato, at latitude
     33(degree)12'00"S and longitude 69(degree)7'00"W. Good road access exists
     to the project area. Elevations at Santa Clara range from 2,500 m to 4,600
     m with moderate to rugged relief.

     2. Santa Clara Project Geology

     The Santa Clara Project is located within metamorphic and intrusive rocks
     of the Frontal Cordillera. Basement rocks at Santa Clara comprise
     metasediments and igneous rocks and volcanic sediments ranging in age from
     billions of years old to about 300 million years old. These rocks are
     intruded by granite and other intrusive and volcanic rocks with ages
     ranging from 200 million years old to the present.

     3. Santa Clara Project Exploration

     The Santa Clara Project was first explored in the 1960s under the United
     Nations-Argentine Government Plan Cordillerano. The property was recognized
     as hosting porphyry copper potential and an exploration campaign consisting
     of geological mapping, geochemical surveys (stream sediment, soil and rock
     chip) and an induced polarization geophysical survey was completed. In
     addition, diamond drilling was completed in 28 holes to depths ranging from
     70 m to 110. In 1982-83, Fabricaciones Militares explored a portion of the
     Santa Clara area for molybdenum. The work consisted of geologic mapping,
     planimetric surveys, an induced polarization geophysical survey and two
     drill holes.

     From 1994 through 1996, MASA completed property-wide prospecting and stream
     sediment sampling surveys which clearly defined a porphyry copper center at
     Tres Quebradas . In addition, four areas of anomalous gold values were
     outlined; Tres Quebradas (north of the copper zone), Quebrada del Norte,
     Quebrada del Azufre and Arroyo Metales. Each of these targets was
     systematically explored by detailed mapping and sampling in subsequent
     exploration programs.

     In 1997, prior to the termination of the joint venture, the Corporation's
     partner, Cominco, constructed access roads and drilled four diamond drill
     holes to explore the copper potential of the Quebrada del Azufre zone.

     4. Santa Clara Project Ownership

     The Santa Clara Project comprised a total of 26,580 ha in 8 cateos and 14
     manifestations of discovery. All land holdings were held by MASA under an
     option to purchase agreement, or directly.

     The Corporation signed a Memorandum of Understanding in March 1996 with
     Cominco providing for a joint venture on the Santa Clara and Pino Andino
     properties. However, after compiling and evaluating data on the Santa Clara
     and Pino Andino properties during the first six months of 1997, Cominco
     terminated the Memorandum of Understanding with respect to Pino Andino in
     February 1997 and with respect to Santa Clara in July 1997.

     Following attempts to joint venture the Santa Clara property, the property
     was abandoned in mid-1998. All underlying contracts with landowners were
     terminated and the Corporation wrote-off deferred expenditures of $756,557.

                                       16
<PAGE>
B.   Pino Andino Project Summary
     ---------------------------

     1. Pino Andino Project Location

     The Pino Andino Project property package is located 250 km northwest of the
     city of Neuquen, in Neuquen Province at latitude 38(0)02'00"S and longitude
     70(0)29'00"W in an area that consists of gentle rolling hills; elevations
     range from 900 m to 2,300 m.

     2. Pino Andino Project Geology

     The Pino Andino Project area is principally underlain by Jurassic
     sedimentary rocks that dip gently to the east into the Neuquen Basin.
     Cretaceous diorite and granodiorite intrudes the Jurassic sequence in the
     western property area. The stocks are part of an extensive north-south belt
     of intrusions. Late Tertiary to Quaternary tuffs occur in the extreme west.

     3. Pino Andino Project Exploration

     A number of old trenches, test pits and minor open cuts are evidence of
     historical exploration of galena-bearing quartz veins. Similar evidence
     exists at numerous copper carbonate (malachite) occurrences scattered
     throughout the property.

     Following the acquisition of the property in 1994, MASA completed
     property-scale and detailed exploration work at Pino Andino, including
     drill programs in 1995 and ground geophysical surveys in 1996 which
     outlined a zone of gold mineralization and a potentially large zone of
     porphyry copper mineralization.

     In 1996, with Cominco as operator of the joint venture, an exploration
     program including geophysical surveys and reverse-circulation drilling was
     completed. Cominco concluded that within the drill zone there is little
     possibility of encountering an open-pittable economic reserve. Cominco
     terminated the Memorandum of Understanding with respect to Pino Andino in
     February 1997.

     In April of 1997 the Corporation completed a nine hole reverse-circulation
     drilling program to test gold targets left untested by the Cominco
     drilling. This drilling failed to delineate gold or copper mineralization
     in economic quantities.

     4. Pino Andino Project Ownership

     In December 1997, due to prevailing conditions in the junior mining equity
     markets and low precious metal prices, the Pino Andino Project was
     abandoned and all contracts with underlying landowners were terminated,
     resulting in a write-off of deferred expenditures of $1,083,862.

C.   San Juan Project Summary
     ------------------------

     1. San Juan Project Location

     The San Juan Province Project comprises seven properties totaling 39,488 ha
     in southwestern San Juan Province. Elevation ranges from 2,500 m to 5,500 m
     and moderate to high relief.

                                       17
<PAGE>
     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 predevelopment at the El Pachon
     copper deposit and advanced exploration at the Araya (Cu), Los Piuquenes
     (Cu), and Cenicero (Au) projects.

     The San Juan Province Project is a regional reconnaissance program, focused
     on epithermal gold and gold 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.
     Several major mining companies are looking at Los Chonchones for a possible
     joint venture.

     In December 1998, the Corporation signed a letter agreement with Battle
     Mountain Gold Corporation regarding a joint venture on Minera Andes' Los
     Azules cateo application in Calingasta Department, San Juan. Battle
     Mountain controls land contiguous to the Los Azules property.

     Through December 31, 1998, the Corporation expended $433,872 on the San
     Juan Project (net of write-offs for properties abandoned).

     4. San Juan Area Project Ownership

     The seven applications for cateos total 39,488 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 1999 are $27,560.

D.   Agua Blanca Project Summary
     ---------------------------

     1. Agua Blanca Project Location

     The Agua Blanca Project is located approximately 220 km northwest of the
     city of San Juan in San Juan Province, at latitude 30(degree)08'00"S,
     longitude 69(degree)45'00"W . The property (totaling 39,426 ha) lies in the
     southeastern extension of the El Indio Gold Belt which hosts the El Indio,
     Tambo and Pascua (Nevada) epithermal Au-Ag deposits. Elevations on the
     property range from 3,300 m to 5,300 m, with moderate relief that permits
     foot access to most areas of the property. Water is plentiful and the
     climate consistent with 

                                       18
<PAGE>
     semi-arid to arid Andean locations, hot dry days and cool nights for much
     of the year. Winter months are snowy with sub-zero temperatures.

     2. Agua Blanca Project Geology

     The eastern portion of the property is underlain by Carboniferous age Agua
     Blanca Formation sedimentary rocks and Permo-Triassic Colanguil Batholith
     granitoids. To the west, volcanic rocks of probable Tertiary age
     predominate. The sequence of volcanic rocks ranges in composition from
     andesite to rhyolite and includes flows, tuffs and, possibly,
     volcaniclastic rocks. The stratigraphy strikes northerly and dips gently to
     the east. A number of diorite plugs intrude the volcanic package.

     Exploration has focused on the Tertiary sequence in two main areas,
     Quebrada Mondaca and Arroyo del Agua Blanca, where numerous zones of
     intense hydrothermal alteration occur that are also visible on satellite
     images of the area. Argillic (kaolinite) and sericitic alteration
     predominates in volcanic rocks; intense potassic alteration occurs in
     diorite. Silicification occurs locally in all rock types and magnetite
     veining to magnetite breccias occur extensively throughout the dioritic
     unit. Weak, propylitic alteration is widespread on the property.
     Disseminated pyrite mineralization occurs variably throughout the zones of
     alteration. Minor chalcopyrite and arsenopyrite mineralization occur
     locally, associated with potassic alteration and silicification
     respectively.

     3. Agua Blanca Project Exploration

     Between 1985 and 1994, a number of limited prospecting and sampling
     excursions were conducted in the Agua Blanca property area by the
     Asociacion Cooperadora Instituto de Investigaciones Mineras ("ACIIM") in
     conjunction with the property owner, Adonis Cantoni. Their work succeeded
     in outlining zones of intense hydrothermal alteration with anomalous values
     of gold and silver.

     Since 1994, MASA completed four exploration programs at Agua Blanca to
     explore the Quebrada Mondaca and Arroyo del Agua Blanca areas. In 1995,
     MASA constructed a 25 km road to access the property from the head of
     Quebrada Mondaca drainage. Exploration efforts have included property-scale
     geologic mapping, prospecting and detailed sampling. Results indicated the
     presence of a gold or copper- gold porphyry system in the area of the
     Quebrada Mondaca.

     The Corporation signed an agreement with Newcrest Resources, Inc. creating
     a joint venture on the property in April 1996. During 1996 Newcrest, as
     operator of the joint venture, completed a work program consisting of
     geologic mapping and rock chip sampling at Quebrada Mondaca. In March 1997
     Newcrest completed a 12-hole, 2,819-meter RC drilling program, which showed
     the area to be widely mineralized in both gold and copper.

     Under the agreement, Newcrest was given the option to earn a 51% interest
     in the joint venture by making exploration expenditures of $3,800,000 over
     four years, paying all associated land and option payments, and making
     certain cash payments. After conducting the drilling program during 1996,
     Newcrest elected to return the property to the Corporation in March 1997.

     In December 1998 the Corporation drilled seven reverse-circulation drill
     holes totaling 990 m (3,250 ft.) at Agua Blanca. Theses holes were intended
     to test targets left untested by Newcrest in the Quebrada Mondaca drainage.
     The holes encountered sub-economic to geochemically anomalous gold and
     copper mineralization in geologic environments similar to those encountered
     by Newcrest.

                                       19
<PAGE>
     To December 31, 1998, the Corporation had spent $1,082,999 on Agua Blanca.
     Newcrest paid all expenditures on the project between April 1996 and March
     1997, and incurred expenses of approximately $429,000 during that time.

     4. Agua Blanca Project Ownership

     The Agua Blanca property package (39,426 ha) was held by MASA under two
     option-to-purchase agreements: with Adonis Cantoni and Juan Lirio. The
     Corporation evaluated the prospects for the property early in 1999 and
     decided that it no longer met its exploration criteria. The property was
     abandoned and the underlying contract with the landowners was terminated
     with a write-off to operations of $1,082,999

E.   Mendoza Project Summary
     -----------------------

     1. Mendoza Project Location

     The Mendoza Project consists of five properties totaling 30,940 ha in the
     western part of Mendoza Province.

     2. Mendoza Project Geology

     The Mendoza Project is focused on those areas of Cordilleran Mendoza that
     are underlain by a generally north-trending fold and thrust belt of
     Mesozoic sedimentary rocks. These rocks host the numerous known skarn
     occurrences in western Mendoza and are permissive for sediment-hosted
     epithermal gold deposits.

     The Mesozoic sediments overlie a basement of Paleozoic metasedimentary and
     igneous rocks, and are intruded by Tertiary stocks, dykes, and sills. The
     sediments are locally overlain by Tertiary volcanics that constitute
     possible hosts for epithermal gold.

     3. Mendoza Project Exploration

     The cordilleran part of Mendoza Province was explored in the late 1960s and
     early 1970s under the Plan Cordillerano of the United Nations and the
     Argentine government. That program identified skarn copper and iron
     occurrences as well as several significant copper and/or molybdenum
     resources and prospects.

     Cateos held or controlled by MASA were selected on the basis of satellite
     image anomalies, compilation of available geologic information, and/or the
     presence of known alteration or mineralization. At the Palau Mahuida
     property sampling identified an anomalous Au-As + Zn-Ag-Sb metal
     association with up to 230 ppb Au. A color anomaly near the Chilean border
     is to be evaluated on the Paso Pehuenche property. Work in late 1996
     identified a large altered area and led to staking the Diamante cateo.

     Through December 31, 1998, the Corporation has expended a total of $399,183
     on Mendoza (net of write-offs for properties abandoned).

     4. Mendoza Project Ownership

     The Mendoza Project area properties are held as five applications for
     cateos and manifestations of discovery comprising 30,940 ha owned by MASA.
     Land holding costs for 1999 are estimated at $12,920.

                                       20
<PAGE>
F.   Santa Cruz Project Summary
     --------------------------

     1. Santa Cruz Project Location

     MASA's properties are located in the Deseado massif of north central Santa
     Cruz. The contiguous cateos and applications for cateos (94,920 ha) are
     located 50 km east and south of Perito Moreno. The northern third of this
     property is referred to as the El Pluma/Cerro Saavedra property. The
     remainder is known as the Southern Cateos.

     2. Santa Cruz Project Geology

     The property is underlain by andesitic to rhyolitic pyroclastic rocks of
     the Jurassic Bahia Laura Group. The Bahia Laura Group rocks host the Cerro
     Vanguardia epithermal gold deposit and are the target of MASA's generative
     program in Santa Cruz Province.

     In the Deseado Massif region of southern Argentina, where the El
     Pluma/Cerro Saavedra property is located, the dominant type of precious
     metal mineral occurrence is vein-type similar to the Cerro Vanguardia
     deposit (3.2 million ounces of gold). This type of mineralized vein
     occurrence in Santa Cruz Province typically has little or no wall rock
     alteration and minimal potential to create a disseminated deposit, due to
     the fact that the rhyolitic wall rocks are relatively dense and
     impermeable. In contrast, the vast majority of major precious metal mines
     developed during the past 20 years have been lower-grade, high tonnage
     disseminated deposits where the precious metals were deposited in highly
     permeable hosts rocks fed by high-grade "feeder" structures.

     3. Santa Cruz 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, FOMICRUZ,
     S.E., a state owned company, completed reconnaissance surveys in the
     province to delineate areas of interest for mineral reserves. The recent
     discovery of the Cerro Vanguardia epithermal gold deposit in eastern Santa
     Cruz and the commencement of production at the Fachinal epithermal gold
     deposit located immediately over the border in Chile, have attracted a
     great deal of exploration activity to the region.

     Since MASA's discovery of gold and silver mineralization at the El
     Pluma/Cerro Saavedra area in March of 1997, the Corporation has completed
     reconnaissance and detailed geologic mapping, stream sediment sampling,
     soil sampling, rock chip sampling and drilling programs. Additionally,
     ground magnetic and CSAMT geophysical resistivity surveys have been
     completed.

     In early 1998, a drill program of 6,165 feet (1,879 meters) tested four
     areas at El Pluma/Cerro Saavedra. At the Saavedra West sub-area, four
     widely-spaced holes totaling 1,760 feet (537 meters) tested a northwest
     trending mineralized structural zone at least 800 meters in length. These
     holes were drilled along the trend and approximately perpendicular to the
     mineralized zone. Hole EP-12 contained 115 feet of 4.05 g/t gold and 617
     g/t silver, including 25 feet of 6.77 g/t gold and 1,628 g/t silver. Hole
     EP-13, drilled 100 meters southeast of EP-12, showed 45 feet of 0.89 g/t
     gold and 525 g/t silver, including 20 feet of 1.44 g/t gold and 1,032 g/t
     silver. Hole EP-15 was drilled 700 meters northwest of EP-12 on the same
     structural zone and cut 15 feet of 1.61 g/t gold and 156 g/t silver.
     Sub-economic disseminated silver and gold mineralization was also found in
     all holes at Saavedra West.

                                       21
<PAGE>
     Precious metals occur in association with sulfide mineralization,
     silicification, quartz stockwork and quartz veining and strong illitic
     alteration. The mineralization is hosted by a sequence of Jurassic
     lacustrine epiclastic tuffs interbedded with carbonaceous shales and
     siltstones that may have been deposited in a lake.

     At the La Sorpresa sub-area, three reverse-circulation holes totaling 885
     feet (270 meters) were drilled. Hole EP-1, drilled to intersect a quartz
     vein with 15.4 g/t gold at the surface, cut two separate zones with 4.98
     g/t gold over 10 feet and 2.74 g/t over 10 feet. The other two holes, EP-2
     and EP-3, were designed to test geophysical anomalies and encountered a
     large Jurassic dacite porphyry intrusion that was probably the heat source
     for the hydrothermal mineralization at La Sorpresa.

     The mineralized zone at La Sorpresa is open-ended to the northwest under
     post-mineral cover of sediments less than ten meters thick and has
     excellent exploration potential.

                                       21
<PAGE>
     The El Pluma West sub-area was drilled with eight holes totaling 2,860 feet
     (872 meters). Extensive zones of anomalous gold, silver, arsenic and
     mercury were encountered, and the drill results demonstrated that the
     mineralized system extends at least an additional 500 meters to the south
     beneath the thin (less than 20 meters) post-mineral Tertiary basalt cover
     that overlies much of the property. Drill results suggest that the
     mineralization exposed at El Pluma West represents the western portion of a
     large hydrothermal system that extends beneath cover to the east.

     The Saavedra Central sub-area was evaluated by two drill holes totaling 660
     feet (201 meters). Hole EP-17 contained anomalous gold and pathfinder
     elements over the entire length of the hole and confirmed that the
     extensive area of high-level alteration and mineralization at Saavedra
     Central has additional exploration potential.

     In April and May of 1998, a second-phase program included 20 reverse-
     circulation angle holes totaling 2,012 meters (6,605 ft.) at the Saavedra
     West target. In this round of drilling, Hole EP-20, drilled 20 meters
     southwest of original discovery Hole EP-12, cut 50 feet (15.2 meters)
     averaging 8.23 g/t (0.240 oz/t) gold and 741 g/t (21.63 oz/t) silver. Hole
     EP-21, drilled 20 meters northeast of EP-12, cut 20 feet (6.1 meters)
     averaging 61.53 g/t (1.79 oz/t) gold and 1,647 g/t (48.02 oz/t) silver.

     Drilling has defined high-grade gold and silver mineralization that is
     largely structurally controlled. However, the better mineralization, in
     terms of grade and thickness, occurs where structures cut favorable, more
     permeable rock types. In addition, both the drilling and trenching show
     that lower grade mineralization also occurs as disseminated mineralization
     in environments where lithology appears to be the dominant ore control.
     This strongly indicates the potential for significant disseminated
     mineralization on the property.

     An independent geologic report, commissioned by the Corporation, comments
     on the possible existence at the Saavedra West target of a maar-diatreme
     structure, a low relief, broad crater and pipe formed by a volcanic
     explosion. Maar-diatremes can host silver/gold mineralization. Precious
     metal in diatremes can be concentrated in veins, hydrothermal breccias,
     stockworks (vein systems), or disseminated in permeable host rock. Drilling
     in this area by Minera Andes in 1998 identified high-grade veins and
     breccias with up to 0.187 oz/t (6.39 g/t) gold and 27.12 oz/t (928.9 g/t)
     silver over 70 feet in drill hole EP-12.

     The evidence of explosive volcanic activity at Saavedra West suggests that
     hydrothermal mineralizing fluids may have filled structural and chemical
     traps, thus making possible "moderate tonnages of discordant high-grade and
     larger tonnage of stratabound moderate grade" precious metal
     mineralization.

                                       22
<PAGE>
     In December 1998, approximately 580 samples were collected from 28 of 30
     trenches excavated on a vein and stockworks system at the Huevos Verdes
     zone. These trenches (totaling 2,125 m) were excavated with a backhoe
     approximately every 50 m perpendicular to the strike of the sub-vertical
     vein. Two trenches were extended to test an area of suspected stockwork
     mineralization.

     The best mineralization was 9.61 g/t gold and 255.8 g/t silver over nine
     meters, including four meters of 18.60 g/t gold and 498.8 g/t silver.
     Additional high-grade mineralization was encountered in four other
     trenches. Here, the strongest mineralization was 5.81 g/t gold and 228.9
     g/t silver over an approximate true width of four meters.

     Trenching at Huevos Verdes shows the vein to be much wider (3-9 meters)
     than is apparent at the surface (1-2 meters), as defined by degree of
     silicification. Assay results from the southern zone and central zones show
     similar width to the vein as defined by assay values. The strongest
     mineralization occurs over an average approximate true width of 6.9 m with
     average grades of 4.8 g/t gold and 189.0 g/t silver over an approximate
     strike length of 200 meters.

     Shallow trenching indicates Huevos Verdes to be highly prospective, with
     good exploration potential at depth. Results to date at the Huevos Verdes
     zone are consistent with a high-grade, somewhat discontinuous (in terms of
     width and grade) "bonanza" epithermal vein system, with stockwork zones
     developed in broader dilational zones. Typically, this type of vein system
     also shows a strong vertical zonation in precious metal values, making it
     imperative to develop a good three-dimensional understanding of the vein
     system. A program of geophysical surveys is being considered prior to a
     drill campaign.

     Work on the Southern Cateos has been limited to preliminary reconnaissance
     mapping and sampling.

     The Corporation has expended approximately $402,861 through December 31,
     1998, on the Santa Cruz Project and $1,273,710 on the El Pluma/Cerro
     Saavedra properties.

     4. Santa Cruz Project Ownership

     The Santa Cruz Project area is made up of 19 cateos and applications for
     cateos totaling 94,920 ha. Ten of these cover the El Pluma/Cerro Saavedra
     properties. The cateos are located in the western half of the province of
     Santa Cruz.

     All of the cateos are presently controlled 100% by MASA and may be subject
     to a provincial royalty. Holding costs for 1999 are $8,000.

G.   Chubut Project Property Summary
     -------------------------------

     1. Chubut Project Location

     Minera Andes currently holds five applications for cateo on properties 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.

                                       23
<PAGE>
     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)
     and El Toque (base metal, strata bound replacement deposit with a minor
     precious metal credit). 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 multi-stage
     epithermal quartz veins. Some of the samples with low gold values show
     strongly anomalous pathfinder elements such as mercury (in the low 2,000 to
     13,000 ppb range) that may indicate higher levels in the gold system.

     The Corporation has expended $196,641 through December 31, 1998, on the
     Chubut Project.

     4. Chubut Project Ownership

     The Corporation currently controls five applications (totaling 29,520 ha)
     for cateos in Chubut Province.

H.   La Horqueta Project Summary
     ---------------------------

     1. La Horqueta Project Location

     The La Horqueta Project is located in central Mendoza Province,
     approximately 200 km south of the city of Mendoza, at latitude
     34(degree)36'00"S and longitude 68(degree)55'00"W. Access is provided to
     the project by paved road from Mendoza to the city of San Rafael, and then
     by approximately 85 km of paved and gravel roads. Elevations range from
     1,150 m to 1,600 m.

     2. La Horqueta Project Geology

     The project area is underlain by a Precambrian and Paleozoic sequence of
     marine sediments and Carboniferous sedimentary and volcanic rocks and
     pyroclastics in the San Rafael Block. The property 

                                       24
<PAGE>
     straddles the contact between Precambrian La Horqueta Formation
     metasediments (phyllites and schists) and Carboniferous Lower Imperial
     Group sediments (feldspathic sandstones, argillites and quartzites). A
     dacitic, quartz-feldspar phyric porphyry stock is exposed in the central
     property area and has been assigned a Tertiary age, although the stock may
     be as old as Permian.

     A westerly trending zone of intense argillic and(quartz) sericite-pyrite
     alteration and mineralization approximately 400 m x 1,500 m in area occurs
     in the porphyry in the central property area. Disseminated pyrite
     mineralization occurs in variable amounts throughout the zone. Anomalous
     gold mineralization trends westerly along N70(degree)E and N70(degree)W
     structures and occurs in zones of intense fracturing associated with
     phyllic alteration and quartz-pyrite veins and stock works.

     3. La Horqueta Project Exploration

     A number of very small adits and trench-like excavations are present on the
     La Horqueta cateo which attest to the historical exploitation of narrow
     fluorite veins.

     In 1995,  the  Corporation  completed  mapping  and  sampling  programs  to
     evaluate the La Horqueta cateo  property-wide  and a detailed  program that
     focused on the central area.

     In July 1996, a campaign of detailed structural mapping, induced
     polarization and ground magnetic geophysical surveys and mechanical
     trenching was completed over 45 line km of grid in the central area and
     dipole-dipole induced polarization was conducted in areas of gradient array
     anomalies. Three km of road access and 1.2 km of trenching were completed
     in the central basin area between geophysical anomalies.

     In late 1996, a 17-hole reverse-circulation reconnaissance drilling program
     totaling 2,260 m tested portions of the 1500 x 400 meter altered zone with
     coincident geophysical and geochemical anomalies.

     4. La Horqueta Project Ownership

     Following the equivocal results from the Corporation's drilling and
     difficulty of attracting a joint venture partner to continue exploration
     work, the La Horqueta properties were abandoned in December 1997, and
     mineral properties and deferred exploration costs of $1,116,156 were
     written-off.

I.   Arroyo Nuevo Project Summary
     ----------------------------

     1. Arroyo Nuevo Project Location

     The Arroyo Nuevo Project is located 35 km west of the town of Chos Malal,
     in northwest Neuquen Province at latitude 37(degree)17'00"S, longitude
     70(degree)40'00"W. Good road access is provided to the property area by a
     combination of paved highway and gravel road. Local topography is of
     moderate relief with elevation ranges from 900 m to 2,100 m.

     2. Arroyo Nuevo Project Geology

     The area is underlain by a sequence of gently dipping Jurassic
     volcano-sedimentary rocks intruded by small stocks of Cretaceous-Tertiary
     porphyritic dacite. Tertiary andesite and basalt flows cap the sequence.
     Jurassic rocks include tuffaceous sandstone, pyroclastic tuff breccias,
     quartzite, shale and carbonate rocks. Steeply 

                                       25
<PAGE>
     dipping, northeast trending faults and structures predominate in the
     property area. In the area around the barite mine, flat lying barite veins
     to 5 m in thickness occur along bedding-parallel faults within a large zone
     of weakly silicified and pyritized sedimentary rocks. Carbonate rocks are
     locally jasperoidal.

     3. Arroyo Nuevo Project Exploration

     At the turn of the century, placer gold mining operations were working
     drainages in the project area and numerous small trenches and old workings
     attest to the historical exploitation of narrow, polymetallic veins. At
     Arroyo Nuevo, a small barite mine has been in operation since the 1970s.
     Between 1993 and 1995, Placer Dome completed an exploration program over a
     large area of reserve land leased from CORMINE S.E.P. that included the
     Arroyo Nuevo Project area.

     In 1994, MASA investigated the Arroyo Nuevo project area in a regional
     reconnaissance program. The program focused on the barite mine area and
     included 1:1250 scale mapping, rock chip sampling and soil sampling over a
     zone of jasperoid in carbonate rocks over 1,000 m along strike, with a
     strong multi-element (Au, Ag, Zn, As) soil anomaly. Several jasperoid rock
     samples returned significant gold assays, including values of up to 3.0 g/t
     and 9.0 g/t Au. A sample collected from Agua Mallin drainage returned a
     gold value of 291.4 g/t.

     Detailed exploration in 1997 consisted of geologic mapping and stream
     sediment sampling over 37 square km. The geochemical soil surveys, induced
     polarization and ground magnetic geophysical surveys covered about nine
     square km, and revealed anomalies in gold and mercury in both soils and
     rocks and areas of silicification in Mesozoic sediments intruded by younger
     igneous rocks. Also in 1997 the Corporation drilled 26 reverse-circulation
     holes totaling 1,220 m. Minor amounts of gold mineralization were
     encountered (up to 3.5 g/t over five feet), with similar intercepts ranging
     up to 8% lead and 1% zinc. The Arroyo Nuevo property will likely be offered
     for joint venture.

     4. Arroyo Nuevo Project Ownership

     The Arroyo Nuevo Project comprised a total of 4,958 ha under two titles;
     Cura Mallin, a provincial mineral reserve leased from CORMINE
     S.E.P.(Corporacion Minera del Neuquen, Sociedad del Estado Provincial) and
     13 minas held under a option-to-purchase agreement with Sapag Hermanos S.A.
     of the city of Zapala. Neuquen Province has waived its right to a net
     smelter return royalty.

     Following a review of late 1997 exploration results, the Corporation
     elected to abandoned its interest in the Arroyo Nuevo project and to return
     the property, resulting in a write-off of deferred expenditures of
     $558,674.

J.   Los Bueyes Project Summary
     --------------------------

     1. Los Bueyes Project Location

     The Los Bueyes Project, consisting of two manifestations of discovery
     (2,000 ha), is located 250 km northwest of the city of Neuquen in Norquin
     department at 70(degree)24'W and 37(degree)43'S. Elevations range from
     1,300 to 2,248 m above sea level.

     2. Los Bueyes Project Geology

     The Los Bueyes Project area is underlain by a thick section of Mesozoic
     sediments intruded by Tertiary porphyritic sill and dykes. Hydrothermal
     alteration/mineralization occurs over a 2.5 square kilometer zone of highly
     fractured, pyritized, silicified, and argillized feldspathic sandstones.
     Barite veins also occur in the 

                                       26
<PAGE>
     region. Jasperoid bodies within altered sandstone are some of the most
     strongly mineralized samples (Au up to 65 ppb, Cu up to 0.15%, Zn up to
     1,200 ppm, and As up to 9,000 ppm). Stream sediment sampling on a portion
     of the property have anomalous concentrations of Cu, Zn, As, and Sb. The
     main focus on this project is an unexposed porphyry copper target.

     3. Los Bueyes Project Previous Exploration

     Numerous small pits indicate minor historic prospecting at Los Bueyes.
     Stream sediment, soil and rock chip geochemical sampling and geologic
     mapping have been completed by MASA at Los Bueyes. Numerous stream sediment
     samples from drainages at Los Bueyes are anomalous in gold (up to 1,036
     ppb) and soil samples range up to 145 ppb gold. Results of the soil surveys
     show a 200 m by 200 m zone anomalous in copper at the 100 ppm level with
     values up to 14,240 ppm copper.

     4. Los Bueyes Project Ownership

     In March 1998, the Los Bueyes project was judged to no longer meet the
     Corporation's exploration criteria and was abandoned.

K.   Northwest Argentina Project Summary
     -----------------------------------

     1. Northwest Argentina Project Location

     The Northwest Argentina Project includes the provinces of La Rioja,
     Catamarca, Salta, Jujuy and Tucuman. Located in northwestern Argentina
     these provinces cover a variety of physiographic and geologic terrains
     ranging from the high desert of the Puna region of Jujuy and Salta to the
     principal cordillera of La Rioja. The region has a moderately good road
     access in the east and a poorly developed network of roads in the more
     mountainous west.

     2. Northwest Argentina Project Geology

     The westernmost geologic terrane, extending from northeastern Salta to
     western La Rioja consists of the Andean Cordillera (up to 100 km wide).
     This mountain range, formed by magmatism and uplift along a convergent
     plate margin since Jurassic time, is product of subduction of the Nazca
     plate beneath the South American continent. Igneous rocks of Permian to
     Triassic age form the basement of this mountain chain. Average elevation of
     the Andean Cordillera is 4,600 m.

     To the east of the Andean Cordillera is the Puna, the southern continuation
     of the Bolivian Altiplano. The Puna is a coherent basement block studded
     with active volcanoes. The plateau (average 4,000 m in elevation) is
     dissected by young faults that form numerous closed basins and low mountain
     ranges with 300 to 400 m relief.

     The Pre Cordillera flanks the Puna to the east and is a belt about 250 km
     wide that is similar to the Basin and Range extensional regime in the
     western United States. Extension-related Cenozoic volcanism is manifested
     as numerous calc-alkaline to alkaline volcanic centers.

     To the east of the Pre Cordillera in Tucuman are the Pampean and
     Transpampean ranges. These ranges are almost entirely composed of
     Precambrian and Paleozoic granitic and metamorphic rocks, sparsely covered
     by Paleozoic and Triassic continental sedimentary rocks.

                                       27
<PAGE>
     3. Northwest Argentina Project Exploration

     Long a target for exploration, the region has received renewed interest in
     recent years with the development of the Bajo de la Alumbrera copper-gold
     deposit and the delineation of a significant copper-gold-molybdenum
     resource at Agua Rica in Catamarca Province, and the discovery of new
     porphyry copper targets at Taca Taca and Cerro Samenta in Salta Province.
     Additionally, the frontier region of Catamarca and La Rioja Provinces
     shares a similar geologic and metallogenic environment with Chile's
     Maricunga gold belt which hosts over 10 million ounces of gold.

     The Corporation has initiated exploration in this region consisting of
     generative reconnaissance exploration, satellite image analysis and
     evaluation of airborne geophysical data and property submittals. Additional
     exploration is contingent upon the recognition and availability for
     acquisition and subsequent exploration of lands demonstrating reasonable
     indications of potentially economic quantities and concentrations of gold
     and/or copper.

     4. Northwest Argentina Project Ownership

     The Corporation neither currently owns nor controls land in the project
     area.

L.   Arroyo Verde Project
     --------------------

     1. Arroyo Verde Project Location

     Arroyo Verde, located in northeast Chubut Province 70 km north northeast of
     the coastal town of Puerto Madryn is easily accessed by road at about 400
     to 500 m above sea level.

     2. Arroyo Verde Project Geology

     The project area is underlain by Jurassic rhyolitic volcanic and
     volcaniclastic rocks of the Marifil Formation on the Northen Patagonian
     Massif. These volcanic flows, flow breccias and pyroclastic rocks appear to
     be associated with a rhyolite dome structure. Gold mineralization is hosted
     by silicified quartz porphyries and controlled by high angle east-west
     striking faults and, to a lesser extent, by subsidiary northeast striking
     structures. About 85% of the property is covered by colluvium of variable
     thickness which mask undiscovered mineralization.

     3. Arroyo Verde Project Exploration

     At Arroyo Verde, a grassroots discovery by Pegasus Gold International, Inc.
     ("Pegasus") in 1994, an inferred resource of 2 million tonnes was
     identified based on 25 shallow, reverse-circulation holes totaling 2,500 m
     drilled in 1996. Within the core mineralized area, gold grade ranges
     between 3-8 g/t, and silver ranges between 10-80 g/t. The holes were
     drilled in a 700 meter by 700 meter area with mineralization open at depth.
     In the area tested, the gold and silver mineralization occurs in
     hydrothermal breccias, sheeted veins and stockwork zones.

     In November of 1997, Minera Andes initiated a program of surface sampling
     and mapping, as well as geophysical work in areas adjacent to the earlier
     Pegasus work.

     In October 1998, the Corporation completed a 782.5 m (2,567 ft.),
     seven-hole reverse-circulation drilling program at Arroyo Verde in order to
     confirm and expand upon the mineralization encountered by Pegasus.

                                       28
<PAGE>
     4. Arroyo Verde Project Ownership

     In October 1997, the Corporation and Pegasus Gold International, Inc.
     signed a definitive joint venture agreement on the Arroyo Verde Project.
     Under terms of the agreement, Minera Andes, as the operator, could earn an
     80% interest in this epithermal gold/silver property by spending US$1.3
     million over four years, including US$200,000 in field evaluations in the
     first year. After spending $365,849 on Arroyo Verde up to December 31,
     1998, the Corporation decided not to continue with the joint venture and
     the agreement was terminated on January 19, 1999.

M.   Rio Negro Project Summary
     -------------------------

     1. Rio Negro Project Location

     A province-wide reconnaissance program encompasses both the Northern
     Patagonian Massif and Cordilleran Region.

     The Cordilleran Region encompasses the Andean mountain chain and its
     eastern foothills and runs from approximately the city of Bariloche in Rio
     Negro Province southward to the border with Chubut. The western-most
     portion of this mountainous area shared with Chile consists of a rugged
     high relief terrain (200-2,500 m) and the pre-cordilleran area consists of
     a basin and range type topography. Access to most of the region is
     excellent, with the exception of the area immediately adjacent to the
     Chilean border, which is largely roadless and heavily vegetated.

     The North Patagonia Massif encompasses a major portion of the southern half
     of Rio Negro Province, east of the Cordillera and is characterized by a
     relatively high base level (900 m) above which rise isolated subdued
     mountain ranges. Vehicular access is generally good.

     2. Rio Negro Project Geology

     Three distinct, mostly Mesozoic, volcanic terranes are the target of nearly
     all gold exploration in the region. These are 1) the Lonco Trapial
     Formation and equivalents of southernmost central Rio Negro, 2) the Marifil
     Formation of eastern Rio Negro, and 3) the Los Menucos Formation of
     south-central Rio Negro.

     The Lonco Trapial Formation is comprised of Jurassic-age intermediate to
     mafic-pyroclastic rocks with some intercalated sedimentary rocks. Gold is
     hosted by epithermal quartz veins, stock works, and breccia fillings
     emplaced within regionally extensive fault zones.

     The Marifil Formation is also Jurassic in age, but is comprised almost
     exclusively of rhyolitic ignimbrite flows and subvolcanic intrusions. Gold
     is hosted in epithermal quartz veins and silicified zones rhyolite domes
     and caldera structures.

     The Los Menucos Formation is older than the above formations, with
     estimated ages being Permo-Triassic to Triassic-Jurassic. The formation is
     comprised of extrusive and intrusive silicic quartz porphyries.

     The geology of the cordillera of southern-most Rio Negro Provinces is
     complex. Rocks range in age from Precambrian to Quaternary and consist of
     an array of igneous, metamorphic, and sedimentary lithologies. The most
     important host to known gold mineralization is the predominately silicic
     pyroclastic rocks of the Jurassic Lago La Plata Formation.

                                       29
<PAGE>
     3. Rio Negro Project Exploration

     Some of the areas have had small scale prospecting by individuals. At
     present, exploration in the province is being done by Rio Tinto Zinc and
     others who have focused their attention on the area's epithermal gold
     potential.

     To date, work by the Corporation in the area has been restricted to
     air-photo interpretation and compilation of geologic data and field
     evaluation of cateos which were subsequently dropped due to negative
     results. A regional reconnaissance program will continue in Rio Negro
     Province. This program would include prospecting, regional mapping and
     stream sediment sampling. If targets are generated, a campaign of geologic
     studies, mechanical trenching and reverse-circulation drilling, will
     follow.

     Through December 31, 1998, the Corporation has spent $71,822 on the Rio
     Negro Project.

     4. Rio Negro Project Ownership

     The Corporation currently neither owns nor controls land in the province of
     Rio Negro.

N.   California-Vetas Project Summary (Colombia)
     -------------------------------------------

     1. California-Vetas Project Location

     The California-Vetas Project area is located in eastern Santander
     Department, approximately 55 km northeast of the city of Bucaramanga. Good
     road access exists to the project area. Elevations range from 2,100 m to
     4,200 m with moderated to rugged relief.

     2. California-Vetas Project Geology

     The California-Vetas Project is located within metamorphic and intrusive
     rocks of the Santander Massif in the Eastern Cordillera. Basement rocks are
     comprised of metamorphic rocks more than 1 billion years old. These rocks
     are intruded by monzonite and other intrusive rocks with ages ranging from
     180 million years old to 30 million years old.

     3. California-Vetas Project Exploration

     The California-Vetas Project area has been intermittently mined for gold
     since at least the mid-1500s and possibly by indigenous people before that.
     Several hundred small underground mines have been worked over the centuries
     and approximately 40 small operations run by local miners and families are
     presently active.

     In 1973, the United States Geological Survey conducted a reconnaissance
     survey of the area, mapping the general geologic features and conducting
     geochemical surveys (stream sediment, soil, and rock chip). In 1975, the
     Colombian Geological Survey (INGEOMINAS) conducted further mapping and
     geochemical sampling outlining numerous area anomalous in gold, silver,
     copper, and molybdenum. 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.

                                       30
<PAGE>
     4. California-Vetas Ownership

     The California-Vetas Project is comprised of a total of 4,739 ha in 5
     Exploration licences. Two of the five licences have been purchased by the
     Corporation and three are under option-to-purchase agreements. Holding
     costs for 1999 are estimated at $22,750.

O.   Mocoa Project Summary (Colombia)
     --------------------------------

     1. Mocoa Project Location

     The Mocoa Project is located in western Putumayo Department approximately
     10 km north of the town of Mocoa. Elevations range from 500 m to 1,500 m in
     precipitous rainforest terrain.

     2. Mocoa Project Geology

     The Mocoa Project area is situated where the Western and Central
     Cordilleras of the Andes Mountains merge into a single range. It is
     underlain by Triassic limestone of the Payande Formation which has been
     intruded by Jurassic granodiorite to dacite intrusives and volcanics.

     3. Mocoa Project Exploration

     The Mocoa Project area was first explored in the late 1970s under the
     United Nations-Colombian Government base metals exploration plan. The
     property was recognized as having copper porphyry potential and an
     exploration campaign comprised of stream sediment sampling, geologic
     mapping, and induced polarization surveys was completed. High-grade copper
     and molybdenum ore was discovered in the first diamond drill hole and the
     subsequent drilling of 30 additional diamond drill holes to depths ranging
     from 306 to 926 meters outlined a substantial copper-molybdenum porphyry
     deposit. The Mocoa Project area had been inactive since the U.N. work, held
     in a government reserve which was lifted in February 1997.

     4. Mocoa Project Ownership

     The Mocoa Project is comprised of a 4,800 ha application for an exploration
     license.

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, 1998.

                                       31
<PAGE>
                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The Corporation's Common Shares are traded on the Alberta Stock Exchange ("ASE")
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 ASE for each of
the quarters during the years ended December 31, 1998 and 1997 are set forth in
the table below:

<TABLE>
<CAPTION>
                                             High ($Cdn)       Low($Cdn)
     <S>                                       <C>               <C> 
     1998    January - March                   2.30              1.10
             April - June                      1.82              1.05
             July - September                  1.00              0.40
             October - December                1.19              0.65

     1997    January - March                   3.40              2.06
             April - June                      3.30              2.00
             July - September                  2.55              1.36
             October - December                1.95              1.10
</TABLE>

The high and low prices for the Common Shares reported for the NASD
over-the-counter market for the period from November 5, 1997 to December 31,
1997 are set forth in the table below:

<TABLE>
<CAPTION>
                                             High ($Cdn)       Low($Cdn)
     <S>                                       <C>               <C> 
     1998    January - March                   1.77              0.69
             April - June                      1.33              0.73
             July - September                  0.75              0.27
             October - December                0.81              0.32

     1997    November 5 - December 31          1.19              0.76
</TABLE>

As of December 31, 1998 there were approximately 361 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.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS 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, 1998 and 1997 which have been prepared in accordance with generally
accepted accounting principles ("GAAP") in Canada. Differences from U.S. GAAP
are described in Note 13 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.

                                       32
<PAGE>
Overview

The principal business of the Corporation is the locating, acquiring, exploring,
and, if warranted, developing mineral properties located in the Republic of
Argentina and also in Colombia. 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 198,400 hectares in six
Argentine provinces and approximately 9,500 hectares in two departments in
Colombia. 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. 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. 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 $0.9 million for
mineral property and exploration activities on its properties in Argentina and
Colombia through 1999. See "Description of Properties." The Corporation believes
that its existing funds and projected sources of funds will be sufficient to
finance this planned exploration and the related operating activities for this
future period. 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

1998 Compared to 1997

The Corporation had a net loss of $3.4 million in 1998 compared to a net loss of
$4.3 million in 1997. This amounted to a net loss of 17 cents per share in 1998
compared to a 24 cents per share loss in 1997. The principal reason for the
decrease in the net loss was the reduced level of write-offs of mineral
properties and deferred exploration costs, which were $2.2 million in 1998
compared to $3.0 million in 1997.

General and administrative expenses decreased from $1.3 million in 1997, to $1.2
million in 1998 as the Corporation reduced its office overhead and travel
expenses. Additional audit and accounting, insurance and consulting fees were
partially offset by decreases in costs for legal fees.

                                       33
<PAGE>
As at the end of 1997, the Corporation again carried out a detailed review of
its exploration properties at the end of 1998 and wrote off a total of $2.2
million in deferred costs. The properties abandoned and returned to the
underlying landowners included the Agua Blanca property ($1.1 million), Santa
Clara ($0.8 million), and the Arroyo Verde property which had been joint
ventured from Pegasus Gold ($0.4 million). The carrying value of these
properties was considerable and the Corporation considered that it would be
unlikely that the additional work the Corporation could undertake would result
in the discovery of economic reserves. The Corporation may incur additional
write-offs in future periods, although the amounts of such write-offs cannot be
predicted as they will be determined by the results of future exploration.

Mineral property and deferred exploration costs totaled $2.3 million in 1998,
down from $2.7 million in 1997. Almost half of the 1998 expenditures were spent
on the El Pluma/Cerro Saavedra property in Santa Cruz province, where the
Corporation discovered encouraging levels of gold and silver mineralization over
a large area, from surface exploration, trenching and drilling programs.
Deferred expenditures for mineral properties and exploration increased slightly
from $3.2 million at the end of 1997 to $3.3 million at the end of 1998.

1997 Compared to 1996

The Corporation's net loss of $4.3 million in 1997, was $3.1 million more than
the net loss of $1.2 million in 1996. This was a net loss of 24 cents per share
in 1997 compared with 10 cents per share in 1996. The increase in net loss was
primarily a result of the write-off of mineral properties and deferred
exploration costs of $3.0 million in 1997, compared with a write-off of $0.5
million in 1996.

General and administrative expenses increased from $0.75 million to $1.35
million mainly because of the increased activity of the Corporation during 1997.
Legal and office overhead costs increased as a result of the registration of the
Corporation's Common Stock under the Exchange Act, which allowed the Corporation
to list its shares on the NASD over-the-counter market, and the increased
investor relations activities. The Corporation also suffered a foreign exchange
loss of $0.2 million resulting from the fall in value of the Canadian dollar, in
which the Corporation had certain invested balances denominated.

At the end of 1997, the Corporation undertook a complete review of its
exploration properties and elected to write-off a total of $3.0 million in
deferred costs. The properties abandoned and returned to the underlying
landowners included the Pino Andino property ($1.1 million), La Horqueta ($1.1
million) and Arroyo Nuevo ($0.6 million). While these properties had
demonstrated some geological potential from exploration activities, they were
abandoned because they did not meet the Corporation's continuing investment
requirements. The Corporation's exploration program involves nearly continuous
prospecting, acquisition, exploration, and evaluation for further exploration of
property interests. If a property does not meet the Corporation's requirements,
costs associated with abandonment of the property will result in a charge to
operations. The Corporation expects to 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 amounted to $2.7 million in
1997, up from $2.1 million in 1996. Geological expenses, assaying, and
analytical costs and travel expenses increased partly as a result of the
acquisition and early-stage exploration of additional property interests in the
southern provinces of Chubut and Santa Cruz. Property and mineral rights also
increased in 1997 ($0.5 million in 1997 compared with $0.1 million in 1996) with
new properties and the increases in holding costs for properties the Corporation
has held for several years. (Acquisition agreements usually provide for
escalating payments over the term of an agreement.) After the write-offs of
deferred expenditures described above, deferred expenditures for mineral
properties and exploration decreased from $3.4 million in 1996 to $3.2 million
in 1997.

                                       34
<PAGE>
Year 2000 Issue

As the year 2000 approaches, there are uncertainties concerning whether computer
systems will properly recognize date-sensitive information when the year changes
to 2000. Systems that do not properly recognize such information could generate
erroneous data or fail.

The Corporation's computer systems and software are already configured to
accommodate dates beyond the year 2000. The Corporation believes that the year
2000 will not pose significant operational problems for the Corporation's
computer systems; however, the Corporation has not yet completed its assessment
of all of its systems, or the computer systems of suppliers and other third
parties with whom it deals. While it is not possible at this time to assess the
effect of a third party's inability to adequately address year 2000 issues, the
Corporation does not believe the potential problems associated with year 2000
will have a material effect on its financial results.

Liquidity and Capital Resources

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.

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, 1998 the Corporation had cash and cash equivalents of $1.9
million, compared to cash and cash equivalents of $4.0 million as of December
31, 1997. Working capital at December 31, 1998 was also $1.9 million. The
Corporation believes that available funds will be sufficient to fund its 1999
exploration activities and general corporate overhead.

Net cash used in operating activities during 1998 was $1.2 million, compared
with $1.4 million in 1997. This change reflects the savings in office overhead,
travel and legal fees, partially offset by additional expenditures for audit and
accounting, consulting and insurance. Investing activities in 1998 used $2.2
million in cash, compared with $2.9 million in 1997. This decrease can be
attributed to management's decision to conserve the Corporation's resources in
this period of low metals prices, concentrating exploration activities on the El
Pluma/Cerro Saavedra discovery.

The principal  financing activity during 1998 was the receipt of a total of $1.3
million from the exercise of share  purchase  warrants and options,  compared to
$1.8 million in 1997.  Financing  activities in both years arose  primarily from
the  exercise  of share  purchase  warrants  issued  in 1996  private  placement
financings.

                                       35
<PAGE>
ITEM 7. FINANCIAL STATEMENTS

Index to Consolidated Financial Statements                                Page
                                                                          ----

     Auditors' Reports                                                     37

     Consolidated Balance Sheets at December 31, 1998 and 1997             38

     Consolidated Statements of Operations and Accumulated Deficit
     for the years ended December 31, 1998 and 1997 and for the
     period July 1, 1994 (commencement) through December 31, 1998          39

     Consolidated Statements of Mineral Properties and Deferred
     Exploration Costs for the years ended December 31, 1998 and 1997
     and for the period July 1, 1994 (commencement) through
     December 31, 1998                                                     40

     Consolidated Statements of Changes in Financial Position for the
     years ended December 31, 1998 and 1997 and for the period July 1,
     1994 (commencement) through December 31, 1998                         41

     Notes to Consolidated Financial Statements                            42

                                       36
<PAGE>
                           PRICEWATERHOUSECOOPERS LLP



AUDITORS' REPORT

To the Shareholders of Minera Andes Inc.:

We have audited the consolidated balance sheets of Minera Andes Inc., as at
December 31, 1998 and 1997 and the consolidated statements of operations and
accumulated deficit, mineral properties and deferred exploration costs and
changes in financial position for the years then ended. 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 audits.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Corporation as at December 31,
1998 and 1997 and the results of its operations and the changes in its financial
position for the years then ended in accordance with generally accepted
accounting principles.

                           PricewaterhouseCoopers LLP

Vancouver, B.C.
Canada
February 18, 1999, except for
Note 12, as to which the date is
March 8, 1999                                             Chartered Accountants

                                       37
<PAGE>
<TABLE>
<CAPTION>
                           MINERA ANDES INC.
                  "An Exploration Stage Corporation"
                      CONSOLIDATED BALANCE SHEETS
                            (U.S. Dollars)

                                                                        December 31,           December 31,
                                                                               1998                   1997
                                                                     --------------         --------------
<S>                                                                  <C>                    <C>
                                ASSETS
Current:
          Cash and cash equivalents                                  $    1,869,765         $    4,003,519
          Receivables and prepaid expenses                                  123,706                212,533
                                                                     --------------         --------------
                Total current assets                                      1,993,471              4,216,052
Mineral properties and deferred exploration costs (Note 5)                3,305,711              3,226,856
Capital assets, net (Note 6)                                                153,240                220,981
                                                                     --------------         --------------
                Total assets                                         $    5,452,422         $    7,663,889
                                                                     ==============         ==============

                              LIABILITIES
Current:
          Accounts payable and accruals                              $       62,883         $       79,168
          Due to related parties (Note 9)                                    36,278                118,273
                                                                     --------------         --------------
                Total current liabilities                                    99,161                197,441
                                                                     --------------         --------------
Commitments and contingencies (Note 8)

                         SHAREHOLDERS' EQUITY
Share capital (Note 7)
Preferred shares, no par value,
  unlimited number authorized,  none issued

Common shares, no par value, unlimited number authorized

           Issued 1998--20,390,030 shares
           Issued 1997--19,216,050 shares                                16,414,666             15,132,262

Accumulated deficit                                                     (11,061,405)            (7,665,814)
                                                                     --------------         --------------
                Total shareholders' equity                                5,353,261              7,466,448
                                                                     --------------         --------------
                Total liabilities and shareholders' equity           $    5,452,422         $    7,663,889
                                                                     ==============         ==============

 The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                       38
<PAGE>
<TABLE>
<CAPTION>
                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
          CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
                                 (U.S. Dollars)

                                                                                                        Period from
                                                                    Years Ended                        July 1, 1994
                                                      --------------------------------------           (commencement)
                                                          December 31,           December 31,             through
                                                                 1998                   1997         December 31, 1998
                                                      ---------------        ---------------         -----------------
<S>                                                   <C>                    <C>                     <C>              
Administration fees                                   $        32,527        $        33,154         $         152,562
Audit and accounting                                           69,182                 49,930                   166,492
Consulting fees                                               182,562                167,540                   622,922
Depreciation                                                    6,345                  3,144                     9,489
Equipment rental                                                6,070                  3,945                    12,942
Foreign exchange loss                                         230,101                244,062                   422,612
Insurance                                                      69,956                 18,576                    88,532
Legal                                                         108,419                133,830                   351,835
Maintenance                                                       101                    165                       266
Materials and supplies                                          2,235                  8,090                    45,512
Office overhead                                               280,235                487,266                 1,045,567
Telephone                                                      69,541                 59,735                   256,913
Transfer agent                                                 13,243                 16,365                    62,398
Travel                                                         42,262                 96,862                   236,661
Wages and benefits                                            212,896                215,339                   714,702
Write-off of deferred expenditures                          2,205,405              2,956,001                 6,690,053
                                                      ---------------        ---------------         -----------------
Total expenses                                              3,531,080              4,494,004                10,879,458
Interest income                                              (141,872)              (187,107)                 (402,783)
                                                      ---------------        ---------------         -----------------
Net loss                                                    3,389,208              4,306,897                10,476,675
Accumulated deficit, beginning of the period                7,665,814              3,275,646                         0
Share issue costs                                               6,383                 83,271                   567,515
Deficiency on acquisition of subsidiary                             0                      0                    17,215
                                                      ---------------        ---------------         -----------------
Accumulated deficit, end of the period                $    11,061,405        $     7,665,814         $      11,061,405
                                                      ===============        ===============         =================

Basic and diluted net loss per common share           $         0.17         $         0.24          $            0.78
                                                      ===============        ===============         =================

Weighted average shares outstanding                        20,056,945             17,724,935                13,385,985
                                                      ===============        ===============         =================

              The accompanying notes are an integral part of these
                       consolidated financial statements.
</TABLE>

                                       39
<PAGE>
<TABLE>
<CAPTION>
                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                  CONSOLIDATED STATEMENTS OF MINERAL PROPERTIES
                         AND DEFERRED EXPLORATION COSTS
                                 (U.S. Dollars)

                                                                                                           Period from
                                                                   Years Ended                            July 1, 1994
                                                      -----------------------------------------          (commencement)
                                                          December 31,             December 31,              through
                                                            1998                     1997               December 31, 1998
                                                      ----------------       ------------------         -----------------
<S>                                                   <C>                    <C>                        <C>            
Administration fees                                   $         21,744       $           25,843         $       304,463
Assays and analytical                                          195,099                  235,524                 767,001
Construction and trenching                                      38,780                   57,718                 505,473
Consulting fees                                                171,408                  121,553                 763,768
Depreciation                                                    73,263                   44,503                 132,550
Drilling                                                       309,131                  112,348                 646,724
Equipment rental                                                21,907                   46,325                 236,907
Geology                                                        488,473                  821,870               2,472,478
Geophysics                                                      61,961                  109,825                 248,588
Insurance                                                       49,874                   43,767                 167,880
Legal                                                          113,544                  110,706                 492,883
Maintenance                                                     29,150                   37,506                 126,705
Materials and supplies                                          39,158                   82,879                 364,105
Project overhead                                                30,189                   47,191                 239,493
Property and mineral rights                                    228,226                  452,036               1,246,678
Telephone                                                       14,466                    9,066                  48,489
Travel                                                         252,448                  253,449                 776,182
Wages and benefits                                             145,439                  129,869                 579,258
                                                      ----------------       ------------------         ---------------

Costs incurred during the period                             2,284,260                2,741,978              10,119,625

Deferred costs, beginning of the period                      3,226,856                3,440,879                       0

Deferred costs, acquired                                             0                        0                 576,139

Deferred costs written off                                  (2,205,405)              (2,956,001)             (6,690,053)

Mineral property option proceeds                                     0                        0                (700,000)
                                                      ----------------       ------------------         ---------------

Deferred costs, end of the period                     $      3,305,711       $        3,226,856         $     3,305,711
                                                      ================       ==================         ===============

              The accompanying notes are an integral part of these
                       consolidated financial statements.
</TABLE>

                                       40
<PAGE>
<TABLE>
<CAPTION>
                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
            CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
                                 (U.S. Dollars)


                                                                                                            Period from
                                                                            Years Ended                     July 1, 1994
                                                              ------------------------------------         (commencement)
                                                                 December 31,         December 31,            through
                                                                      1998                1997           December 31, 1998
                                                              ---------------      ---------------       -----------------

<S>                                                               <C>              <C>                        <C>          
Operating Activities
     Net loss for the period                                      $(3,389,208)     $     (4,306,897)          $(10,476,675)
     Non-cash items:
          Write-off of incorporation costs                                  0                     0                    665
          Write-off of deferred expenditures                        2,205,405             2,956,001              6,690,053
          Depreciation                                                  6,345                 3,144                  9,489
                                                              ---------------      ----------------      -----------------
                                                                   (1,177,458)           (1,347,752)            (3,776,468)
     Net changes in non-cash working capital items                     (9,453)              (75,811)               (24,545)
                                                              ---------------      ----------------      -----------------
     Cash used in operating activities                             (1,186,911)           (1,423,563)            (3,801,013)
                                                              ---------------      ----------------      -----------------

Investing Activities
     Incorporation costs                                                    0                     0                   (665)
     Purchases of capital assets                                      (11,867)             (220,053)              (295,279)
     Mineral properties and deferred exploration                   (2,284,260)           (2,741,978)           (10,119,625)
     exploratio
     costs
     Non-cash item: depreciation                                       73,263                44,503                132,550
     Acquisition of subsidiaries                                            0                     0               (593,354)
     Mineral property option proceeds                                       0                     0                700,000
                                                              ---------------      ----------------      -----------------
     Cash used in investing activities                             (2,222,864)           (2,917,528)           (10,176,373)
                                                              ---------------      ----------------      -----------------

Financing Activities
     Shares issued for cash                                         1,282,404             1,767,248             15,839,129
     Shares issued for subsidiaries                                         0                     0                575,537
     Share issue costs                                                 (6,383)              (83,271)              (567,515)
                                                              ---------------      ----------------      -----------------
     Cash provided by financing activities                          1,276,021             1,683,977             15,847,151
                                                              ---------------      ----------------      -----------------

Increase (decrease) in cash and cash equivalents                   (2,133,754)           (2,657,114)             1,869,765
Cash and cash equivalents, beginning of the period                  4,003,519             6,660,633                      0
                                                              ---------------      ----------------      -----------------
Cash and cash equivalents, end of the period                  $     1,869,765      $      4,003,519            $ 1,869,765
                                                              ===============      ================      =================

              The accompanying notes are an integral part of these
                       consolidated financial statements.
</TABLE>

                                       41
<PAGE>
                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (U.S. Dollars)


1. NATURE OF OPERATIONS

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,
1998, the Corporation was in the exploration stage and had interests in 25
properties in six provinces in the Republic of Argentina, and two properties in
Colombia.

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.

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 non-compliance with regulatory requirements.

2. ORGANIZATION

The Corporation, Minera Andes Inc., was incorporated in Alberta on July 19,
1994, although operations are considered to have commenced on July 1, 1994, the
effective date of the acquisition of the Argentine properties (see Note 4a). On
November 6, 1995, the amalgamation of Minera Andes Inc. with Scotia Prime
Minerals, Incorporated (Scotia), a reporting issuer, pursuant to section 186 of
the Business Corporations Act (Alberta), became effective. The business
combination was accounted for using the purchase method of accounting. Under
this method of accounting, Minera Andes Inc. has been identified as the acquiror
and accordingly, the comparative figures are those of Minera Andes Inc.

3. SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Canada. 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. and its wholly-owned subsidiaries (see Note 4), Minera
          Andes S.A. (MASA) and NAD S.A. (NADSA), both Argentine corporations,
          and Minera Providencia S.A., a Colombian corporation. All significant
          intercompany transactions and balances have been eliminated from the
          consolidated financial statements.

     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.

                                       42
<PAGE>
     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 written off 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 1998
          and 1997, 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
          1998 and 1997.

     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.

     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.

4. ACQUISITION AND FORMATION OF SUBSIDIARIES

     a)   Pursuant to an agreement dated March 8, 1995, the Corporation acquired
          on March 15, 1995, 95% (19 of the 20 shares issued) of MASA and 91.66%
          (11 of the 12 shares issued) of NADSA in exchange for the issue of
          4,000,000 shares, an additional bonus issue of shares payable if any
          of the properties reach bankable feasibility (which shall be 11% or
          1,213,409 shares of the issued and outstanding common shares of the
          Corporation after the amalgamation--see Note 2), a royalty on all
          existing and future

                                       43
<PAGE>
          properties equal to the difference between 3% of net smelter returns
          and any underlying royalties subject to a maximum of 2% of net smelter
          returns, and reimbursement of all property costs incurred from July 1,
          1994 through the closing date of March 15, 1995. An additional $602
          was paid in cash to certain minority shareholders of MASA and NADSA.
          Concurrent with the agreement, the Corporation also entered into
          option agreements, having an initial term of four years each and
          renewable every four years to acquire the remaining shares of MASA and
          of NADSA for an exercise price of $100 per share. For accounting and
          reporting purposes, MASA and NADSA are considered to be wholly-owned
          subsidiaries of the Corporation.

          MASA and NADSA have no assets or liabilities other than mineral
          property rights which had been purchased or directly staked. The
          deemed value of the 4,000,000 shares issued was equal to the
          accumulated property acquisition costs and exploration expenditures
          acquired by MASA and NADSA effective July 1, 1994, which totaled
          $575,537. The acquisition was accounted for using the purchase method
          with an effective date of July 1, 1994 through the closing date of
          March 15, 1995, being the date from which the Corporation agreed to
          reimburse the property costs incurred.

          The 4,000,000 shares were required to be held in escrow in accordance
          with the Escrow Agreement between the Corporation, N.A. Degerstrom,
          Inc. and Montreal Trust of Canada. Common shares were released from
          escrow upon obtaining the consent of The Alberta Stock Exchange, at
          the earn-out rate of Cdn$0.375 per share of deferred expenditures as
          defined in the Escrow Agreement, with a maximum of 1,333,334 shares
          released per year.

     b)   As disclosed in Note 2, the business combination of Minera Andes Inc.
          and Scotia, which was made effective November 6, 1995, has been
          accounted for using the purchase method whereby Minera Andes Inc.
          acquired all of the issued and outstanding shares of Scotia. The
          acquisition has been recorded as follows:

<TABLE>
<CAPTION>
               <S>                                                                   <C>      
               Assets acquired                                                       $   1,986
               Less: liabilities assumed                                                19,201
                                                                                     ---------
               Net liabilities assumed                                                 (17,215)
               Asset deficiency allocated to accumulated deficit                        17,215
                                                                                     ---------
               Purchase price                                                        $       0
                                                                                     =========

               Consideration given: 336,814 common shares                            $       0
                                                                                     =========
</TABLE>

          As a result of the acquisition (amalgamation), Minera Andes Inc.
          became a reporting issuer. All fees paid with respect to the
          amalgamation (legal, audit, accounting, printing) were considered to
          be share issue costs. Scotia was an inactive company which from
          December 31, 1994 to the date of acquisition had only the following
          transactions: general and administrative expenses of $6,248,
          forgiveness of indebtedness owed of $13,391 and the issue of shares to
          settle debts of $20,000.

     c)   Minera Providencia S.A. (MPSA) was formed on April 17, 1998, as a
          private Colombian corporation, to hold the Corporation's mineral
          interests in Colombia. The Corporation owns 94% of MPSA directly and
          has entered into option agreements to acquire the remaining shares.
          For accounting and reporting purposes, MPSA is considered to be a
          wholly-owned subsidiary of the Corporation.

                                       44
<PAGE>
5. MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS

At December 31, 1998, the Corporation, through its subsidiaries, held interests
in a total of 198,414 hectares of mineral rights and mining lands in six
Argentine provinces: San Juan, Mendoza, Neuquen, Rio Negro, Chubut and Santa
Cruz, and two properties totaling 9,539 hectares in two departments in Colombia.
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 8. 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                1997              1998              1998              1998             1998
--------------- ------------------------  ----------------  ----------------  -----------------  --------------  ----------------
<S>             <C>                       <C>               <C>               <C>                <C>             <C>             
                                                              ARGENTINA
San Juan        Agua Blanca               $        680,717  $        111,139  $         291,143  $   (1,082,999) $              0
                Cateos                             367,431             2,867             63,574               0           433,872
Mendoza         Santa Clara                        713,285            35,000              8,272        (756,557)                0
                Cateos                             343,788                 0             55,395               0           399,183
Neuquen         Cateos                               4,839             2,844             54,858               0            62,541
Santa Cruz      El Pluma/Cerro Saavedra            335,704            19,616            918,390               0         1,273,710

                Cateos                             239,753            41,627            121,481               0           402,861
Rio Negro       Cateos                              64,119                 0              7,703               0            71,822
Chubut          Arroyo Verde                        81,943             3,183            280,723        (365,849)                0
                Cateos                             127,256             8,962             60,423               0           196,641
Northern        Cateos                             178,632                 0            130,179               0           308,811

                                                              COLOMBIA

Santander and   California-Vetas                    89,389             2,989             63,892               0           156,270
Putumayo        Mocoa
                                          ----------------  ----------------  -----------------  --------------  ----------------
TOTAL                                     $      3,226,856  $        228,227  $       2,056,033  $   (2,205,405) $      3,305,711
                                          ================  ================  =================  ==============  ================
</TABLE>

                                       45
<PAGE>
<TABLE>
<CAPTION>
                                                                                 Exploration
                                           Carrying Value     Acquisition            and                          Carrying Value
   Province/                                December 31,         Costs            Overhead         Write-Offs      December 31,
    Region              Property                1997              1998              1998              1998             1998
--------------- ------------------------  ----------------  ----------------  -----------------  --------------  ----------------
<S>             <C>                       <C>               <C>               <C>                <C>             <C>             
San Juan        Agua Blanca               $        431,737  $        148,038  $         100,942  $            0  $        680,717
                Cateos                             235,107               123            201,843         (69,642)          367,431
Mendoza         Santa Clara                        591,509            42,753             79,023               0           713,285
                La Horqueta                        913,068            61,857            141,231       1,116,156)                0
                Cateos                             234,087            26,502            210,866        (127,667)          343,788
Neuquen         Pino Andino                        786,956            23,779            273,127      (1,083,862)                0
                Arroyo Nuevo                        75,171            91,614            391,889        (558,674)                0
                Cateos                               2,909               195              1,735               0             4,839
Santa Cruz      El Pluma/Cerro Saavedra                  0             8,666            327,038               0           335,704

                Cateos                              88,567            42,410            108,776               0           239,753
Rio Negro       Cateos                              40,197                 0             23,922               0            64,119
Chubut          Arroyo Verde                             0             6,069             75,874               0            81,943
                Cateos                              10,443                 0            116,813               0           127,256
Northern        Cateos                              31,128                30            236,863               0           268,021
                                          ----------------  ----------------  -----------------  --------------  ----------------
TOTAL                                     $      3,440,879  $        452,036  $       2,289,942  $   (2,956,001) $      3,226,856
                                          ================  ================  =================  ==============  ================
</TABLE>

     a)   Agua Blanca Project
          The Agua Blanca project is located approximately 220 km northwest of
          the city of San Juan in San Juan Province. Agua Blanca was held by the
          Corporation under a four year option-to-purchase agreement, dated June
          21, 1995, which called for option payments totaling $920,000 and a
          final buy-out payment of $1,080,000 to earn a 100% interest in the
          property claims.

          The Corporation signed a letter agreement in 1996 with Newcrest
          Resources, Inc. with respect to a joint venture on the Agua Blanca
          property. Newcrest made a $100,000 cash payment to the Corporation
          upon formation of the joint venture, but, after conducting a drilling
          program during 1996, Newcrest elected to return the property to the
          Corporation in March 1997.

          The Corporation conducted a drilling program on the Agua Blanca
          property in late 1998. The Corporation evaluated the prospects for the
          property early in 1999, the property was abandoned and the underlying
          contract with the landowner was terminated with a write-off to
          operations in 1998 of $1,082,999.

                                       46
<PAGE>
     b)   Santa Clara and Pino Andino Projects
          The Santa Clara project is located in northwest Mendoza Province,
          approximately 63 km west of the city of Tupungato. The bulk of the
          property was held by the Corporation under an option-to-purchase
          agreement, whereby the Corporation could earn a 100% interest in the
          property by making option payments totaling $1,950,000 by October
          1998.

          The Pino Andino project consisted of three contiguous properties
          approximately 250 km northwest of the city of Neuquen and 20 km east
          of the city of Loncopue in Neuquen Province. The individual properties
          included: a reserve area acquired under an exploration contract with a
          mining option from CORMINE S.E.P., a provincial corporation; a
          four-year option-to-purchase contract; and a cateo and manifestation
          of discovery owned by the Corporation.

          In March 1996, the Corporation signed a Memorandum of Understanding
          with Cominco Ltd. regarding a joint venture on the Santa Clara and
          Pino Andino properties. Under this agreement, Cominco could have
          earned a 51% interest in each of the properties by making cash
          payments and exploration expenditures of $5,000,000 at each property
          over four years, in addition to paying all associated option payments
          and land costs. Cominco made cash payments of $250,000 in the case of
          the Santa Clara property and $350,000 in the case of the Pino Andino
          property. The Memorandum of Understanding also included Cominco
          subscribing to a private placement of Cdn$3,000,003 in the
          Corporation. After exploration programs on both the Santa Clara and
          Pino Andino properties, Cominco terminated the Memorandum of
          Understanding with respect to Pino Andino in February 1997 and with
          respect to Santa Clara in July 1997.

          The Corporation evaluated the prospects for the Pino Andino property
          late in 1997, the property was abandoned and all underlying contracts
          with landowners were terminated, with a write-off to operations of
          $1,083,862 in 1997.

          Following attempts to joint venture the Santa Clara property, the
          property was abandoned in mid-1998, and all underlying contracts with
          landowners were terminated, with a write-off to operations in 1998 of
          $756,557.

     c)   La Horqueta Project
          The La Horqueta project is located 200 km south of the city of Mendoza
          and 95 km from the city of San Rafael in central Mendoza Province. The
          property comprised cateos wholly-owned by the Corporation in addition
          to two separate four-year options-to-purchase. Following exploration
          programs in 1995 and 1996, including a drilling program, the
          Corporation notified the landowners in late 1997 that it was
          abandoning the property. The write-off to operations in 1997 amounted
          to $1,116,156.

     d)   Arroyo Nuevo Project
          The Arroyo Nuevo project is located in northwest Neuquen Province, 35
          km west of the town of Chos Malal. The property was held under two
          titles; Cura Mallin, a provincial mineral reserve leased from CORMINE
          S.E.P., and 13 minas held under an option-to-purchase agreement. The
          contract with CORMINE S.E.P. was terminated and the decision was made
          to abandon the property early in 1998, with a write-off to operations
          in 1997 of $558,674.

     e)   El Pluma/Cerro Saavedra Project
          The contiguous El Pluma and Cerro Saavedra properties are located in
          north central Santa Cruz Province, 50 km east of the town of Perito
          Moreno. The properties, made up of seven applications for cateos, were

                                       47
<PAGE>
          located during the Corporation's regional exploration program. The
          Corporation conducted drill programs on the properties in 1998. The
          Corporation acquired additional applications for cateos during 1998.
          Jointly, the properties now comprise 94,920 hectares.

     f)   Arroyo Verde Project
          The Arroyo Verde project is located in northeast Chubut Province, 70
          km northeast of the coastal town of Puerto Madryn. In October 1997,
          the Corporation and Pegasus Gold International, Inc. entered into a
          joint venture agreement whereby the Corporation, as operator, was
          earning into an 80% interest by spending $1,300,000 over four years,
          including $200,000 in the first year.

          In December, 1998, following a drilling program on the property, the
          Corporation evaluated the prospects for the Arroyo Verde property and
          notified Pegasus that it was withdrawing from the joint venture. The
          write-off to operations in 1998 was $365,849.

     g)   Colombian Projects
          The California-Vetas project is located in the Eastern Cordillera of
          the Andes Mountains in the eastern part of the Department of
          Santander, approximately 55 km east of the Department capital city of
          Bucaramanga. The property totals 4,739 hectares consisting of two
          wholly-owned and three option-to-purchase agreements for five granted
          exploration licenses.

          The Mocoa project is comprised of a 4,800 hectare application for an
          exploration license. The project is located in southern Colombia,
          approximately 100 km north of the Ecuador border, in the Department of
          Putumayo.

     h)   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 $2,205,405 in 1998 (which
          included the amounts for Agua Blanca, Santa Clara and Arroyo Verde as
          noted above) and $2,956,001 in 1997.

6. CAPITAL ASSETS

<TABLE>
<CAPTION>
                                December 31, 1998                                    December 31, 1997
                                -----------------                                    -----------------
                                   Accumulated                                         Accumulated
                         Cost      Depreciation          Net               Cost        Depreciation       Net
                         ----      ------------          ---               ----        -------------      ---
  <S>                   <C>          <C>             <C>                  <C>             <C>             <C>     
  Vehicles              $269,408     $132,430        $136,978             $267,620        $59,287         $208,333
  Office Equipment        25,871        9,609          16,262               15,791          3,143           12,648
                        --------     --------        --------             --------        -------         --------
                        $295,279     $142,039        $153,240             $283,411        $62,430         $220,981
                        ========     ========        ========             ========        =======         ========
</TABLE>

7.   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.

                                       48
<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
  Allotted for acquisition of subsidiaries
  (Issued March 15, 1995-see Note 4)                                                   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 (see Note 4)                                                     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
                                                                                    ============            ============
</TABLE>

          i)   In February 1996, the Corporation concluded a private placement
               of 1,433,333 special warrants at a price of Cdn$1.50 per special
               warrant for total gross proceeds of Cdn$2,150,000 (US$1,565,265).
               Each special warrant comprised a unit consisting of one common
               share and one share purchase warrant. Each warrant entitled the
               holder to purchase one additional common

                                       49
<PAGE>
               share at any time up to February 1997 at a price of Cdn$1.80 per
               share. The agents received 90,400 broker special warrants (each
               convertible into one common share and one share purchase
               warrant), cash commission of Cdn$25,650, Cdn$15,000 as a
               corporate finance fee, and a finder's fee of Cdn$16,500 was also
               paid.

          ii)  In May 1996, the Corporation concluded the Cominco private
               placement (see Note 5b) with the issuance of 877,194 common
               shares and 877,194 Cominco warrants at a price of Cdn$3.42 for
               gross proceeds of Cdn$3,000,003 (US$2,174,388). Two Cominco
               warrants entitled Cominco to acquire one additional common share
               at any time on or before May 10, 1997 at a price of Cdn$3.98 per
               share. In May 1997, the Corporation extended the date for the
               exercise of the Cominco warrants until May 10, 1998. In May 1998,
               the Corporation amended the exercise price to Cdn$1.53 and
               Cominco fully exercised the warrants.

          iii) Following regulatory and shareholder approval, in July 1996 the
               Corporation issued 500,000 units under the Degerstrom
               Subscription Agreement (see Note 9b) at a price of Cdn$1.44 per
               unit. Each unit was comprised of one common share and one share
               purchase warrant. Each warrant entitled the holder, N. A.
               Degerstrom, Inc. (NAD), to purchase one additional common share
               for Cdn$1.75 at any time until January 11, 1998. The warrants
               were also exercised in July 1996.

          iv)  On December 13, 1996 and December 19, 1996, the Corporation
               raised gross proceeds of Cdn$7,078,010 (US$5,197,540) in
               aggregate by way of a private placement of special warrants at a
               price of Cdn$2.10 per unit. Each unit comprised one common share
               and one share purchase warrant. Two warrants will entitle the
               holder to purchase one additional common share at a price of
               Cdn$2.50 per share if exercised on or before December 13, 1997 or
               at a price of Cdn$2.88 if exercised before December 13, 1998. In
               connection with the private placement, the Corporation granted
               140,420 broker special warrants for commission, 200,000 broker
               special warrants for a corporate finance fee (with each broker
               special warrant convertible into a broker share purchase
               warrant), and cash commissions totaling Cdn$441,501. The
               Corporation filed a prospectus to qualify the shares and warrants
               on the exercise of the special warrants and the warrants on
               exercise of the broker special warrants and received final
               approval of the prospectus on May 8, 1997. Upon the exercise of
               the special warrants, the Corporation issued 3,370,481 common
               shares. The Corporation amended the terms of the share purchase
               warrants in December 1997 to allow the first exercise of warrants
               at a price of Cdn$1.60 on or before February 27, 1998, and in
               February 1998 further amended the terms to allow the first
               exercise on or before March 31, 1998. In March 1998, 1,440,766
               warrants were exercised for the issuance of 720,383 shares.

     c)   Stock Options
          At December 31, 1998, there were options held by directors, officers
          and employees of the Corporation for the purchase of common shares as
          follows:

<TABLE>
<CAPTION>
                Number of Shares               Exercise Price        Expiry Date
                ----------------               --------------        -----------
                    <S>                          <C>                 <C> 
                       205,000                   Cdn$1.44            January 10, 2001
                       550,000                   Cdn$1.15            August 16, 1999
                       485,000                   Cdn$1.15            February 17, 2000
                       120,000                   Cdn$1.27            August 29, 2000
                       245,000                   Cdn$1.10            March 2, 2003
                         5,000                   Cdn$1.19            March 2, 2003
                  ------------
                     1,610,000
                  ============
</TABLE>

                                       50
<PAGE>
     d)   Warrants
          At December 31, 1998, there were no warrants outstanding.

     e)   Escrow
          During 1998, the final 1,333,334 million shares were released from
          escrow and there were no remaining common shares held in escrow at
          December 31, 1998 (See Note 4a).

8. 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
          Neuquen 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 NAD is in
          effect (see Note 9a), 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 the acquisition agreement disclosed in Note 4a, the
          Corporation may be obligated to issue additional common shares as
          consideration for the acquisition of its subsidiaries. The number of
          shares to be issued to NAD upon a property reaching bankable
          feasibility shall be 1,213,409 common shares of the Corporation.

9. RELATED PARTY TRANSACTIONS

     a)   Concurrent with the acquisition of the Corporation's wholly-owned
          subsidiaries as disclosed in Note 4a, the Corporation also entered
          into an operating agreement effective March 15, 1995 with the vendor,
          NAD. As a result of the acquisition agreement, NAD is currently the
          controlling shareholder of the Corporation. Under the terms of the
          operating agreement, 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, 1998 and 1997, administrative fees were paid to NAD
          of $54,272 and $58,997 on total costs incurred by the Corporation of
          $749,041 and $841,131, respectively. Equipment rentals of $6,070 and
          $40,305 were included in the total costs for 1998 and 1997,
          respectively. During the year ended December 31, 1997, the Corporation
          acquired six vehicles in Argentina from NAD for $112,140.

     b)   On November 6, 1995, certain debt the Corporation had with NAD was
          formalized into a promissory note. Terms of payment to NAD called for
          $365,000 to be paid on November 15, 1995, and this payment was made as
          specified. The remainder of the debt, $1,140,000, was carried as a
          convertible interest bearing note. The Corporation and NAD entered
          into a Debt Settlement Agreement on January 11, 1996 and an amendment
          dated May 13, 1996, whereby a promissory note dated May 13, 1996
          replaced the earlier note. Under the May 13, 1996 promissory note, the
          Corporation agreed to make payments of Cdn$720,000 by July 15, 1996
          and Cdn$875,000 by August 15, 1996. As per Note 7b(iii) above, under
          the terms of the Degerstrom Subscription Agreement, in July 1996, the
          Corporation issued 500,000 units to NAD and NAD exercised the 500,000
          warrants it received. The funds received from NAD on the 

                                       51
<PAGE>
          Degerstrom Private Placement were used to repay the debt outstanding,
          pursuant to the Debt Settlement Agreement, as amended.

     c)   During 1998 and 1997, the Corporation incurred the following
          transactions with related parties: financial consulting to a director
          and officer totaling $39,130 and $51,330, and legal fees to a firm in
          which a director and officer is an associate, totaling $49,435 and
          $84,898, respectively.

10.  INCOME TAXES

Due to the losses incurred by the Corporation, there is no income tax provision
or benefit recorded for all periods presented. The Corporation has Canadian
non-capital losses available to carry forward to apply against future taxable
income of approximately Cdn$3.1 million expiring as follows:

     1999           $    92,000
     2000           $   454,000
     2001           $   660,000
     2002           $   782,000
     2003           $ 1,147,000

11. 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.

12. SUBSEQUENT EVENTS

Subsequent to December 31, 1998, options to acquire 205,000 shares at Cdn$1.44,
245,000 shares at Cdn$1.10 and 5,000 shares at Cdn$1.19 were repriced to
Cdn$0.68.

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

As discussed in Note 3, these consolidated financial statements are prepared in
accordance with accounting principles generally accepted in Canada.

Differences in accounting principles as they pertain to these consolidated
financial statements are as follows:

     a)   Accounting for Share Issue Costs
          All costs related to the issuance of shares are offset against
          proceeds under U.S. generally accepted accounting principles (GAAP)
          and the net amount is credited to share capital.

     b)   Loss Per Share
          In February 1996, the United States Financial Accounting Standards
          Board ("FASB") issued Statement of Financial Accounting Standards
          ("SFAS") No.128, "Earnings per Share". For U.S. GAAP, SFAS 128
          simplified the existing standards and requires a basic and diluted
          earnings per share (EPS), unless the effect of including common stock
          equivalents is anti-dilutive. The application of this new standard
          does not have a material effect on the presentation of EPS for U.S.
          GAAP purposes, and the calculation of EPS under SFAS No.128 more
          closely approximates EPS under Canadian GAAP.

                                       52
<PAGE>
     c)   Non-Cash Issuance of Common Shares
          Under U.S. GAAP, value is assigned to issuances of common shares for
          non-cash consideration and the basis for valuing the consideration is
          stated.

          i)   During 1995, the Corporation issued 150,000 common shares as a
               finder's fee and 168,000 common shares for services, in
               connection with a financing. Under U.S. GAAP, these issuances
               would be valued at Cdn$1.00 per share or $110,710 and $123,995,
               respectively, being the fair market value of the shares issued.

          ii)  During 1996, the Corporation issued 90,400 common shares for
               broker special warrants, in connection with a financing. Under
               U.S. GAAP, these shares would be valued at Cdn$1.50 per share or
               $96,847, being the fair market value of the shares issued.

          iii) Share issuance costs are offset against share proceeds resulting
               in no net change to share capital.

     d)   Acquisition of Scotia
          During 1995, the Corporation issued 336,814 common shares for the
          acquisition of Scotia (see Note 4b). 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 goodwill and
          expensed immediately at the acquisition date under U.S. GAAP.

     e)   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 (see Note 4a) and with the
          consent of The Alberta Stock Exchange. During the years ended December
          31, 1998 and 1997 and for the period from July 1, 1994 (commencement)
          through December 31, 1998, the Corporation would have recorded
          compensation expense of $0, $2,503,975, and (cumulative) $6,324,914
          respectively, under U.S. GAAP.

     f)   Mineral Properties and Deferred Exploration Costs
          In 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
          of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
          which requires that long-lived assets and associated intangibles be
          written down to fair value whenever an impairment review indicates
          that the carrying value cannot be recovered on an undiscounted
          cash-flow basis. Management believed that on the adoption of SFAS No.
          121 there would be no material difference in the consolidated
          financial statements as presented. However, 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.

     g)   Stock-Based Compensation
          At December 31, 1998, 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
          3,000,000 shares. The options vest immediately and are exercisable
          over terms of up to a maximum of five years. Under Canadian generally
          accepted accounting principles, the Corporation is not required to
          report, and has not reported,

                                       53
<PAGE>
any stock-based compensation expense in the consolidated financial statements.
Had compensation expense for the stock option plan been determined based on the
fair market value based method, in accordance with the FASB SFAS No. 123, the
Corporation's net loss for the year and net loss per common share would have
been increased to the pro forma amounts below:

<TABLE>
<CAPTION>
                                                                        1998             1997
                                                                        ----             ----
         <S>                                                           <C>              <C>       
         Net loss for the year                 As reported:            $3,389,208       $4,306,897
                                               Pro forma:              $3,759,985       $4,746,790
         Net loss per common share             As reported:            $ 0.17           $0.24
                                               Pro forma:              $ 0.19           $0.27
</TABLE>

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 1998 and 1997:

<TABLE>
<CAPTION>
                                             1998           1997
                                             ----           ----
         <S>                                <C>             <C>
         Dividend yield (%)                     0              0
         Expected volatility (%)            134.0           52.0
         Risk-free interest rates (%)        5.05           5.65
         Expected lives (years)                 5              2
</TABLE>

Approximately $207,000 of the compensation expense in 1998 resulted from
modifications to the exercise prices and remaining lives of previously granted
options.

A summary of the status of the Corporation's stock option plan as of December
31, 1998 and 1997, and changes during the years ended on those dates is:

<TABLE>
<CAPTION>
                                                            1998                                 1997
                                                            ----                                 ----
                                                                     ($CDN)                                ($CDN)
                                                                    Weighted                              Weighted
                                                                       Ave.                                  Ave.
                                                                    Exercise                              Exercise
                                                  Options             Price            Options             Price
                                                  -------             -----            -------             -----
<S>                                             <C>                   <C>              <C>                  <C>  
Outstanding and exercisable at
beginning of year                               1,375,000             $1.96            895,000              $1.94
Granted                                           250,000             $1.10            681,000              $1.95
Exercised                                         (15,000)            $1.15            (75,000)             $1.44
Forfeited                                               0           $     0           (126,000)             $2.06
                                                ---------           -------          ---------              -----
Outstanding and exercisable at                                                                                    
end of year                                     1,610,000             $1.19          1,375,000              $1.96
                                                =========             =====          =========              =====
Weighted average fair value of                                        $0.97                                 $0.90
options granted during the year                                       =====                                 =====
</TABLE>

The range of exercise prices is from Cdn$1.10 to Cdn$1.44 with a weighted
average remaining contractual life of 1.58 years at December 31, 1998.

     h)   Non-Cash Working Capital
          The following table sets forth the components of the net changes in
          non-cash working capital items related to operations as reflected in
          the consolidated statements of changes in financial position under
          U.S. GAAP:

                                       54
<PAGE>
<TABLE>
<CAPTION>
                                                                                               July 1, 1994
                                                                 Years Ended                     through
                                                      December 31,          December 31,       December 31,
                                                           1998               1997                  1998
                                                      ------------          ----------         ------------
<S>                                                      <C>                 <C>                 <C>       
Add (deduct) non-cash working capital items:
   Receivables and prepaid expenses                      $  88,827           $ (45,423)          $(123,706)
   Accounts payable and accruals                           (16,285)            (56,701)             62,883
   Due to related party                                    (81,995)             26,313              36,278
                                                         ---------           ---------           ---------
                                                         $  (9,453)          $ (75,811)          $ (24,545)
                                                         =========           =========           =========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                  Years Ended
                                                                                  -----------
                                                             December 31, 1998                    December 31, 1997
                                                             -----------------                    -----------------
<S>                                                          <C>                                  <C>
Accumulated deficit, end of period, per Canadian
GAAP                                                         $      11,061,405                    $       7,665,814

Adjustment for acquisition of Scotia                                   248,590                              248,590

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

Adjustment for share issue costs                                      (567,515)                            (561,132)

Adjustment for deferred exploration costs                            3,175,473                            3,178,388
                                                             -----------------                    -----------------
Accumulated deficit, end of period, per U.S.                 $      20,242,867                    $      16,856,574
                                                             =================                    =================
GAAP
</TABLE>


<TABLE>
<CAPTION>
                                                             December 31, 1998                    December 31, 1997
                                                             -----------------                    -----------------
<S>                                                          <C>                                  <C>              
Share capital, per Canadian GAAP                             $      16,414,666                    $      15,132,262

Adjustment for acquisition of Scotia                                   248,590                              248,590

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

Adjustments for share issue costs                                     (567,515)                            (561,132)
                                                             -----------------                    -----------------
                                                             $      22,420,655                    $      21,144,634
                                                             =================                    =================
Share capital, per U.S. GAAP
</TABLE>

                                       55
<PAGE>
<TABLE>
<CAPTION>
                                                                                             Period from
                                                                                            July 1, 1994
                                                          Years Ended                      (commencement)
                                                          -----------                          through
                                              December 31,          December 31,             December 31,
                                                     1998                  1997                     1998
                                             ------------          ------------             ------------
<S>                                          <C>                   <C>                      <C>         
Net loss for the period, per
Canadian GAAP                                $  3,389,208          $  4,306,897             $ 10,476,675
Adjustment for acquisition of
Scotia                                                  0                     0                  248,590
Adjustment for compensation
expense                                                 0             2,503,975                6,324,914
Adjustment for deferred
exploration costs                                  (2,915)             (676,814)               3,175,473
                                             ------------          ------------             ------------
Net loss for the period, per U.S.  
GAAP                                         $  3,386,293          $  6,134,058             $ 20,225,652
                                             ============          ============             ============
Basic and diluted net loss per               $       0.17          $       0.35 
                                             ============          ============
common share, per U.S. GAAP
</TABLE>

14.  UNCERTAINTY DUE TO THE YEAR 2000 ISSUE

     The Year 2000 Issue arises because many computerized systems use two digits
     rather than four to identify a year. Date-sensitive systems may recognize
     the year 2000 as 1900 or some other date, resulting in errors when
     information using year 2000 dates is processed. In addition, similar
     problems may arise in some systems which use certain dates in 1999 to
     represent something other than a date. The effects of the Year 2000 Issue
     may be experienced before, on, or after January 1, 2000, and, if not
     addressed, the impact on operations and financial reporting may range from
     minor errors to significant systems failure which could affect an entity's
     ability to conduct normal business operations. It is not possible to be
     certain that all aspects of the Year 2000 Issue affecting the entity,
     including those related to the efforts of customers, suppliers or other
     third parties, will be fully resolved.



                                       56
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

On recommendation of the Board of Directors and by resolution of the
Shareholders of the Corporation, dated June 19, 1997, the Corporation replaced
its auditors, MacKay & Partners, Chartered Accountants, of Vancouver, British
Columbia, with Coopers & Lybrand LLP, of Spokane, Washington, effective until
the next Annual General Meeting of the Shareholders of the Corporation or until
a successor is appointed. Coopers & Lybrand LLP, of Spokane, who subsequently
changed its name to PricewaterhouseCoopers LLP, were reappointed auditors at the
June 1998 annual meeting of the Corporation. There have been no disagreements,
or unresolved issues on any matter of accounting principles or practices,
financial statements, disclosure or auditing scope or procedure during the
period in which PricewaterhouseCoopers LLP, Coopers & Lybrand LLP or MacKay &
Partners have been auditing the financial statements of the Corporation. MacKay
& Partners were initially appointed auditors of the Corporation in November
1994.

                                    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                42          President and Director

Brian Gavin                  45          Vice-President of Exploration and
                                         Director of MASA

Allan J. Marter              51          Chief Financial Officer and Director

Jorge Vargas                 57          Director and President of MASA & NADSA

Armand Hansen                63          Director

John Johnson Crabb           73          Director

A.D. (Darryl) Drummond       62          Director

Bonnie L. Kuhn               33          Secretary and Director

Allen Ambrose has been President and a Director of the Corporation since
November 1995. Mr. Ambrose also serves as an Exploration Manager/Geologist for
Degerstrom. He has 19 years of experience in the mining industry including
extensive experience in all phases of exploration, project evaluation and
project management. He 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. Mr. Ambrose also is a member of the board of
directors of Cadre Resources Ltd., a company with mining interests in Venezuela.

                                       57
<PAGE>
Brian Gavin has been the Vice President of Exploration and an officer of MASA
since 1994. He has 19 years of experience in exploration geology, including
experience in all phases of exploration, project evaluation and project
management. Mr. Gavin has worked in the field as project manager and consultant
in the U.S., Mexico, Nigeria and most recently, in Argentina. He holds a B. Sc.
(Honours) degree in Geology from the University of London and an M.S. degree in
Geology and Geophysics from the University of Missouri. From 1981 to 1994, he
was a consultant with Ernst K. Lehman & Associates, which is a geological mining
consulting firm. Since 1994, he also has been employed by Degerstrom.

Allan J. Marter has been Chief Financial Officer and a director of the
Corporation since June 1997. Mr. Marter has been a financial advisor in the
mining industry and Principal of Waiata Resources, from April 1996 to present
and has provided financial advisory services to the Corporation since April 30,
1996. Mr. Marter is a finance professional with 22 years of 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.

Jorge Vargas has been the President and a director of NADSA and MASA since July
1994 and September 1994, respectively. Mr. Vargas received his law degree in
1967 from the National University of Buenos Aires, Argentina, and has been in
private practice since 1967. Mr. 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. Mr. Vargas is a
registered attorney in the provinces of Mendoza and San Juan, and at the Federal
level in Argentina.

Armand Hansen has been a director of the Corporation since November 1995. Mr
Hansen has served as Vice-President of Operations for Mining Contracting for
Degerstrom for the past 17 years. His responsibilities include managing 350
employees at various job sites throughout the U.S. and Latin America. Mr. Hansen
has also served as Vice-President and a director of Aresco Inc., a manufacturing
company conducting speciality fabrication of mining equipment since 1989.

John Johnson Crabb has been a director of the Corporation since November 1995.
From 1985 to November 1995, Mr. Crabb served as a mining executive and geologist
for and as a director of Inland Resources, Inc. From April 1995 to March 1996,
Mr. Crabb was a director of Cadre Resources Ltd. Mr Crabb was also a director of
Pegasus Gold Inc. from 1984 until 1991. Mr. Crabb graduated from the University
of British Columbia in 1951 with an M.Sc. in Geology.

A.D. (Darryl) Drummond has been a director of the Corporation since June 1996.
Since 1981, Dr. Drummond has been a principal and President of D.D.H.
Geomanagement, a mineral exploration firm concentrating 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, the U.S. and Venezuela. Dr. Drummond has
also served as a director of The Quinto Mining Corporation since September 1996,
of International All-North Resources Ltd. since July 1996, of All-North
Resources Ltd. from May 1995 to July 1996, and of Cadre Resources Ltd. from
November 1994 to February 1995. Dr. Drummond graduated from the University of
British Columbia with a B.A.Sc. in Geological Engineering in 1959 and with an
M.A.Sc. in 1961. He obtained his Ph.D. in 1966 from the University of California
at Berkeley. 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.

Bonnie L. Kuhn has been a director of the Corporation since June 1997. 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 in 1999. From January 1,
1999 

                                       58
<PAGE>
on, Ms. Kuhn has been 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. From July 1990 to June 1993, Ms. Kuhn was an
associate with Howard, Mackie, Barristers and Solicitors. 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 currently practices law in
the areas of natural resources, corporate and commercial and securities laws.

The Corporation has six directors, three 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 for services rendered by each
other executive officer whose compensation in the last fiscal year was $100,000
or more ("Named Executives").

<TABLE>
<CAPTION>
                                     Summary Compensation Table

                                         Annual Compensation                   Long Term Compensation
                                         -------------------                   ----------------------
                                                              Other Annual
                              Fiscal            Salary        Compensation     Securities Underlying
                               Year               ($)             ($)           Options/SARs (#)
                              ------           -------        ------------     ---------------------
<S>                            <C>              <C>              <C>                 <C>   
Allen Ambrose (1)              1998             96,200           9,660               30,000
President                      1997             89,126          11,436

Brian Gavin (1)                1998            122,600          11,112               30,000
Vice President of              1997            117,510          13,762
Exploration

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 1998 fiscal year, the following benefits were provided to Mr.
     Ambrose by Degerstrom and invoiced to the Corporation:
           401K Base                   $3,360
           401K Match                  $1,920
           Medical Insurance           $4,380

                                       59
<PAGE>
(3)  During the 1998 fiscal year, the following benefits were provided to Mr.
     Gavin by Degerstrom and invoiced to the Corporation:
           401K Base                   $4,284
           401K Match                  $2,448
           Medical Insurance           $4,380
</TABLE>

Stock Options Granted in 1998. The following table sets forth certain
information concerning individual stock options granted to the Named Executives
during the year ended December 31, 1998.

<TABLE>
<CAPTION>
                      Option Grants in the Last Fiscal Year

                                                      Percentage of
                                                       Total Options
                                   Number of            Granted to             Exercise
                             Securities Underlying     Employees in             Price              Expiration
                              Options Granted (#)      Fiscal Year             (Cdn$/Sh)              Date
                             ---------------------    --------------           ---------           -----------
<S>                                  <C>                  <C>                   <C>   <C>                <C>    
Allen Ambrose                        30,000               12.0%                 $1.10 (1)          March 2, 2003
Brian Gavin                          30,000               12.0%                 $1.10 (1)          March 2, 2003

Notes:

(1)  Subsequent to December 31, 1998, The Alberta Stock Exchange consented to
     these options being repriced at Cdn$0.68 per share.
</TABLE>

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, 1998. 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, 1998.

<TABLE>
<CAPTION>
                          Fiscal Year-End Option Values

                                               Number of                         Value of Unexercised
                                          Unexercised Options                    In-the-Money Options
                                        at Fiscal Year-End (#)               at Fiscal Year-End ($)(1)(2)
                                   --------------------------------       ----------------------------------
                                   Exercisable        Unexercisable       Exercisable          Unexercisable
                                   -----------        -------------       -----------          -------------
<S>                                  <C>                    <C>               <C>                   <C>
Allen Ambrose                        270,000                0                 $0                    $0
Brian Gavin                          270,000                0                 $0                    $0

Notes:

(1)    The value of unexercised  in-the-money  options was calculated  using the
       closing price of common shares on The Alberta Stock  Exchange on December
       31, 1998,  less the exercise  price of  in-the-money  stock  options.  On
       December 31, 1998 the closing  price of the Common  Shares on The Alberta
       Stock Exchange was Cdn$0.65.

                                       60
<PAGE>
(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, 1998 as reported by the Wall Street Journal for conversion of
     United States dollars into Canadian dollars was U.S. $1.00 = Cdn$1.53 or
     Cdn$1.00 = U.S. $0.65.
</TABLE>

Stock Option Plan

The Board of Directors has 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. 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 3,000,000
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.

As of December 31, 1998, an aggregate of 1,826,000 stock options had been
granted under the Plan and 75,000 options had been exercised at an exercise
price of Cdn$1.44 per share and 15,000 options had been exercised at an exercise
price of Cdn$1.15 per share. In addition, 126,000 options had been forfeited,
leaving 1,610,000 options outstanding and exercisable at December 31, 1998.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership, as of March 22, 1999, 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 Chief Executive Officer and each
other officer named in the Summary Compensation Table and (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.

<TABLE>
<CAPTION>
                                                           Shares
                                                        Beneficially                         Percentage of
Name and Address                                          Owned (1)                        Common Shares (1)
----------------                                          ---------                        -----------------
<S>                                                        <C>                                  <C>  
Named Executive Officers and Directors

Allen Ambrose                                              422,200 (2)                          2.04%
3303 North Sullivan Road
Spokane, WA 99216

Armand Hansen                                              271,000 (3)                          1.32%
3303 North Sullivan Road
Spokane, WA 99216

John Johnson Crabb                                         170,000 (3)                          0.83%
3303 North Sullivan Road
Spokane, WA 99216

Brian Gavin                                                430,400 (2)                          2.08%
3303 North Sullivan Road
Spokane, WA 99216

A.D. (Darryl) Drummond                                     120,000 (4)                          0.59%
3303 North Sullivan Road
Spokane, WA 99216

Bonnie L. Kuhn                                              71,000 (5)                          0.35%
1600 Canada Place
407 - 2nd Street S.W.
Calgary, Alberta
T2P 2Y3

Allan J. Marter                                            120,000 (4)                          0.59%
4828 W. Fair Place
Littleton, CO 80123

5% or Greater Shareholders
Neal A. and Joan L. Degerstrom                           5,100,000 (6)(7)                      25.01%
3303 North Sullivan Road
Spokane, WA 99216

All directors and                                        1,604,600                              7.51%
executive officers
as a group (7 persons)

                                       62
<PAGE>
Notes:

(1)  Shares which the person or group has the right to acquire within 60 days
     after December 31, 1998 are deemed to be outstanding in determining the
     beneficial ownership of he 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 50,000 shares upon
     payment of Cdn$0.68, 110,000 shares upon payment of Cdn$1.15, 80,000 shares
     upon payment of Cdn$1.15 and 30,000 shares upon payment of Cdn$0.68.

(3)  Includes stock options entitling the holder to acquire 20,000 shares upon
     payment of Cdn$0.68, 60,000 shares upon payment of Cdn$1.15, 40,000 shares
     upon payment of Cdn$1.15 and 20,000 shares upon payment of Cdn$0.68.

(4)  Includes stock options entitling the holder to acquire 60,000 shares upon
     payment of Cdn$1.15, 40,000 shares upon payment of Cdn$1.15 and 20,000
     shares upon payment of Cdn$0.68.

(5)  Includes stock options entitling the holder to acquire 60,000 shares upon
     payment of Cdn$1.27 and 10,000 shares upon payment of Cdn$0.68.

(6)  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.

(7)  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."
</TABLE>

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
perform 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, 1998 and 1997, administrative fees were paid
to NAD of $54,272 and $58,997 on total costs incurred by the Corporation of
$749,041 and $841,131, respectively. Equipment rentals of $6,070 and $40,305
were included in the total costs for 1998 and 1997, respectively. During the
year ended December 31, 1997, the Corporation acquired six vehicles in Argentina
from NAD for $112,140.

During 1998 and 1997, the Corporation incurred the following transactions with
related parties: financial consulting to a director and officer totaling $39,130
and $51,330, and legal fees to a firm in which a director and officer is an
associate or partner, totaling $49,435 and $84,898, respectively.

                                       63
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8K

     a)   Exhibits
          The Exhibits as indexed on pages 65 through 66 of this report are
          included as part of this Form 10-KSB.

     b)   Reports on Form 8K
          There were no reports on Form 8K filed in the quarter ended December
          31, 1998.

                                       64
<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).

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).

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).

                                       65
<PAGE>
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.*

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).

11.1      Statement regarding the computation of per share loss.*

21.1      Description of MASA and NADSA (incorporated by reference to Exhibit
          21.1 to the Form 10-SB).

23.1      Consent of PricewaterhouseCoopers LLP.*

27        Financial Data Schedule.*

--------------

*    Exhibit filed herewith.

                                       66
<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 26, 1999.

     MINERA ANDES INC.
     Registrant


By:  ALLEN V. AMBROS                By: ALLAN J. MARTER
     ----------------------------       ----------------------------------------
     Allen V. Ambrose, President        Allan J. Marter, Chief Financial Officer


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, 1999         By   ALLEN V. AMBROSE
      --------------------        ----------------------------------------------
                                  Allen V. Ambrose, Director


Date: March 29, 1999         By:  JOHN JOHNSON CRABB
      --------------------        ----------------------------------------------
                                  John Johnson (Jack) Crabb, Director


Date:  March 29, 1999        By:  A. D. DRUMMONS
       -------------------        ----------------------------------------------
                                  A.D. (Darryl) Drummond, Director


Date: March 29, 1999         By:  ARMAND G. HANSEN
      --------------------        ----------------------------------------------
                                  Armand G. Hansen, Director


Date:  March 29, 1999        By:  BONNIE L. KUHN
       -------------------        ----------------------------------------------
                                  Bonnie L. Kuhn, Director


Date:  March 29, 1999        By:  ALLEN J. MARTER
       -------------------        ---------------------------------------------
                                  Allan J. Marter, Director

                                       67