<PAGE>

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

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                  Form 10-KSB
(Mark One)
     [X]    Annual report under section 13 or 15(d) of the Securities Exchange
                Act of 1934 for the fiscal year ended December 31, 2000

     [_]    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 Canadian Venture Exchange
                                      (Formerly 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.[X]

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

The aggregate market value of the voting stock held by non-affiliates as of
March 15, 2001 was $1,718,250.

(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 15, 2001, the Registrant
had 30,046,030 common shares 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
                               -----------------

<TABLE>
<CAPTION>
PART I                                                                                              Page
                                                                                                    ----
<S>                                                                                                 <C>
     Item 1                Description of Business                                                     2

     Item 2                Description of Properties                                                   9

     Item 3                Legal Proceedings                                                          24

     Item 4                Submission of Matters to a Vote
                           of Security Holders                                                        24

PART II

     Item 5                Market for Common Equity and Related
                           Shareholder Matters                                                        25

     Item 6                Management's Discussion and Analysis
                           of Financial Condition and Results of Operations                           26

     Item 7                Financial Statements                                                       30

     Item 8                Changes in and Disagreements With Accountants
                           on Accounting and Financial Disclosure                                     50

PART III

     Item 9                Directors, Executive Officers, Promoters and
                           Control Persons; Compliance with Section 16(a)
                           of the Exchange Act                                                        50

     Item 10               Executive Compensation                                                     52

     Item 11               Security Ownership of Certain Beneficial Owners
                           and Management                                                             55

     Item 12               Certain Relationships and Related Transactions                             56

     Item 13               Exhibits and Reports on Form 8-K                                           57
</TABLE>

                                       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 15, 2001, 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 $1.56 or Cdn $1.00 = U.S. $0.64.

ITEM 1.   DESCRIPTION OF BUSINESS

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

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

The Corporation's current properties and projects consist of mineral rights and
applications for mineral rights covering approximately 163,000 hectares in three
Argentine provinces. The lands comprise option to purchase contracts,
exploration and mining agreements and direct interests through the Corporation's
filings for exploration concessions. The Corporation's properties are all early
stage exploration prospects. 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 (3 persons) under the
Operating Agreement.

Operating Structure

The Corporation is the product of an amalgamation in November 1995 of Minera
Andes and Scotia Prime Minerals, Incorporated, a then inactive Alberta
corporation which had previously had its Common Shares listed for trading on The
Alberta Stock Exchange (presently, the Canadian Venture Exchange ("CDNX")). The
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 interest in its Colombian properties was held through
Minera Providencia Inc. ("MPI"), which was incorporated in December 1998 under
the Business Corporations Act (Alberta). The Corporation holds

                                       2
<PAGE>

71.11% of the issued and outstanding shares of MPI and the remaining shares are
held by Jon Lehmann, the President of MPI. MPI's Colombian properties are held
through Minera Providencia S.A. ("MPSA"), incorporated in April 1998. MPI owns
92% of the issued and outstanding shares of MPSA and has entered into option
agreements to acquire the remaining shares for $400. Transylvania Gold S.R.L.
("TGS") was incorporated under the laws of Romania in October 1999, to hold the
Corporation's Romanian property interests. The Corporation holds 100% of the
issued and outstanding share of TGS.

The corporate structure of Minera Andes is as follows:

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

                              Minera Andes Inc.         ----------------------
                                  (Alberta)                     71.11%
                                                          Minera Providencia
                       --------------------------                Inc.
                                                               (Alberta)

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

     --------------  ---------------   ---------------  ----------------------
           100%             95%              91.6%               92%
       Transylvania    Minera Andes        NAD S.A.       Minera Providencia
         Gold SRL          S.A.           (Argentina)            S.A.
        (Romania)       (Argentina)                           (Colombia)
     --------------  ---------------   ---------------  ----------------------

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
transferable option to purchase the one remaining MASA share and an irrevocable
transferable option to purchase the one remaining NADSA share. Each of those
single shares is held by a natural person shareholder as required by local law.

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

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

The Corporation's management office is 3303 North Sullivan Road, Spokane,
Washington, 99216, while the principal business address of the Corporation is
Coronel Moldes 837, (5500) Mendoza, Argentina. The Corporation's business
address in Colombia is Carrera 9 #74-08, Oficina 504, Bogota, Colombia. In
Romania, the principal business address is Str. Av. Zorileanu Nr.39 Sector 1,
Bucharest, Romania. The registered address of the Corporation is 1600, 407 2nd
Street S.W., Calgary, Alberta, T2P 2Y3 Canada.

                                       3
<PAGE>

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
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 are
the subject of applications for concessions and licenses, many of which have not
yet been granted. The filing of an application for a concession grants the
holder the exclusive right to obtain the concession conditioned on the outcome
of the approval process. In Argentina, the approval process is an administrative
procedure under the authority of the province in which the property is located.
The process includes a public notice and approval procedure allowing third
parties to give notice of opposition or prior claim, if any, before the title to
the concession is granted. Although 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.

                                       4
<PAGE>

Need for Additional Capital. The exploration and, if warranted, development of
Minera Andes' properties would 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 subject property.
There can be no assurance that additional capital or other types of financing
will be available when needed or that, if available, the terms of such financing
will be favorable to Minera Andes.

Competitive Business Conditions. The exploration and development of mineral
properties in the Republic of Argentina is a highly competitive business. A
large number of companies compete with 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. 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.

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.

                                       5
<PAGE>

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 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. At December 31, 2000,
Degerstrom beneficially owns approximately 23% 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;

                                       6
<PAGE>

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

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

"Claims" means the Cateos, 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;

"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;

                                       7
<PAGE>

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

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

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

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

"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

                                       8
<PAGE>

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

ITEM 2.   DESCRIPTION OF PROPERTIES

The principal business of the Corporation is the exploration and development of
mineral properties ("Claims") located in the Republic of Argentina. The
Corporation's interests in the Argentinian Claims are held through MASA and
NADSA. MASA holds properties and is the company in which the daily business
operations in Argentina are conducted. NADSA holds properties and drilling
equipment in Argentina 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

                                       9
<PAGE>

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.

PRINCIPAL PROPERTIES

I.   ARGENTINA

     Recent Mining and Economic History in Argentina

Argentina is the second largest country in South America, over 2.7 million sq.
km in area. In 1983, Argentina returned to a 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 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 dropped to between 1% and 3% per annum. However,
following a -3% decline in GDP in 1999, the economy grew at 0.8% in 2000. The
government is focused on diversifying the economy to increase exports and
decrease Argentina's dependency on imports. The country is encouraging foreign
investment. In October of 1999, Fernando de la Rua was elected president on the
Alliance party ticket. Mr. De la Rua has pledged to continue the economic
policies of his predecessor.

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, administered by its 23 provinces, are subject to a provincial
royalty capped at 3% of the "mouth of mine" value of production, although
provinces may opt to waive 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. The Bajo de la Alumbrera porphyry
copper deposit has been brought onstream. Other copper deposits currently under
development include the Agua Rica and El Pachon deposits. In addition, gold
deposits are concentrated in the Argentine portion of the Central Andes'
Maricunga-El Indio gold belts and in the newly discovered Santa Cruz gold belt
in southern Patagonia.

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

The Corporation initiated gold exploration in Argentina in 1991, in conjunction
with Degerstrom. As of December, 2000, the Corporation had Argentine land
holdings totaling 163,009 ha in three Argentine provinces (Figure 1). The
Corporation's exploration efforts initially focused on evaluating prospects
generated by 1960's

                                      10
<PAGE>

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 its property portfolio, and conducting grassroots
exploration to evaluate its other properties and to generate new targets.

     Property And Title in Argentina

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

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

          Cateos are awarded by the following process:

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

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

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

                                      11
<PAGE>

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

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

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

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

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

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

                                      12
<PAGE>

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

                              [LAND HOLDING MAP]

                                      13
<PAGE>

A.   San Juan Project Summary
     ------------------------

     1.   San Juan Project Location

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

     2.   San Juan Area Project Geology

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

     3.   San Juan Project Exploration

     No formal records of previous exploration in the project area exist.
     Evidence of prospecting (small trenches or pits) exists on some of the
     cateos. The area is currently active with 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.
     Lands are held pending possible joint ventures.

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

     Through December 31, 2000, the Corporation has spent $327,235 on the San
     Juan Project (net of write-offs for properties abandoned).

     4.  San Juan Area Project Ownership

     The Corporation's lands in San Juan consist of six applications for cateos
     and 11 manifestations of discovery and total 36,070 ha. At present, these
     lands are not subject to a royalty, however, the government of San Juan has
     not waived its rights to retain up to a 3% "mouth of mine" royalty from
     production. Property canon fees for the properties in 2001 are estimated at
     $29,560.

                                      14
<PAGE>

B.   Mendoza Project Summary
     -----------------------

     The Mendoza Project consisted of property acquisition and geologic
     exploration for precious metal and porphyry copper targets in the province
     of Mendoza.

     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.

     Following a review of its Mendoza properties in late 1999, the Corporation
     elected to drop its lands in the province, with a corresponding write-off
     in 1999 of $404,075.

C.   Santa Cruz Project Summary
     --------------------------

     1.  El Pluma/Cerro Saavedra Project Location

     The El Pluma/Cerro Saavedra property package is located in the Santa Cruz
     province of Argentina, 230 km southwest of the city of Comodoro Rivadavia,
     near latitude 46(degree)41'S and longitude 70(degree)17'W. The property
     consists of 7 cateos and 70 manifestations of discovery covering a total of
     88,519 ha (approximately 880 km2), 100% owned by Minera Andes. No
     environmental liabilities exist on the property, although Minera Andes is
     obligated to fill in all trenches prior to the cessation of exploration.

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

     2.  El Pluma/Cerro Saavedra Project Geology

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

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

                                      15
<PAGE>

     area (Southern Cateos), ignimbrites and rhyolite domes of the Chon Aike
     Formation crop out extensively, and the La Matilde Formation may be present
     locally.

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

     3.  El Pluma/Cerro Saavedra Project Exploration

     Santa Cruz is one of Argentina's least well-explored provinces. The area
     was explored under the Argentine government-United Nations regional
     exploration Plan Patagonia-Comahue in the 1970s. In the 1980s, FOMICRUZ,
     S.E., a state owned company, completed reconnaissance surveys in the
     province to delineate areas of interest for mineral reserves.

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

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

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

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

     Huevos Verdes is a system of en echelon, variably mineralized,
     north-northwest trending quartz veins with associated strong argillic
     alteration, cutting Bajo Pobre Formation. In this area, the Bajo Pobre
     Formation

                                      16
<PAGE>

     consists of massive and fragmental andesite. Preliminary indications are
     that the massive andesite constitutes a more favourable host rock for the
     veins and that stockwork mineralization develops at north-northwest and
     west-northwest structural intersections. The vein system occurs over a
     strike length of at least 2.2 km and possibly as much as 3.5 km. The
     central and northwest parts of the system are covered by Cretaceous tuffs
     and sediments and locally by Tertiary basalt; geophysical work has
     confirmed the continuity of the system below cover. Additional targets
     established by recent enzyme leach and gradient array IP surveys have not
     yet been drill tested.

     Mineralized quartz veins with true thicknesses up to eleven metres (36.1')
     have been intersected in drillholes and trenches over the entire length of
     the Huevos Verdes vein system. The best trench results were 4.0 m (13.1') @
     18.6 g/t Au and 498.8 g/t Ag and 6.5 m (21.3') @ 12.06 g/t Au and 330.3 g/t
     Ag. Prior to 2000 nineteen holes were drilled on the main vein system, of
     which twelve intersected significant precious metal mineralization. Best
     drill intersections were 7.4 m (24.3') @ 2.19 g/t Au and 170.0 g/t Ag in
     hole EP-38, 6.3 m (20.7') @ 9.74 g/t Au and 630.3 g/t Ag in EP-39, 4.1 m
     (13.45') @ 3.85 g/t Au and 249.8 g/t Ag in EP-40, and 11.3 m (37.17') @
     2.01 g/t Au and 102.6 g/t Ag in EP-54 (true thicknesses).

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

         Significant Gold/Silver Intercepts, Huevos Verdes, Argentina

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                             True                                          Gold
                                          Intersection      Drilled       Thickness         Gold        Silver            Equiv.
  Drill      TD                           To      From      Interval          m              g/t         g/t            g/t (opt)
  Hole        m       Azim     Angle       m        m          m             (ft)           (opt)       (opt)          Au+(Ag/50)
---------------------------------------------------------------------------------------------------------------------------------
<S>         <C>       <C>      <C>        <C>     <C>       <C>           <C>               <C>         <C>            <C>
EP-39        64       N240      -50       27       36          9              8.1            2.19       170.0              5.59
                                                                            (26.6)          (0.06)       (5.0)            (0.16)
 Includes:                                34       36          2              1.8            6.24       617.2             18.58
                                                                             (5.9)          (0.18)      (18.0)            (0.54)
---------------------------------------------------------------------------------------------------------------------------------
EP-39        63       N240      -50       36       43          7              6.3            9.74       630.3             22.35
                                                                            (20.7)          (0.28)      (18.4)            (0.65)
 Includes:                                36       40          4              3.6           15.17     1,068.8             36.55
                                                                            (11.8)          (0.44)      (31.2)            (1.07)
---------------------------------------------------------------------------------------------------------------------------------
EP-40       117       N240      -50       46       51          5              4.1            3.85       249.8              8.85
                                                                            (13.5)          (0.11)       (7.3)            (0.26)
---------------------------------------------------------------------------------------------------------------------------------
EP-41        98       N240      -50       32       35          3              2.9            2.18       175.1              5.68
                                                                             (9.5)          (0.06)       (5.1)            (0.17)
---------------------------------------------------------------------------------------------------------------------------------
EP-42        90       N240      -50       80       83          3              2.7            2.17        99.8              4.17
                                                                             (8.9)          (0.06)       (2.9)            (0.12)
---------------------------------------------------------------------------------------------------------------------------------
EP-43       130       N240      -50       99      100          1              0.8            7.37       769.0             22.75
                                                                             (2.6)          (0.21)      (22.4)            (0.66)
---------------------------------------------------------------------------------------------------------------------------------
EP-46        51       N060      -50       33       35          2              1.9            1.26       105.8              3.38
                                                                             (6.2)          (0.04)       (3.1)            (0.10)
---------------------------------------------------------------------------------------------------------------------------------
EP-47        75       N240      -50       32       36          4              3.6            1.70       196.3              5.86
                                                                            (11.8)          (0.05)       (5.7)            (0.17)
 Includes:                                34       36          2              1.8            2.66       324.5              9.60
                                                                             (5.9)          (0.08)       (9.5)            (0.28)
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      17
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                             True                                          Gold
                                          Intersection      Drilled       Thickness         Gold        Silver            Equiv.
  Drill      TD                           To      From      Interval          m              g/t         g/t            g/t (opt)
  Hole        m       Azim     Angle       m        m          m             (ft)           (opt)       (opt)          Au+(Ag/50)
---------------------------------------------------------------------------------------------------------------------------------
<S>        <C>        <C>      <C>        <C>     <C>       <C>           <C>               <C>         <C>            <C>
EP-48        66       N240      -50       42       45          3              2.6            0.69       114.0              2.97
                                                                             (8.5)          (0.02)       (3.3)            (0.09)
---------------------------------------------------------------------------------------------------------------------------------
EP-49        60       N210      -50       24       27          3              3.0            1.11       131.4              3.74
                                                                             (9.8)          (0.03)       (3.8)            (0.11)
---------------------------------------------------------------------------------------------------------------------------------
EP-54        66       N240      -50       44       56         12             11.3            2.01       102.6              4.06
                                                                            (37.1)          (0.06)       (3.0)            (0.12)
 Includes:                                54       56          2              1.9            8.94       269.5             14.33
                                                                             (6.2)          (0.26)       (7.9)            (0.42)
---------------------------------------------------------------------------------------------------------------------------------
EP-58        60       N060      -50       49       50          1              1.0            1.00       106.0              3.12
                                                                             (3.3)          (0.03)       (3.1)            (0.09)
---------------------------------------------------------------------------------------------------------------------------------
EP-61      151.5      N240      -60    135.5    136.5          1              0.9            7.41        99.5              9.40
                                                                             (2.9)          (0.22)       (2.9)            (0.27)
---------------------------------------------------------------------------------------------------------------------------------
EP-62       81.5      N240      -60       68       72          4              3.8            2.93        88.4              4.70
                                                                            (12.5)          (0.09)       (2.6)            (0.14)
---------------------------------------------------------------------------------------------------------------------------------
EP-64        111      N240      -50       89       93          4              3.9            7.79       568.5             19.16
                                                                            (12.8)          (0.23)      (16.6)            (0.56)
---------------------------------------------------------------------------------------------------------------------------------
EP-65        153        --      -90      124      126          2              1.0            9.31       286.4             15.04
                                                                             (3.3)          (0.27)       (8.4)            (0.44)
---------------------------------------------------------------------------------------------------------------------------------
EP-69        115     240      -60          64       65       1              0.8            2.16       201.6              6.05
                                                                           (2.6)          (0.06)       (5.9)            (0.18)
EP-69                                     100      103       3              2.5            4.10       479.0             13.68
                                                                           (8.2)          (0.12)      (14.0)            (0.40)
---------------------------------------------------------------------------------------------------------------------------------
EP-70        135     240      -70         117      124       7              5.4           15.92      1634.1             48.60
                                                                          (17.7)          (0.46)      (47.7)            (1.42)
---------------------------------------------------------------------------------------------------------------------------------
includes:                                 120      123       3              2.3           30.73      3166.3             94.01
                                                                           (7.6)          (0.90)      (92.3)            (2.74)
EP-74        144     240      -70         126      132       6              4.2            3.34       315.9              9.66
                                                                          (13.8)          (0.10)       (9.2)            (0.28)
includes:                                 126      128       2              1.4            2.90       299.0              8.88
                                                                           (4.6)          (0.08)       (8.7)            (0.26)
and                                       129      132       3              2.1            4.32       414.7             12.61
                                                                           (6.9)          (0.13)      (12.1)            (0.37)
includes:                                 131      132       1              0.7            7.58       938.5             26.40
                                                                           (2.3)          (0.22)      (27.4)            (0.77)
---------------------------------------------------------------------------------------------------------------------------------
EP-76        102     240      -50          75       76       1              0.8            1.61       204.0              5.69
                                                                           (2.6)          (0.05)       (5.9)            (0.17)
and                                        80       84       4              3.0            3.47       352.8             10.53
                                                                           (9.8)          (0.10)      (10.3)            (0.31)
and                                        88       91       3              2.3            7.89       764.5             23.18
                                                                           (7.5)          (0.23)      (22.3)            (0.68)
---------------------------------------------------------------------------------------------------------------------------------
EP-77         93     240      -50          64       66       2              1.5            3.75       380.5             11.36
                                                                           (4.9)          (0.11)      (11.1)            (0.33)
---------------------------------------------------------------------------------------------------------------------------------
EP-79        102     240      -50          83       84       1              0.9            1.20       120.0              3.60
                                                                           (3.0)          (0.03)       (3.5)            (0.10)
---------------------------------------------------------------------------------------------------------------------------------
EP-80        108     240      -50          73       74       1              0.9            4.32       583.0             15.98
                                                                           (3.0)          (0.13)      (17.0)            (0.47)
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

                                      18
<PAGE>

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

     Saavedra West is interpreted as a synvolcanic graben developed within the
     Bajo Pobre Formation, and infilled by pyroclastic and lesser sedimentary
     rocks correlated with the La Matilde Formation. Pebble dikes are abundant
     within the graben and ignimbrites that may be correlative with the Chon
     Aike Formation occur as dikes along one edge. Grab samples with up to 22
     g/t Au and 10,000 g/t Ag occur, as well as numerous trench and 1.52 m (5')
     drill sample intervals with (greater than)1 g/t Au and/or 500 g/t Ag,
     generally within north- northwest trending structures. Illite-silica
     alteration, typical of low sulfidation epithermal systems, surrounds the
     structures. Significant mineralization is located at Sinter Flats and on
     Discovery Hill, the latter of which appears to have been a locus for
     magmatic and hydrothermal explosive activity. The easternmost graben-
     bounding fault, which has not been drill tested, contains anomalous Au (176
     to 599 ppb) and Hg (360 to 2,000 ppb).

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

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

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

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

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

                                      19
<PAGE>

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

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

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

     4.  El Pluma/Cerro Saavedra Project Ownership

     The El Pluma/Cerro Saavedra Project area is made up of 7 cateos and 70
     manifestations of discovery totaling 88,519 ha. The cateos are located in
     the western half of the province of Santa Cruz. All of the cateos are
     controlled 100% by MASA and may be subject to a provincial royalty. Holding
     costs for 2001 are estimated to be $20,000.

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

     On March 15, 2001, Minera Andes Inc. signed an option and joint venture
     agreement with Mauricio Hochschild & Cia. Ltda. (Hochschild), Lima, Peru,
     for the exploration and possible development of Minera Andes' 217,000-acre
     (88,000 hectares) epithermal gold-silver exploration land package in
     southern Argentina. The land package, known as El Pluma/Cerro Saavedra,
     includes Huevos Verdes, a high-grade gold/silver vein system target, and
     Minera Andes' most advanced exploration prospect. The signing allows
     Hochschild to immediately begin exploration work on El Pluma/ Cerro
     Saavedra, and requires an initial payment to Minera Andes of US$200,000 as
     part of a total annual payment of US$400,000.

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

     The agreement also outlines a business plan for possible mining production
     based on the positive exploration results achieved to date by Minera Andes
     at Huevos Verdes.

                                      20
<PAGE>

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

     Total expenditure on the total property package to December 31, 2000 is
     $2,869,811.

D.   Chubut Project Property Summary
     -------------------------------

     1.  Chubut Project Location

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

     2.  Chubut Project Geology

     Jurassic-Cretaceous volcanic terranes have been the focus of exploration in
     the southern Chilean Cordillera over the past decade. These rocks are
     potential hosts of epithermal gold and gold rich replacement deposits
     attested to by the discoveries, in Chile, at Fachinal (epithermal Au-Ag)
     and El Toque (base metal, stratabound 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.

                                      21
<PAGE>

     The Corporation had spent $169,820 through December 31, 2000, on the Chubut
     Project, net of $50,000 payment received upon signing the
     option-to-purchase agreements on the properties as discussed below.

     4.  Chubut Project Ownership

     The Corporation currently controls two cateos, three applications for
     cateos and two manifestations of discovery (totaling 38,420 ha) in Chubut
     Province.

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

E.   Northern Argentina Project Summary
     ----------------------------------

     The Northern Argentina Project includes the provinces of La Rioja,
     Catamarca, Salta, Jujuy and Tucuman. Located in north and 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 Corporation had conducted exploration in this region consisting of
     generative reconnaissance exploration, satellite image analysis and
     evaluation of airborne geophysical data and property submittals. At the end
     of 1999, however, the Corporation dropped its activities in the region and
     wrote-off expenditures of $187,078.

II.  COLOMBIA

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

A.   California-Vetas Project
     ------------------------

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

     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.

                                      22
<PAGE>

B.   Mocoa Project
     -------------

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

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

III.   ROMANIA

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

A.   Voia Project Summary
     --------------------

     On March 12, 1999, the Corporation and National Agency for Mineral
     Resources (NAMR) representatives signed an exclusive License of Concession
     For Exploration No. 153 (Voia).The Voia project is located in the
     Metaliferi Mountains (South Apuseni Mountains) of the Transylvania region
     of Romania. The property is approximately 22 to 30 km east of Deva, ten to
     15 km southeast of Brad and 390 to 400 km northwest of Bucharest. The Voia
     property is 4,900 hectares in area. Through December 31, 2000, the
     Corporation spent $75,831 on the Voia project.

     Past exploration work on the Voia property was conducted by various
     Romanian state-owned companies and institutions. This work took place
     between 1935 and 1996. The work consisted of geological mapping,
     geophysical studies (aeromagnetic, detailed ground magnetic, gravity, and
     electromagnetic surveys), soil and rock chip sampling as part of a copper
     porphyry and high-grade gold-base metal vein exploration programs. In April
     and May of 1999, data, reports, maps and additional information on the Voia
     concession was evaluated and compiled.

     In June and July, 1999 (after conditions in the field allowed access), a
     brief reconnaissance and sampling program was conducted on the Voia
     property. A total of 135 samples (53 stream sediment and 82 rock samples)
     were taken throughout the perimeter. Also areas of significant alteration
     and potential mineralization within the concession were visited and
     evaluated. The stream sediment sampling and rock sampling delineated four
     areas within the perimeter which may contain anomalous gold mineralization.

B.   Ostoros Project Summary
     -----------------------

     On March 12, 1999, the Corporation and NAMR signed an Exploration License
     on the Ostoros concession (License of Concession for Exploration No 152).
     The Ostoros project (181 sq. km) is located in Harghita County, Romania in
     the Eastern Carpathian mountains some 30 km northwest of the city of
     Miercurea Ciuc (the capital city of Harghita County) and approximately 320
     km north of Bucharest.

                                      23
<PAGE>

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

     Past exploration work on the Ostoros property was conducted by various
     Romanian state-owned companies and institutions. This work took place
     between 1961 and 1983 and consisted of geological mapping (at various
     scales), geophysical studies (aeromagnetic, detailed ground magnetic,
     gravity, and electromagnetic surveys), and limited soil and rock chip
     sampling as part of a copper porphyry exploration program.

     Work to date on the perimeter has consisted of data compilation and review.
     Minera Andes completed a first- pass reconnaissance and sampling program of
     the Ostoros property in October and November, 1999. A total of 87 samples
     (74 stream sediment and 13 rock samples) were taken throughout the area.
     The stream sediment sampling delineated eight areas that appeared to
     contain anomalous gold mineralization.

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

ITEM 3. LEGAL PROCEEDINGS

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

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

There were no matters submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 2000.

                                      24
<PAGE>

                                    PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

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

The high and low prices for the Common Shares reported by the CDNX for each of
the quarters during the years ended December 31, 2000 and 1999 are set forth in
the table below:

                                                    High ($Cdn)   Low ($Cdn)

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

     1999     January - March                          0.85          0.49
              April - June                             0.90          0.46
              July - September                         0.59          0.31
              October - December                       0.50          0.17

The high and low prices for the Common Shares reported for the NASD
over-the-counter market for each of the quarters during the years ended December
31, 2000 and December 31, 1999 are set forth in the table below:

                                                    High ($US)    Low ($US)

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

     1999     January - March                          0.53         0.33
              April - June                             0.69         0.31
              July - September                         0.39         0.22
              October - December                       0.32         0.10

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

As of December 31, 2000, there were approximately 367 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.

In two closings, the first on December 14, 1999 and the second on January 31,
2000, the Corporation issued an aggregate of 9,200,000 units to investors
outside of the United States in reliance on Regulation S. Each unit comprised
one common share and one common share purchase warrant. The warrants were
exercisable for one

                                      25
<PAGE>

year at an exercise price of Cdn$0.35. The offering raised gross proceeds of
Cdn$2,300,000. Canaccord Capital Corporation, Toronto, Ontario, acted as agent
for the offering and received a cash commission equal to 7.5% of the gross
proceeds raised as well as Common Shares equal to approximately 4% of the units
sold as additional commission.

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

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, 2000 and 1999 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.

Overview

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

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

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

                                      26
<PAGE>

Plan of Operations

The Corporation has budgeted and plans to spend approximately $0.5 million on
its mineral property and exploration activities and general and administrative
expenses through 2001, with most properties being kept on care and maintenance.
See "Description of Properties." In addition, the Corporation's joint venture
partners on the El Pluma/Cerro Saavedra and Chubut projects will be spending in
excess of $1 million for exploration over the next 12 months. The Corporation's
existing funds plus funds from the joint ventures on the El Pluma/Cerro Saavedra
and Chubut projects are estimated by management to be sufficient to finance
these activities through 2001. If additional funds are raised during 2001
through the exercise of warrants or options, through a further equity financing,
by the sale of property interests or by joint venture financing, additional
exploration could be planned and carried out on the Corporation's properties
before year-end. If the Corporation were to develop a property or a group of
properties beyond the exploration stage, substantial additional financing would
be necessary. Such financing would likely be in the form of equity, debt, or a
combination of equity and debt. The Corporation has no current plan to seek such
financing and there is no assurance that such financing, if necessary, would be
available to the Corporation on favorable terms.

Results of Operations

2000 Compared to 1999

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

The Corporation again undertook a review of its exploration properties in 2000,
as in prior years, and elected to write-off a total of $0.5 million in deferred
costs for the Colombian and Romanian projects. Because of adverse conditions in
both these countries, and in the precious mineral exploration industry as a
whole, the Corporation terminated its Colombian and Romanian exploration
programs and all land agreements at the end of 2000. While the Corporation would
like to increase its programs in the future, continuing the prospecting,
acquisition, exploration and evaluation of property interests that has been its
hallmark since its inception, the plans for 2001 will focus on the Santa Cruz,
Chubut and San Juan properties. The Corporation expects that both the Chubut
projects and the Santa Cruz projects will be explored by its joint venture
partners during 2001. As in the past, if a property or program does not meet the
Corporation's requirements in the future, costs associated with abandonment of
the property or program will result in a charge to operations. For this reason,
the Corporation may incur additional write-offs in future periods, although the
amounts of such write-offs are difficult to predict, as they will be determined
by the results of future exploration activities.

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

                                      27
<PAGE>

1999 Compared to 1998

The Corporation's net loss of $1.8 million (9 cents per share) in 1999, was
substantially less than the loss of $3.4 million (17 cents per share) in 1998.
The net loss decreased mainly as a result of reduced property write-offs in 1999
of $0.9 million compared with $2.2 million in 1998. The Corporation had also
initiated a program of cost cutting early in 1999, when it became apparent that
the period of low gold prices was going to continue, with a corresponding
reduction in expenses.

General and administrative costs were reduced from $1.2 million in 1998 to $0.9
million in 1999. While office overhead, consulting fees and wage and benefit
costs were all down from the prior year, slightly higher travel expenses offset
some of these gains. The Corporation also saw its foreign exchange loss from
1998 change to a gain in 1999 (as the Canadian dollar, in which the Corporation
had certain invested balances denominated, held its own during the year compared
to the US dollar), resulting in a saving of $0.3 million over last year.

The Corporation undertook a complete review of its exploration properties at the
end of 1999, and elected to write-off a total of $0.9 million in deferred costs.
With limited funds and staffing available, the Corporation elected to focus on
its properties in the three provinces of Santa Cruz, Chubut and San Juan.
Discontinuing exploration activities in the provinces of Mendoza, Neuquen, Rio
Negro and in the northern provinces resulted in a write-off of $0.9 million. The
Corporation's exploration program has involved nearly continuous prospecting,
acquisition, exploration and evaluation of property interests. If a property or
program does not meet the Corporation's requirements, costs associated with
abandonment of the property or program 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 $1.2 million in
1999, down from $2.3 million in 1998. As a result of cut-backs in all projects,
even on the El Pluma/Cerro Saavedra property, there were savings across the
board, but the biggest reductions were in drilling, assay and analytical,
consulting and travel expenses. With a reduced property portfolio, the
Corporation also reduced its property and mineral rights payments from $0.2
million in 1998 to $0.01 million in 1999.

Liquidity and Capital Resources

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

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

                                      28
<PAGE>

At December 31, 2000, the Corporation had cash and cash equivalents of $0.1
million, compared to cash and cash equivalents of $0.5 million as of December
31, 1999. Working capital at December 31, 2000 was $35,000.

Net cash used in operating activities during 2000 was $0.8 million compared with
$0.6 million in 1999. Investing activities in 2000 used $0.7 million, compared
with $1.1 million in 1999. 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 2000 was the receipt of net proceeds of
$1.0 million from the closing in January 2000 under the Corporation's Canadian
offering and $162,000 from the Special Warrant placement with N.A. Degerstrom,
Inc.

                                      29
<PAGE>

ITEM 7.   FINANCIAL STATEMENTS

Index to Consolidated Financial Statements

<TABLE>
<CAPTION>
                                                                                            Page
         <S>                                                                                <C>
         Auditors' Report                                                                     31

         Consolidated Balance Sheets at December 31, 2000 and 1999                            32

         Consolidated Statements of Operations and Accumulated Deficit
         for the years ended December 31, 2000 and 1999 and for the
         period from July 1, 1994 (commencement) through December 31, 2000                    33

         Consolidated Statements of Mineral Properties and Deferred Exploration
         Costs for the years ended December 31, 2000 and 1999 and for the
         period from July 1, 1994 (commencement) through December 31, 2000                    34

         Consolidated Statements of Cash Flows for the years ended December 31,
         2000 and 1999 and for the period from July 1, 1994
         (commencement) through December 31, 2000                                             35

         Notes to Consolidated Financial Statements                                           36
</TABLE>

                                      30
<PAGE>

                          PRICEWATERHOUSECOOPERS LLP


AUDITORS' REPORT

To the Shareholders of Minera Andes Inc.:

We have audited the consolidated balance sheets of Minera Andes Inc. and
subsidiaries, as at December 31, 2000 and 1999 and the consolidated statements
of operations and accumulated deficit, of mineral properties and deferred
exploration costs and of cash flows for each of the years then ended. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of Minera Andes Inc. and subsidiaries
as at December 31, 2000 and 1999 and the results of their operations and their
cash flows for each of the years then ended in accordance with Canadian
generally accepted accounting principles.

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


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

In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the Corporation's ability to continue as a going concern such as those described
in Note 1 of the consolidated financial statements. Our report to the
shareholders dated March 15, 2001, is expressed in accordance with Canadian
reporting standards which do not permit a reference to such conditions and
events in the auditors' report when these are adequately disclosed in the
financial statements.

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

                                      31
<PAGE>

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

<TABLE>
<CAPTION>
                                                                         December 31,        December 31,
                                                                             2000                1999
                                                                         ------------        ------------
<S>                                                                      <C>                 <C>
                                                              ASSETS

Current:
          Cash and cash equivalents                                      $    101,818        $    483,471
          Receivables and prepaid expenses                                     32,439              32,031
                                                                         ------------        ------------
                Total current assets                                          134,257             515,502
Mineral properties and deferred exploration costs (Note 5)                  3,859,297           3,622,902
Capital assets, net (Note 6)                                                   41,063              62,059
                                                                         ------------        ------------
                Total assets                                             $  4,034,617        $  4,200,463
                                                                         ============        ============
                                             LIABILITIES
                                                                                             ============
Current:
          Accounts payable and accruals                                  $     48,512        $    155,748
          Due to related parties (Note 9)                                      50,307              83,412
                                                                         ------------        ------------
                Total current liabilities                                      98,819             239,160
                                                                         ------------        ------------
Commitments and contingencies (Notes1 and 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 2000--30,000,030 shares
   Issued 1999--23,733,152 shares                                          18,189,864          16,960,540

Accumulated deficit                                                       (14,254,066)        (12,999,237)
                                                                         ------------        ------------
                Total shareholders' equity                                  3,935,798           3,961,303
                                                                         ------------        ------------
                Total liabilities and shareholders' equity               $  4,034,617        $  4,200,463
                                                                         ============        ============
</TABLE>

Approved by the Board of Directors:

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

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

                                      32
<PAGE>

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

<TABLE>
<CAPTION>



                                                                                                         Period from
                                                                      Years Ended                        July 1, 1994
                                                        ----------------------------------------
                                                                                                       (commencement)
                                                          December 31,           December 31,              through
                                                             2000                   1999              December 31, 2000
                                                        -----------------      -----------------      -----------------
<S>                                                     <C>                    <C>                    <C>
Administration fees                                       $     24,248           $     28,202           $    205,012
Audit and accounting                                            61,079                 60,651                288,222
Consulting fees                                                 93,760                159,868                876,550
Depreciation                                                     4,128                 40,440                 54,057
Equipment rental                                                 2,510                  6,070                 21,522
Foreign exchange (gain) loss                                    12,340                (28,537)               406,415
Insurance                                                       56,138                 65,044                209,714
Legal                                                          112,074                110,277                574,186
Maintenance                                                        549                     77                    892
Materials and supplies                                               0                      0                 45,512
Office overhead                                                 93,543                163,479              1,302,589
Telephone                                                       33,446                 48,039                338,398
Transfer agent                                                  13,369                 11,196                 86,963
Travel                                                          10,472                 60,458                307,591
Wages and benefits                                             143,033                187,157              1,044,892
Write-off of deferred costs                                    511,018                917,052              8,118,123
                                                        -----------------      -----------------      -----------------
Total expenses                                               1,171,707              1,829,473             13,880,638
Gain on sale of capital assets                                       0                (35,004)               (35,004)
Interest income                                                (21,062)               (27,952)              (451,797)
                                                        -----------------      -----------------      -----------------
Net loss                                                     1,150,645              1,766,517             13,393,837
Accumulated deficit, beginning of the period                12,999,237             11,061,405                      0
Share issue costs                                              104,184                171,315                843,014
Deficiency on acquisition of subsidiary                              0                      0                 17,215
                                                        -----------------      -----------------      -----------------
Accumulated deficit, end of the period                    $ 14,254,066           $ 12,999,237           $ 14,254,066
                                                        =================      =================      =================

Basic and diluted net loss per common share               $       0.04           $       0.09           $       0.79
                                                        =================      =================      =================

Weighted average shares outstanding                         29,467,070             20,545,737             16,962,999
                                                        =================      =================      =================
</TABLE>

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

                                      33
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                         Period from
                                                                   Years Ended                           July 1, 1994
                                                        ----------------------------------------       -----------------
                                                                                                        (commencement)
                                                           December 31,           December 31,              through
                                                               2000                   1999             December 31, 2000
                                                        -----------------      -----------------       -----------------
<S>                                                     <C>                    <C>                     <C>
Administration fees                                      $      18,522            $      20,038          $    343,023
Assays and analytical                                           51,466                  120,355               938,822
Construction and trenching                                           0                    2,484               507,957
Consulting fees                                                 55,256                   73,850               892,874
Depreciation                                                    18,721                   10,170               161,441
Drilling                                                       198,448                   83,661               928,833
Equipment rental                                                   696                    6,465               244,068
Geology                                                        109,885                  318,752             2,901,115
Geophysics                                                           0                   61,314               309,902
Insurance                                                       22,406                   38,822               229,108
Legal                                                           43,402                   83,500               619,785
Maintenance                                                      9,473                   20,634               156,812
Materials and supplies                                          23,547                   43,672               431,324
Project overhead                                                 8,345                   44,138               291,976
Property and mineral rights                                     18,785                   12,762             1,278,225
Telephone                                                       22,275                   10,318                81,082
Travel                                                          72,756                  148,172               997,110
Wages and benefits                                             123,430                  135,136               837,824
                                                        -----------------      -----------------       -----------------

Costs incurred during the period                               797,413                1,234,243            12,151,281

Deferred costs, beginning of the period                      3,622,902                3,305,711                     0

Deferred costs, acquired                                             0                        0               576,139

Deferred costs written off                                    (511,018)                (917,052)           (8,118,123)

Mineral property option proceeds                               (50,000)                       0              (750,000)
                                                        -----------------      -----------------       -----------------

Deferred costs, end of the period                          $ 3,859,297              $ 3,622,902            $3,859,297
                                                        =================      =================       =================
</TABLE>
  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      34
<PAGE>

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

<TABLE>
<CAPTION>

                                                                            Years Ended                      Period from
                                                                 -----------------------------------         July 1, 1994
                                                                                                            (commencement)
                                                                  December 31,         December 31,             through
                                                                      2000                 1999            December 31, 2000
                                                                 --------------       --------------     -------------------
<S>                                                              <C>                  <C>                <C>
Operating Activities:
       Net loss for the period                                   $ (1,150,645)        $ (1,766,517)        $(13,393,837)
       Adjustments to reconcile net loss to net cash
       used in operating activities:
            Write-off of incorporation costs                                0                    0                  665
            Write-off of deferred expenditures                        511,018              917,052            8,118,123
            Depreciation                                                4,128               40,440               54,057
            Gain on sale of capital assets                                  0              (35,004)             (35,004)
            Change in:
                 Receivables and prepaid expense                         (408)              91,675              (30,453)
                 Accounts payable and accruals                       (107,236)              92,865               29,311
                 Due to related parties                               (33,105)              47,134               50,307
                                                                 --------------       --------------     -------------------
       Cash used in operating activities                             (776,248)            (612,355)          (5,206,831)
                                                                 --------------       --------------     -------------------

Investing Activities:
       Incorporation costs                                                  0                    0                 (665)
       Sale (purchase) of capital assets                               (1,853)              75,575             (221,557)
       Mineral properties and deferred exploration                   (778,692)          (1,224,073)         (11,989,840)
       Acquisition of subsidiaries                                          0                    0                 (602)
       Mineral property option proceeds                                50,000                    0              750,000
                                                                 --------------       --------------     -------------------
       Cash used in investing activities                             (730,545)          (1,148,498)         (11,462,664)
                                                                 --------------       --------------     -------------------

Financing Activities:
       Shares and subscriptions issued for cash, less
       issue costs                                                  1,125,140              374,559           16,771,313
                                                                 --------------       --------------     -------------------
       Cash provided by financing activities                        1,125,140              374,559           16,771,313
                                                                 --------------       --------------     -------------------

Increase (decrease) in cash and cash equivalents                     (381,653)          (1,386,294)             101,818
Cash and cash equivalents, beginning of period                        483,471            1,869,765                    0
                                                                 --------------       --------------     -------------------
Cash and cash equivalents, end of period                         $    101,818         $    483,471         $    101,818
                                                                 ==============       ==============     ===================
</TABLE>

See Notes 3, 7 and 13 for non-cash financing and investing activities.

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


                                      35
<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,
2000, the Corporation was in the exploration stage and had interests in
properties in three provinces in the Republic of Argentina.

The recoverability of amounts shown as mineral properties and deferred
exploration costs is dependent upon the existence of economically recoverable
reserves, the ability of the Corporation to obtain necessary financing to
complete their development, and future profitable production or disposition
thereof. The accompanying consolidated financial statements have been prepared
using Canadian generally accepted accounting principles applicable to a going
concern. The use of such principles may not be appropriate because, as of
December 31, 2000, there was significant doubt that the Corporation would be
able to continue as a going concern.

For the year ended December 31, 2000, the Corporation had a loss of $1.15
million and an accumulated deficit of $14.3 million. In addition, due to the
nature of the mining business, the acquisition, exploration and development of
mineral properties requires significant expenditures prior to the commencement
of production. To date, the Corporation has financed its activities through the
sale of equity securities and joint venture arrangements. The Corporation
expects to use similar financing techniques in the future and is actively
pursuing such additional sources of financing.

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

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

                                      36
<PAGE>

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., its wholly-owned subsidiaries (see Note 4), Minera Andes
         S.A. (MASA) and NAD S.A. (NADSA), both Argentine corporations, and
         Transylvania Gold S.R.L., (TGS) a Romanian corporation; its 71% owned
         subsidiary, Minera Providencia Inc. (MPI), an Alberta corporation; and
         MPI'S 92% owned Colombian subsidiary, Minera Providencia S.A. All
         significant intercompany transactions and balances have been eliminated
         from the consolidated financial statements.

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

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

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

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

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

     g)  Basic and Diluted Loss Per Common Share
         Basic earnings per share (EPS) is calculated by dividing loss
         applicable to common shareholders by the weighted-average number of
         common shares outstanding for the year. Diluted EPS reflects the
         potential dilution that could occur if potentially dilutive securities
         were exercised or converted to common stock. Due to the losses in 2000
         and 1999, potentially dilutive securities were excluded from the
         calculation of

                                      37
<PAGE>

         diluted EPS, as they were anti-dilutive. Therefore, there was no
         difference in the calculation of basic and diluted EPS in 2000 and
         1999.

     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.

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

     k)  New Accounting Pronouncement
         In January 1999, the Corporation adopted the requirements of Canadian
         Institute of Chartered Accountants (CICA) 1540, "Cash Flow Statements",
         in preparing the statement of cash flows. The comparative information
         for the period from July 1, 1994 (commencement) through December 31,
         2000 has been restated to reflect the presentation in the current year.

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

4.       ACQUISITION AND FORMATION OF SUBSIDIARIES

     a)  Pursuant to an agreement dated March 8, 1995, the Corporation acquired
         from N.A. Degerstrom, Inc. 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 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.

                                      38
<PAGE>

         MASA and NADSA had 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 incurred 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. The final release from escrow was in 1998.

     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:

                  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
                                                                        =======

         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 Inc. (MPI) was formed on December 2, 1998 under the
         Business Corporations Act (Alberta). The Corporation holds 71.11% of
         the issued and outstanding shares of MPI (the remaining shares are held
         by Jon H. Lehmann, the president of MPI). MPI's interest in the
         Colombian properties is held through Minera Providencia S.A. (MPSA),
         which was incorporated under the laws of Colombia on April 17, 1998, as
         a private Colombian corporation. MPI owns 92% of the issued and
         outstanding shares of MPSA and has entered into option agreements to
         acquire the remaining shares for $400.

     d)  Transylvania Gold S.R.L. (TGS) was incorporated on October 15, 1999 as
         a private Romanian corporation to hold the Corporation's mineral
         interests in Romania. The Corporation owns 100% of TGS.

5.   MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS

At December 31, 2000, the Corporation, through its subsidiaries, held interests
in a total of approximately 163,000 hectares of mineral rights and mining lands
in three Argentine provinces. Under its present acquisition and exploration
programs, the Corporation is continually acquiring additional mineral property
interests and exploring and evaluating its properties. If, after evaluation, a
property does not meet the Corporation's requirements, then the property and
deferred exploration costs are written off to operations. All properties in
Argentina are subject to a royalty agreement as disclosed in Note 8. Mineral
property costs and deferred exploration costs are as follows:

                                      39
<PAGE>

<TABLE>
<CAPTION>
====================================================================================================================================
                                                                                 Exploration
                                           Carrying Value     Acquisition            and                             Carrying Value
   Province/                                December 31,         Costs            Overhead          Write-Offs        December 31,
    Region              Property                1999              2000              2000               2000               2000
====================================================================================================================================
<S>             <C>                        <C>                <C>                <C>                <C>              <C>
                                                              ARGENTINA
------------------------------------------------------------------------------------------------------------------------------------
San Juan        Cateos                       $  314,661           $ 7,007         $    5,567          $       0       $   327,235
------------------------------------------------------------------------------------------------------------------------------------
                El Pluma                      1,150,159               474            520,141                  0         1,670,774
Santa Cruz    ----------------------------------------------------------------------------------------------------------------------
                Cerro Saavedra                1,000,447             3,706            194,884                  0         1,199,037
              ----------------------------------------------------------------------------------------------------------------------
                Cateos                          471,539             7,298             13,594                  0           492,431
------------------------------------------------------------------------------------------------------------------------------------
Chubut          Cateos                          211,664           (50,000)             8,156                  0           169,820
------------------------------------------------------------------------------------------------------------------------------------
                                                             COLUMBIA
------------------------------------------------------------------------------------------------------------------------------------
Santander and   California-Vetas                175,137               301              1,996           (177,434)                0
Putumayo        Mocoa
------------------------------------------------------------------------------------------------------------------------------------
                                                              ROMANIA
------------------------------------------------------------------------------------------------------------------------------------
Hunedoara       Voia                            299,295                 0             34,289           (333,584)                0
Harghita        Ostoros
------------------------------------------------------------------------------------------------------------------------------------
TOTAL                                        $3,622,902          $(31,214)        $  778,627          $(511,018)      $ 3,859,297
====================================================================================================================================

<CAPTION>
====================================================================================================================================
                                                                                 Exploration
                                           Carrying Value     Acquisition            and                             Carrying Value
   Province/                                December 31,         Costs            Overhead          Write-Offs        December 31,
    Region              Property                1998              1999              1999               1999               1999
====================================================================================================================================
<S>             <C>                        <C>                <C>                <C>                <C>              <C>
                                                             ARGENTINA
------------------------------------------------------------------------------------------------------------------------------------
San Juan        Agua Blanca                  $        0           $     0         $   31,268          $ (31,268)      $         0
              ----------------------------------------------------------------------------------------------------------------------
                Cateos                          433,872                 0             30,478           (149,689)          314,661
------------------------------------------------------------------------------------------------------------------------------------
Mendoza         Cateos                          399,183                 0              4,892           (404,075)                0
------------------------------------------------------------------------------------------------------------------------------------
Neuquen         Cateos                           62,541                 0                 14            (62,555)                0
------------------------------------------------------------------------------------------------------------------------------------
                El Pluma                        507,940             2,478            639,739                  0         1,150,159
Santa Cruz    ----------------------------------------------------------------------------------------------------------------------
                Cerro Saavedra                  765,770             1,888            232,789                  0         1,000,447
              ----------------------------------------------------------------------------------------------------------------------
                Cateos                          402,861             2,190             66,488                  0           471,539
------------------------------------------------------------------------------------------------------------------------------------
Rio Negro       Cateos                           71,822                 0              1,084            (72,906)                0
------------------------------------------------------------------------------------------------------------------------------------
Chubut          Arroyo Verde                          0               601              8,880             (9,481)                0
                Cateos                          196,641                80             14,943                  0           211,664
------------------------------------------------------------------------------------------------------------------------------------
Northern        Cateos                          187,048                 0                 30           (187,078)                0
------------------------------------------------------------------------------------------------------------------------------------
                                                             COLOMBIA
------------------------------------------------------------------------------------------------------------------------------------
Santander and   California-Vetas                156,270             5,154             13,715                  0           175,137
Putumayo        Mocoa
------------------------------------------------------------------------------------------------------------------------------------
                                                              ROMANIA
------------------------------------------------------------------------------------------------------------------------------------
Hunedoara       Voia                            121,763               371            177,161                  0           299,295
Harghita        Ostoros
------------------------------------------------------------------------------------------------------------------------------------
TOTAL                                        $3,305,711           $12,762         $1,221,481          $(917,052)      $ 3,622,902
====================================================================================================================================
</TABLE>

     a)  El Pluma/Cerro Saavedra Projects
         The contiguous El Pluma and Cerro Saavedra properties are located in
         north central Santa Cruz Province. The properties, made up of
         applications for cateos, were located during the Corporation's regional

                                      40
<PAGE>

         exploration program. The Corporation conducted drill programs on the
         properties in 1998, 1999 and 2000. The Corporation acquired additional
         applications for cateos during 1998.

     b)  Colombian Projects
         The California-Vetas project was located in the Eastern Cordillera of
         the Andes Mountains in the eastern part of the Department of Santander.
         The property consisted of two wholly-owned and three option-to-
         purchase agreements for five granted exploration licenses.

         The Mocoa project was an application for an exploration license. The
         project is located in southern Colombia, in the Department of Putumayo.

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

     c)  Romanian Projects
         The Voia project was located in the Golden Quadrilateral of the
         Transylvania region of Romania, northwest of Bucharest. On March 12,
         1999, the Corporation signed an exclusive License of Concession for
         Exploration on the Voia property. The Ostoros project was located in
         the eastern Carpathian mountains, north of Bucharest. On March 12,
         1999, the Corporation signed an exclusive License of Concession for
         Exploration on the Ostoros property.

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

     d)  Write-Off of Mineral Property and Deferred Exploration Costs
         The Corporation has acquired exploration concessions, entered into
         option agreements and contracts, and carried out exploration on certain
         properties where it has determined that it would be unlikely that
         additional work would result in the discovery of economic reserves.
         Accordingly, any acquisition payments and the accumulated cost of
         exploration on those properties have been written off to operations.
         These write-offs totaled $511,018 in 2000 (Romania and Colombia) and
         $917,052 in 1999.

6.   CAPITAL ASSETS

<TABLE>
<CAPTION>
                                December 31, 2000                                   December 31, 1999
                                -----------------                                   -----------------
                                      Accumulated                                       Accumulated
                          Cost        Depreciation        Net                Cost       Depreciation        Net
                          ----        ------------        ---                ----       ------------        ---
  <S>                 <C>             <C>              <C>               <C>            <C>               <C>
  Vehicles              $163,151        $130,758         $32,393           $163,151       $111,251         $51,900
  Office Equipment        27,722          19,052           8,670             25,871         15,712          10,159
                        --------        --------         -------           --------       --------         -------
                        $190,873        $149,810         $41,063           $189,022       $126,963         $62,059
                        ========        ========         =======           ========       ========         =======
</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.

     b)  Issued, Allotted and/or Subscribed:

                                      41
<PAGE>

<TABLE>
<CAPTION>
                                                                                         Number
                                                                                       of Shares      Amount
                                                                                      ----------    -----------
<S>                                                                                   <C>           <C>
Common shares issued:
  Issued for cash on incorporation                                                             1    $         1
  Issued 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
  Issued for cash (by prospectus Cdn$0.25)                                             3,214,540        545,874
  Issued for broker's fees                                                               128,582              0
                                                                                      ----------    -----------
Balance, December 31, 1999                                                            23,733,152     16,960,540
  Issued for cash (by prospectus Cdn$0.25)                                             5,985,460      1,032,973
  Issued for broker's fees                                                               191,418              0
  Issued for cash on exercise of stock options (Cdn$0.55)                                 90,000         34,109
  Subscriptions received for private placement                                                 0        162,242
                                                                                      ----------    -----------
Balance, December 31, 2000                                                            30,000,030    $18,189,864
                                                                                      ==========    ===========
</TABLE>

                                      42
<PAGE>

             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 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 a private placement
                  with Cominco Ltd. 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 entitled
                  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.

             v)   On December 14, 1999, the Corporation raised gross proceeds of
                  Cdn$803,635 (US$545,874) through a unit offering by way of a
                  Canadian offering in late 1999 with the issuance of 3,214,540
                  units at a price of Cdn$0.25 per unit. Each unit comprised one
                  common share and one share purchase warrant, which entitled
                  the holder to purchase one further common share at an exercise
                  price of Cdn$0.35 on or before December 14, 2000. In
                  connection with the financing, the Corporation paid a 7.5
                  percent commission on the gross proceeds and issued Common
                  Shares equal to 4 percent of the units sold (128,582 shares)
                  as additional commission.

                                      43
<PAGE>

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

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

     c)       Stock Options
              At December 31, 2000, the Corporation has one stock option plan.
              The aggregate number of shares to be delivered upon the exercise
              of all options granted under the plan shall not exceed 10% of the
              Corporation's issued and outstanding Common Shares, up to a
              maximum of 6,000,000 shares. The options vest immediately and are
              exercisable over terms of up to a maximum of five years. Had
              compensation expense for the stock option plan been determined
              based on the fair market value based method, in accordance with
              EICA 98, 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>
                                                                                 2000             1999
                                                                                 ----             ----
              <S>                                                          <C>                   <C>
              Net loss for the year         As reported:                   $1,150,645            $1,766,517
                                            Pro forma:                     $1,238,380            $2,277,699
              Net loss per common share     As reported:                        $0.04                 $0.09
                                            Pro forma:                          $0.04                 $0.11
</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 2000 and 1999:

<TABLE>
<CAPTION>
                                                                                2000               1999
                                                                                ----               ----
              <S>                                                               <C>                <C>
              Dividend yield (%)                                                   0                 0
              Expected volatility (%)                                            204               152
              Risk-free interest rates (%)                                      6.08              5.68
              Expected lives (years)                                            4.20                 5
</TABLE>

         Approximately $0 of the compensation expense in 2000 ($20,000 in 1999)
         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, 2000 and 1999, and changes during the years ended on those
         dates is:

                                      44
<PAGE>

<TABLE>
<CAPTION>
                                                       2000                                 1999
                                                       ----                                 ----
                                                                (Cdn)                                (Cdn)
                                                              Weighted                              Weighted
                                                                Ave.                                  Ave.
                                                 Options      Exercise            Options           Exercise
                                                 -------      --------            -------           --------
                                             <S>              <C>                 <C>               <C>
         Outstanding and exercisable at
         beginning of year                      1,840,000       $0.58                1,610,000        $1.19
         Granted                                  870,000       $0.19                1,445,000        $0.56
         Exercised                                (90,000)      $0.55                        0            0
         Forfeited                               (175,000)      $0.59               (1,215,000)           0
                                                ---------       -----              -----------           --
         Outstanding and exercisable at
         end of year                            2,445,000       $0.44                1,840,000        $0.58
                                                =========       =====              ===========        =====
         Weighted average fair value of
         options granted during the year                        $0.19                                 $0.51
                                                                =====                                 =====
</TABLE>

         The range of exercise prices is from Cdn$0.16 to Cdn$0.68 with a
         weighted average remaining contractual life of 3.13 years at December
         31, 2000.

         At December 31, 2000, there were options held by directors, officers
         and employees of the Corporation for the purchase of Common Shares as
         follows:

            Number of Shares         Exercise Price             Expiry Date
            ----------------         --------------             -----------
               185,000                 Cdn$0.68                January 10, 2001
               215,000                 Cdn$0.68                March 2, 2003
             1,146,000                 Cdn$0.55                June 3, 2004
                29,000                 Cdn$0.59                June 3, 2004
               250,000                 Cdn$0.25                January 10, 2002
               620,000                 Cdn$0.16                August 28, 2005
             ---------
             2,445,000
             =========

     d)  Warrants
         At December 31, 2000, warrants were outstanding to acquire 9,200,000
         Common Shares at an exercise price of Cdn$0.35 per share on or before
         January 31, 2001, when the warrants expired without being exercised.

         At December 31, 2000, the 1,175,000 special warrants described in Note
         7b(vii) were outstanding.

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.

                                      45
<PAGE>

     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 that would be issued to NAD upon a property reaching bankable
         feasibility would 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 was 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,
         2000 and 1999, administrative fees were paid to NAD of $42,770 and
         $48,240 on total costs incurred by the Corporation of $460,043 and
         $492,325, respectively. Equipment rentals of $3,206 and $6,070 were
         included in the total costs for 2000 and 1999, respectively.

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

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

     d)  During 2000 and 1999, the Corporation incurred the following
         transactions with related parties: financial consulting to a director
         and officer totaling $8,155 and $38,395, and legal fees to a firm in
         which a director and officer is now a partner, totaling $44,675 and
         $114,144, respectively.

                                      46
<PAGE>

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 net deferred tax asset is
comprised of net operating loss carryforwards which is totally offset by an
identical valuation allowance. No deferred tax asset has been recognized due to
the uncertainty of future realization.

The Corporation has Canadian non-capital losses available to carry forward to
apply against future taxable income of approximately Cdn$4.4 million expiring as
follows:

     2001       Cdn      $  378,000
     2002       Cdn          77,000
     2003       Cdn         659,000
     2004       Cdn         782,000
     2005       Cdn         716,000
     2006       Cdn         860,000
     2007       Cdn         923,000
                         ----------
                         $4,395,000
                         ==========

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

On March 15, 2001, Minera Andes Inc. signed an option and joint venture
agreement with Mauricio Hochschild & Cia. Ltda. (Hochschild), Lima, Peru, for
the exploration and possible development of Minera Andes' epithermal gold-silver
exploration land package in southern Argentina. The land package, known as El
Pluma/Cerro Saavedra, includes Huevos Verdes, a high-grade gold/silver vein
system target, and Minera Andes' most advanced exploration prospect. The signing
allows Hochschild to immediately begin exploration work on El Pluma/ Cerro
Saavedra, and requires an initial payment to Minera Andes of US$200,000 as part
of a total annual payment of US$400,000. Cash payments continue until pilot
plant production is achieved. Under the agreement, Hochschild can earn a 51
percent ownership on El Pluma/Cerro Saavedra.

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.

                                      47
<PAGE>

     b)  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) During 1999, the Corporation issued 128,582 Common Shares for
                  a broker's fee in connection with the offering of Common
                  Shares by way of a prospectus. Under U.S. GAAP, these shares
                  would be valued at Cdn$0.25 per share (approximately $22,000),
                  being the fair market value of the shares issued.

             iv)  During 2000, the Corporation issued 191,418 Common Shares for
                  a broker's fee in connection with the offering of Common
                  Shares by way of a prospectus. Under U.S. GAAP, these shares
                  would be valued at Cdn$0.25 per share (approximately $32,000),
                  being the fair market value of the shares issued.

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

     c)  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 property rights
         at the acquisition date under U.S. GAAP.

     d)  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, 2000 and
         1999 and for the period from July 1, 1994 (commencement) through
         December 31, 2000, the Corporation would have recorded compensation
         expense of $0, $0 and $6,324,914, respectively, under U.S. GAAP.

     e)  Mineral Properties and Deferred Exploration Costs
         The U.S. Securities and Exchange Commission staff has taken the
         position that a U.S. registrant without proven and probable economic
         reserves, in most cases, could not support the recovery of the carrying
         value of deferred exploration costs. Therefore, the Corporation has
         presented the effect of expensing all deferred exploration costs as a
         reconciling item between U.S. and Canadian GAAP. During the fourth
         quarter of 2000, the Corporation abandoned the Colombian and Romanian
         properties when the decision was made to continue to expend available
         cash flows on the Argentine properties, due to continuing financial and
         cash flow pressures.

                                      48
<PAGE>

     f)  Impact on Consolidated Financial Statements

         The impact of the above on the consolidated financial statements is as
follows:

<TABLE>
<CAPTION>
                                                               December 31, 2000                    December 31, 1999
                                                               -----------------                    -----------------
         <S>                                                   <C>                                  <C>
         Accumulated deficit, end of period, per Canadian
         GAAP                                                      $14,254,066                          $12,999,237
         Adjustment for acquisition of Scotia                          248,590                              248,590
         Adjustment for compensation expense                         6,324,914                            6,324,914
         Adjustment for share issue costs                             (843,014)                            (738,830)
         Adjustment for deferred exploration costs                   3,708,509                            3,482,068
                                                                   -----------                          -----------
         Accumulated deficit, end of period, per U.S.
         GAAP                                                      $23,693,065                          $22,315,979
                                                                   ===========                          ===========



         Share capital, per Canadian GAAP                          $18,189,864                          $16,960,540
         Adjustment for acquisition of Scotia                          248,590                              248,590
         Adjustment for compensation expense                         6,324,914                            6,324,914
         Adjustments for share issue costs                            (843,014)                            (738,830)
                                                                   -----------                          -----------
         Share capital, per U.S. GAAP                              $23,920,354                          $22,795,214
                                                                   ===========                          ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                Period from
                                                               Years Ended                      July 1, 1994
                                                    -----------------------------------     -------------------
                                                                                               (commencement)
                                                     December 31,         December 31,             through
                                                         2000                 1999            December 31, 2000
                                                    --------------       --------------     -------------------
         <S>                                        <C>                  <C>                <C>
         Net loss for the period, per
         Canadian GAAP                                 $1,150,645            $1,766,517           $13,393,837
         Adjustment for acquisition of
         Scotia                                                 0                     0               248,590
         Adjustment for compensation
         expense                                                0                     0             6,324,914
         Adjustment for deferred
         exploration costs, net                           226,441               306,595             3,708,509
                                                       ----------            ----------           -----------
         Net loss for the period, per U.S.
         GAAP                                          $1,377,086            $2,073,112           $23,675,850
                                                       ==========            ==========           ===========
         Basic and diluted net loss per
         common share, per U.S. GAAP                   $     0.05            $     0.10
                                                       ==========            ==========
</TABLE>

                                      49
<PAGE>

<TABLE>
<CAPTION>
Net Cash Provided By (Used In):                       Operating Activities                       Investing Activities
                                                      --------------------                       --------------------
                                                    Canadian           U.S.                   Canadian             U.S.
For the Years Ended:                                  GAAP             GAAP                     GAAP               GAAP
--------------------                                  ----             ----                     ----               ----
<S>                                               <C>              <C>                      <C>               <C>
    December 31, 2000                             $  (776,248)     $(1,002,689)             $   (730,545)     $  (504,104)

    December 31, 1999                                (612,355)        (918,950)               (1,148,498)        (841,903)

    Period from July 1, 1994
    (commencement) through
    December 31, 2000                             $(5,206,831)     $(8,915,340)             $(11,462,664)     $(7,754,155)
</TABLE>

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

None.

                                   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                44       President and Director, Director and CEO
                                      of MPI, Director of MPSA

Brian Gavin                  47       Vice-President of Exploration, Director of
                                      MASA Director of MPSA

Allan J. Marter              53       Director, Director of MPSA

Jorge Vargas                 59       Director and President of MASA & NADSA

Armand Hansen                65       Director

John Johnson Crabb           75       Director

A.D. (Darryl) Drummond       64       Director

Bonnie L. Kuhn               35       Secretary, CFO and Director, Secretary and
                                      Director of MPI

Jon H. Lehmann               44       President of MPI, Secretary of MPSA

                                      50
<PAGE>

Allen Ambrose, President and Director, Director and CEO of MPI, Director of
MPSA, has 21 years of experience in the mining industry including his position
as Exploration Manager with Degerstrom. Prior to joining Degerstrom in 1988, Mr.
Ambrose was a geologist for Cyprus Minerals, Kidd Creek Mines, Molycorp, Boise
Cascade and Dennison Mines. Mr. Ambrose has extensive experience in all phases
of exploration, project evaluation and project management and has worked as a
geologist consultant in the U.S., Venezuela and most recently Argentina. He
holds a B. Sc. degree in Geology from Eastern Washington University (EWU). While
consulting for Gold Reserve Corporation, he was a co-discoverer of the
auriferous massive sulfide exposure that led to their acquisition of the Brisas
project in Venezuela. Mr. Ambrose sits on the board of directors of Cadre
Resources Ltd. (1994 to present), a company listed on the CDNX with mining
interests in Venezuela. Mr. Ambrose sits on the board of trustees for the
Northwest Mining Association, a mining industry association of approximately
3,000 members.

Brian Gavin, Vice President of Exploration, Director of MASA, Director of MPSA,
has 21 years of experience in exploration geology. Mr. Gavin has extensive
experience in all phases of exploration, project evaluation and project
management in the search for precious and base metals, industrial minerals and
has worked in the field as project manager and consultant in the U.S., Mexico,
Nigeria, Argentina and most recently, in Romania. He holds a B. Sc. (Honours)
degree in Geology from the University of London and M. S. degree in Geology and
Geophysics from the University of Missouri. From 1981 to 1993, he was a
consultant with Ernest K. Lehman & Associates, which is a geological mining
consulting firm. From 1993, he has been employed by Degerstrom.

Allan J. Marter, Director, Director of MPSA, was Chief Financial Officer of the
Corporation from June 1997 to March 2000 and a director of the Corporation since
June 1997. On November 9, 1999, he was appointed Vice President and Chief
Financial Officer of Golden Star Resources Ltd. Mr. Marter was a financial
advisor in the mining industry and Principal of Waiata Resources, from April
1996 to November 9, 1999 and has provided financial advisory services to the
Corporation since April 30, 1996. Mr. Marter is a finance professional with 23
years experience in the mining industry. From 1992 through 1996, he was employed
as a director of Endeavor Financial Inc., a mining financial advisory firm. Mr.
Marter also serves as a director of Addwest Minerals International, Ltd. and
Golden Phoenix Minerals Inc.

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

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

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

                                      51
<PAGE>

A.D. (Darryl) Drummond, Director, is a Ph.D. and a professional engineer. He
graduated from the University of British Columbia with a B.A.Sc. in Geological
Engineering in 1959 and with a M.A.Sc. in 1961. He obtained his Doctorate degree
in 1966 from the University of California at Berkeley. As an undergraduate and
graduate, he worked with Kennco Explorations (Western) Ltd. during the period
1958 to 1961. He has been associated with the Placer Development Group of
Companies since 1963, first with Craigmont Mines Ltd., then Endako Mines and
Gibraltar Mines. At the Placer head office since 1967, he initially was a
Research Geologist and then Assistant Exploration Manager, Western Canada, for
Canex Placer Ltd. During 1977 to 1979, he was Manager of Placer Development y
Cia. Ltda. in Santiago, Chile, then returned to the position of Research
Geologist with the Technical Services Advisory Group for the Placer Group of
Companies in Vancouver. On March 1, 1981, he and David Howard became principals
in a mineral exploration management firm called D.D.H. Geomanagement Ltd. with
offices in Vancouver, British Columbia. Since 1981, consulting tasks have
concentrated on all aspects of mineral deposit evaluation covering precious
metal, base metal and industrial mineral types in such countries as Argentina,
Canada, Chile, China, Costa Rica, Ecuador, Guyana, Mexico, Philippines, United
States of America and Venezuela. He is a member of the Society of Economic
Geology and a member of the Geology Section of the Canadian Institute of Mining
and Metallurgy. He is the President of D.D.H. Geomanagement from 1981 to the
present; director of Cadre Resources Ltd. from November 1994 to February 1995;
director of All North Resources Ltd. from May 1995 to July 9, 1996; and director
of International All-North Resources Ltd. from July 10, 1996 to present;
Director of The Quinto Mining Corporation from September 11, 1996 to present.

Bonnie L. Kuhn, Secretary, Chief Financial Officer and Director, Secretary and
Director of MPI, has been the Secretary and 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 LLP in 1999. From January 1, 1999 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. Ms. Kuhn
is a member of the Law Society of Alberta and the Canadian Bar Association. She
obtained her LLB from the University of Manitoba in 1989. Ms. Kuhn was a
director of Talon Petroleums Ltd., an oil and gas exploration company, from
September 1997 to September 1999. Ms. Kuhn is currently a director of Tajzha
Ventures Ltd., an oil and gas exploration company.

Jon Lehmann, President of MPI, Secretary of MPSA, has 24 years of experience in
exploration and mine geology including his position as General Manager -
Northern Andes with the Corporation. Prior to joining the Corporation in 1996,
Mr. Lehmann was a geologist for Echo Bay Mines, Cyprus-Amax Minerals, Inland
Gold and Silver, Meridian Minerals and Conoco Minerals. He has extensive
experience in all phases of exploration, project management, mine development
and mine geology. Mr. Lehmann was the project manager of the predevelopment
feasibility study of the Cerro Queina gold deposit in Panama for Cyprus-Amax
Minerals. He holds a B.Sc. Degree in geology from Washington State University.

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

ITEM 10.  EXECUTIVE COMPENSATION

Summary of Executive Compensation. The following table sets forth compensation
paid, directly or indirectly, by Minera Andes during the last fiscal year for
services rendered by Allen Ambrose, President, and for services rendered by each
other executive officer whose compensation in the last fiscal year was $100,000
or more ("Named Executives").

                                      52
<PAGE>

                          Summary Compensation Table

<TABLE>
<CAPTION>
                                                    Annual Compensation                         Long Term Compensation
                                                    -------------------                         ----------------------
                                                                     Other Annual
                              Fiscal            Salary               Compensation               Securities Underlying
                                                -------              ------------
                               Year               ($)                     ($)                     Options/SARs (#)
                               ----               ---                     ---                     ----------------
<S>                           <C>               <C>                  <C>                        <C>
Allen Ambrose (1)              2000              87,404                  9,164 (2)                       100,000
President                      1999              92,302                  8,960                           210,000 (4)
                               1998              96,200                  9,660                            30,000

Brian Gavin (1)                2000              87,404                  9,164 (3)                       100,000
Vice President of              1999             105,502                  9,620                           210,000 (4)
Exploration                    1998             122,600                 11,112                            30,000
</TABLE>

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 2000 fiscal year, the following benefits were provided to Mr.
       Ambrose by Degerstrom and invoiced to the Corporation:

           401K Base                   $2,616
           401K Match                  $1,744
           Medical Insurance           $4,804

(3)    During the 2000 fiscal year, the following benefits were provided to Mr.
       Gavin by Degerstrom and invoiced to the Corporation:

           401K Base                   $2,616
           401K Match                  $1,744
           Medical Insurance           $4,804

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

Stock Options Granted in 2000. The following table sets forth certain
information concerning individual stock options granted to the Named Executives
during the year ended December 31, 2000.

                     Option Grants in the Last Fiscal Year

<TABLE>
<CAPTION>
                                                       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>
Allen Ambrose                      100,000                 11.5%                $0.16          August 28, 2005
Brian Gavin                        100,000                 11.5%                $0.16          August 28, 2005
</TABLE>

                                      53
<PAGE>

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, 2000. 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, 2000.

                          Fiscal Year-End Option Values

<TABLE>
<CAPTION>
                         Shares                                                             Value of Unexercised
                        acquired                     Number of Unexercised                In-the-Money Options at
                           on          Value       Options at Fiscal Year End             Fiscal Year-End ($)(1)(2)
                                                   --------------------------             -------------------------
                        Exercise      Realized    Exercisable      Unexercisable       Exercisable       Unexercisable
                        --------      --------    -----------      -------------       -----------       -------------
<S>                     <C>           <C>         <C>              <C>                 <C>               <C>
Allen Ambrose               0            $0           390,000              0                  $0                 $0
Brian Gavin                 0            $0           390,000              0                  $0                 $0
</TABLE>

Notes:

(1)    The value of unexercised in-the-money options was calculated using the
       closing price of Common Shares on The Canadian Venture Exchange on
       December 31, 2000, less the exercise price of in-the-money stock options.
       On December 29, 2000 the closing price of the Common Shares on The
       Canadian Venture Exchange was Cdn$0.11.

(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 29, 2000 as reported by the Wall Street Journal for
       conversion of United States dollars into Canadian dollars was U.S. $1.00
       = Cdn$1.50 or Cdn$1.00 = U.S. $0.67.

Stock Option Plan

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

Under the Plan, the exercise price of the shares covered by each option shall be
determined by the directors and shall be not less than the closing price of the
Corporation's shares on the stock exchange or stock exchanges on which the
shares are listed on the last trading day immediately preceding the day on which
the stock exchange is notified of the proposed issuance of option, less any
discounts permitted by the policy or policies of such stock

                                      54
<PAGE>

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

At December 31, 2000, 3,555,000 options were available for grant under the Plan.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership, as of March 15, 2001, 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                                              457,200 (2)                          1.50%
3303 North Sullivan Road
Spokane, WA 99216

Armand Hansen                                              311,000 (3)                          1.03%
3303 North Sullivan Road
Spokane, WA 99216
John Johnson Crabb                                         210,000 (3)                          0.69%
3303 North Sullivan Road
Spokane, WA 99216

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

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

Bonnie L. Kuhn                                             131,000 (4)                          0.43%
1600 Canada Place
407 - 2nd Street S.W.
Calgary, Alberta
T2P 2Y3
</TABLE>

                                      55
<PAGE>

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

5% or Greater Shareholders

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

All directors and
executive officers
as a group (7 persons)                                   1,929,600 (7)                          6.42%
</TABLE>

Notes:

(1)   Shares which the person or group has the right to acquire within 60 days
      after March 15, 2001 are deemed to be outstanding in determining the
      beneficial ownership of the person or group and in calculating the
      percentage ownership of the person or group, but are not deemed to be
      outstanding as to any other person or group.

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

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

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

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

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

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

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

Allen Ambrose and Brian Gavin both serve as employees of Degerstrom and receive
all of their compensation for management services provided to the Corporation
under the Operating Agreement from Degerstrom. Neither Mr. Ambrose nor Mr. Gavin
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

                                      56
<PAGE>

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, 2000 and 1999, administrative fees were paid
to NAD of $42,770 and $48,240 on total costs incurred by the Corporation of
$460,043 and $492,325, respectively. Equipment rentals of $3,206 and $6,070 were
included in the total costs for 2000 and 1999, respectively.

During 2000 and 1999, the Corporation incurred the following transactions with
related parties: financial consulting to a director and officer totaling $8,155
and $38,395, and legal fees to a firm in which a director and officer is an
associate, totaling $44,675 and $114,144, respectively.

ITEM 13.   EXHIBITS AND REPORTS ON FORM 8K

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

     b)  Reports on Form 8K
         There were no reports on Form 8K filed in the quarter ended December
         31, 2000.

                                      57
<PAGE>

                               INDEX TO EXHIBITS

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

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

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

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

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

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

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

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

4.4           Special Warrant Certificate issued by the Corporation to N.A.
              Degerstrom, Inc. dated November 30, 2000.*

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).

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<PAGE>

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

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

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

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

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

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

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

10.15         Amended Stock Option Plan, dated June 26, 1996, as amended June
              26, 1998, as amended June 23, 2000.*

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

10.17         Purchase and Sales Agreement (Chubut cateos, Mina Leon I, Mina
              Leon II and Leleque) dated August 28, 2000 between Minera Andes
              S.A. and Cordon Leleque S.A.*

10.18         Purchase and Sales Agreement (Chubut cateos, Willimanco) dated
              August 28, 2000 between Minera Andes S.A. and Minera El Desquite
              S.A.*

10.19         Option and Joint Venture Agreement (El Pluma/Cerro Saavedra
              properties) between the Corporation and Mauricio Hochschild & Cia.
              Ltda. dated March 15, 2001.*

11.1          Statement regarding the computation of per share loss.*

21.1          List of subsidiaries.*

23.1          Consent of PricewaterhouseCoopers LLP.*

*    Exhibits filed herewith

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<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 28, 2001.

     MINERA ANDES INC.
     Registrant


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


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


Date: March 28, 2001                  By: /s/ Allen V. Ambrose
      --------------------------          ---------------------------------
                                          Allen V. Ambrose, Director


Date: March 28, 2001                  By: /s/ John Johnson Crabb
      --------------------------          ---------------------------------
                                          John Johnson (Jack) Crabb, Director


Date: March 28, 2001                  By: /s/ A.D. Drummond
      --------------------------          ---------------------------------
                                          A.D. (Darryl) Drummond, Director


Date: March 28, 2001                  By: /s/ Armand G. Hansen
      --------------------------          ---------------------------------
                                          Armand G. Hansen, Director


Date: March 28, 2001                  By: /s/ Bonnie L. Kuhn
      --------------------------          ---------------------------------
                                          Bonnie L. Kuhn, Director


Date: March 28, 2001                  By: /s/ Allan J. Marter
      --------------------------          ---------------------------------
                                          Allan J. Marter, Director

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