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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 20-F

(Mark One)

[]
  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
  ACT OF 1934

[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934

For the fiscal year ended April 30, 2004

[]
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934

For the transition period from ______ to ______

[]
  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934

Date of event requiring this shell company report ______

COMMISSION FILE NUMBER: 000-49919

KIRKLAND LAKE GOLD INC.(Exact name of Registrant as specified in its charter)

N/A(Translation of Registrants name into
English)

Canada(Jurisdiction of incorporation or
organization)

Highway 66, Kirkland Lake, Ontario, Canada(Address of principal executive offices)

|Securities registered or to be registered        | N/A                   | N/A                                        
|------------------------------------------------ | --------------------- | -------------------------------------------
|pursuant to section 12(b) of the Act:            | (Title of each Class) | (Name of each exchange on which registered)
|                                                 |                       |                                            
|Securities registered or to be registered        | Common Shares         |                                            
|pursuant to Section 12(g) of the Act:            | (Title of Class)      |                                            
|                                                 |                       |                                            
|Securities for which there is a reporting        | N/A                   |                                            
|obligation pursuant to Section 15(d) of the Act: | (Title of Class)      |                                            

|Indicate the number of outstanding common
      shares of each of the issuers classes of capital or common stock as
      of the close of the period covered by the annual report. | Common Shares: 36,479,606
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------

Indicate by check mark if the registrant is a well-known seasoned
  issuer, as defined in Rule 405 of the Securities Act. 
  Yes []
  No [ x ]

If this report is an annual or transition report, indicate by
  check mark if the registrant is not required to file reports pursuant to Section
  13 or 15(d) of the Securities Exchange Act of 1934. 
  Yes []
  No [ x ]

Note  checking the box above will not relieve any registrant
  required to file reports pursuant to Section 13 or 15 (d) of the Securities
  Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all
  reports required to be filed by Section 13 or 15(d) of the Securities Exchange
  Act of 1934 during the preceding 12 months (or for such shorter period that
  the registrant was required to file such reports), and (2) has been subject
  to such filing requirements for the past 90 days. 
  Yes []
  No [ x ]

Indicate by check mark whether the registrant is a large accelerated
  filer, an accelerated filer, or a non- accelerated filer. See definition of
  accelerated filer and large accelerated filer in Rule 12b-2 of the
  Securities Exchange Act of 1934. 
  Large Accelerated Filer []   Accelerated Filer [ x ]   Non-accelerated
  Filer []

Indicate by check mark which financial statement item the registrant
  has elected to follow.
  Item 17 [ x ]Item 18 []

If this is an annual report, indicate by check mark if the registrant
  is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act
  of 1934. 
  Yes []
  No [ x ]

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TABLE OF CONTENTS

|                                                    |                                                             |                                                           | Page No
|--------------------------------------------------- | ----------------------------------------------------------- | --------------------------------------------------------- | -------
|**NOTE
      REGARDING FORWARD LOOKING STATEMENTS** | vi                                                         
|                                                    |                                                             |                                                           |        
|**GLOSSARY OF TERMS USED HEREIN**                   | vi                                                         
|                                                    |                                                             |                                                           |        
|                                                    |                                                             |                                                           |        
|PART I                                              |                                                             |                                                           | 1      
|ITEM 1                                              | IDENTITY
      OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS | 1                                                        
|                                                    |                                                             |                                                           |        
|                                                    | A.                                                          | DIRECTORS AND SENIOR MANAGEMENT                           | 1      
|                                                    | B.                                                          | ADVISERS                                                  | 2      
|                                                    | C.                                                          | AUDITOR                                                   | 2      
|                                                    |                                                             |                                                           |        
|ITEM 2                                              | OFFER STATISTICS
      AND EXPECTED TIMETABLE               | 2                                                        
|                                                    |                                                             |                                                           |        
|ITEM 3                                              | KEY INFORMATION                                             | 2                                                        
|                                                    | A.                                                          | SELECTED FINANCIAL DATA                                   | 2      
|                                                    | B.                                                          | CAPITALIZATION AND INDEBTEDNESS                           | 4      
|                                                    | C.                                                          | REASONS FOR THE OFFER AND USE OF PROCEEDS                 | 4      
|                                                    | D.                                                          | RISK FACTORS                                              | 4      
|                                                    |                                                             |                                                           |        
|ITEM 4                                              | INFORMATION ON THE COMPANY                                  | 10                                                       
|                                                    | A.                                                          | HISTORY AND DEVELOPMENT OF THE COMPANY                    | 10     
|                                                    | B.                                                          | BUSINESS OVERVIEW                                         | 13     
|                                                    | C.                                                          | ORGANIZATIONAL STRUCTURE                                  | 15     
|                                                    | D.                                                          | PROPERTY, PLANTS AND EQUIPMENT                            | 16     
|                                                    |                                                             |                                                           |        
|ITEM 4A                                             | UNRESOLVED STAFF COMMENTS                                   | 31                                                       
|                                                    |                                                             |                                                           |        
|ITEM 5                                              | OPERATING
      AND FINANCIAL REVIEW AND PROSPECTS          | 31                                                       
|                                                    | A.                                                          | OPERATING RESULTS                                         | 33     
|                                                    | B.                                                          | LIQUIDITY AND CAPITAL RESOURCES                           | 35     
|                                                    | C.                                                          | RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES,
      ETC | 38     
|                                                    | D.                                                          | TREND INFORMATION                                         | 38     
|                                                    | E.                                                          | OFF-BALANCE SHEET ARRANGEMENTS                            | 38     
|                                                    | F.                                                          | TABULAR DISCLOSURE OF CONTRACTUAL
      OBLIGATIONS       | 39     
|                                                    | G.                                                          | SAFE HARBOR                                               | 40     
|                                                    |                                                             |                                                           |        
|ITEM 6                                              | DIRECTORS, SENIOR MANAGEMENT
      AND EMPLOYEES            | 40                                                       
|                                                    | A.                                                          | DIRECTORS AND SENIOR MANAGEMENT                           | 40     
|                                                    | B.                                                          | COMPENSATION                                              | 43     
|                                                    | C.                                                          | BOARD PRACTICES                                           | 44     
|                                                    | D.                                                          | EMPLOYEES                                                 | 45     
|                                                    | E.                                                          | SHARE OWNERSHIP                                           | 45     
|                                                    |                                                             |                                                           |        
|ITEM 7                                              | MAJOR SHAREHOLDER
      AND RELATED PARTY TRANSACTIONS      | 47                                                       
|                                                    | A.                                                          | MAJOR SHAREHOLDERS                                        | 47     
|                                                    | B.                                                          | RELATED PARTY TRANSACTIONS                                | 48     
|                                                    | C.                                                          | INTERESTS OF EXPERTS AND COUNSEL                          | 50     

---

ITEM
        8
      FINANCIAL
        INFORMATION
      50A.
      CONSOLIDATED STATEMENTS AND OTHER FINANCIAL
        INFORMATION
      50B.
      SIGNIFICANT CHANGES
      50ITEM
        9
      THE OFFER
        AND LISTING
      51A.
      OFFER AND LISTING DETAILS
      51B.
      PLAN OF DISTRIBUTION
      52C.
      MARKETS
      52D.
      SELLING SHAREHOLDERS
      52E.
      DILUTION
      52F.
      EXPENSES OF THE ISSUE
      52ITEM
        10
      ADDITIONAL INFORMATION
      52A.
      SHARE CAPITAL
      52B.
      MEMORANDUM AND ARTICLES
        OF ASSOCIATION
      53C.
      MATERIAL CONTRACTS
      53D.
      EXCHANGE CONTROLS
      56E.
      TAXATION
      56F.
      DIVIDENDS AND PAYING AGENTS
      62G.
      STATEMENTS BY EXPERTS
      63H.
      DOCUMENTS ON DISPLAY
      63I.
      SUBSIDIARY INFORMATION
      63ITEM 11
      QUANTITATIVE AND QUALITATIVE
        **DISCLOSURE ABOUT MARKET RISK**
      63ITEM 12
      DESCRIPTION OF SECURITIES
        OTHER THAN EQUITY SECURITIES
      63PART II
      
      
      63ITEM 13
      DEFAULTS, DIVIDEND ARREARAGES
        AND DELINQUENCIES
      63ITEM 14
      MATERIAL MODIFICATIONS
        TO THE **RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS**
      64ITEM 15
      CONTROLS AND PROCEDURES
      64ITEM 16A
      AUDIT COMMITTEE FINANCIAL
        EXPERT
      66ITEM 16B
      CODE OF ETHICS
      67ITEM 16C
      PRINCIPAL ACCOUNTANT FEES
        AND SERVICES
      67**ITEM** 16D
      **EXEMPTIONS**
        **FROM THE** **LISTING STANDARDS FOR** **AUDITCOMMITTEES**
      69ITEM 16E
      PURCHASES OF EQUITY SECURITIES
        BY THE ISSUER **& AFFILIATED PURCHASERS**
      69


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|PART III       |                      | 69
|-------------- | -------------------- | --
|               |                      |   
|ITEM 17        | FINANCIAL STATEMENTS | 69
|               |                      |   
|ITEM 18        | FINANCIAL STATEMENTS | 70
|               |                      |   
|ITEM 19        | EXHIBITS             | 70
|               |                      |   
|**SIGNATURES** | 74                  

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GENERAL

All references herein to the Corporation mean Kirkland
Lake Gold Inc.

The Corporation uses the Canadian dollar as its reporting
currency. All references herein to dollars or $ or
Cdn$ means Canadian dollars, unless otherwise indicated. See Item 3
Key Information  Selected Financial Data  Currency and Exchange Rates for
detailed currency conversion information.

Except as noted, the information set forth herein is as of
June 30, 2006.

NOTE REGARDING FORWARD LOOKING STATEMENTS

This document contains statements that constitute
forward-looking statements. Forward looking statements are statements
which include the words believes, anticipates, intends, expects,
estimates, projects and words of similar import, as well as all projections
of future results. Such forward-looking statements involved known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Corporation to be materially different from
any future results, performance or achievements of the Corporation expressed or
implied by such forward-looking statements. Such risks are discussed in Item 3
Risk Factors. The statements contained in Item 4 Business Overview, Item 5
Operating and Financial Review and Prospects and Item 11 Quantitative and
Qualitative Disclosures about Market Risk are inherently subject to a variety
of risks and uncertainties that could cause actual results, performance or
achievements to differ significantly.

The Corporation expressly disclaims any obligation or
undertaking to provide an update or revision to any forward looking statement
contained herein to reflect any change in the Corporations expectations or any
change in events, conditions or circumstances on any which any statement is
based. You should carefully review the cautionary statements and risk factors
contained herein and in other documents that the Corporation files from time to
time with the Securities and Exchange Commission.

GLOSSARY OF TERMS USED HEREIN

Certain terms used herein are defined as follows:

Term
      Definitionadvance royalty
      A form of royalty where the payment is made before the
      commencement of commercial production and which forms a credit against
      future royalty payments once commercial production begins.alkalic
      Containing one of sodium or potassium.alkali-feldspar
      Potassic or sodium feldspar.alluvial
      Relatively recent deposits of sedimentary material laid
      down in river beds, flood plains, lakes, or at the base of mountain
      slopes.Archaean
      An era in geologic time about 3.8 billion to 2.5 billion
      years ago during which the Earths crust solidified.augite
      A mineral consisting of calcium magnesium iron aluminium
      silicate.batholith
      A large mass of igneous rock extending to great depth
      with its upper portion dome-like in shape. It has crystallized below
      surface, but may be exposed as a result of erosion of the overlying rock.
      Smaller masses of igneous rocks are known as bosses or plugs.


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Term
      Definitionbreccia
      Rock consisting of angular fragments in a matrix of
      finer-grained cementing material.Canadian Shield
      A region of Precambrian (greater than 600 million years
      old) rock covering central, eastern and northern Canada and extending
      south into Minnesota and Wisconsin. Large areas of the Canadian Shield
      have been exposed by the erosion of younger rocks overlaying the
      Precambrian rock.cataclasis
      Crushing of rocks.collar
      1) The timbering or concrete around the mouth of a shaft.
      2) The top of a drill hole.conglomerate
      A sedimentary rock consisting of rounded, water-worn
      pebbles or boulders cemented into a solid mass.crosscut
      A horizontal opening driven from a shaft and at right
      angles to the strike of a vein or rock formation.cut (and uncut)
      Assays are cut or reduced to a lower consistent value
      in order to avoid such higher grade assays skewing the average which would
      otherwise produce inconsistent results. If assays are uncut such higher
      grade assays are included.cyanidation
      A milling process, using hydrogen cyanide, to extract
      gold from the host rock.diabase
      A common basic igneous rock usually occurring in dykes or
      sills.diamond drill(ing)
      A rotary type of rock drill in which the cutting is done
      by abrasion rather than percussion. The cutting bit is set with diamonds
      and is attached to the end of long hollow rods through which water or
      other fluid is pumped to the cutting face as a lubricant. The drill cuts a
      core of rock that is recovered in long cylindrical sections, two
      centimetres or more in diameter.doré
      The final saleable product of a gold mine. Usually a bar
      consisting of gold and silver.drift
      A horizontal underground opening that follows along the
      length of a vein or rock formation as opposed to a crosscut which crosses
      the rock formation.dyke
      A long and relatively thin body of igneous rock that,
      while in the molten state, intruded a fissure in older rocks.fault
      A break in the Earths crust caused by tectonic forces
      which have moved the rock on one side with respect to the other; faults
      may extend many kilometres, or be only a few centimetres in length;
      similarly, the movement or displacement along the fault may vary widely.feldspar
      A group of rock-forming minerals.felsic
      The term used to describe light-coloured rocks containing
      feldspar, feldpathoids and silica.fluvial
      Sedimentary material found in river beds.footwall
      The wall or rock on the underside of a vein or ore
      structure.fracture
      A break in the rock, the opening of which affords the
      opportunity for entry of mineral-bearing solutions. A cross fracture is
      a minor break extending at more- or-less right angles to the direction of
      the principal fractures.free-milling [gold]
      Gold is free-milling if it
          can be extracted from ore such that cyanidation can extract approximately
          95% of the gold when the ore is ground to size 80%, without prohibitively
          high reagent consumption. The highest level of free- milling ore is
          that from which the gold can be separated by a gravity process.


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Term
      Definitionfuchsite
      A mica with a characteristic (emerald)
          green colour arising from the presence of chrome or vanadium.gangue
      Worthless minerals in an ore deposit.geotechnical
      Using geology and geological engineering.gneiss
      A coarsely crystalline metamorphic rock
          that looks like granite except that the light and dark minerals are
          segregated into thin layers or lenses.granite
      A course-grained (intrusive) ingenious
          rock consisting of quartz, feldspar and mica.granitoid
      Rocks which are in the family of granites.greenstone
      Volcanic rocks forming belts
          within intrusive or sedimentary rocks and which are the source of most
          metal deposits.hangingwall
      The wall or rock on the upper side of a
          vein or ore deposit.hectare
      A square of 100 metres on each side.igneous
      A type of rock which has been formed from
          magna, a molten substance from the earths core.intrusive
      A body of igneous rock formed by the consolidation
          of magma intruded into other rocks, in contrast to lavas, which are
          extruded upon the surface.komatiitic
      A volcanic rock containing a high concentration
          of magnesium and generally a low concentration of silica.lithofacies
      An association of several sedimentary rocks
          laid down during a common geologic time period.lithological
      The nature and composition of rocks.mafic
      Igneous rocks composed mostly of dark iron
          and magnesium rich minerals.massive
      Solid (without fractures) wide (thick)
          rock unit.metamorphic
      A type of rock which, through heat and
          pressure, has been changed from igneous or sedimentary rock.meta-sedimentary
      Metamorphosed sedimentary rocks.meta-volcanic
      Metamorphosed volcanic rocks.mill
      1)      A plant
          in which ore is treated for the recovery of valuable metals, or the
          
                   concentration of valuable
          minerals into a smaller volume for shipment to 
                   a smelter or refinery.
          
          2)      A piece of milling equipment consisting
          of a revolving drum, for the fine-
                   grinding of ores as
          a preparation for treatment.mineralization
      The concentration of metals and their chemical
          compounds within a body of rock.MNDM
      Ministry of Northern Development and Mines
          of the government of the province of Ontario.modal
      The most frequent value of a set of data.molybdenite
      Molybdenum sulphide (MoS2); which is the
          main ore in which molybdenum is found; often found in granitic rocks


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Term
      Definitionnet smelter royalty
      A type of royalty based on a percentage of the proceeds,
      net of smelting, refining and transportation costs and penalties, from the
      sale of metals extracted from concentrate and doré by the smelter or
      refinery.non-refractory
      Ore that has high melting point and is resistant to
      milling treatment. Such ore is commonly associated with sulphides.ore
      A mixture of minerals and gangue from which at least one
      metal can be extracted at a profit.ortho-gneisses
      Gneisses (rocks) which have metamorphosed from granites.orthoclase
      Feldspar - potassic.para-gneisses
      Schists (rocks) which have metamorphosed from sedimentary
      rocks.pillowed
      Volcanic rocks that have formed from the bulbous cooling
      of magma when cooled quickly in water.placer
      An alluvial deposit of sand and gravel containing
      valuable metals such as gold, tin, etc.plagioclase
      Feldspar which has had calcium and aluminium substituted
      for sodium and silica.plugs
      A common name for a small offshoot from a larger
      batholith.plunge
      The vertical angle an ore body makes between the
      horizontal plane and the direction along which it extends, longitudinally
      to depth.pluton
      Body of rock exposed after solidification at great depth.polyphase
      Having multiple phases.porphyry
      Any igneous rock in which relatively large, conspicuous
      crystals (called phenocrysts) are set in a fine-grained groundmass.proto-continent
      The earliest crust forming event in the Earths
      geological history and which is a predecessor to the current continent.quartz
      A mineral whose composition is silicon dioxide. A
      crystalline form of silica.raise
      A vertical or inclined underground working that has been
      excavated from the bottom upward.reserve
      National Instrument 43-101 Standards of Disclosure for
      Mineral Projectsof the Canadian Securities Administrators defines a
      Mineral Reserve as the economically mineable part of a Measured or
      Indicated Mineral Resource demonstrated by at least a comprehensive study
      of the viability of a mineral project that has advanced to a stage where
      the mining method, in the case of underground mining, or the pit
      configuration, in the case of an open pit, has been established, and where
      an effective method of mineral processing has been determined. This study
      must include a financial analysis based on reasonable assumptions of
      technical, engineering, operating, and economic factors and evaluation of
      other relevant factors which are sufficient for a person qualified under
      such instrument, acting reasonably, to determine if all or part of the
      Mineral Resource may be classified as a Mineral Reserve. This study must
      include adequate information on mining, processing, metallurgical,
      economic and other relevant factors that demonstrate, at the time of
      reporting, that economic extraction can be justified. A Mineral Reserve
      includes diluting materials and allowances for losses that may occur when
      the material is mined.


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Term
      DefinitionMineral Reserves are sub-divided in order of increasing
      confidence into Probable Mineral Reserves and Proven Mineral Reserves. A
      Probable Mineral Reserve has a lower level of confidence than a Proven
      Mineral Reserve. (1) Probable Mineral Reserve.A Probable
      Mineral Reserve is the economically mineable part of an Indicated, and in
      some circumstances a Measured Mineral Resource demonstrated by at least a
      Preliminary Feasibility Study. This Study must include adequate
      information on mining, processing, metallurgical, economic, and other
      relevant factors that demonstrate, at the time of reporting, that economic
      extraction can be justified. (2) Proven Mineral Reserve.A
      Proven Mineral Reserve is the economically mineable part of a Measured
      Mineral Resource demonstrated by at least a Preliminary Feasibility Study.
      This Study must include adequate information on mining, processing,
      metallurgical, economic, and other relevant factors that demonstrate, at
      the time of reporting, that economic extraction is justified.
      Industry Guide 7 Description of Property by Issuers Engaged or
      to be Engaged in Significant Mining Operationsof the
      Securities and Exchange Commission defines a reserve as that part of a
      mineral deposit which could be economically and legally extracted or
      produced at the time of the reserve determination. Reserves consist of:
      (1) Proven (Measured) Reserves.Reserves for which: (a)
      quantity is computed from dimensions revealed in outcrops, trenches,
      workings or drill holes; grade and/or quality are computed from the
      results of detailed sampling; and (b) the sites for inspection, sampling
      and measurement are spaced so closely and the geologic character is so
      well defined that size, shape, depth and mineral content of reserves are
      well-established. (2) Probable (Indicated) Reserves.Reserves for which quantity and grade and/or quality are computed from
      information similar to that used for proven (measured) reserves, but the
      sites for inspection, sampling and measurement are farther apart or are
      otherwise less adequately spaced. The degree of assurance, although lower
      than that for proven (measured) reserves, is high enough to assume
      continuity between points of observation. As used herein,
      reserves are as defined in National Instrument 43-101 and do not
      include resources.resource
      National Instrument 43-101 Standards of Disclosure for
      Mineral Projectsof the Canadian Securities Administrators defines a
      Mineral Resource as a concentration or occurrence of natural, solid,
      inorganic or fossilized organic material in or on the Earths crust in
      such form and quantity and of such a grade or quality that it has
      reasonable prospects for economic extraction. The location, quantity,
      grade, geological characteristics and continuity of a mineral resource are
      known, estimated or interpreted from specific geological evidence and
      knowledge. Mineral Resources are sub-divided, in order of
      increasing geological confidence, into Inferred, Indicated and Measured
      categories. An Inferred Mineral Resource


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Term
      Definitionhas a lower level of confidence than that applied to an
      Indicated Mineral Resource. An Indicated Mineral Resource has a higher
      level of confidence than an Inferred Mineral Resource but has a lower
      level of confidence than a Measured Mineral Resource. (1)
      Inferred Mineral Resource.An Inferred Mineral Resource is that
      part of a Mineral Resource for which quantity and grade or quality can be
      estimated on the basis of geological evidence and limited sampling and
      reasonably assumed, but not verified, geological and grade continuity. The
      estimate is based on limited information and sampling gathered through
      appropriate techniques from locations such as outcrops, trenches, pits,
      workings and drill holes. (2) Indicated Mineral Resource.An Indicated Mineral Resource is that part of a Mineral Resource for
      which quantity, grade or quality, densities, shape and physical
      characteristics can be estimated with a level of confidence sufficient to
      allow the appropriate application of technical and economic parameters, to
      support mine planning and evaluation of the economic viability of the
      deposit. The estimate is based on detailed and reliable exploration and
      testing information gathered through appropriate techniques from locations
      such as outcrops, trenches, pits, workings and drill holes that are spaced
      closely enough for geological and grade continuity to be reasonably
      assumed. (3) Measured Mineral Resource.A Measured Mineral
      Resource is that part of a Mineral Resource for which quantity, grade or
      quality, densities, shape, physical characteristics are so well
      established that they can be estimated with confidence sufficient to allow
      the appropriate application of technical and economic parameters, to
      support production planning and evaluation of the economic viability of
      the deposit. The estimate is based on detailed and reliable exploration,
      sampling and testing information gathered through appropriate techniques
      from locations such as outcrops, trenches, pits, workings and drill holes
      that are spaced closely enough to confirm both geological and grade
      continuity. Industry Guide 7 Description of Property by Issuers
      Engaged or to be Engaged in Significant Mining Operationsof
      the Securities and Exchange Commission does not define or recognize
      resources. As used herein, resources are as defined in
      National Instrument 43-101 and do not include reserves.royalty
      An amount of money paid at regular intervals, or based on
      production, by the lessee or operator of an exploration or mining property
      to the current or former owner of the mineral interests. Generally based
      on a certain amount per ton or a percentage of the total production or
      profits.sedimentary
      A type of rock which has been created by the deposition
      of solids from a liquid.shaft
      A vertical or inclined excavation in rock for the purpose
      of providing access to an ore body. Usually equipped with a hoist at the
      top, which lowers and raises a conveyance for handling workers and
      materials.shear
      The deformation of rocks by lateral movement along
      innumerable parallel planes, generally resulting from pressure and
      producing such metamorphic


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Term
      Definitionstructures as cleavage and schistosity.shoot
      A concentration of mineral values. That part of a vein or
      zone carrying values of ore grade.sill
      An intrusive sheet of igneous rock of roughly uniform
      thickness, generally extending over considerable lateral extent, that has
      been forced between the bedding planes of existing rock.splay
      An offshoot of a fault. A split from a major fault.stope
      An excavation in a mine from which ore is being or has
      been extracted.strike
      The direction, or bearing, from true north of a vein or
      rock formation measured on a horizontal surface.structural
      Pertaining to geologic structure.subprovince
      A part of a shield (such as the Canadian Shield)
      subdivided by common geologic time and rock types. In the Canadian Shield
      some of the major subprovinces are: Abitibi, Opatica and Pontiac.syenite
      An intrusive igneous rock composed chiefly of orthoclase.synclinorium
      A syncline (rocks folded in a U shape) related area.tailings
      Material rejected from a mill after most of the
      recoverable valuable minerals have been extracted.telluride
      A mineral associated with gold that contains tellurium.tholeiitic
      Volcanic rock with higher silica and lower sodium,
      potassium and magnesium content relative to alkaline magma types of
      volcanic rocks and considered to be related to each other by crystal
      fractionation processes (such as basalt or andesite containing augites or
      pigeonite).tonalitic
      Intrusive igneous rock with plagioclase feldspar,
      hornblende (an amphibole mineral), biotite (a platy magnesium-iron mica
      common in igneous rock) and greater than 10% quartz.trondjhemite
      A sodic, siliceous rock containing feldspar and quartz.tuff
      A rock formed of compacted volcanic fragments.turbidite
      Submarine landslides along a continental slope containing
      large masses of sediment.ultramafic
      Igneous rock which are very high in mafic minerals, that
      is, containing virtually no quartz or feldspar and composed essentially of
      iron-magnesium silicates and metallic oxides.uncomformably
      Not having the same direction of stratification due to
      the erosion or folding over of younger rocks.unconformity
      A surface of erosion that separates younger rocks from
      older rocks.uncut (and cut)
      See cut (and uncut).vein
      An occurrence of ore with an irregular development in
      length, width and depth usually from an intrusion of igneous rock.volcanics
      Volcanically formed rocks.winze
      An internal shaft.


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PART I

ITEM 1IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

A.          
DIRECTORS AND SENIOR MANAGEMENT

The names, business addresses and functions of the directors
and senior management of the Corporation are:

Name and Business Address
      FunctionD. Harry W. Dobson c/o Rambler Metals & Mining Plc
      33 St. James's Square London SW1Y 4JS United Kingdom
    Chairman of the Board of DirectorsBrian A. Hinchcliffe c/o Kirkland Lake Gold Mines
      Highway 66 Kirkland Lake, Ontario P2N 3J1 Canada
    President, Chief Executive Officer and DirectorRobert G. Rodrigue c/o Kirkland Lake Gold Mines
      Highway 66 Kirkland Lake, Ontario P2N 3J1 Canada
    Chief Financial OfficerJohn S. Thomson Millhill House Inchture, Perthshire
      PH14 9SN United Kingdom
    Executive Vice-PresidentSandra Lee c/o Quest Capital Corp. Suite 300, 570
      Granville Street Vancouver, British Columbia V6C 3P1 Canada
    Corporate SecretaryMichael W. Sutton c/o Kirkland Lake Gold Mines
      Highway 66 Kirkland Lake, Ontario P2N 3J1 Canada
    Chief Geologist & Assistant General ManagerDuncan K. Middlemiss c/o Kirkland Lake Gold Mines
      Highway 66 Kirkland Lake, Ontario P2N 3J1 Canada
    Engineering & Production ManagerRaymond A. Belecque c/o Kirkland Lake Gold Mines
      Highway 66 Kirkland Lake, Ontario P2N 3J1 Canada
    General ManagerBrian E. Bayley c/o Quest Capital Corp. Suite 300,
      570 Granville Street Vancouver, British Columbia V6C 3P1 Canada
    Director


1

---

Name and Business Address
      FunctionS. Paul Kostuik Suite 601, 2288 Bellevue Avenue
      West Vancouver, British Columbia V7V 1C6 Canada
    DirectorGeorge A. Milton Feorus West, Kenmare Kerry,
      Ireland
    Director


B.          
ADVISERS

Not Applicable

C.          
AUDITOR

The names and addresses of the Corporations auditor for the
three preceding fiscal years and the auditors membership in its governing
professional body are:

Name and Address
      Governing Professional BodyPricewaterhouseCoopers LLP 250 Howe Street Vancouver,
      British Columbia V6C 3S7 Canada
    Institute of Chartered Accountants of British
      Columbia


ITEM
2OFFER
STATISTICS AND EXPECTED TIMETABLE

Not Applicable

ITEM 3KEY INFORMATION

A.          
SELECTED FINANCIAL DATA

The following table presents selected consolidated financial
data of the Corporation for the five fiscal years ended April 30, 2004, 2003,
2002, 2001 and 2000. This information should be read in conjunction with the
financial statements for the three most recent fiscal years included elsewhere
in this document.

The Corporations 2004, 2003 and 2002 annual financial
statements have been audited by its current independent auditor,
PricewaterhouseCoopers LLP, Chartered Accountants, and the 2001 and 2000 annual
financial statements have been audited by its former independent auditor,
Davidson & Company, Chartered Accountants. The financial statements have
been prepared in accordance with Canadian Generally Accepted Accounting
Principles (Canadian GAAP). Note 19 to the 2004 annual financial
statements provides a description of the principal measurement differences
between Canadian GAAP and United States Generally Accepted Accounting Principles
(US GAAP) as they relate to the Corporation and reconciliation to US
GAAP of the Corporations financial statements.

All information provided herein is in Canadian GAAP (except as
  set out in the two tables below).

2

---

SUMMARY OF FINANCIAL INFORMATION IN THE CORPORATIONS
FINANCIAL STATEMENTS

Years ended April 30th(Cdn$)2004
      2003
      2002
      2001
      2000OPERATING DATAMining Revenue
    9,807,106
    11,704,639
    0
    0
    0Operating Costs
    25,045,418
    10,787,637
    0
    0
    0Net Income (Loss) Canadian GAAP
      US GAAP
    (22,616,158) (22,514,851)
    (4,934,979) (4,851,311)
    (2,178,587) (2,178,587)
    (385,149) (315,149)
    (1,270,889) (1,115,889)Basic and Diluted Earnings
      (Loss) per Common Share(1) Canadian
      GAAP US GAAP
    (0.76) (0.76)
    (0.25) (0.24)
    (0.16) (0.16)
    (0.04) (0.03)
    (0.56) (0.49)


As at April 30th(Cdn$)2004
      2003
      2002
      2001
      2000BALANCE SHEET DATAWorking Capital (Deficiency) 
        Canadian GAAP 
        US GAAP
      3,633,306 
        (1,431,735)
      (2,372,658) 
        (2,383,536)
      239,522 
        239,522
      116, 348 
        116, 348
      179,199 
        179,199Total Assets 
        Canadian GAAP 
        US GAAP
      40,530,110 
        40,530,110
      21,333,559 
        21,333,559
      13,991,298 
        13,991,298
      204,605 
        204,605
      440,525 
        370,525Total Liabilities 
        Canadian GAAP 
        US GAAP
      12,690,473 
        12,789,155
      9,611,378 
        9,622,256
      7,651,000 
        7,651,000
      88,257 
        88,257
      14,028 
        14,028Shareholders Equity (Deficiency) 
        Canadian GAAP 
        US GAAP
      27,839,637 
        27,740,955
      11,722,181 
        11,711,303
      6,340,298 
        6,340,298
      116,348 
        116,348
      426,497 
        356,497Common Shares 
        Number 
        Dollar Amount
      36,479,606 
        51,956,501
      24,076,166 
        17,757,582
      17,978,504 
        7,177,882
      9,559,239 
        14,545,449(2)
      9,309,239 
        14,470,449(2)Dividends Declared per Common Share
      0
      0
      0
      0
      0


|(1) | The net loss per Common Share amounts are the same on
      both a basic and a diluted basis.
|--- | ---------------------------------------------------------------------------------------------
|    |                                                                                              
|(2) | Prior to the Corporations stated capital adjustment in
      fiscal 2002.                   

3

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Currency and Exchange Rates

The following table sets out the average of the month-end exchange
  rates for one United States dollar (US$), expressed in terms
  of one Canadian dollar ($orCdn$), during
  the following fiscal years.

Number of Canadian Dollars equal to US $1.00
        Fiscal year Ended April 30th2006
    2005
    2004
    2003
    2002
    2001
    20001.1769
    1.2640
    1.3439
    1.5335
    1.5698
    1.5127
    1.4707


The following table sets out the highest and lowest exchange
rates for one United States dollar, expressed in terms of one Canadian dollar,
for each month during the previous six months.

US $1.00 Equals
      High (Cdn$)
      Low (Cdn$)2006June
    1.1241
    1.1001May
    1.1232
    1.0989April
    1.1718
    1.1203March
    1.1722
    1.1320February
    1.1577
    1.1379January
    1.1726
    1.1436


The noon rate of exchange on June 30, 2006 for the conversion
of Canadian dollars into United States dollars was US$ 1.00 = Cdn$ 1.1003.

Exchange rates are based upon the noon buying rate for foreign
currencies posted by the Federal Reserve Bank of New York on its website.

B.          
CAPITALIZATION AND INDEBTEDNESS

Not Applicable.

C.          
REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable

D.          
RISK FACTORS

The securities of the Corporation are highly speculative and
subject to a number of risks. These risks might impede or prevent the
Corporation successfully exploring for and developing further gold resources and
reserves, developing its mining operations and carrying out, on a profitable
basis, its planned mining activities (collectively business
objectives).

A prospective investor should not consider an investment in the
Corporation unless the investor is capable of sustaining an economic loss of the
entire investment.

The risks associated with the Corporations business and
securities include:

4

---

The Corporation is experiencing Negative Cash Flow

The success of the Corporations business depends upon the
Corporations ability to develop its cash flow from operations to a point where
it becomes profitable. The Corporation currently has limited revenue from
operations and is experiencing negative cash flow. Accordingly, the Corporation
must occasionally rely on additional funds presently available to it which have
been raised through the sale of equity and debt capital. The only alternatives
for the financing of the Corporations business would be the offering by the
Corporation of an interest in its mining properties to be earned by another
party or to obtain project or operating financing from financial institutions,
neither of which is presently intended. If the Corporation cannot increase its
cash flow and become profitable it will be unable to sustain its business and it
will fail to achieve its business objectives.

The notes to the Corporations financial statements also
discuss such issues and should be read in conjunction with the foregoing.

The Corporation has a Very Limited History of Operations

The Corporation has a very limited history of, and is in the
early stages of restarting, production from its mining properties. In restarting
such operations, the Corporation has experienced higher costs and lower revenues
than budgeted and delays which were not expected. The Corporation must also
locate and retain qualified personnel to operate its mining operations which it
is finding to be difficult, but not impossible. Further adverse changes or
continued adverse circumstances in any one of such factors or the failure to
locate and retain such personnel will delay or possibly prevent the Corporation
meeting its business objectives.

The Mining Industry is Speculative and of a Very High Risk
Nature

Mining activities are speculative by their nature and involve a
high degree of risk, which even a combination of experience, knowledge and
careful evaluation may not be able to overcome.

The Corporations drilling activities are an exploratory search
for additional gold deposits. Such exploration is subject to the risk that
little or no mineralization is discovered or that any deposits discovered are
not economic. If this occurs, the Corporations existing gold resources and
reserves may not be sufficient to sustain operations for a lengthy period. This
will have an adverse effect on the Corporations revenues over the
long-term.

The Corporations mining activities are subject to a number of
factors beyond its control including intense industry competition and changes in
economic conditions, including some operating costs (such as electrical power).
Its operations are subject to all the hazards normally incidental to
exploration, development and production of gold, any of which could result in
work stoppages, damage to or loss of property and equipment and possible
environmental damage.

An adverse change in any one of such factors, hazards and risks
would have a material adverse effect on the Corporation, its business and
results of operations. This might result in the Corporation not meeting its
business objectives.

5

---

The Corporation is Dependent on Various Key Personnel

The Corporations success is dependent upon the performance of
key personnel working full-time in management, supervisory and administrative
capacities or as consultants, namely, Brian A. Hinchcliffe (President and Chief
Executive Officer), Robert G. Rodrigue (Chief Financial Officer), John S.
Thomson (Executive Vice-President), Michael W. Sutton (Chief Geologist and
Assistant General Manager), Duncan K. Middlemiss (Engineering & Production
Manager) and Raymond A. Belecque (General Manager). The Corporation does not
maintain life insurance for such personnel. The loss of the services of senior
management or key personnel could have a material and adverse effect on the
Corporation, its business and results of operations.

The Corporation might have Labour Difficulties

Factors such as work slowdowns or stoppages caused by the
attempted unionization of operations and difficulties in recruiting qualified
miners and hiring and training new miners could materially adversely affect the
Corporations business. This would have a negative affect on the Corporations
business and results of operation which might result in the Corporation not
meeting its business objectives.

The Corporations Activities might suffer Losses from or
Liabilities for Risks which are not Insurable

Hazards such as unusual or unexpected geological formations and
other conditions are involved in mineral exploration and development. The
Corporation may become subject to liability for pollution, cave-ins or hazards
against which it cannot insure or against which it may elect not to insure. The
payment of such liabilities would have a material, adverse effect on the
Corporations financial position and results of operation.

Although the Corporation maintains liability insurance in an
amount which it considers adequate, the nature of these risks is such that
liabilities might exceed policy limits, the liabilities and hazards might not be
insurable against, or the Corporation might not elect to insure itself against
such liabilities due to high premium costs or other reasons, in which event the
Corporation could incur significant costs that could have a materially adverse
effect upon its financial condition and results of operation.

There is Uncertainty of the Nature and Amount of the
Corporations Gold Resources and Reserves

While the Corporation has carried out, and will carry out on an
annual basis, estimates of its mineral resources and reserves and has had such
estimates independently reviewed, this should not be construed as a guarantee
that such estimates are accurate. Furthermore, the historical gold production
from the Corporations mining properties is no assurance they will contain
deposits of gold greater than those currently estimated to exist by the
Corporation. If such estimates prove to be materially overstated, that would
have a material and adverse effect on the Corporations business and results of
operations as the Corporation would be unable to maintain its mining operations
for the length of time presently contemplated.

The Corporation will Experience Uncertainty in Marketing the
Gold which it has Mined

The Corporations revenues are mainly derived from the mining
  and sale of gold. The price of gold fluctuates and is affected by numerous factors
  beyond the Corporations control including international economic and political
  trends, expectations of inflation, currency exchange fluctuations, interest
  rates, global or regional consumptive patterns, speculative activities and increased
  production due to new mine developments and improved mining and production methods.

6

---

The Corporations Activities will be subject to Fluctuating
  Foreign Currency Exchange Rates

The Corporation sells the gold it produces, raises its equity
  and maintains its accounts in Canadian dollars. Because the world gold market
  is principally priced in English pounds and United States dollars, a substantial
  increase in the value of the Canadian dollar against either of those currencies
  would adversely affect the Corporations revenue and net income, if any.
  The Corporation does not engage in any hedging or other transactions to protect
  itself against such currency fluctuations.

There is Uncertainty of the Title to the Corporations
Mining Claims and Leases

While the Corporation has carried out reviews of title to its
mining claims and leases, this should not be construed as a guarantee that title
to such interests will not be challenged or impugned. The mining claims and
leases may be subject to prior unregistered agreements or transfers or native
land claims, and title may be affected by undetected defects. The existence
thereof would have a material and adverse effect on the Corporation, its
business and results of operations.

The Corporations Activities are subject toExtensive
  Governmental Regulation and Permitting Requirements

Exploration, development and mining of minerals are subject to
extensive federal, provincial and local laws and regulations governing
acquisition of the mining interests, prospecting, development, mining,
production, exports, taxes, labour standards, occupational health, waste
disposal, toxic substances, land use, environmental protection, mine safety and
other matters. These laws and regulations are administered by various
governmental authorities including:

(a) the federal government of
Canada ****- Canada Customs and Revenue Agency
(taxation) ****- Canadian Environmental Assessment Agency, Environment Canada
(environmental
protection) ****- Natural Resources Canada (land use and conservation)

(b) the government of
Ontario ****- MNDM (mineral tenure, development and
use) ****- Ministry of Natural Resources (land use and
conservation) ****- Ministry of the Environment (environmental
protection) ****- Ministry of Finance
(taxation) ****- Ministry of Labour (labour rights and relations)

(c) the town of Kirkland Lake,
Ontario ****- tax
assessment ****- building
permitting ****- business licensing

In addition, the current and future operations of the
Corporation, from exploration through development activities and production,
require permits, licences and approvals from some of these governmental
authorities. The Corporation has obtained all government licenses, permits and
approvals necessary for the operation of its business to date, however,
additional licenses, permits and approvals may be required. The failure to
obtain any licenses, permits or approvals that may be required or the revocation
of existing ones would have a material and adverse effect on the Corporation,
its business and results of operations.

Failure to comply with applicable laws, regulations and permits
  may result in enforcement actions thereunder, including orders issued by regulatory
  or judicial authorities requiring the Corporations operations to cease
  or be curtailed, and may include corrective measures requiring capital expenditures,
  installation of additional equipment or remedial actions. The Corporation may
  be required to compensate those suffering loss or damage by reason of its mineral
  exploration activities and may have civil or criminal fines or penalties imposed
  for violations of such laws, regulations and permits. Any such events could
  have a material and adverse effect on the Corporation and its business and could
  result in the Corporation not meeting its business objectives.

7

---

Amendments to current laws, regulations and permits governing
operations and activities of mining companies, or more stringent implementation
thereof, could have a material adverse impact on the Corporation and cause
increases in capital expenditures or production costs or reduced levels of
production at producing properties or require abandonment or delays in
development of its mining properties.

The Corporations Activities are Subject to Extensive
Environmental Protection Requirements

All phases of the Corporations operations are subject to
environmental regulation. Environmental legislation is evolving in a manner
which will require stricter standards and enforcement, increased fines and
penalties for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for companies and
their officers, directors and employees. Future changes in environmental
regulation could adversely affect the Corporations operations by increasing
costs and reducing profitability.

The Corporation has posted, in accordance with mine closure
plans filed with the MNDM, bonds totalling $2,043,435 to secure the costs of
rehabilitating the Macassa Mine and the non-operating Lake Shore Mine. Failure
to comply with the Corporations mine closure plans would result in the loss of
some or all of such bonds. In addition, it is possible that such bonds are
insufficient to secure all of the reclamation costs for which the Corporation
will be liable.

There is a Limited Market for the Corporations Securities
in the United States of America

The Corporations securities are not listed on any stock
exchange in the United States of America and there is only a limited
over-the-counter market in the United States for the Common Shares. Accordingly,
investors might need to rely on Canadian equity markets to trade in the
Corporations securities. Such markets might not have the liquidity found in
markets in the United States resulting in investors being unable to dispose of
the Corporations securities.

The Common Shares have only recently ceased to be a Penny
Stock

The Securities and Exchange Commission has adopted rules (the
Penny Stock Rules) that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are equity
securities with a price of less than US$ 5.00 (other than securities registered
on certain national securities exchanges or quoted on the NASDAQ system,
provided that current prices and volume information with respect to transactions
in such securities is provided by the exchange or system).

The Penny Stock Rules require a broker-dealer, prior to
effecting a transaction in a penny stock not otherwise exempt from such rules,
to deliver a standardized risk disclosure document prepared by the Securities
and Exchange Commission that provides information about penny stocks and the
nature and level of risks in the penny stock market. In particular the statement
must contain:

|(a) | a description of the nature and level of risk in the
      market for penny stocks in both public offerings and secondary
    trading;                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                            
|(b) | a description of the broker-dealers duties to the
      customer and of the rights and remedies available to the customer with
      respect to a violation to such duties or other requirements of securities
      laws;
|    |                                                                                                                                                                                                                            
|(c) | a brief, clear, narrative description of a dealer market,
      including bid and ask prices for penny stocks and the significance of the
      spread between the bid and ask price;                                      
|    |                                                                                                                                                                                                                            
|(d) | a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                  

8

---

|(e) | the definitions of significant terms in the disclosure
      document or in the conduct of trading in penny stocks; and                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                          
|(f) | such other information and be in such form, including
      language, type, size and format, as the Commission shall require by rule
      or regulation.

The broker-dealer must obtain from the customer a written
acknowledgement of receipt of the standardized disclosure document.

The broker-dealer also must provide the customer with:

|(a) | the inside bid and offer quotations for the penny stock,
      or other bid and offer price information for the penny stock if inside bid
      and offer quotations are not available;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                        
|(b) | the compensation of the broker-dealer and its
      salespersons in the transaction;                                                                                                   
|    |                                                                                                                                                                                        
|(c) | the number of Common Shares to which such bid and ask
      prices apply, or other comparable information relating to the depth and
      liquidity of the market for such stock; and  
|    |                                                                                                                                                                                        
|(d) | a monthly account statements showing the market value of
      each penny stock held in the customers account.                                                                        

In addition, the Penny Stock Rules require that prior to a
transaction in a penny stock not otherwise exempt from such rules the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchasers written
acknowledgment of the receipt of a risk disclosure statement, a written
agreement to transactions involving penny stocks, and a signed and dated copy of
a written suitability statement.

At the present market prices the Common Shares have recently
ceased to fall within the definition of a penny stock. Should the market price
for the Common Shares fall under US$ 5.00 the Common Shares will again be a
penny stock and United States broker-dealers trading in the Common Shares will
be subject to the Penny Stock Rules. Rather than complying with those rules,
some broker-dealers will refuse to attempt to sell penny stock and, as a result,
shareholders and their broker-dealers in the United States might find it more
difficult to sell Common Shares in the United States.

Investors might experience Difficulty in Enforcing Foreign
Judgments Against the Corporation

The Corporation is incorporated under the federal laws of
Canada and a majority of the Corporations directors and officers are residents
of Canada. Consequently, it may be difficult for United States investors to
effect service of process within the United States upon the Corporation or upon
those directors or officers who are not residents of the United States, or to
enforce, inside or outside of the United States, any judgements of United States
courts predicated upon civil liabilities under the United States Securities
Exchange Act of 1934, as amended. A judgement of a U.S. court predicated
solely upon such civil liabilities may not be enforceable in Canada by a
Canadian court if the U.S. court in which the judgement was obtained is
determined by the Canadian court not to have had jurisdiction in the matter.
Furthermore, an original action might not be able to be brought successfully in
Canada against any of such persons or the Corporation predicated solely upon
such civil liabilities.

The Corporation does not Pay Dividends

Investors cannot expect to receive a dividend on their
investment in the foreseeable future, if at all. Accordingly, it is likely
investors will not receive any return on their investment in the Corporations
securities other than possible capital gains.

9

---

ITEM
4INFORMATION ON THE COMPANY

A.          
HISTORY AND DEVELOPMENT OF THE COMPANY

Name, Incorporation and Offices

The Corporation was incorporated under the Company Act
(British Columbia) on June 29, 1983 under the name Goldpac Investments Ltd..
Effective April 22, 1988, the Corporation and Tectono Resources Ltd. amalgamated
to become Goldpac Investments Ltd..

On July 27, 1988, the Corporation was continued under the
Canada Business Corporations Act, thereby changing from a provincially to
a Canadian federally incorporated company, at which time the authorized capital
was changed to an unlimited number of shares.

The Corporation changed its name from Goldpac Investments
Ltd. to Brimstone Gold Corp. on May 19, 1994 and its outstanding shares were
consolidated on the basis of one share for each five shares then
outstanding.

On October 21, 1999, the Corporation changed its name from
Brimstone Gold Corp. to Foxpoint Resources Ltd. and its outstanding Common
Shares were consolidated on the basis of one new common share (Common
Shares) for every 15 shares then outstanding.

The Corporation changed its name from Foxpoint Resources Ltd.
to Kirkland Lake Gold Inc. on October 25, 2002 to reflect the nature and
location of the Corporations business.

The Corporations head office is located at the minesite on
Highway 66 near Kirkland Lake, Ontario, Canada. Its telephone number is (705)
567-5208. The Corporations registered office is located at Suite 1880, 1055
West Georgia Street, Vancouver, British Columbia V6E 3P3, Canada.

History

The Corporation commenced operations in 1983. Over the next 18
years the Corporation explored properties in British Columbia, the Northwest
Territories, Montana and Idaho. Eventually, the Corporation abandoned, and
wrote-off the total acquisition and exploration expenditures of, these
properties.

Acquisition of Kirkland Lake Mining Assets

On December 14, 2001 the Corporation acquired various mining
assets located in and around Kirkland Lake, Ontario from Kinross Gold
Corporation (Kinross). These assets included a recently closed gold
underground gold mine, the Macassa Mine, the mill constructed on the mine
property and four contiguous properties known as the Lake Shore,
Wright-Hargreaves, Teck-Hughes and Kirkland Lake properties and their
respective, formerly producing, underground gold mines (such five mines being
collectively called the Mine Complex).

The consideration paid to Kinross consisted of payments
totalling Cdn$5 million, the assumption of all environmental rehabilitation
costs of the mining properties, including mine closure bonds, and the
replacement of existing environmental bonds totalling Cdn$ 2,043,435 posted by
Kinross and a net smelter royalty payable to Kinross on the production of gold
from the properties. The royalty is payable on a sliding scale commencing at US$
300 per ounce of gold as follows:

Average Price Per Ounce of Gold
      Bullion Sold
      Amount of RoyaltyLess than US$ 300
    0%


10

---

Equal to or greater than US$ 300 but less
      than US$ 400
    2%Equal to or greater than US$ 400 but less
      than US$ 500
    3%Equal to or greater than US$ 500
    4%


The royalty is paid quarterly until the Corporation has paid a
total of Cdn$ 15 million in royalties. The Corporation shall have the right to
terminate the royalty at any time by paying the balance of the Cdn$ 15 million.
As of April 30, 2004, a total of Cdn$ 264,974 had been paid or was payable to
Kinross in respect of royalties.

Kinross is a publicly traded company based in Toronto, Ontario
the shares of which trade on the New York and Toronto Stock Exchanges. None of
the insiders of Kinross are insiders of the Corporation.

Plans for the Mine Properties and Assets

It is the Corporations intention to develop the five historic
gold mining properties which it acquired from Kinross in a comprehensive
fashion. Until their acquisition by the Corporation the five properties were
developed and operated independently. This analysis will be supplemented by
additional exploration carried out by the Corporation, including significant
above and below ground drilling. In that regard, the Corporation has been and
will continue to review, compile and reconcile results from exploration,
drilling, operations and mineral resource and reserve calculations.

The Corporation hopes that the exploration will result in an
increase in the mineral resources and reserves contained in the five properties
which will enable it to become a medium cost gold producing company.

Exploration of the Kirkland Lake Mining Properties

Following completion of an 18 month data compilation program in
October 2003 the Corporation began an exploration and drilling program in a
search for new, and extensions of existing, mineralized structures on its
properties. The program is to be carried out over a period of approximately
three years and scheduled for completion in fiscal 2007. It includes both
surface and underground drilling at an estimated cost of approximately $21
million. In addition, the Corporation is studying the expenditure of
approximately $2 million on re-commissioning Shaft No. 5 on the Lake Shore
Property, including hoist repairs, shaft and drift rehabilitation and a new
headframe, and on other development programs.

This program has been and is being primarily funded, in stages
over its three year life, from private and public financings through the sale of
equity and debt securities of the Corporation supplemented by cash flow from
operations.

Development of the Kirkland Lake Mining Assets

To date, the Corporation completed dewatering of the Mine
Complex, rehabilitated the 5720-foot loading pocket of the Macassa Mine,
acquired mining equipment including scoop trams and custom designed mobile
drilling equipment, and developed a hydraulic paste filling system to support
production from Shaft No. 2 of the Macassa Mine.

Production

On May 14, 2002 the Corporation restarted gold production from
the Mine Complex by processing tailings from the Lake Shore property at a rate
of 880 tons per day and an estimated head grade of 0.12 ounces of gold per ton.
Gold recovery was in excess of 75%.

Subsequently, the Corporation began mining operations. Initially,
  it mined surface deposits, which were accessible through open pit operations.
  In December 2002 and January 2003 the Corporation was able to change its mining
  operations to underground mining as its dewatering program progressed although
  some modest surface mining operations were continued to be carried out.

11

---

As a result of the successful completion of the dewatering program,
  underground mining can now be carried out from the 2475-foot, 3400-foot, 3835-foot,
  4250-foot, 4500-foot, 4750-foot, 4900-foot, 5025-foot, 5150-foot, 5300-foot,
  5450-foot, 5600-foot and 5720-foot levels of the Macassa Mine. The underground
  production is hoisted to surface by the No. 2 and 3 Shafts of the Macassa Mine.

Gold from most of the properties is predominately quartz vein
hosted. It is fine grained, free gold, usually accompanied by 1 to 3% pyrite and
sometimes associated with molybdenite and tellurides of lead, gold, gold-silver,
silver, nickel and mercury. The gold is non-refractory and free-milling and
responds well to cyanidation. Recoveries are in the range of 95 to 97%.

The ore recently discovered to the south of the properties is
predominately sulphide hosted gold zones. The gold recoveries are similar to the
quartz vein hosted ore.

Personnel

During the summer of 2003, the union which claimed to represent
former workers at the Mine withdrew that claim. As a result, the Corporations
workforce is not unionized.

In the Corporations 2004 fiscal year it completed the
transition from a contractor-based workforce to an employee-based workforce. The
Corporations goal is to operate with a minimal use of outside contractors,
however, there has been an ongoing shortage of skilled miners.

The mine is currently operating two shifts a day for five days
a week with select, priority development work being carried out for two shifts a
day for seven days a week.

Capital Expenditures and Divestitures

During the three fiscal years ended April 30, 2004, 2003 and
  2002 the Corporation invested $5,696,656 on the purchase of property, plant
  and equipment, $190,000 on the purchase of short term investments, $14,019,388
  on the development of its mining properties and $2,043,435 on the acquisition
  of mine closure bonds.

During the three fiscal years ended April 30, 2005, 2004 and
2003 the Corporation invested $7,971,837 on the purchase of property, plant and
equipment, $10,535,000 on the purchase of investments and $19,567,864 on the
development of its mining properties.

During the three fiscal years ended April 30, 2006, 2005 and
2004 the Corporation invested $9,441,173 on the purchase of property, plant and
equipment, $10,535,000 on the purchase of short term investments and $25,638,025
on the development of its mining properties.

The Corporation currently has undertaken a variety of capital
programs at the Mine Complex totalling $37.7 million million over the next five
fiscal years (2007 through 2011). These programs include various development
activities (such as loading pocket rehabilitation and re-commissioning of Shafts
No. 2 and 5) and purchase of mining equipment. These programs are being financed
through a combination of cash flow from operations, cash proceeds from equity
financings and the exercise of warrants and stock options.

All of the foregoing expenditures have been on the
Corporations mining properties in Kirkland Lake, Ontario, Canada.

The Corporation did not have any material capital divestitures
during the foregoing periods.

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Takeover Offers

Since the commencement of the Corporations 2004 fiscal year it
has neither received any public takeover offers for its Common Shares from third
parties nor made any such offers.

B.          
BUSINESS OVERVIEW

Nature

The Corporation is a natural resource company engaged in the
  acquisition, exploration and development of and production (mining and milling
  of gold ore) from mineral resource properties in Canada.

Principal Markets

The Corporation has received only limited revenue since
commencing production at its current operations on its Kirkland Lake mining
properties. Such revenue was from, and it anticipates its markets will continue
to be, the North American gold bullion markets.

Seasonality of the Corporations Business

The Corporations business is not seasonal.

Sources and Availability of Raw Materials

Other than water and electrical power  both of which are
readily available and of which only electrical power experiences any material
price volatility  the Corporation does not require any raw materials with which
to carry out its business.

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Marketing Channels

The Corporation markets the gold bullion produced from the Mine
  Complex through direct sales to the gold bullion banking industry, principally
  to Johnson Matthey Plc. of London, England, a multinational specialty chemical
  and precious metals company.

Patents and Licenses; Industrial Commercial and Financial
Contracts; and New Manufacturing Processes

In conducting its business operations, the Corporation is not
dependent on any patented or licensed processes, technology, industrial,
commercial or financial contracts or new manufacturing processes.

Competitive Conditions

Competition in the mineral exploration and production industry
is intense. The Corporation competes with other mining companies, many of which
have greater financial resources and technical facilities, for the acquisition
and development of, and production from, mineral concessions, claims, leases and
other interests, as well as for the recruitment and retention of qualified
employees and consultants.

Government Regulation

Exploration, development and mining of minerals are subject to
extensive federal, provincial and local laws and regulations governing
acquisition of the mining interests, prospecting, development, mining,
production, exports, taxes, labour standards, occupational health, waste
disposal, land use, toxic substances and environmental protection (further
described in the next risk factor), mine safety and other matters. These laws
and regulations are administered by various governmental authorities including:

| | • | the federal government of Canada  
| | - | ----------------------------------
| |   | o                                 
| |   | o                                 
| |   | o                                 
| |   |                                   
| | • | the government of Ontario         
| |   | o                                 
| |   | o                                 
| |   | o                                 
| |   | o                                 
| |   | o                                 
| |   |                                   
| | • | the town of Kirkland Lake, Ontario
| |   | o                                 
| |   | o                                 
| |   | o                                 

The Corporation estimates that the annual costs of complying
with such laws and regulations are as follows:

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Description
      Amount (Cdn$)Provincial Land Taxes
    7,600Regional Land Taxes
    1,300Municipal Property Taxes
    637,600Federal Taxes
    59,000Environmental Protection
    115,000Mine and Mill Worker Safety
    300,000Total
    1,120,500


In addition, the current and future operations of the
Corporation, from exploration through development activities and production,
require permits, licences and approvals from some of these governmental
authorities. The Corporation has obtained all government licenses, permits and
approvals necessary for the operation of its business to date, however,
additional licenses, permits and approvals may be required.

The principal legislation governing the Corporations
operations is the Mining Act (Ontario) which governs the acquisition and
maintenance of mineral rights, development of mines, commercial production from
mines and procedures for mine closure in the province of Ontario. The Act is
administered by the MNDM. The Corporations operations are subject to such
legislation and to overview by the MNDM.

Mineral rights are acquired when a licensed prospector stakes
an unpatented mining claim on the ground. Assessment work, which may include
sampling, trenching, drilling, blasting, geological and geophysical surveying
and feasibility studies, must be performed and reported annually to the MNDM to
maintain an unpatented mining claim in good standing and prevent its forfeiture.
Patented mining claims were based on a staked area of ground which was
subsequently surveyed. They are no longer granted. Existing patented mining
claims do not require any assessment work to be carried out but do require
annual payments to be made to the MNDM in order to be kept in good standing and
prevent its forfeiture.

If exploration of an unpatented mining claim warrants it, the
claim holder may then enter into a 21 year renewable mining lease over the
ground covered by the claim. Mining claims must be leased before mineral
extraction for production commences. The mining lease is maintained by paying an
annual rent per hectare.

The Mining Actprovides a one-window approach to
permitting and licensing. Before beginning mine development, environmental
studies must be carried out, the public must be notified, public hearings held,
and the mine development and closure plans must be approved. The closure plans
require posting of reclamation bonds to ensure sufficient funds are available to
carry out the closure plans. As well, the Act encouraged companies to conduct
progressive rehabilitation during the life of the mine.

In addition all phases of the Corporations operations are
subject to environmental regulation by various levels of government including
regional, provincial and federal authorities. Environmental legislation is
evolving in a manner which will require stricter standards and enforcement,
increased fines and penalties for non-compliance, more stringent environmental
assessments of proposed projects and a heightened degree of responsibility for
companies and their officers, directors and employees.

C.ORGANIZATIONAL STRUCTURE

The Corporation does not have any subsidiaries.

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D.          
PROPERTY, PLANTS AND EQUIPMENT

The Corporations headquarters are located at the site of the
Mine Complex, near Kirkland Lake, Ontario, Canada.

The Corporations material tangible fixed assets (property,
plant and equipment) are also located at the Mine Complex. All of its mining
properties are located around the Mine Complex. These assets and properties are
described below.

Fixed Assets  Property, Plant and Equipment

The Mine Complex facilities consist of a mill and paste plant,
offices, laboratory, warehouse and mechanical and electrical shops.

The processing plant at the Mine Complex has been in place in
its present configuration since 1988. The mill is a conventional carbon-in-pulp
processing facility, which has been modified by the addition of a thickener,
ball mill and tower mill to process tailings from the Lake Shore Property.

The plants rated capacity is 1,450 tons per day, however, it
can process up to a combined 625 tons per day of ore and 1,200 tons per day of
tailings. The mill capacity exceeds the 600 tons per day mining rate presently
contemplated by the Corporations engineering department.

The Mine Complex has two shafts, both of which are operational.
Production Shaft No.2 reaches a depth of 4,625 feet and is equipped with a hoist
having a capacity of 800 tons per day. Production Shaft No. 3 was sunk in 1984
one mile west of Shaft No. 3 to a depth of 7,050 feet. It is equipped with a
hoist having a capacity of 1,800 tons per day.

Mining Properties Description and Location

The Corporations Kirkland Lake mining properties consist
  of 224 patented (surveyed) and unpatented (staked and not surveyed) mining claims
  and crown leases, located near Kirkland Lake, Ontario, Canada. From west to
  east, the past producing properties include the Macassa (which now includes
  the Tegren Property west of the original Macassa Property), Kirkland Lake, Teck-Hughes,
  Lake Shore and Wright-Hargreaves Properties. The properties are in eastern Teck
  Township and western Lebel Township in the district of Timiskaming, Ontario
  and consist of:

Interest
      Number of Claims / Leases
      Area (acres)Patented claims
    174
    7,892.3Staked claims
    45
    3,240.0Crown leases
    5
    543.5Total
    --
    11,675.8


To maintain these mining interests in good standing with the
authorities from which these interests were granted, the following annual
minimum levels of exploration must be carried out, taxes paid to the MNDM and
the town of Kirkland Lake, Ontario and advance royalties paid to various royalty
holders:

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Nature
      Amount (Cdn$)Exploration
    32,400 (1)Municipal taxes
    637,600Miscellaneous taxes
    8,900Advance royalties
    13,000 (2)Total:
    $ 691,900


|(1) | The unpatented (staked) claims will not require these
      exploration expenditures to be incurred until 2009 since previous
      exploration expenditures on the claims can be carried forward and applied
      to keep them in good standing until then.                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(2) | An advance royalty of Cdn$ 10,000 per year is also
      payable on the Macassa Property when the Mine is in production from the
      claims held by the royalty holder, Newmont Mining Corporation of Canada
      Limited (a public company the shares of which trade on the Toronto Stock
      Exchange). There was no production from the Macassa Property in the 2004
      or 2006 fiscal years, however there was some production in the 2005 fiscal
      year.

In addition there is a net smelter royalty payable to Kinross
as described under Item 4 History and Development of the Company  History 
Acquisition of Kirkland Lake Mining Assets.

Some of the mining interests are also subject to a royalty
payable to previous owners. The royalties differ depending on which claim they
were granted and range from net smelter royalties of 1% to 2%, production
royalties of $ 0.10, $ 0.25, $ 1.50, $ 3.00 or $ 4.00 (all in Canadian dollars)
per ton of ore mined or net profits royalties of 2% to 5% while some claims have
a royalty of 1% of gross proceeds from production or a net profit royalty of
20%.

Reclamation Bonds and Permits

As part of the permitting process for the development and commercial
  operation of the Macassa Mine and Lake Shore Mine, Kinross prepared, and had
  approved by the MNDM, closure plans for both the Macassa Mine and the Lake Shore
  Mine. Financial bonds totalling $2,043,435 for the Macassa Mine ($1,481,795)
  and the Lake Shore Mine ($561,640) were posted by Kinross with the MNDM. Upon
  acquisition of the properties from Kinross the Corporation assumed responsibility
  for these bonds and reimbursed Kinross for them. The other three properties,
  the Kirkland Lake, Teck-Hughes and Wright-Hargreaves Properties, will require
  geotechnical investigations and possible closure remediation to meet the MNDMs
  approval. This Asset Retirement Obligation was $2,043,435 as at
  April 30, 2004.

In order to perform diamond drilling underground in the Mine
Complex a dewatering program has been carried out. This required a Permit to
Take Water to be obtained under the Water Resources Act (Ontario). This
permit allows the Corporation to pump up to 13,104,000 litres per day from the
Mine.

Accessibility, Climate, Local Resources and Physiography

The town of Kirkland Lake, Ontario (approximate population
8,800) and its immediate surroundings are located within the Canadian Shield and
are surrounded by several lakes and swamps. The local vertical relief is limited
with Kirkland Lake sitting at 310 metres above mean sea level. The immediate
area is dominated by temperate boreal forest.

The annual precipitation in the area is 300 centimetres of snow
in the winter and 59 centimetres of rain in the summer. The average temperature
ranges from minus 22.8 degrees Celsius in the winter to 23.6 degrees Celsius in
the summer.

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Kirkland Lake and the Corporations five mining properties are
accessible by paved highways. The properties are located approximately 125
kilometres southeast of Timmins, Ontario which has an all-weather, jet capable
airport with frequent scheduled service. Kirkland Lake is serviced by rail and
motor coach and has a small airport without scheduled service. It is a modern
town with most of the amenities usually expected in larger centres. There is an
available workforce in the area and the entire infrastructure required for a
full mining operation. Electrical power for the Corporations mining operations
is readily available from the Ontario provincial power authority.

History

In mid-1995 Kinross acquired the Macassa Mine, Lake Shore Mine
  and the mining properties on which they were situated and the Wright-Hargreaves
  mining property from Barrick Gold Corporation (Barrick),
  a publicly traded company based in Toronto, Ontario the shares of which are
  traded on the Toronto, New York, London and Paris Stock Exchanges. Barrick had
  acquired these mines and properties as part of its take-over of Lac Minerals
  Ltd. in September, 1994. Kinross acquired the Kirkland Lake and Teck-Hughes
  mining properties in 1998.

All five of the mining properties acquired by the Corporation
and the formerly producing mines developed thereon are located along a
continuous stretch known as the Main Break and related subsidiary zones. The
first of the five to enter production was the Teck-Hughes Mine in 1917, followed
by the Lake Shore (1918), Kirkland Lake (1919), Wright-Hargreaves (1921) and
Macassa (1933).

The five former mining properties acquired by the Corporation
had the following operating profiles at the time of acquisition:

Mine
      Period of Operation
      Gold Produced
      (Ounces)Macassa
    1933  1999
    3,525,389Lake Shore
    1918  1965
    8,602,791(1)Teck-Hughes
    1917  1968
    3,709,007(1)Kirkland Lake
    1919  1960
    1,172,955Wright-Hargreaves
    1921  1965
    4,821,296(1)


| | (1) | Includes production during 1984 through 1988 when owned
      by Lac Minerals Ltd.
| | --- | ----------------------------------------------------------------------------------

Macassa Mine

Overview

The Macassa Mine was in continuous production from 1933 until
operations were suspended in June 1999. The mine was the last of the five major
gold mines to cease production. On May 14, 2002 the Corporation restarted mining
operations at the mine.

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History

The original mine was developed on 11 mining claims by Macassa
Mines Ltd. that organized in 1926 and obtained the assets of United Kirkland
Gold Mines Ltd. in 1933. In 1962 it combined with Bicroft Uranium Mines Ltd. and
Renable Mines Ltd. to become Macassa Gold Mines Ltd. An amalgamation in November
1970 with Willroy Mines Ltd. and Willecho Mines Ltd. created Little Long Lac
Gold Mines, located in Toronto. Upper Canada Mine Ltd. optioned the mining
rights from 1970 to 1976. In December 1982, the amalgamation of several
corporations, including Little Long Lac Gold Mines, created Lac Minerals Ltd. It
was during this period that the Tegren Property was added to the original
Macassa Property. In September 1994, Barrick successfully took over Lac Minerals
Ltd., and Kinross acquired it from Barrick in May 1995.

The first shaft sunk on the property was the 500 foot Elliot
shaft developed in the Main Break Zone in the late 1920s. Mining was
unsuccessful and operations halted. In 1931, development westward onto Macassa
ground from the 2475-foot level of the Kirkland Lake Mine discovered ore on the
Main Break for 700 feet along strike and in subsidiary hangingwall veins. These
underground workings were connected with the 3100 foot long No. 1 shaft, and
later by two winzes to greater depths. The No. 1 winze connected the 3000-foot
to 4625-foot levels and the No. 2 winze the 4625-foot to 6875-foot levels. The
No. 2 shaft was sunk from surface to a depth of 4625 feet about 1000 feet
southwest of the No. 1 shaft. In 1986, the No. 3 Shaft was sunk from surface (in
what had been the Tegren Property) to the 7050-foot level and then to a final
level of 7225 feet. Until the mid 1990s this was the deepest single-lift shaft
in the Western Hemisphere. The No. 3 Shaft was the most recent access shaft, and
gave access to 21 levels from the 3800-foot to the 7050-foot level until 1997.
As a result of a rock burst on April 12, 1997, only the zones above the
5150-foot level remained active. Exploration development was underway on the
3800-foot level when production was halted in 1999. Rehabilitation of levels
down to the 5700-foot level was in progress prior to closure.

The first mill on the property began operation in October 1933
at a capacity of 200 tons per day. The milling rate was increased to 425 tons
per day in 1949 and to 500 to 525 tons per day in 1956. In August 1988 a new
mill was built which could process 500 to 600 tons of rock and 750 tons of
tailings per day. By 1996, modifications had increased capacity to 900 tons of
rock per day and 1,000 tons of tailings per day. When closed in 1999, mill
capacity was near 1,500 tons of rock per day. Based on a 2,000 ton per day
processing rate the tailings impoundment area of the mill has a capacity greater
than 10 years. All of the appropriate permits for processing ore through the
mill are in place.

Current Operations

See Current and Proposed Exploration and Development
following.

Lake Shore Mine

Overview

The Lake Shore Mine is located in the centre of the Kirkland
Lake camp bounded to the west by the Teck-Hughes mine and to the east by the
Wright-Hargreaves mine. Lake Shore was by far the largest gold producer of the
five former producing mines producing 8,499,195 ounces at a grade of 0.51 ounces
per tonin continuous production from 1918 to 1965. This is almost twice
the total number of ounces produced from the neighbouring second highest
producer, Wright-Hargreaves, and represents 36% of the total ounces produced
from the entire camp. From 1984 to 1988 an additional 103,592 ounces were
subsequently recovered from pillars by Lac Minerals Ltd. for a total of
8,602,791 ounces of gold recovered.

Gold was discovered on the property in 1911. From 1914 to 1918
  the No. 1 Shaft was developed to 400 feet on the South (No. 1) Vein Zone and
  7,464 feet of underground development on levels at 100, 200, 300, and 400 feet
  was carried out. A 65 ton mill was installed and milling began in 1918. All
  work was carried out by Lake Shore Gold Mines Limited.

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History

From 1919 to 1965 the mine was eventually serviced by four
surface shafts and three internal shafts. The original No. 1 Shaft and its
extension were both inactive during the latter years of operations. The No. 4
Shaft, collared at 4325-foot level, took the workings to a depth of 8,150 feet.
Underground development was carried out on 57 levels and, during the life of the
mine, totalled 279,238 feet of drifting, 108,317 feet of crosscutting, and
154,547 feet of raising. Milling capacity was gradually increased to a maximum
of 2,400 tons per day and production was continuous until the mine closed in
July 1965. Ore from the Wright-Hargreaves Mine was treated at the Lake Shore
Mill from 1957 until the closure of that mill in March 1965.

High-grade ore material on the bottom levels was being mined
when the mine closed. Diamond drilling below these levels indicated that the ore
continues and that the Main Break shows no signs of weakening at depth.
Relatively low tonnage of ore at deeper levels and difficulties in mining at
these extreme depths proved deepening of the mine workings to be uneconomical
with the fixed gold prices in the 1960s.

The Main Break and related sub-parallel structures strike
continuously across the Lake Shore Property but are offset by significant
post-ore faulting along the Lake Shore fault at the east end of the property.
The North, or No. 2 vein, is the most productive and extensive structure at Lake
Shore. This structure is continuous from surface down to the 8075-foot level and
has been traced by diamond drilling for 800 feet below this level. Between the
1200 and 4000-foot levels the Main Break branches into several faults.

Mining on the North (No. 2) vein was extensive throughout the
mine. Of these zones, the area containing mixed syenite porphyry and augite
syenite west of the shaft area from surface to the 5450-foot level was most
productive. Occasionally sub-parallel veins were mined separately from this
vein, but in places the veins are closely spaced and have been stoped together
across widths up to 70 feet. Stoping was nearly continuous on the North vein
from surface to the 5400-foot level where veining weakened considerably and
stopped at the 6325-foot level. Another ore shoot continues below this from the
7575-foot level to the 8075-foot level, the bottom level of the mine. This ore
shoot was traced by diamond drilling down to 8,500-foot level and showed no
signs of weakening. The North vein on the 8075-foot level was mined over an 807
foot strike length at an average stoping width of 7.6 feet and an average grade
of 0.677 ounces per ton.

Current Operations

The mine has been decommissioned. Accordingly, any ore
recovered therefrom will have to be accessed from a ramp driven down into the
property by previous owners or by a recommissioning of the No. 5 Shaft.

Kirkland Lake Mine

Overview

The Kirkland Lake Mine is near the western end of the five
mines bounded to the west by the Macassa Mine and to the east by the Teck-Hughes
Mine. A total of 1,172,955 ounces of gold at an average grade of 0.37 ounces per
tonwas mined between 1919 and 1960.

History

The first reported discovery on the property was in 1911. In
1912 the Main Break was discovered. In 1913 a two-compartment shaft (Kirkland
Lake No. 1) was sunk to 80 feet by Kirkland Gold Mines Limited. The No. 1 shaft
was deepened in 1915 to 200 feet and a level was established at 175 feet by
Beaver Consolidated Mines Limited (under option from Kirkland Lake Gold Mines
Limited).

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From 1916 to 1918 Kirkland Lake Gold Mining Company Limited
(controlled by Beaver Consolidated Mines Limited) deepened the No. 1 shaft to
700 feet and sank another shaft (the No. 2 main shaft) to 500 feet with levels
at 300, 400 and 500 feet. A 150 ton per day mill was installed and production
began in 1918.

In the early years of the mine, most gold production came from
workings on the Main Break. In 1937 significant production started from the No.
5 vein. The No. 5 vein was a south dipping hangingwall vein structure which was
mined as a continuous sheet of ore from the 3475-foot level to the 3875-foot
level along a strike length of 1,200 feet. This vein rolls into the Main Break
along a line gently plunging to the west.

Current Operations

The mine has been decommissioned. Accordingly, any ore recovered
  therefrom will have to be accessed from existing operations in the Macassa Mine
  and on the Lake Shore Property. Alternatively, the Corporation could undertake
  new surface mining operations or drive a ramp down into the Property to access
  the ore. Also see Current and Proposed Exploration and Development
  following.

Teck-Hughes Mine

Overview

The Teck-Hughes Mine is bounded on the west by the Kirkland
Lake Mine and Lake Shore Mine to the east. The mine began production in 1917 and
had produced 3,688,664 ounces of gold at a recovered grade of 0.38 ounces per
ton when it ceased operating in 1968. In the latter years of operation the mine
relied heavily on lower grade slough ore which had caved from the hangingwalls
of open stopes. From 1984 to 1988 Lac Minerals Ltd. mined the east boundary
pillar area of the Mine which adjoins the Lake Shore Mine, as well as some ore
available within the Teck-Hughes Mine accessible from the Lake Shore Ramp. It
recovered a further 20,343 ounces for a total of 3,709,007 ounces of gold
recovered.

History

In 1911 three claims, which were to form the most important
part of the mine, were staked and three neighbouring claims were staked. In 1912
gold was discovered on one of the neighbouring claims. Prospecting and surface
trenching was carried out by Teck-Hughes Gold Mines Limited and a 35 foot shaft
was sunk.

In 1913 the No. 1 Shaft was sunk to 212 feet and 203 feet of
drifting was carried out on the 200-foot level. The No. 2 Shaft was sunk to a
depth of 75 feet with 500 feet of lateral development on the 75-foot level by
Teck-Hughes Gold Mines Limited. From 1914 to 1915 the No. 3 Shaft was sunk to
124 feet and an 85 foot winze was developed from the second level. A total of
1,360 feet of lateral development in the No. 1 and No. 3 Shafts were carried out
by Nipissing Mining Company (under option from Teck-Hughes Gold Mines Limited).

From 1915 to 1917 the underground workings were dewatered and
the No. 3 Shaft was deepened to 400 feet with a winze to 600 feet, and 1,804
feet of lateral development was carried out. In 1917, a 50 ton mill was
installed and milling began. This work was completed by Teck-Hughes Gold Mines
Limited.

As with the other four mines, the most important structure at
  the Teck-Hughes mine is the Main Break. This structure and the veins related
  to it yielded most of the gold in the mine. The mineralized structure was mined
  as the No. 3 vein from surface to the 6105-foot level, the deepest level at
  the mine. Longitudinal sections reveal that stoping on the No. 3 vein was almost
  continuous from surface to near the 3000-foot level. Diamond drilling defined
  the Main Break down to 6650 feet, however, there was insufficient ore to warrant
  development below the 6105-foot level. Grade and production both decreased below
  3,000 feet. This decrease in ore with depth has been suggested to be directly
  related to a decrease in the proportion of augite syenite to syenite porphyry
  with depth.

21

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Current Operations

The mine has been decommissioned. Accordingly, any ore recovered
  therefrom will have to be accessed from existing operations in the Macassa Mine
  and on the Lake Shore Property. Alternatively, the Corporation could undertake
  new surface mining operations or drive a ramp down into the Property to access
  the ore. Also see Current and Proposed Exploration and Development
  following.

Wright-Hargreaves Mine

Overview

The Wright-Hargreaves Mine is located to the east of the Lake
Shore Mine in the eastern portion of the five properties. It ranks second to the
Lake Shore Mine in terms of gold production and grade, having produced 4,817,680
ounces of gold at a grade of 0.49 ounces per ton. From 1984 to 1988 Lac Minerals
Ltd. produced an additional 3,616 ounces of gold from the Mine for a total of
4,821,296 ounces of gold.

History

This was the first discovery of gold in the Kirkland Lake
Mining Camp, made in 1911. In 1913 a shaft (Wright-Hargreaves No. 1) was sunk to
85 feet with 110 feet of drifting on the 75-foot level. From 1916 to 1921 the
No. 1 shaft was deepened to 400 feet, No. 2 Shaft to 320 feet, No. 3 Shaft to
425 feet, and a total of 3,900 feet of lateral development took place. In 1921 a
mill was constructed and milling started at 175 tons per day.

The mine was developed down to the 8200-foot level, the deepest
development in the Kirkland Lake Mining Camp. Diamond drilling below the
8200-foot level revealed several high-grade intersections persisting several
hundred feet below the level. However, the cost to develop these intersections
at such deep levels proved to be too high, and mining was not continued.

The Main Break is the most prominent structure crossing the
Wright-Hargreaves Property. This structure has been traced as a consistently
strong fault, down to the 8100-foot level, and by diamond drilling below that
level. A significant amount of ore was mined from this structure, however, most
of the tonnage came from the North vein. The North vein branches off the Main
Break to the north just to the west of the property boundary with Lake Shore.
Stoping on the North vein was extensive to about the 4500-foot level and
development was to the 6600-foot level. Below this level mining was concentrated
along ore-bearing fractures of the North vein zone known as the North Heading
Vein, North vein, and North D Vein. These veins are typically steeply dipping to
the south.

Another significant mineralized structure is the South
vein-fault which branches off the south side of the Kirkland Lake fault in the
western portion of the mine. As with many of the other mines in the camp there
are also numerous veins which branch or splay off the main structures and form
along tension fractures in the wedge of ground between major faults.

Most of the ore mined at Wright-Hargreaves was found within
syenite porphyry with veins north of the Main Break below the 6600-foot level
mainly in tuff, greywacke, conglomerate and granite porphyry located in the
footwall of the main syenite porphyry plug. The Main Break is located within
syenite porphyry throughout the mine. The north veins below the 6600-foot level
are much less continuous than veins in the upper levels hosted by syenite
porphyry.

Current Operations

The mine has been decommissioned. Accordingly, any ore recovered
  therefrom will have to be accessed from existing operations in the Macassa Mine
  and on the Lake Shore Property. Alternatively, the Corporation could undertake
  new surface mining operations or utilize the existing ramp to access the ore.
  Also see Current and Proposed Exploration and Development following.

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Geological Setting

The Abitibi Greenstone Belt

The Corporations Kirkland Lake Mining Properties are located
in the 2.75 to 2.67 billion year old Abitibi greenstone belt, which is the
worlds largest greenstone belt covering an area of roughly 85,000 square
kilometres in north-eastern Ontario and north-western Québec. The Abitibi belt
is part of the larger Abitibi Subprovince  a granite-greenstone-gneiss terrain
that is located within the south-eastern portion of the Archaean Superior
Province. The Abitibi Subprovince is bound in the north by para- and
ortho-gneisses of the Opatica Subprovince, to the west by the Kapuskasing
Structural Zone, to the east by the faulting and cataclasis of the Grenville
Front Tectonic Zone, to the south-west by unconformably overlying sediments of
the Huronian Supergroup and Keweenawan volcanics and sediments, and to the
south-east by fault contact with Archaean metasediments of the Pontiac
Subprovince.

Although outcrop in the Abitibi greenstone belt is limited by a
till and clay cover, locally over 100 feet thick, exposure in the Corporations
Kirkland Lake Mining Properties is quite good, leading to the first discovery of
gold in a surface outcrop in 1911. Surface mapping in the Abitibi Subprovince
has been supplemented by geophysical surveys showing broad regional negative
magnetic and positive gravity expressions in areas where the surface geology
consists of greenstone belts and tonalitic plutons, and similar broad regional
positive magnetic and negative gravity anomalies in areas of granitic plutons.

Volcanic rocks were formed between 2.75 and 2.70 billion years.
The volcanic rocks are komatiitic, tholeiitic, and calc-alkaline. Between 2.70
and 2.68 billion years, turbidite dominated assemblages of sedimentary rock
formed. This was followed locally by formations of alkaline meta-volcanic rocks
and associated alluvial fluvial metasedimentary rocks between 2.68 and 2.67
billion years. Three main divisions of granitoid intrusive rocks exist.
Tonalite-trondjhemite-granodiorite batholiths reached their intrusive peak
between 2.74 to 2.69 billion years, smaller granodiorite intrusives formed
between 2.70 to 2.68 billion years, and syenite stocks formed between 2.69 to
2.67 billion years.

The Kirkland Lake Mining Properties

To the north and south of the Corporations Kirkland Lake
Mining Properties are massive and pillowed mafic volcanic rocks which have been
subdivided into the Blake River and Kinojevis Groups. To the north the volcanic
rocks of the Blake River Group are profoundly unconformably overlain by the
alkalic volcanic and sedimentary rocks known as the Timiskaming Group.

Numerous alkaline sills intrude the Timiskaming sediments. They
consist of alkali-feldspar syenite, augite syenite as well as quartz-monzonite
porphyry. In general terms, these units are known as feldspar porphyry (or
syenite porphyry) as it is difficult to estimate modal percentages of primary
plagioclase and alkali feldspar in the ground mass.

A series of alkali-feldspar syenite and quartz-monzonite
(feldspar porphyry) plutons with differing phases of composition intrude the
central and south limb of the synclinorium. The Otto and Murdock Creek Stocks
are examples. Another pluton, the Lebel Stock, is entirely syenitic and may be
the core intrusive of the alkaline volcanic rock assemblage.

There are a number of key structural features within the
Corporations Kirkland Lake Mining Properties. The major regional zone of
accommodation is known as the Larder Lake Break or more regionally the
Cadillac-Larder Lake Break and has been traced for over 300 kilometres along
strike. This complex structural feature has been traced to the east through the
Larder Lake-Virginiatown area (Kerr-Addison Mine) and into Québec through
Rouyn-Noranda, Cadillac, Val dOr and terminates near Louvicourt at the

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Grenville Front. The Larder Lake Break continues westward under
Huronian sediments and appears in the Matachewan area some 50 kilometres away.
The Larder Lake Break is a broad zone of intense shearing and polyphase ductile
deformation which represents the zone of structural accommodation between the
proto-continent to the south and the main mass of volcanics to the north. One of
the more colourful lithofacies in the Timiskaming assemblage of rocks and
situated partly in the Larder Lake Break is a zone of extremely altered
ultramafic volcanic rocks and associated massive and bedded carbonate up to
several hundred feet thick and locally sufficiently rich in gold to constitute
ore (such as the Kerr-Addison Mine). Characteristic green fuchsite is often
associated and is mined locally in the Kirkland Lake area as a decorative stone
in large panels. The Larder Lake Break generally strikes near east-west and dips
subvertically. Folding is polyphase but is homogeneously distributed, creating
all scales of interference patterns locally within the Timiskaming. In the
Kirkland Lake area, known plunges are mostly steep and to the west south west at
about 60 degrees. The thickest part of the syenite sill, with which most of the
significant gold mineralization is associated, plunges the same way.

Mineralization

All of the properties are contiguous and very similar in nature
to the Macassa Property.

Mineralization of the Macassa Property is intimately associated
with the Main Break and the '04 Break which generally strike to the northeast
and dip steeply to the south. The Main Break and various related branches play
host to most of the gold mineralization in the camp in quartz-rich zones
adjacent to the faults and in related hangingwall and footwall quartz veins. At
the east end of the camp there are an increasing number of branches and splays
off the strong main branch. These faults act to dissipate and lessen overall
fault displacement which, based on pre-ore lithological relationships, is of a
reverse nature (south side up). The overall displacement is rotational and has
been calculated to be near 1,500 feet at the west end of the camp, and near 350
feet at the east end. To the west end of the camp, a fault sub-parallel to the
Main Break, known as the '04 Break, hosts most of the ore at the Mine Complex.
At least some movement on the Main Break post-dates the Matachewan diabase dyke
swarm.

Recent exploration by the Corporation has discovered
mineralized structures trending from oblique to near perpendicular to the Main
Break and the '04 Break.

A series of later cross-faults have displaced the various
lithological structures and mineralization in Kirkland Lake. The two most
significant of these late faults are the Amikougami Creek Fault and the Lake
Shore Fault. Both faults strike near north-south and are sub-vertical. The
vertical displacement of these faults is not well known.

The area surrounding the Mine Complex is underlain by
sedimentary and volcanic rocks of the Archaean Timiskaming Group. These rocks
are several kilometres thick and trend to the east. They flank and are nearly
parallel to the strike of the Larder Lake Break. They unconformably overlie
pre-Timiskaming, pillowed and massive, volcanic rocks belonging to the Abitibi
Supergroup which include the Blake River Group volcanics and the predominantly
tholeiitic Kinojevis Group. Although these pre-Timiskaming volcanics are
ubiquitous in the surrounding district, they have not been encountered in any of
the workings at the Mine Complex.

Intruded into the Timiskaming sedimentary and volcanic rocks is
a composite syenitic sill that is broadly centred on the town of Kirkland Lake.
The long axis of the stock is roughly parallel to the strike of the Timiskaming
rocks and dips steeply to the south. The three main components of the syenitic
stock and related dykes are augite syenite, felsic syenite, and syenite
porphyry. These intrusive rocks are host to an important part of the ore at the
Mine Complex.

The youngest rocks at Macassa, other than mineralization, are a
few Matachewan diabase dykes.

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Mineral Reserve & Resource Estimates

The following tables set out the reserve and resource estimates
for the Macassa Property as at April 30, 2004 and 2003 made by the Corporations
Chief Geologist, Michael Sutton, P.Geo., and Senior Geologist, Stewart
Carmichael, P.Geo. The estimates are contained in their reports dated

- August 31, 2004 entitled Mineral Resources and Mineral Reserves of the
  Macassa Mine Property, Kirkland Lake, Ontario (Kirkland Lake Gold Inc.)
  as at April 30, 2004, and
- August 30, 2003 entitled Mineral Resources and Mineral Reserves of the
  Macassa Mine Property, Kirkland Lake, Ontario (Kirkland Lake Gold Inc.)
  as at April 30, 2003.

The basis for those reports is the initial reserve and resource
estimate made for the Corporation by the independent geological and mining
consultants, Roscoe Postle Associates Inc. of Toronto, Ontario, in their report
to the Corporation dated December 18, 2002.

The estimates are reported in accordance with National
Instrument 43-101 Standards of Disclosure for Mineral Projects of the
Canadian Securities Administrators. Both Michael Sutton and Stewart Carmichael
are qualified persons for the purposes of that National Instrument. Note that
the reserves are classified separately from, and do not form part of, the
resources.

The reserves as at April 30, 2004 and 2003 were estimated to
be:

Proven & Probable Reserves
      Tons 
        (of ore)
      Grade 
        (ounces of gold per ton)
      Ounces 
        (of gold)2004
      2003
      2004
      2003
      2004
      2003Proven
      586,400
      497,700
      0.42
      0.42
      248,900
      207,100Probable
      735,200
      554,100
      0.52
      0.51
      381,200
      284,000Total
      1,321,600
      1,051,800
      0.48
      0.47
      630,100
      491,200


The total reserves and resources increased in some areas and
decreased in others from April 30, 2003 to April 30, 2004 due to additions from
definition and exploration drilling, additions from drifting, additions from
moving blocks from resource to reserve, additions and subtractions from
re-interpretations and subtractions due to mining.

The total reduction in reserves from April 30, 2003 to April
30, 2004 due to mining was 18,448 ounces of gold while actual gold production
was 19,265 ounces (which consisted of gold produced from reserves and resources
as well as from ore which was not classified as either resources or reserves).

The measured and indicated resources as at April 30, 2004 and
2003 were estimated to be:

Measured &
      Indicated Resources
      Tons 
        (of ore)
      Grade 
        (ounces of gold
      per ton)
      Ounces 
        (of gold)2004
    2003
      2004
    2003
      2004
    2003Measured
      923,300
    986,200
      0.37
    0.36
      337,300
    355,700Indicated
      2,329,500
    2,361,700
      0.30
    0.31
      708,800
    729,500Total
      3,252,800
    3,347,900
      0.32
    0.32
      1,046,100
    1,085,100


Cautionary Note to U.S. Investors
concerning estimates of Measured and Indicated Resources

The foregoing table uses the terms
measured resources and indicated resources. The Corporation advises U.S.
investors that while those terms are recognized and required by Canadian

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regulations (under National Instrument
43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities
and Exchange Commission does not recognize them. U.S. investors are cautioned
not to assume that any part or all of mineral deposits in these categories will
ever be converted into reserves.

The inferred resources as at April 30, 2004 and 2003 were
estimated to be:

Inferred Resources
      Tons 
        (of ore)
      Grade 
        (ounces of gold
      per ton)
      Ounces 
        (of gold)2004
    2003
      2004
    2003
      2004
    2003Total
      642,800
    558,900
      0.30
    0.35
      191,300
    193,900


Cautionary Note to U.S. Investors
concerning estimates of Inferred Resources

The foregoing table uses the term
inferred resources. The Corporation advises U.S. investors that while this
term is recognized and required by Canadian regulations (under National
Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S.
Securities and Exchange Commission does not recognize it. Inferred resources
have a great amount of uncertainty as to their existence, and great uncertainty
as to their economic and legal feasibility. It cannot be assumed that all or any
part of an Inferred Mineral Resource will ever be upgraded to a higher category.
Under Canadian rules, estimates of Inferred Mineral Resources may not form the
basis of feasibility or other economic studies. U.S. investors are cautioned
not to assume that part or all of an inferred mineral resource exists, or is
economically or legally mineable.

The reserves and resources are estimated using the polygonal
method. All intersections are calculated out to a 5.0 foot minimum horizontal
mining width.

Dilution is added to reserves at varying rates depending on
mining method, and the width of the ore. Dilution in the reserve estimate
overall averages 26% at 0.02 ounces of gold per ton. All higher grade assays are
cut to 3.50 ounces of gold per ton. The average cut-off grade is 0.25 ounces of
gold per ton over the horizontal mining width.

The area of influence of the proven and measured categories is
30 feet from development chip samples while the area of influence of the
probable and indicated categories is 50 feet of radius from a known sample point
(drill holes) and of the inferred resources is another 50 feet of influence. A
94% tonnage recovery is used. Continuity of the veins appears very good.

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The assumptions used include a price of US$ 375 (2000 
  US$ 325) per ounce of gold and an exchange rate of Cdn$ 0.75 (2003  Cdn$
  0.72) equals US$ 1.00 resulting in a price of Cdn$ 500 (2003  Cdn$ 451)
  per ounce of gold.

The Corporation is not aware of any metallurgical,
environmental, permitting, legal, title, taxation, socio-political, marketing or
other issue that may materially affect its estimate of mineral resources and
reserves.

Current and Proposed Exploration and Development

Overview

In November 2003 the Corporation began a three year exploration
  program at an estimated cost of Cdn$ 21 million. The exploration has significantly
  increased the resources and reserves (see Mineral Reserve & Resource
  Estimates above) and resulted in the discovery of a completely new mineralized
  trend  north-south, rather than the classic east-west of the Kirkland
  Lake Camp  beyond the original goals of the exploration program. This
  new mineralized trend has opened substantial areas for new resources to be added.
  Not only is it a different style of mineralization (wide sulphide system) but
  it is running north-south instead of the east-west nature of the mineralization
  from which previous mining companies have mined approximately 24 million ounces
  of gold over the last 90 years. Included in this mineralization is the D Zone,
  which was discovered in 2003, and it too is north-south trending. At least 14
  other mineralized zones have been discovered in the south of the properties.

The Corporation has completed a number of developments to the
Mine Complex, Mill and surrounding properties, namely:

- Rehabilitation work was completed on 11 levels of the Macassa Mine.
- Shaft No. 2 of the Macassa Mine was re-commissioned.
- An ore and waste handling device at the 4250-foot level of the Macassa Mine
  was installed in Shaft No. 2. That and improvements to the headframe have
  enabled, for the first time, ore and waste to be hoisted from the Shaft No. 2.
  Historically, Shaft No. 2 was primarily used for just lowering materials and
  as an emergency egress, but now this shaft will be used for production
  purposes.
- The microseismic system was also expanded to just below the 5725-foot level
  of the Macassa Mine thereby giving rock mechanic monitoring to the lower
  extents of the mine.
- The paste fill underground distribution system of the Mill was expanded to
  the 5300-foot level allowing mining to be carried out on all levels down to
  that level.
- Established a new level, the 3400-foot level, from which more than 100,000
  tones of high grade ore can be accessed. Due to favourable exploration results
  above this level, the Corporation is studying whether a level should be
  established at the 3000-foot horizon to access additional ore that it has
  discovered.

Some of these developments are described below in greater
detail.

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Shaft and Ramp Rehabilitation

The Corporation has re-commissioned Shafts No. 2 and 3 of the
Macassa Mine and the Lake Shore/Teck-Hughes/Wright-Hargreaves Ramp. Such shafts
and ramp are now available for use in the Corporations drilling programs and
for production.

Dewatering

The previous owner of the Mine Complex allowed it to flood
after the Macassa Mine ceased production. To dewater the mine, the Corporation
has installed pumping equipment. As at June 30, 2005 dewatering of the No. 3
Shaft had extended to approximately the 5700-foot level. This enabled the
Corporation to rehabilitate the 5150-foot level and make operational the loading
pocket located on that level.

The goal of the dewatering program to the mines lower workings
at the 5720-foot level was achieved in April, 2005. Rehabilitation of the
loading pocket located at this level has commenced. Concurrently an underground
exploration and development drilling program is being carried out for the
purpose of adding to reserves.

Data Analysis

In April 2002, the Corporation commenced an 18 month program of
data compilation on its gold properties and, in the summer of 2003, engaged a
team of exploration consultants to work with its geologists to study and make
recommendations based upon the results. This compilation has resulted in the
data entry of 18,500 drill holes. Mine openings were digitized for all five
mines, along the more than 200 miles of levels. The data compilation process
enabled the team to delineate a host of highly prospective targets that were not
drilled or well understood in the past.

Drilling Exploration

2004 Fiscal Year

In the first six months of the Corporations 2004 fiscal year
only limited exploration was carried out. This was due to an on-going expansion
of mining activities at the No. 3 Shaft, No. 2 Shaft, and Lake Shore Ramp
requiring an emphasis on definition drilling of existing stoping areas.

During the second half of the 2004 fiscal year, the Corporation
began a three year, Cdn$ 21 million exploration drilling campaign with the goal
of drilling targets that have the combined potential to host (using a 25%
success ratio for the area) up to 15 million tons of ore. The Corporation
originally intended that the drilling would be carried out on 500 to 1,000 foot
centres, however, infill drilling has been carried out as necessitated by the
results obtained.

The drilling primarily targeted grassroots near-surface
targets, a localized area of the '05/Narrows Break, the D Zone and South Zone.
The second stage of the program comprises drilling of various large camp-wide
zones parallel to the main, seven kilometre long, east-west ore horizon that has
historically produced 22 million ounces of gold. The surface targets included
the Narrows Break, South Break, Boundary Pillar, Amalgamated Break and the F/58
Vein systems and the Wright-Hargreaves Property.

The first half of the surface program utilized three drills
with one drill concentrating on the Narrows Break, the second drill testing near
surface hangingwall veins and the near-surface Boundary Pillar (Main Break) and
the last drill dedicated to grassroots surface targets. The pace of drilling
increased through 2004 and by August 2004 eight drills were operating on the
surface. A total of 231,390 feet of surface and underground drilling was carried
out by the Corporation in its 2004 fiscal year ending April 30, 2004. Of the
approximately $3.1 million spent on the drilling, approximately $1.7 million was
spent on exploration drilling.

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Underground drilling was initially focused on the South Break
(which resulted in the discovery of the Lower D) and Upper D Zone. Two
additional drills were added during the late spring of 2004 to drill the South
Break and Narrows Break from the 4500-foot level.

The most significant result to date from the drilling in the
2004 fiscal year is the discovery of the Lower D Zone on the Macassa Property.
This was discovered shortly after the initial South Break exploration program
was commenced in October 2003. Though initially interpreted as an east-west
system parallel and further south of the South Break, subsequent drilling has
confirmed that this new zone is north-striking and shows continuity with the D
Zone discovered above the 3800-foot level of the Macassa Property. The
dimensions at this time indicate a strike length of 3,000 feet with a down-dip
component of 3,200 feet. A further four zones were also discovered.

2005 Fiscal Year

An aggressive exploration drill program was undertaken in the
Corporations 2005 fiscal year, primarily funded by flow-through investments
made by Canadian investors which entitle the investors to certain tax
write-offs. A total of $7.33 million was spent on drilling and $1.3 million in
exploration development and rehabilitation. A total of 498,000 feet of drilling
took place, with 209,900 feet in surface drilling and the remainder being
underground. The average cost was $14.51 (surface was $15.37) per foot.

Major drill programs included the South Break (surface and
underground), north-south zones such as the D Zone (surface and underground),
the '05/Narrows Break (surface and underground) and the Main Break (and
subsidiary hangingwall veins) on the Kirkland Lake Property. This drilling was
carried out on 500 to 1000 foot centres. As a result, even though significant
ore-grade intersections were realized, there was not any change to the
Corporations reserves or resources from this drilling since it was carried out
on drill centres which were too far apart to establish the necessary continuity
of ore under applicable Canadian resource and reserve criteria. The most
significant results to date from the drilling in the 2005 fiscal year were the
discovery of the LK Zone in August 2004, and the discovery of the ABM Zone
October 2004.

Of the 575,000 feet of drilling planned to be carried out in
2005, a total of 391,000 feet was not completed for a variety of reasons,
including lack of access. In particular, both the No. 5 Shaft (from which
126,000 feet of drilling was planned but none was completed) and No. 2 Shaft
(from which only 45,000 out of 310,000 feet of planned underground drilling was
completed  although development therefrom is currently being completed) were
behind schedule. These are critical areas for the exploration, with the bulk of
expected new ore tonnage originally anticipated.

2006 Fiscal Year

In the Corporations 2006 fiscal year, it carried out 9,950
feet of surface exploration drilling and 103,050 feet of underground exploration
drilling. On average, four drilling machines were employed each month.

During the year, the focus of the program changed from drilling
widely-spaced holes to closely spaced holes at 100 to 200 feet centers. The
purpose of the change was to define new gold reserves and resources from
mineralization identified during the exploration drilling completed over the two
previous years.

In July, 2005 the Corporation intersected a significant new discovery,
  the New South Zone, to the south of the '04 Break and Main Break
  system in the area between the No. 2 and No. 3 Shafts. The drilling returned
  assays of 2.3 ounces (uncut) of gold per ton over 90.4 feet and 1.43 ounces
  (uncut) of gold per ton over 124.5 feet. To follow-up on this discovery a 2,500
  feet long exploration crosscut from No. 3 Shaft at the 5300-foot level was begun.
  From this crosscut a drift will be constructed to serve as both a drilling platform
  and facilitate obtaining a bulk sample.

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Summary

The strategy of the original three-year exploration program initiated
  in November 2003 was to drill large mineralized structures  using a 25%
  success ratio for the total area  on 500 to 1,000 foot centres to identify
  areas that would have the potential to host gold ore. Where such mineralization
  was located, additional drilling would be required to be carried out on 200
  foot centres to establish gold resources and on 30 to 100 foot centres to establish
  gold reserves.

Newly-discovered mineralized zones found through this program
(namely the LK, Lower D, Upper D and ABM zones) substantially increase the
potential for the Corporation to expand its ore resources and reserves. At the
same time, deeper drill holes than originally planned are required, and
discovery of the new zones has shifted the original program substantially. Some
originally-targeted zones are achieving less than the 25% success rate
historically attained. These include the '05/Narrows at surface, South Break at
surface, and Main Break at surface. Other zones are achieving higher success
rates than planned, such as the Lower D, New South, #6, LK and ABM.

Positive results continue to be obtained from the previously
discovered D and '05 Zones and the recently discovered Lower D (discovered in
November 2003), ABM (discovered in October 2004), '05, and LK (discovered in
August 2004) Zones. Up to 14 new mineralized zones has been discovered to the
south of the mining workings as a result of this exploration.

2007 Fiscal Year

The Corporations exploration strategy for 2007 will continue
to focus in building reserves and resources from the new discoveries as well as
expand known mineralization. The focus will remain on underground drilling, with
possible surface drilling should the need arise. Structural studies (to be
carried out by consultants) and underground geophysical surveying (to be carried
out by the Corporation) are planned to delineate the extension and geometry of
the newly discovered mineralized zones. This work is aimed at uncovering the
genesis, spatial localization and extensions of the new discoveries.

The Corporation intends that drilling will intensify on the
newly discovered mineralized zones to the south of the existing mine workings.
Drilling of the Main Break and other structures in the central and eastern
portions of the mining properties has been undertaken. The drilling of the Main
Break and other structures in the easternmost portion of Macassa and Kirkland
Lake properties is allowing the exploration of the central and eastern portions
of the properties. An exploration strategy for the No. 5 Shaft has been designed
and will be implemented upon re-commissioning of the Shaft.

The Corporations exploration strategy for fiscal 2007 is to
also explore the main ore horizon in the western portion of the properties. This
exploration will be carried out on a joint venture basis with other mining
companies based on agreements made during 2005, including the Queenston Joint
Venture described below.

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Queenston Joint Venture

The Corporation and Queenston Mining Inc. have entered into a
Joint Venture Agreement dated December 8, 2005 to explore the Kirkland Lake West
Property owned by Newmont Mining Company of Canada Limited. The property adjoins
the western boundary of the Corporations Macassa Property and the Corporation
believes it contains the western extension of the Main-'04 Break (east-west) ore
horizon. The properties are separated by a late north-south cross-fault.

A previous Joint Venture Agreement between the Corporation and
Queenston dated November 12, 2004, created a 50%-50% joint venture on the Gracie
West property, located on the western boundary of the Kirkland Lake West
Property.

Security of Samples

To ensure the validity and integrity of samples taken by the
Corporation it re-assays pulps and takes second cuts on rejects at a second
recognized lab. As well, blank (non-mineralized) core samples are inserted
within core samples from mineralized zones to check contamination. The core is
regularly quartered and sent out to check for replicability. Core is handled by
one person only, after being split and bagged securely.

Quality Control

The results of the Corporations exploration programs have been
reviewed, verified (including sampling, analytical and test data) and compiled
by the Corporations geological staff. Furthermore, the Corporation has
implemented a quality control program to ensure sampling and analysis of all
exploration work is conducted in accordance with the best possible practices.
The drill core is sawn in half with half of the core samples shipped to the
Swastika Laboratories in Swastika, Ontario for analysis. The other half of the
core is retained for future assay verification. Gold analysis is conducted by
fire assay using atomic absorption or gravimetric finish. The laboratory
re-assays at least 10% of all samples and additional checks may be run on
anomalous values. Blank cores are added in the midst of mineralized zones.
Quarter coring has been undertaken for replication purposes. Pulps and rejects
are routinely sent to a second assay lab.

ITEM 4AUNRESOLVED
  STAFF COMMENTS

Not applicable.

ITEM
5OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following should be read in conjunction with the
Corporations financial statements, forming a part of this document, including
Note 19 to the 2004 annual financial statements which provides a reconciliation
between US GAAP and Canadian GAAP for significant measurement differences.

Critical Accounting Policies

The Corporations most significant accounting policies are as
follows:

- Revenue is recognized on transfer of title to the purchasers of the Corporations
      gold bullion sold in the spot market. This occurs when the gold is received
      by the purchasers. Adjustments to accounts receivable, if any, between the
      date of title transfer and the settlement date are recorded when determinable.
- Doré bars and gold in process are recorded in inventory at the lower
      of average production cost and net realizable value.

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- Exploration expenditures and near term ore development costs are expensed
      as incurred.
- Property acquisition costs and longer term development costs incurred to
      expand ore reserves are deferred and depleted on a units-of-production basis
      over proven and probable reserves. The capitalized costs are reviewed annually,
      or more frequently if changes in circumstances warrant, to consider whether
      the carrying value can be recovered from estimated undiscounted future cash
      flows. If the carrying value is considered not recoverable on this basis,
      the Corporation will write down the carrying value to the estimated net
      recoverable amount, calculated on non-discounted basis.

Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP
requires the Corporations management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the fiscal year. The most
critical accounting policies, upon which the Corporations financial statements
depend, are those requiring estimates of proven and probable reserves,
recoverable ounces therefrom and assumptions of operating costs and future gold
prices. Such estimates and assumptions affect the potential impairment of
long-lived assets and the rate at which depletion and amortization are charged
to earnings. In addition, management must estimate costs associated with mine
reclamation and closure costs.

The Corporation utilizes the following key estimates in the
preparation of its financial statements:

Mining Properties and Deferred Exploration Costs

The Corporation expenses exploration expenditures and near-term
ore development costs as incurred. Property acquisition costs, and longer term
development costs incurred to expand ore reserves are deferred and depleted on a
units-of-production basis over proven and probable reserves which are accessible
by the Corporation. Managements estimate of gold price, recoverable proven and
probable reserves, operating, capital and reclamation costs are subject to risks
and uncertainties affecting the recoverability of the Corporations investment
in mining properties. The Corporation assesses capitalized costs for
recoverability on an annual basis or more frequently if circumstances warrant.
When the carrying value is less than its net recoverable value as determined on
an undiscounted basis, an impairment loss is recognized to the extent that its
fair value, measured as the discounted cash flows over the life of the asset is
below the assets carrying value.

Mineral Reserves

The process of estimating quantities of gold reserves is
complex, requiring significant decisions in the evaluation of all available
geological, geophysical, engineering and economic data. The data for a given ore
body may also change substantially over time as a result of numerous factors,
including, but not limited to, additional development activity, production
history and the continual reassessment of the viability of ore bodies under
various economic conditions. A material revision to existing reserve estimates
could occur because of, among other things: revisions to geological data or
assumptions; a change in the assumed gold prices; and the results of drilling
and exploration activities.

If estimates of reserves prove to be inaccurate, or a mining
plan changes due to reductions in the price of gold or otherwise, resulting in a
reduction in the reserves expected to be recovered, The Corporation could be
required to write-down the recorded value of its plant and equipment and mine
development costs, or to increase the amount of future depreciation, depletion
and amortization expense, both of which would adversely affect the Corporations
earnings and net assets.

32

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Closure Costs

The Corporation has an obligation to reclaim its properties
after the minerals have been mined from the site, and has estimated the costs
necessary to comply with existing reclamation standards. These estimated costs
are recorded as a liability at their fair values in the periods in which they
occur. If the estimate of reclamation costs proves to be inaccurate, The
Corporation could be required to increase the provision for site closure and
reclamation costs, which would increase the amount of future reclamation expense
per ounce, resulting in a reduction in the Corporations earnings and net
assets.

Changes in Accounting Policies

Effective May 1, 2004 the Corporation adopted two new
accounting policies. The adoption was effective retroactively to the beginning
of the Corporations 2004 fiscal year.

Stock-Based Compensation

The Corporation adopted the new accounting standard for
stock-based compensation. The standard sets out a fair value approach required
for all stock-based transactions. Prior to May 1, 2004, the Corporation used the
intrinsic value-based method to account for its employee stock incentive plan,
therefore, no compensation expense had been recognized under the plan for stock
options issued to employees and directors. This change in policy has been
applied retroactively without restatement of prior periods.

Stock-based compensation on options is recorded as an expense
in the period the options are vested, based on the fair value estimated based on
the Black-Scholes option pricing method.

The restatement resulted in a cumulative increase of $807,250
to the opening deficit at May 1, 2004 and increases of $132,009, $54,030 and
$621,211 to Common Share capital, contributed surplus and options respectively

Asset Retirement Obligations

The Corporation adopted a new accounting standard on asset
retirement obligations. Under this standard, asset retirement obligations are
now recognized for the costs associated with exit activities and recorded as a
liability at fair value. The liability will be accreted over time through
periodic charges to earnings. In addition, the asset retirement cost is
capitalized as part of the assets carrying value and amortized over the assets
useful life. This change in accounting policy is not expected to have a
significant impact on the Corporation.

A. OPERATING RESULTS

Results of Operation

The Corporation incurred a loss for the year ended April 30,
2004 of $22,616,158 or $0.76 per share, which compares with a loss of $4,934,979
or $0.25 per share reported for the same period in fiscal 2003. Gold revenues
were lower on a year over year basis at $9,807,106 (2003  $11,704,639) due to
lower gold sales.

During the 2004 fiscal year negative operating cash flow
amounted to $17,545,532 (2003  negative $2,102,899) as efforts were made to
increase production and make the Corporation become cash flow positive and the
Corporation raised almost $38 million on a net basis to fund its operations and
exploration initiative.

Operating Expenses

Operating costs rose significantly to $25,045,418 (2003 
  $10,787,637) in fiscal 2004 as near term development and stope mining increased
  as part of establishing underground production.

33

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The 2004 operating costs included costs incurred on the No. 3
Shaft, Lake Shore Ramp and milling operations, with approximately 60% of current
operating costs relating to labour. In fiscal 2004 the Corporation experienced
higher diamond drilling costs with 130,000 feet of definition drilling carried
out, which also contributed to a rise in operating costs.

In November 2003, the Corporation embarked on a planned $21
million three year exploration program targeted at finding significant new gold
reserves and resources. Exploration costs for fiscal 2004 were $3,124,589 (2003
 $ 1,798,836), of which over $2.5 million was spent on flow through
expenditures. As such, after raising $7.7 million in flow-through Common
Shares in late 2003, $5.2 million was required to be (and was) spent on eligible
exploration expenditures by December 31, 2004.

Restricted Cash

Under U.S. GAAP, funds raised from the issue of flow-through
shares which have not yet been disbursed on qualifying exploration expenditures
would be disclosed as restricted cash and excluded from current assets.
Accordingly, cash and cash equivalents under U.S. GAAP would be reduced by Cdn$
5,163,723 at April 30, 2004 (2003  nil) and restricted cash would be presented
outside of current assets on the balance sheet.

Capital Expenses

During the 2004 fiscal year, total capital expenditures climbed
to $11,113,659, up from $7,046,301 reported for the prior year. Of this amount,
$4,839,072 was spent on the purchase of equipment. This equipment consisted of
jumbo drills, scoop trams and long-tom drills, resulting in a higher level of
mechanization than has been historically utilized which, in turn, should support
higher production levels.

The re-commissioning of the No. 2 Shaft was completed after
spending approximately $1 million over several months.

The remaining$6,274,587 was invested in developmental
projects which included raiseboring, lateral development, rehabilitation of
three levels (4,750 foot level, 4,900 foot level, and the 5,025 foot level), and
the expansion of the paste fill distribution system.

Production and Costs

Gold sales during the 2004 fiscal year were 18,623 troy ounces
with an average price of Cdn$ 526 per ounce. This compares with gold sales from
surface production of 23,431 ounces with an average sales price of Cdn$ 499 per
ounce during the prior year. Gold sales for fiscal 2004 were lower than
projected with roughly two-thirds of the shortfall due to the average ore grade
being lower than expected and the balance related to fewer tons of ore
mined.

Cash flow used for operations during fiscal 2004 was
$17,545,532 (2003  $2,102,899), the increase being largely due to the
Corporation building a significantly larger mining workforce and undertaking
significantly more near-term development work, in its quest to reach sustainable
and profitable production levels. During fiscal 2004, 101,186 tons of rocks were
broken underground, of which 58,828 tons was ore and 51,358 tons was waste.
Furthermore, 8,864 feet of lateral and vertical stope development was completed.
There was no underground development undertaken during the prior fiscal
year.

The dewatering campaign continued in fiscal 2004 and, as a
result, three levels (4,750 foot level, 4,900 foot level and 5,025 foot level)
were rehabilitated, and the microseismic system coverage was expanded down to
the 5,025 foot level to provide for accurate and timely seismic event location.
Lastly, work began on the No. 5 Shaft re-commissioning project with engineering
work completed on the hoist and headframe design.

34

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The Corporation incurred $1,229,508 (2003  $785,337) in
amortization and depletion of asset costs and $940,280 (2003  $835,504) on
interest and bank charges and amortization of finance charges. For the year
ended April 30, 2004, general and administrative expenses (including share based
compensation) were $1,889,778, which is lower than the $2,264,735 reported for
the prior year due to the Corporation incurring fees associated with listing on
the Toronto Stock Exchange during that prior fiscal year.

Finally, the balance of $2 million of the $5 million purchase
price of the Kirkland Lake Mining Properties was paid to Kinross Gold
Corporation during fiscal 2004.

B.          
LIQUIDITY AND CAPITAL RESOURCES

The Corporations cash balance at April 30, 2004 was
$11,720,591 (2003  $3,664,607), an increase of $8,055,984 from April 30, 2003,
while its working capital surplus was $3,633,306 compared to a working capital
deficit of $2,372,658 as at April 30, 2003, an improvement of $6,005,964.

The Corporation was required to spend $7.7 million raised in a
flow-through financing on exploration by December 31, 2004. By April 30, 2004
a total of $2.5 million had been spent on qualifying expenditures, with the
balance of $5.2 million being spent by the December 31, 2004 deadline.

During the 2004 fiscal year proceeds from the issuance of
equity totalled $37.7 million (including $4.2 million from the exercise of
options and warrants) and $1 million was raised by issuing a convertible
debenture in August 2003. Also during the 2004 fiscal year, the maturity date of
a convertible loan in the principal amount of $2,187,500 was extended from June
11, 2003 to June 11, 2004. As at April 30, 2004 the Corporation had outstanding
indebtedness of $3,088,818 from the issuance of these convertible securities.
There were no restrictions on the use of such borrowings. In the 2004 fiscal
year, the Corporation made payments of $2,000,000 on notes payable.

The Corporations borrowings are not subject to any changes due
to seasonality. Funds are generally held in Canadian currency. The Corporation
does not use financial instruments for hedging purposes.

The total amount of new capital invested in the Corporations
operations stood at $11,113,659 for fiscal 2004 (2003  $7,046,301 and 2002 
$1,556,084). Of this amount $4,839,072 (2003  $857,584 and 2002  nil) being
for new mining equipment, and the balance of $6,274,587 being on development
expenditures (2003  $6,188,717 and 2002  $1,556,084), as the Corporation
sought to reach profitability.

35

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Subsequent Events

On June 10, 2004 the Corporation completed the sale, by way of
private placement, of a convertible promissory note in the principal amount
$2,406,250. The note matured on December 10, 2004 and paid interest at the rate
of 10% per year. The principal amount was convertible by the lender into Common
Shares at the rate of $4.40 per share and the accrued interest was convertible
by the lender into Common Shares at that rate equal to $4.40 per share or such
higher rate required by the Toronto Stock Exchange. As a bonus for making the
loan, the Corporation issued the lender a total of 60,156 Common Shares. The
lender converted the loan on December 10, 2004 into 546,875 Common Shares and
was paid the accrued interest of $120,312.

On July 29, 2004, the Corporation completed the sale, by way of
private placement, of 3,987,730 Common Shares at a price of £1.63 (approximately
Cdn$ 4.00) each for gross proceeds of £6,500,000 (approximately Cdn$
15,950,920). The agents for the placement were paid a £390,000 (approximately
Cdn$ 957,055 or 6%) cash commission and issued 199,386 warrants to purchase
199,386 Common Shares, which warrants are exercisable until January 30, 2006 at
a price of £1.63 (approximately Cdn$ 4.00) per share.

On November 16, 2004, the Corporation completed the sale, by
way of private placement, of 1,950,292 Common Shares at a price of £2.70
(approximately Cdn$ 6.00) each for gross proceeds of £5,265,788 (approximately
Cdn$ 11,701,752). The agents for the placement were paid a £315,947
(approximately Cdn$ 702,105 or 6%) cash commission.

On December 10, 2004 the lender under a convertible promissory
note in the principal amount $2,406,250, which paid interest at 10% per year,
had a term of six months and matured on December 10, 2004, was issued 546,875
Common Shares upon the lenders election to convert the principal amount into
Common Shares at the rate of $4.40 per share on the maturity of the note. The
lender elected to be paid the accrued interest of $120,312 in cash.

On December 22, 2004 the Corporation completed the sale, by way
of private placement, of 500,000 Common Shares at a price of $6.00 each for
gross proceeds of $3,000,000. The shares were flow-through Common Shares
entitling the investors to certain tax benefits under applicable Canadian tax
legislation. The agent for the placement was paid a $180,000 (6%) cash
commission.

On February 11, 2005 the lender under a convertible promissory
note in the principal amount $1,000,000, which paid interest at 10% per year,
had a term of 18 months and matured on February 11, 2005, was issued 250,000
Common Shares upon the lenders election to convert the principal amount into
Common Shares at the rate of $4.00 per share on the maturity of the note. The
lender did not elect whether to convert the accrued interest into Common Shares
at that rate equal to $4.00 per share or such higher rate required by the
Toronto Stock Exchange or be paid the accrued interest in cash. Accordingly, the
Corporation has recorded the accrued interest of $150,685 as an account payable
and is seeking payment instructions from the lender.

On August 25, 2005 the Corporation completed the sale, by way
of private placement, of 1,250,000 units at a price of $4.00 each for gross
proceeds of $5,000,000. Each unit consisted of one Common Share and one-half of
a Common Share purchase warrant. Each whole warrant entitled the placee to
purchase a further Common Share for $4.60 until May 25, 2006. A finder was paid
a $200,000 cash fee in connection with the placement.

On September 26, 2005 the Corporation completed the sale, by
way of private placement, of 1,000,000 units at a price of $4.00 each for gross
proceeds of $4,000,000. Each unit consisted of one Common Share and one-half of
a Common Share purchase warrant. Each whole warrant entitled the placee to
purchase a further Common Share for $4.60 until June 28, 2006. A finder was paid
a $200,000 (5%) cash fee in connection with the placement.

36

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On October 12 and 14, 2005 the Corporation completed the sale,
by way of private placement, of 555,500 Common Shares at a price of $4.50 each
for gross proceeds of $2,499,750. The shares were flow-through Common Shares
entitling the investors to certain tax benefits under applicable Canadian tax
legislation. Finders were paid an aggregate of $125,000 (5%) in cash fees in
connection with the placement.

On May 24 and 25, 2006 and June 2, 2006 the Corporation
completed the sale, by way of private placement, of an aggregate of 1,793,500
units at a price of $9.20 each for gross proceeds of $16,500,200. Each unit
consisted of one Common Share and one-half of a Common Share purchase warrant.
Each whole warrant entitles the placee to purchase a further Common Share for
$10.50 for a period of 12 months from the respective closings. Finders were paid
an aggregate of $990,000 (6%) in cash fees in connection with the placement.

Outlook

The Corporation expected gold production for its 2004 fiscal
year to be between 30,000 to 50,000 ounces. Actual production was 19,265 ounces
of gold. The shortfall is attributable to the extended time taken to develop key
reserve blocks which were of higher grade ore. A major contributing factor to
the length of time for reserve development were conditions underground, levels
of required manpower, and overall productivity. All stopes required
rehabilitation and development in order to put them into a producing mode and
due to the amounts of re-timbering, re-supporting the ground, and re-installing
infrastructure necessary to carry on the work, this timeframe was extended. The
level rehabilitation certainly impeded the planned development and stoping
activities required for the extraction of the reserve.

In the 2004 fiscal year, the Corporation made considerable
strides in developing the Mine Complex using its own mining workforce. The major
challenge was to build its own mining workforce, unfortunately, the shortage of
skilled labour, in particular, of underground miners, continued to restrain the
Corporations progress to do so.

In addition to seeking to continue to improve efficiencies,
finding additional low cost ore reserves remains a top priority of the
Corporations management as part of the three year approximately $21 million
program that commenced during the third quarter of fiscal 2004 and expected to
be completed in fiscal 2007.

Capital expenditures in fiscal 2005 were expected to be $4.7
million, or $6.4 million lower than reported levels reported for the 2004 fiscal
year, with roughly half of program spending on longer-term developmental work.
Actual expenditures were $9.9 million. The excess expenditures are attributable
to the acquisition of mobile equipment, as the Corporation continued to enhance
its mining equipment to meet the requirements of the operation with some of the
enhancement being outside the early projections for capital. In addition, the
increase in capital spending was due to the development of significant
exploration results, which have identified ore reserves, the bulk of which were
not mined in the 18 months following the end of the 2004 fiscal year.

Capital spending in fiscal 2006 on mine development and
equipment increased to $14.6 million, up from $9.9 million reported for the
prior year. This increase resulted from an additional $6.1 million of mine
development costs incurred during the year.

Capital expenditure commitments in fiscal 2007 are approximately
  $9.6 million. These funds will be used for the development of newly-discovered
  ore and the purchase of capital equipment. The Corporation expects that such
  funds will be provided from operating revenue and proceeds from its recent financing
  and exercise of warrants and options.

The Corporation believes its current working capital is sufficient
  for its present purposes.

37

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As at April 30, 2004 the Corporations ability to continue
  as a going concern was dependent on future financings until the attainment of
  profitable and cash-generating operations, sufficient to sustain it. The Corporations
  financial statements contained herein do not include any adjustments to the
  recoverability and classification of recorded asset amounts and classification
  of liabilities that might be necessary, should the Corporation be unable to
  continue as a going concern.

C.          
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

Not Applicable

D.TREND INFORMATION

The Corporation commenced production at its mining properties
during May 2002 and has gradually increased its gold production ever since. The
most critical task to increase gold production in the 2005 fiscal year is to
complete the dewatering and preparation for mining of the 4900-foot to 5700-foot
levels. These levels permit the access of important reserves and critical
infrastructure (such as two loading pockets for hoisting the ore to surface)
requiring re-commissioning and provide an exploration platform to carry out
critical exploration drilling. The on-going exploration campaign and the
extensive definition drilling work are also important factors for increased and
more efficient gold production.

Continuing operation of these properties is dependent on there
being a sufficient quantity and an economic grade of ore to be processed  which
is dependent on the price of gold and the Corporations efficiency in
controlling mining and, in particular, labour costs. If the price of gold is to
drop significantly, and the costs are not sufficiently controlled, it is
possible that the mining properties would become uneconomical to operate (and
which would have an adverse effect on the Corporations ability to raise funds
in the equity markets required to sustain operations until profitability is
attained).

The Corporation has increased the size of its mining workforce
to meet the requirements of its production. While the Corporation has made
considerable progress in its efforts to recruit experienced miners, additional
progress must be made.

Provided the Corporation has adequate funding and the price of
gold remains favourable, the Corporation plans to develop the five gold
properties into a medium cost and productive gold mine.

To the Corporations knowledge, there are not, during the
current financial year, any known trends, uncertainties (other than the price of
gold), demands, commitments or events that are reasonably likely to have a
material effect on the revenues, income from continuing operations,
profitability, liquidity or capital resources, or that would cause reported
financial information not necessarily to be indicative of future operating
results or financial condition.

E.OFF-BALANCE SHEET ARRANGEMENTS

The Corporation does not have any; off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on its financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to investors.

For the purposes of the foregoing, the term off-balance sheet
arrangement means any transaction, agreement or other contractual arrangement
to which an entity unconsolidated with the Corporation is a party, under which
it has:

|(a) | Any obligation under a guarantee contract that has any of
      the characteristics identified in paragraph 3 of the United States
      Financial Accounting Standards Board (FASB) Interpretation No.
      45, Guarantors Accounting and Disclosure Requirements for Guarantees,
      Including Indirect Guarantees of Indebtedness of Others(November
      2002) (FIN 45), as may be modified or
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

38

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|    | supplemented, excluding the types of guarantee contracts
      described in paragraphs 6 and 7 of FIN 45;                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(b) | A retained or contingent interest in assets transferred
      to an unconsolidated entity or similar arrangement that serves as credit,
      liquidity or market risk support to such entity for such assets;                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(c) | Any obligation under a derivative instrument that is both
      indexed to the Common Shares and classified in stockholders equity, or
      not reflected, in the Corporations statement of financial position;
    or                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(d) | Any obligation, including a contingent obligation,
      arising out of a variable interest (as referenced in FASB Interpretation
      No. 46, Consolidation of Variable Interest Entities(January 2003),
      as may be modified or supplemented) in an unconsolidated entity that is
      held by, and material to, the Corporation, where such entity provides
      financing, liquidity, market risk or credit risk support to, or engages in
      leasing, hedging or research and development services with, the
      Corporation.

F.TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

As of the Corporations fiscal year ended April 30, 2004, the
Corporations known contractual obligations identified in the following table
are:

Payments Due by PeriodContractual Obligations
      Total
      Less than 1 year
      1- 3 years
      3 -5 years
      More than 5 yearsLong-Term Debt Obligations
    $2,043,435
    
    
    
    $2,043,435 (1)Capital (Finance) Lease Obligations
    
    
    
    
    Operating Lease Obligations
    
    
    
    
    Purchase Obligations
    $84,000
    
    
    
    $84,000Other Long-Term Liabilities reflected on
      the Corporations Balance Sheet under Canadian GAAP
    
    
    
    
    Total
    $2,127,435
    
    
    
    $2,127,435


|(1) | This amount represents funds posted for reclamation bonds
      in connection with the acquisition of the Macassa and Lake Shore Mines.
      See Item 4 History and Development of the Company  History  Current
      Operations  Acquisition of Kirkland Lake Mining
Assets.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

39

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G.SAFE HARBOR

The safe harbour provided in Section 27A of the Securities
  Act and Section 21E of the Exchange Act applies to forward-looking
  information provided pursuant to sections E Off-Balance Sheet Arrangements
  and F Tabular Disclosure of Contractual Obligations of this Item.

ITEM
6DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.DIRECTORS AND SENIOR MANAGEMENT

All of the directors of the Corporation are elected annually by
the shareholders and hold office until the next annual meeting of shareholders
or until their successors are duly elected and qualified, unless they sooner
resign or cease to be directors in accordance with the Corporations By-Laws.
The Corporations last regular annual meeting was held on October 6, 2005. The
Corporations officers are appointed by and serve at the pleasure of the Board
of Directors.

As at the date hereof, the following persons were the officers,
directors and senior management of the Corporation:

Name(1)
      Position with the Corporation
      SinceDOBSON, D. Harry W.
      Chairman of the Board of Directors
      October 11, 2001HINCHCLIFFE, Brian A.
      President, Chief Executive Officer and Director
      February 26, 2001RODRIGUE, Robert G.(2)
      Chief Financial Officer
      March 14, 2005THOMSON, John S.
      Executive Vice-President
      May 19, 2006LEE, Sandra
      Corporate Secretary
      February 27, 1995SUTTON, Michael W.(3)
      Chief Geologist & Assistant General Manager
      February 1, 2002MIDDLEMISS, Duncan K.(3)
      Engineering & Production Manager
      September, 9,2002BELECQUE, Raymond A.
      General Manager
      January 1, 2002BAYLEY, Brian E.(4)
      Director
      October 15, 1998KOSTUIK, S. Paul(4)
      Director
      February 26, 2001MILTON, George A(4)
      Director
      December 1, 2003


|(1) | None of such persons has any family relationship with any
      other and none were elected as a director or appointed as an officer as a
      result of an arrangement or understanding with a major shareholder,
      customer, supplier or any other party.                                       
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                        
|(2) | Robert G. Rodrigue, the Corporations former Controller,
      replaced the Corporations former Chief Financial Officer, Robert P
      Hinchcliffe, as Chief Financial Officer on March 14, 2005. Robert
      Hinchcliffe is the brother of the Corporations President, Brian A.
      Hinchcliffe.
|    |                                                                                                                                                                                                                                                                                                        
|(3) | The Corporation relies upon Michael Sutton and Duncan
      Middlemiss to review and approve all technical information contained in
      its written disclosure.                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                        
|(4) | Audit Committee member.                                                                                                                                                                                                                                                                                

The following is biographical information on each of the
persons listed above:

D. HARRY W. DOBSON has served as a director and the
Chairman of the Board of Directors since October 11, 2001. In addition to his
activities with the Corporation Mr. Dobson engages in various merchant banking
and venture capital activities in North America and Europe. Mr. Dobson was
formerly

40

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Deputy Chairman of Lytton Minerals Limited (publicly traded diamond
  exploration company). He is the founder and former Chairman of American Pacific
  Mining Company Inc. (publicly traded mining company). Mr. Dobson also holds
  the following principal directorships of other publicly traded companies:

Issuer
      BusinessBelvedere Resources Ltd.
    Gold, copper & base metal explorationBorders and Southern Petroleum Plc
    Petroleum explorationBrazauro Resources Corp.
    Gold explorationMountain Province Diamonds Inc.
    Diamond explorationOvoca Resources Plc
    Platinum, gold & zinc explorationRambler Metals & Mining Plc
    Copper & gold explorationSuroco Energy Inc.
    Petroleum & natural gas explorationWestern Uranium Corp.
    Uranium exploration


BRIAN A. HINCHCLIFFE has served as President and Chief
Executive Officer since February 26, 2001 and as a director since February 26,
2001. Mr. Hinchcliffe was formerly President of Jordex Resources Inc. (publicly
traded mining company). Prior to that, he was the President of American Pacific
Mining Company Inc. (publicly traded mining company). Mr. Hinchcliffe also holds
the following principal directorships of other publicly traded companies:

Issuer
      BusinessRambler Metals & Mining Plc
    Copper & gold explorationRupert Resources Ltd.
    Gold explorationSuroco Energy Inc.
    Petroleum & natural gas exploration


ROBERT G. RODRIGUE has served as Chief Financial Officer
since March 14, 2005 and prior thereto he was the Corporations controller since
December 29, 2003. Mr. Rodrigue served most recently as senior controller at a
major oil production project in Alberta. Prior to that, he served in senior
management accounting positions at a number of large underground and open-pit
mining operations for more than 25 years. Mr. Rodrigue does not have any
business activities outside the Corporation.

JOHN S. THOMSON has served as Executive Vice-President
since May 19, 2006. Mr. Thomson is a Chartered Accountant from Scotland who has
also studied at INSEAD (a graduate business school based in Fontainebleau, near
Paris). He has worked internationally in a variety of senior roles for companies
including PepsiCo. Most recently, Mr. Thomson has built up and continues to
maintain a successful consulting business providing advice to institutional
shareholders and management teams in the media, minerals and technology sectors.
He is a director (non-executive) of Parragon Publishing Ltd, a successful
international publisher with operations in Europe, India, the UK and USA and was
formerly the Managing Director of Vianet Group Plc., a publicly traded
technology company based in the United Kingdom. Mr. Thomsons business
activities outside the Corporation consist of providing consulting services
described above.

SANDRA LEE has served as Corporate Secretary since February
  27, 1995. Ms. Lee is a certified legal assistant and is currently Corporate
  Secretary of Quest Capital Corp. (a publicly traded merchant banking company)
  and Quest Management Corp. (a management company wholly-owned by Quest Capital
  Corp.). Previously, she was Assistant Corporate Secretary and Corporate Secretary
  of Quest Oil & Gas Inc. (publicly traded oil and gas company) from May,
  1995 to April, 1997 and before that she worked as a legal assistant for a number
  of large law firms in the areas of corporate and securities laws. She is the
  corporate secretary of a number of publicly traded companies, including the
  following principal companies:

41

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Issuer
      BusinessGreystar Resources Ltd.
    Gold explorationMidway Gold Corp.
    Gold explorationQuest Capital Corp.
    Merchant banking


MICHAEL W. SUTTON has served as Chief Geologist since
February 1, 2002 and as Assistant General Manager since November 2003.
Previously he was employed at the Macassa Mine as a Geologist for over eight
years and as Chief Geologist since 1997 by Kinross Gold Corporation. Mr. Sutton
does not have any business activities outside the Corporation other than
prospecting.

DUNCAN K. MIDDLEMISS has served as Engineering &
Production Manager since November 2004 and, prior thereto, as Chief Mine
Engineer since September 9, 2002. Previously he was employed by Barrick Gold
Corp. as Chief Mine Engineer. Mr. Middlemiss does not have any business
activities outside the Corporation

RAYMOND A. BELECQUE has served as General Manager since
January 1, 2002. Previously he was employed as Operations Superintendent and
Mill Superintendent for the Macassa Mine by Kinross Gold Corporation. Mr.
Belecque has over 30 years of experience working at the mine site. Mr. Belecque
does not have any business activities outside the Corporation.

BRIAN E. BAYLEY has served as a director since October
15, 1998. Mr. Bayley is the President and Chief Executive Officer of Quest
Capital Corp. and President of Quest Management Corp. Mr. Bayley is an officer
and director of a number of public companies and holds the following principal
directorships of other publicly traded companies:

Issuer
      BusinessAmerican Natural Energy Corp.
    Petroleum and natural gas productionGreystar Resources Ltd.
    Gold explorationMidway Gold Corp.
    Gold explorationPetroFalcon Corporation
    Petroleum and natural gas productionQuest Capital Corp.
    Merchant bankingTransAtlantic Petroleum Corp.
    Petroleum and natural gas production


Previously, Mr. Bayley was the Vice-President, Corporate
Administration from September, 1986 to October, 1990, the President and Chief
Executive Officer from October, 1990 to October, 1996, a director from November,
1990 to April, 1997 and the Corporate Secretary from October, 1996 to April,
1997 of Quest Oil & Gas Inc.

S. PAUL KOSTUIK has served as a director since February
26, 2001. Mr. Kostuik is a Professional Engineer and a self-employed mining
consultant. He was formerly Chairman and Chief Executive Officer of Jordex
Resources Inc. and formerly President of Quintette Coal Ltd. (privately held
senior coal mining company). Mr. Kostuik is not a director of any other publicly
traded company.

GEORGE A. MILTON has served as a director since December
1, 2003. Mr. Milton is a retired stock broker. He was formerly a Vice-President
of Richardson Greenshield of Canada Ltd. (a stock brokerage company) from 1996
to April 1, 1998, a Director of Moss Lawson & Co. Limited (a stock brokerage
company) from 1993 to 1995 and prior thereto a stock broker with, and eventually
becoming a director of, Midland Walwyn Ltd. (a stock brokerage company) for 31
years. Mr. Milton does not hold any other directorship in any publicly traded
companies.

42

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B.COMPENSATION

Compensation Summary

The following table sets forth details of the compensation paid
  during the Corporations fiscal year ended April 30, 2004 to its directors,
  officers and senior management:

Name
      Position
      Salary (Cdn$)
      Bonus (Cdn$)
      Benefits & Other Compensation(1) (Cdn$)DOBSON, D. Harry W.
    Chairman of the Board of
      Directors
    0
    0
    0HINCHCLIFFE, Brian A.
    President, Chief Executive
      Officer & Director
    177,172
    0
    0HINCHCLIFFE, Robert P.
    Former Chief Financial Officer
      (2)
    124,693
    0
    0RODRIGUE, Robert G.
    Chief Financial Officer
      (2)
    24,923
    0
    0LEE, Sandra
    Secretary
    0
    0
    0SUTTON, Michael W.
    Chief Geologist &
      Assistant General Manager
    77,300
    2,000
    0MIDDLEMISS, Duncan K.
    Engineering & Production
      Manager
    87,400
    2,000
    0BELECQUE, Raymond A.
    General Manager
    80,900
    30,000
    0BAYLEY, Brian E.
    Director
    0
    0
    0HOLMES, Warren W.
    Director (3)
    0
    0
    0KOSTUIK, S. Paul
    Director
    0
    0
    0SINCLAIR, A. Murray
    Director (3)
    0
    0
    0


|(1) | Senior management did not receive any benefits from the
      Corporation other than health, dental and similar benefits on the same
      basis as paid to other employees. See Share Ownership  Options to
      Purchase Securities from the Corporation or Subsidiary below for
      particulars of stock options granted to directors and officers.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                             
|(2) | Robert G. Rodrigue, the Corporations former Controller,
      replaced the Corporations former Chief Financial Officer, Robert P
      Hinchcliffe, as Chief Financial Officer on March 14, 2005. The amount
      shown is for the entire year.                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                             
|(3) | Subsequent to the 2004 fiscal year end, two members of
      the Board of Directors resigned  W. Warren Holmes resigned on June 14,
      2004 and A. Murray Sinclair resigned on May 10,
2005.                                                                                                                                                            

Agreements with Senior Officers

Other than employment agreements entered into in the ordinary
  course of business, the Corporation has entered into consulting agreements with
  two senior officers as follows:

Brian A. Hinchcliffe, President and Chief Executive
Office:Written consulting agreement dated March 15, 2001 pursuant to
which Mr. Hinchcliffe provides the services of a chief executive officer for the
Corporation at a remuneration of US$ 120,000 per year. In consideration of Mr.
Hinchcliffe entering into the agreement the Corporation paid Mr. Hinchcliffe a
bonus of US$ 30,000. Effective March 1, 2004 the remuneration under the
agreement was increased from US$ 120,000 to US$ 225,000 per year. In addition,
bonuses and stock options may be paid or granted in the discretion of the Board
of Directors. The agreement may be terminated upon two months notice.

43

---

Robert P. Hinchcliffe, Chief Financial Officer: Oral
consulting agreement made in January 2003 and terminated on March 13, 2005
pursuant to which chief financial officer services were provided to the
Corporation at a remuneration of US$ 85,000 per year. Pursuant to the agreement
Mr. Hinchcliffe has been granted an incentive stock option to purchase 50,000
Common Shares at Cdn$ 2.20 per share until January 10, 2008.Effective
February 1, 2004 the remuneration under the agreement was increased from US$
85,000 to US$ 115,000 per year. In addition, bonuses and further stock options
may be paid or granted in the discretion of the Board of Directors. The
agreement was terminated on March 14, 2005 by mutual consent so Mr. Hinchcliffe
could pursue other business endeavours.

Pension, Retirement & Similar Benefits

The Corporation does not have any pension or retirement plans
nor does it provide any similar benefits to its directors, officers and senior
management.No amounts were set aside or accrued by the Corporation
during fiscal 2004 to provide pension, retirement or similar benefits for
directors, officers and senior management of the Corporation.

Administration Agreement

Pursuant to an agreement dated as of February 1, 1997 between
the Corporation and Quest Management Corp. (Management) of Suite 300,
570 Granville Street, Vancouver, British Columbia the Corporation pays $3,500
per month to Management in consideration of Management providing office space
and certain services, including reception, secretarial, accounting and corporate
records services, to the Corporation. These services include those of the
Corporations corporate secretary.

Management is a wholly-owned subsidiary of Quest Capital Corp.
(Capital), the shares of which trade on the Toronto Stock and American
Stock Exchanges and the AIM market of the London Stock Exchange. Brian E.
Bayley, the President and Chief Executive Officer and a director of Capital, is
a director of the Corporation and Sandra Lee, the Corporate Secretary of
Capital, is the Corporate Secretary of the Corporation.

C.BOARD PRACTICES

Directors, Officers and Term of Office

Members of the Board of Directors are elected by the
Corporations shareholders to represent the interests of all shareholders. The
Board of Directors meets periodically to review significant developments
affecting the Corporation and to act on matters requiring Board approval.
Directors hold office until they resign or the next Annual Meeting, whichever is
earlier. The Board of Directors may appoint a director to fill a vacancy at any
time in accordance with the By-Laws of the Corporation.

Officers are appointed from time to time by the Board of
Directors. The Board, in its discretion, may remove any officer of the
Corporation, otherwise each officer shall hold office until their successor is
appointed or until they resign, whichever is earlier.

Senior management employees are retained by the Corporations
Senior Officers from time to time. The Senior Officers, in their discretion, may
remove any senior management employees of the Corporation, otherwise each
officer shall hold office until their successor is appointed or until they
resign, whichever is earlier.

Service Contracts with Directors

Other than stock options which may be granted from time to
time, the Corporation does not compensate its directors for their services as
directors and does not have any service contracts with directors providing for
payment of benefits upon termination of employment.

44

---

Directors are entitled to reimbursement for reasonable travel
and other out-of-pocket expenses incurred in connection with attendance at
meetings of the Board of Directors. The Board of Directors makes separate
remuneration to any director undertaking services on behalf of the Corporation
other than services ordinarily required of a director.

Board Committees

The only standing committee of the Board of Directors of the
Corporation is an Audit Committee. The Audit Committee is responsible for
reviewing the Corporations annual and quarterly interim financial statements
before they are reviewed and approved by the Board, the Corporations financial
reporting procedures and internal controls and the performance of the
Corporations auditor. Such reviews are carried out with the assistance of the
Corporations auditor, as required, and the Corporations senior financial
management.

Members of the Audit Committee may be appointed any time by the
Board of Directors. The Board, in its discretion, may change the membership and
fill vacancies in the committee, otherwise members shall serve until their
successor is appointed or until their earlier resignation. The Audit Committee
consists of Brian E. Bayley, George A. Milton and S. Paul Kostuik.

D.EMPLOYEES

All of the Corporations employees work at the Corporations
  Mine Complex in Kirkland Lake, Ontario in the following areas:

**Area**
      Number of Employees (by area)
        as at April 302004
      2003
      2002Full-time
      Part-time
      Full-time
      Part-time
      Full-time
      Part-timeAdministration
    47
    3
    31
    5
    7
    0Maintenance
    25 (1)
    2
    10 (1)
    1
    0
    0Production - Underground - Above Ground
    131 (2)21
    12 2
    16 (2)13
    8 0
    0 0
    0 0


|(1) | Some maintenance is carried out for the Corporation by
      independent contractors.                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                               
|(2) | Some underground production was carried out for the
      Corporation by independent contractors in fiscal 2003, however, commencing
      part way through fiscal 2004 the Corporation began carrying out
      underground production using its own employees resulting in a greater
      number of employees engaged in underground production as at April 30,
      2004.

The Corporations employees voted to decertify as a union in
fiscal 2003. During the summer of 2003, the union which claimed to represent
former workers at the Mine withdrew its claim.

E.SHARE OWNERSHIP

Share Ownership

The following table sets out the Common Shares beneficially
held by the directors, officers and senior management of the Corporation:

45

---

Name
      Position with
      the Corporation
      Number & Percentage of
      Outstanding Common Shares Owned as at June 30, 2006(1)DOBSON, D. Harry W.
    Chairman of the Board of
      Directors
    3,390,000 (6.4%)HINCHCLIFFE, Brian A.
    President, Chief Executive
      Officer & Director
    1,138,000 (2.1%)THOMSON, John S.
    Executive Vice-President
    0RODRIGUE, Robert G.
    Chief Financial Officer
    0LEE, Sandra
    Corporate Secretary
    0SUTTON, Michael W.
    Chief Geologist & Assistant
      General Manager
    0MIDDLEMISS, Duncan K.
    Engineering & Production
      Manager
    0BELECQUE, Raymond A.
    General Manager
    0BAYLEY, Brian E.
    Director
    9,700 (0.02%)KOSTUIK, S. Paul
    Director
    33,500 (0.06%)MILTON, George A.
    Director
    1,058,795 (2.0%)


|(1) | A total of 52,840,388 Common Shares were issued and
      outstanding as at June 30, 2006. Numbers shown do not include Common
      Shares issuable upon exercise of options or warrants. See Options to
      Purchase Securities from the Corporation or Subsidiary
  below.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

None of the persons set out in the foregoing table have
different voting rights than other shareholders.

Options to Purchase Securities from the Corporation or
Subsidiary

The Corporation may grant, pursuant to its stock option plan,
stock options to directors, officers and employees of and consultants to the
Corporation or a subsidiary or to employees of a company providing management
services to the Corporation in consideration of them providing their services to
the Corporation or subsidiary. The options enable such persons to purchase
Common Shares at a price fixed pursuant to the rules of the Exchange.

The number of Common Shares subject to each option is
determined by the Corporations Board of Directors within the guidelines
established by the plan and the rules of the Toronto Stock Exchange. The options
can have a term of up to 10 years, but it is the Corporations policy to grant
options for a term of no more than five years.

The option agreements must provide that the option can only be
exercised by the optionee and only so long as the optionee shall continue in the
capacity as a director, officer or employee of or consultant to the Corporation
or subsidiary or as an employee of the management company and during a period of
not more than 90 days after ceasing to be a director, officer, employee or
consultant (30 days if employed in an investor relations capacity) or, if the
optionee dies, one year from the date of the optionees death. The options are
exercisable by the optionee giving the Corporation notice and payment of the
exercise price for the number of Common Shares to be acquired. The agreements
further provide that disinterested shareholder approval will be obtained prior
to the reduction of the exercise price of options granted to insiders. Other
than stock options there are no arrangements with the Corporations employees to
allow them to participate in the Corporations capital.

The following table sets out the names of the directors,
officers and senior management of the Corporation to whom stock options have
been granted and the number of Common Shares subject to such stock options:

46

---

Name
      Number of Common Shares under Options
      Granted in 2004 Fiscal year
      Number
      of Common Shares under Options Outstanding at
      Price Exercise
      (Cdn$)
      Expiration DateApril 30,
        2004
      June 30,
        2006Officers:DOBSON, D. Harry W. Chairman of the Board
    0
    100,000
    100,000
    1.35
    October 3, 2006HINCHCLIFFE, Brian A. President & CEO
    0
    200,000
    0
    1.10
    March 27, 2006HINCHCLIFFE, Robert P. (1)Former Chief Financial Officer
    0
    0
    
    
    RODRIGUE, Robert G. (1)Chief
      Financial Officer
    
    
      17,500  4.70  September 24, 2009THOMSON, John S. (2)Executive
      Vice-President
    
    
    0
    
    LEE, Sandra Secretary
    0
    0
    0
    
    Directors:BAYLEY, Brian E.
    0
    50,000
    50,000
    1.35
    October 3, 2006HOLMES, W. Warren (3)
    0
    35,000
    
    2.05
    September 12, 2004KOSTUIK, S. Paul
    0
    0
    0
    
    MILTON, George A.
    0
    100,000
    100,000
    3.95
    November 26, 2008SINCLAIR, A. Murray (3)
    0
    0
    
    
    Senior Management:SUTTON, Michael W. Chief Geologist
      & Assistant General Manager
    0 0
    40,000 20,000
    20,000 20,000
    1.35 2.20
    October 3, 2006 January 10, 2008MIDDLEMISS, Duncan K. Engineering &
      Production Manager
    0 0
    30,000 0
    0 5,000
    2.20 4.70
      January 10, 2008 
        September 24, 2009BELECQUE, Raymond A. General Manager
    0
    10,000
    0
    2.20
    January 10, 2008


|(1) | Robert G. Rodrigue, the Corporations former Controller,
      replaced the Corporations former Chief Financial Officer, Robert P
      Hinchcliffe, as Chief Financial Officer on March 14, 2005.                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                             
|(2) | John S. Thomson was appointed Executive Vice-President on
      May 19, 2006.                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                             
|(3) | Subsequent to the 2004 fiscal year end, two members of
      the Board of Directors resigned  W. Warren Holmes resigned on June 14,
      2004 and A. Murray Sinclair resigned on May 10, 2005. Their options
      terminated 90 days after they resigned.

47

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**ITEM 7****MAJOR SHAREHOLDER AND RELATED PARTY TRANSACTIONS**

A.MAJOR SHAREHOLDERS

The Corporation is currently a publicly-held company, with its
Common Shares held by residents of Canada, the United States of America and
other countries. To the best of its knowledge, the Corporation is not
controlled, directly or indirectly, by another company, any government or any
natural or legal persons, severally or jointly, and no person, company or other
entity owns, directly or indirectly, or controls more than 5% of the Common
Shares, the only class of securities with voting rights, except for those listed
below:

Name and Relationship to Corporation
      Number of Shares Beneficially
      Owned(1) as at June 30, 2006
      Percentage of Class(2)DOBSON, D. Harry W. Chairman of the Board of Directors
    3,490,000 (3)
    6.6%


|(1) | Shares Beneficially Owned includes Common Shares
      issuable pursuant to the exercise of warrants or stock options held by the
      named party.                                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                       
|(2) | Based on 52,840,388 Common Shares issued and outstanding
      at June 30, 2006 plus Common Shares issuable pursuant to the exercise of
      warrants or stock options held by the named party.                                                                      
|    |                                                                                                                                                                                                                                                                       
|(3) | There has not been any significant change in the number
      of Common Shares owned in the past three years. This number includes
      100,000 Common Shares issuable at a price of $1.35 per share until October
      3, 2006 upon the exercise of a stock option.

The Corporations major shareholders do not have different
voting rights from other shareholders of the Corporation.

To the Corporations knowledge, it is not directly or
indirectly owned or controlled by any other companies, any foreign government or
any other natural or legal persons, severally or jointly. There are no
arrangements known to the Corporation which, at a subsequent date, may result in
a change in control of the Corporation.

B.RELATED PARTY TRANSACTIONS

Except as disclosed herein and in note 15 of the Corporations
2004 annual financial statements and note 14 of the Corporations 2005 annual
financial statements and 2006 annual financial statements, the Corporation has
not, during those fiscal years and thereafter up to the date of this Annual
Report, and does not presently propose to:

|(1) | enter into any transactions which are material to the
      Corporation or a related party, or any transactions unusual in their
      nature or conditions, involving goods, services or tangible or intangible
      assets to which the Corporation was a party, with any of the persons named
      below; or
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                  
|(2) | make any loans or guarantees to or for the benefit of any
      of the persons named below.                                                                                                                                                                                                                      

For the purposes of the foregoing, such persons are:

|(1) | enterprises directly or indirectly through one or more
      intermediaries, controlling, controlled by or under common control with
      the Corporation;                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                 
|(2) | associates of the Corporation (unconsolidated enterprises
      in which the Corporation has significant influence or which has
      significant influence over the Corporation) including shareholders
      beneficially owning 10% or more of the outstanding Common
Shares;
|    |                                                                                                                                                                                                                                                                                 
|(3) | individuals owning, directly or indirectly, Common Shares
      that gives them significant influence over the Corporation and close
      members of any such individuals families;                                                                                           

48

---

|(4) | key management personnel (persons having authority in
      responsibility for planning, directing and controlling the activities of
      the Corporation including directors and senior management and close
      members of any such individuals family); or                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                       
|(5) | enterprises in which a substantial voting interest is
      owned, directly or indirectly, by any person described in (c) or (d) or
      over which such a person is able to exercise significant influence,
      including enterprises owned by directors or major shareholders of the
      Corporation and enterprises that have a member of key management in common
      with the Corporation.

For the purposes hereof:

|(1) | close members of an individuals family are those that
      may be expected to influence, or be influenced by, that person in their
      dealings with the Corporation; and                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                         
|(2) | significant influence over an enterprise is the power
      to participate in the financial and operating policy decisions of the
      enterprise but is less than control over those policies. Shareholders
      beneficially owning a 10% interest in the voting power of the Corporation
      are presumed to have a significant influence on the
  Corporation.

49

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C.INTERESTS OF EXPERTS AND COUNSEL

Not Applicable

ITEM 8FINANCIAL INFORMATION

A.CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Financial Statements

The Corporations audited annual financial statements for the
years ending April 30, 2004, 2003 and 2002 are contained and incorporated
herein. See Item 17 Financial Statements.

Export Sales

Almost 100% of the gold produced from the Corporations
operations are sold into the North American gold bullion markets.

Legal and Arbitration Proceedings

The Corporation is not involved in any legal or arbitration
proceedings which may have or have had in the recent past, a significant effect
on the Corporations financial position or profitability except as described
below.

On May 8, 2006 four charges were laid against the Corporation
under the Provincial Offences Act(Ontario) in the Ontario Court of
Justice by the Ontario Ministry of Labour for four alleged violations of the
Occupational Health and Safety Act (Ontario). The charges are in
connection with the falling death of an employee in December, 2005. The
Corporation entered an appearance to the proceedings on June 13, 2006 and will
next appear in court on September 5, 2006 at which time it must enter a plea. If
the charges proceed to trial and the Corporation is found guilty, the
Corporation could be subject to fines not exceeding Cdn$ 500,000 per charge. The
Corporation intends to vigorously defend itself against these charges and
believes that its conduct was in compliance with the Act and that it has a good
work safety environment.

Dividends

The Corporation has not paid any dividends on any of its Common
Shares since incorporation. The Corporation does not presently have any
intention of paying dividends. Its future dividend policy will be determined by
its Board of Directors on the basis of earnings, financial requirements and
other relevant factors.

B.SIGNIFICANT CHANGES

The Corporation does not have any significant changes to report
since the date of the financial statements included herein except as disclosed
herein.

50

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ITEM
9THE
OFFER AND LISTING

A.OFFER AND LISTING DETAILS

The Corporation has only one class of shares authorized,
namely, the Common Shares. The Common Shares do not have a nominal or par value.
There are an unlimited number of Common Shares authorized. As of June 30, 2006 a
total of 52,840,388 Common Shares were issued and outstanding.

All Common Shares are initially issued registered in the name
of the shareholder or its nominee. There are no restrictions on the
transferability of the Common Shares imposed by the Corporations constating
documents. The register of Common Share is maintained by and the Common Shares
can be transferred at the offices of Pacific Corporate Trust Company in
Vancouver, British Columbia and Toronto, Ontario.

The following is a summary, on an annual basis, of the high and
low prices of the Common Shares on the Corporations principal trading market,
the Toronto Stock Exchange (since March 20, 2003) and TSX Venture Exchange (up
to March 19, 2003), during the Corporations last five fiscal years:

Fiscal year
      High (Cdn$)
      Low (Cdn$)2006
    8.97
    3.402005
    7.04
    3.352004
    4.98
    2.442003
    3.10
    1.502002
    2.10
    0.73


The following is a summary, on a fiscal quarter basis, of the
  high and low prices of the Common Shares on the Corporations principal
  trading market, the Toronto Stock Exchange, during the Corporations two
  most recent fiscal years and any subsequent financial quarter.

Fiscal Quarter
      High (Cdn$)
      Low (Cdn$)20064thQuarter
      8.97
      4.953rdQuarter
      5.60
      3.552ndQuarter
      4.45
      3.401stQuarter
      4.74
      3.6020054thQuarter
      5.31
      3.793rdQuarter
      7.04
      4.652ndQuarter
      6.65
      3.451stQuarter
      4.49
      3.35


51

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The following is a summary, on a monthly basis, of the high and
low prices of the Common Shares on the Corporations principal trading market,
the Toronto Stock Exchange, during the past six months:

Month
      High (Cdn$)
      Low (Cdn$)2006June
      8.20
      5.61May
      9.50
      7.60April
      8.97
      6.77March
      7.45
      5.90February
      6.65
      4.95January
      5.60
      3.95


B.PLAN OF DISTRIBUTION

Not Applicable

C.MARKETS

The Common Shares have traded on the Toronto Stock Exchange
since March 20, 2003. Prior thereto, they traded on the TSX Venture Exchange 
initially on the Vancouver Stock Exchange and then on the Canadian Venture
Exchange (which was formed by the merger of the Vancouver Stock Exchange and the
Alberta Stock Exchange on November 26, 1999 and which changed its name to the
TSX Venture Exchange on May 1, 2002) in Canada. The Common Shares first became
publicly traded on December 10, 1984.

On July 1, 2004 the Common Shares were also listed on the AIM
Market of the London Stock Exchange.

Other than described above, the Common Shares are not and have
not been listed or quoted on any other exchange or regulated markets.

D.SELLING SHAREHOLDERS

Not Applicable

E.DILUTION

Not Applicable

F.EXPENSES OF THE ISSUE

Not Applicable

ITEM
10ADDITIONAL INFORMATION

A.SHARE CAPITAL

Not applicable.

52

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B.MEMORANDUM AND ARTICLES OF ASSOCIATION

The description of the Corporations Articles of Incorporation
and By-Laws and the laws applicable thereto are incorporated herein by reference
from the Corporations Registration Statement on Form 20-F dated June 28, 2002
and filed with the Securities and Exchange Commission on July 1, 2002.

C.MATERIAL CONTRACTS

The Corporation has entered into the following material contracts,
  other than contracts entered into in the ordinary course of business, in the
  two previous fiscal years and thereafter up to the date of this Annual Report:

|1. | Loan Agreements dated May 22, 2002 with RAB Europe Fund
      Ltd. ($2,187,500) of George Town, Cayman Islands and RAB Europe Partners
      L.P. ($312,500) of Dover, Delaware in respect of one year loans made to
      the Corporation on June 11, 2002 totalling $2.5 million and bearing
      interest at 10% per year. The outstanding principal was convertible by the
      lenders into Common Shares at the rate of Cdn$ 4.00 per share and the
      accrued interest was convertible by the lenders into Common Shares at that
      rate equal to the higher of Cdn$ 4.00 per share or the prevailing trading
      price at the time of conversion. The terms of the loans could be extended
      by one year by the issuance of 125,000 Common Shares. The loan from RAB
      Europe Fund Ltd. was extended by one year by the issuance of 109,375
      Common Shares. The loan to RAB Europe Partners L.P. was repaid on the
      original maturity date. As a bonus for making the loans, the lenders were
      issued a total of 125,000 Common Shares at a deemed price of Cdn$ 256,250.
      The Corporation paid a finders fee of Cdn$ 25,000 in connection with this
      placement.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | Investor Relations Agreement dated May 30, 2002 with DSK
      Consulting Ltd. of Calgary, Alberta in respect of the supply of investor
      relation services to the Corporation for an initial one year term
      (subsequently renewed) at a remuneration of $3,000 per month and a stock
      option to purchase 35,000 Common Shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|3. | Agency Agreement dated June 21, 2002 pursuant to which
      Fahnestock Canada Inc. (now called Fort House Inc.) of Toronto, Ontario
      acted as the Corporations agent in connection with a private placement of
      1 million Common Shares at $2.35 per share and in consideration of which
      received a 6.5% cash commission of $152,750 and a compensation option to
      purchase 100,000 Common Shares at a price of $2.35 per share until June
      21, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4. | Subscription Agreements dated June 21, 2002 with four
      placees in respect of a private placement of 1 million Common Shares
      completed on June 21, 2002 for proceeds of $2.35 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|5. | Agency Agreement dated December 30, 2002 pursuant to
      which Octagon Capital Corporation and Fahnestock Canada Inc. of Toronto,
      Ontario acted as the Corporations agents in connection with a private
      placement of 2.625 million Common Shares at $1.80 per share and in
      consideration of which received 8% cash commissions totalling $378,000 and
      compensation options to purchase an aggregate of 393,750 Common Shares at
      a price of $2.05 per share until June 30, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|6. | Subscription Agreements dated December 30, 2002 with
      various placees in respect of a private placement of 2.625 million Common
      Shares completed on December 30, 2002 for proceeds of $4.725
    million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|7. | Listing Agreement dated March 5, 2003 with the Toronto
      Stock Exchange in respect of the listing of the Common Shares on the
      Exchange.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|8. | Publicity Agreement dated March 27, 2003 with Jefferson
        Financial, LLC of Jefferson, Louisiana in connection with the publication
        of a newsletter in respect of the Corporation at a cost of US$250,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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|9.  | Loan Agreement dated June 10, 2003 with CBG Compagnie
        Bancaire Genève of Geneva, Switzerland in respect of an 18 month
        loan of Cdn$ 1 million made to the Corporation on August 11, 2003 with
        interest at 10% per year payable every 18 months. The outstanding principal
        was convertible by the lender into Common Shares at the rate of Cdn$ 4.00
        per share and the accrued interest was convertible by the lender into
        Common Shares at that rate equal to the higher of Cdn$ 4.00 per share
        or the 10 day weighted volume average trading price at the time of conversion.
        As a bonus for making the loan, the lender was issued 75,000 Common Shares
        at a deemed price of Cdn$ 300,000. The Corporation paid a finders
        fee of Cdn$ 50,000 in connection with this placement.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10. | Subscription Agreements dated August 8, 2003 and August
        26, 2003 with 13 placees in respect of a private placement of 3.755 million
        units (each unit consisting of one Common Share and one- half of one Common
        Share purchase warrant, each whole warrant entitling the holder to purchase
        one Common Share for a period of 24 months at a price of $3.00 per share)
        completed on August 8, 2003 and August 26, 2003 for proceeds of $9.763
        million.                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|11. | Agency Agreement dated November 14, 2003 pursuant to
        which Fort House Inc. and Octagon Capital Corporation of Toronto, Ontario
        acted as the Corporations agents in connection with a private placement
        of 1.925 million flow-through Common Shares (which entitle
        the investors to certain tax benefits under applicable Canadian tax legislation)
        at $4.00 per share and in consideration of which received 5% cash commissions
        totalling $385,000 and warrants to purchase an aggregate of 96,250 Common
        Shares at a price of $3.60 per share until November 14, 2005.                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|12. | Subscription Agreements dated November 14, 2003 with
        various placees in respect of the private placement of the 1.925 million
        flow-through Common Shares completed on November 14, 2003
        for proceeds of $7.7 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|13. | Agency Agreement dated December 1, 2003 pursuant to
        which Fort House Inc. and Octagon Capital Corporation of Toronto, Ontario
        acted as the Corporations agents in connection with a private placement
        of 2.2 million units at $3.90 per unit (each unit consisting of one Common
        Share and one-half of one Common Share purchase warrant, each whole warrant
        entitling the holder to purchase a Common Share for $4.40 until June 1,
        2005) and in consideration of which received 5% cash commissions totalling
        $283,584 on that portion of the placement sold by them.                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|14. | Subscription Agreements dated December 1, 2003 with
        eight placees in respect of the private placement of 2.2 million units
        completed on December 1, 2003 for proceeds of $8.58 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|15. | Subscription Agreements dated April 29, 2004 with 24
        placees in respect of a private placement of 2,174,129 units (each unit
        consisting of one Common Share and one-half of one Common Share purchase
        warrant, each whole warrant entitling the holder to purchase one Common
        Share until July 29, 2005 at a price of $5.20 per share) completed on
        April 29, 2004 for proceeds of $10 million.                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|16. | Loan Agreement dated June 2, 2004 with Middlemarch Partners
        Limited of London, England in respect of a six month loan of $2,406,250
        made to the Corporation on June 2, 2004 with interest at the rate of 10%
        per year. The outstanding principal was convertible by the lender into
        Common Shares at the rate of $4.40 per share and the accrued interest
        was convertible by the lender into Common Shares at that rate equal to
        $4.40 per share or such higher rate required by the Toronto Stock Exchange.
        As a bonus for making the loan, the lender was issued 60,156 Common Shares.
        The lender converted the loan on December 10, 2004 into 546,875 Common
        Shares and was paid the accrued interest of $120,312.50.                                                                  

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|17. | Nominated Advisor and Broker Agreement dated June 24,
      2004 with the Canaccord Capital (Europe) Limited in respect of the
      provision of nominated advisor services to the Corporation in connection
      with its listing of the Common Shares on, and the Corporations
      obligations to, the AIM Market of the London Stock Exchange Plc. The
      Agreement may be terminated on three months notice by either
  party.                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|18. | Agency Agreement dated July 29, 2004 pursuant to which
      Canaccord Capital (Europe) Limited of London, England acted as the
      Corporations agent in connection with a private placement of 3,987,730
      Common Shares at £1.63 (approximately Cdn$ 4.00) per share and in
      consideration of which received a cash commission of £390,000
      (approximately Cdn$ 957,055) (6%) and was issued warrants to purchase
      199,386 Common Shares at a price of £1.63 (approximately Cdn$ 4.00) per
      share until January 30, 2006.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|19. | Subscription Agreements dated July 29, 2004 with nine
      placees in respect of the private placement of the 3,987,730 Common Shares
      completed on July 29, 2004 for proceeds of £6.5 million (approximately
      Cdn$ 15,950,920).                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|20. | Agency Agreement dated November 16, 2004 pursuant to
      which Canaccord Capital (Europe) Limited of London, England acted as the
      Corporations agent in connection with a private placement of 1,950,292
      Common Shares at £2.70 (approximately Cdn$ 6.03) per share and in
      consideration of which received a 6% cash commission of £315,947
      (approximately Cdn$ 705,616).                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|21. | Subscription Agreements dated November 16, 2004 with
      seven placees in respect of the private placement of the 1,950,292 Common
      Shares completed on November 16, 2004 for proceeds of £5,265,788
      (approximately Cdn$ 11,705,752).                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|22. | Agency Agreement dated December 22, 2004 pursuant to
      which Canaccord Capital Corporation of Toronto, Ontario acted as the
      Corporations agent in connection with a private placement completed on
      December 22, 2004 of 500,000 flow-through Common Shares (which entitle
      the investors to certain tax benefits under applicable Canadian tax
      legislation) at $6.00 per share and in consideration of which received a
      6% cash commission of $180,000.                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|23. | Subscription Agreements dated December 22, 2004 with 31
      placees in respect of the private placement of the 500,000 flow-through
      Common Shares completed on December 22, 2004 for proceeds of
      $3,000,000.                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|24. | Subscription Agreements dated August 25, 2005 with one
      placee in respect of a private placement of 1,250,000 units (each unit
      consisting of one Common Share and one-half of one Common Share purchase
      warrant, each whole warrant entitling the holder to purchase one Common
      Share for $4.60 until May 25, 2006) completed on August 25, 2006 for
      proceeds of $5 million. A 4% finders fee of $200,000 was paid in
      connection with the placement.                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|25. | Subscription Agreement dated September 26, 2005 with one
      placee in respect of a private placement of 1 million units (each unit
      consisting of one Common Share and one-half of one Common Share purchase
      warrant, each whole warrant entitling the holder to purchase one Common
      Share for $4.60 until June 28, 2006) completed on September 26, 2005 for
      proceeds of $4 million. A 5% finders fee of $200,000 was paid in
      connection with the placement.                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|26. | Subscription Agreements dated October 12 and 14, 2005
      with six placees in respect of a private placement of 555,500
      flow-through Common Shares (which entitle the investors to certain tax
      benefits under applicable Canadian tax legislation) completed on October
      12 and 14, 2005 for proceeds of $2,499,750. A 5% finders fee of $125,000
      was paid in connection with the placement.                                                                                                                               

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|27. | Subscription Agreements dated May 24 and 25, 2006 and
      June 2, 2006 with placee in respect of a private placement of 1,793,500
      units (each unit consisting of one Common Share and one-half of one Common
      Share purchase warrant, each whole warrant entitling the holder to
      purchase one Common Share for $10.50 for a period of 12 months) completed
      on September 26, 2005 for proceeds of $4 million. A 6% finders fee of
      $990,000 was paid in connection with the placement.                       
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|28. | Broker Agreements dated June 1, 2006 with Mirabaud
      Securities Limited and Ocean Equities Ltd. of London, England pursuant to
      the Corporation appointed Mirabaud and Ocean Equities as its brokers in
      the United Kingdom in connection with the Corporations public equity
      market issues in the United Kingdom and its obligations to, and trading of
      the Common Shares on, the AIM Market of the London Stock Exchange Plc. The
      Agreements may be terminated on three months notice by either
  party.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|29. | Various Stock Option Agreements with directors, officers,
      employees and consultants pursuant to which such persons are entitled to
      purchase Common Shares. See Item 6 Directors, Senior Management and
      Employees  Share Ownership  Options to Purchase Securities from the
      Corporation or Subsidiary for particulars.                                                                                                                                                                                          

See also Item 6 Compensation  Agreements with Senior
Officers for terms of contracts entered into with officers of the
Corporation.

D.EXCHANGE CONTROLS

There are no governmental laws, decrees or regulations in
Canada which may affect the import or export of capital or the remittance of
interest, dividends or other payments to non-resident holders of the Common
Shares other than a 5% to 15% withholding tax on dividends paid to United States
residents pursuant to Article X of the reciprocal tax treaty between Canada and
the United States. See Taxation below.

E.TAXATION

Canadian Federal Income Tax Consequences

The following is a general summary of all material Canadian
federal income tax considerations generally applicable to a holder of the Common
Shares who is not a resident of Canada for the purposes of the Income Tax
Act (Canada) (the Act). The discussion does not address individual
consequences to persons subject to special provisions of federal income tax law.

The summary is based on the current provisions of the Act and
the regulations thereunder and the Corporations understanding of the current
administrative practices published by, and press announcements released by
Canada Customs and Revenue Agency and the Department of Finance. This summary
takes into account proposals to amend the Act announced prior to the date hereof
(although no assurances can be given that such changes will be enacted in the
form presented or at all), but does not otherwise take into account or
anticipate any other changes in law, whether by judicial, governmental or
legislative action or decision nor does it take into account any provincial,
territorial, local or foreign tax considerations. Accordingly, holders and
prospective holders of the Common Shares are urged to consult their own tax
advisors about the federal, provincial, territorial, local and foreign tax
consequences of purchasing, owning and disposing of such Common Shares.

The Act provides in subsection 212(2) that dividends and other
distributions which are deemed to be dividends and which are paid or credited or
are deemed to be paid or credited by a Canadian resident company to a
non-resident of Canada shall be subject to non-resident withholding tax equal to
25 percent of the gross amount of the dividend or deemed dividend.

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Subsections 2(3) and 115(1) of the Act provide that a
non-resident person is subject to tax in Canada at the rates generally
applicable to residents of Canada on any taxable capital gain arising on the
disposition of the common shares of a company which are listed on a prescribed
stock exchange if such non-resident, together with persons with whom he does not
deal at arms length, owned 25 percent or more of the issued shares of any class
of the capital stock of the company at any time in the five years immediately
preceding the date of disposition of the shares. Subsections 2(3) and 115(1)
also provide that a non-resident person is subject to tax in Canada on taxable
capital gains arising on the disposition of shares that constitute capital
property used in carrying on a business in Canada. The taxable portion of a
capital gain is equal to one-half of the amount by which the proceeds of
disposition of such shares, net of any reasonable costs associated with the
disposition, exceeds the adjusted cost base to the holder of the shares.

Provisions in the Act relating to dividend and deemed dividend
payments and gains realized by nonresidents of Canada who are residents of the
United States are subject to the Canada-United States Income Tax Convention
(1980), as amended (the 1980 Convention).

Article X of the 1980 Convention provides that for 1997 and
subsequent taxation years pursuant to the Third Protocol to the 1980 Convention
the rate of Canadian non-resident withholding tax on dividends paid to a U.S.
company that beneficially owns at least 10% of the voting stock of the
Corporation shall not exceed 5% of the dividends. Otherwise, and except in the
case of dividends received by a resident of the United States who carries on
business in Canada through a Canadian permanent establishment and the shares in
respect of which the dividends are paid are effectively connected with that
permanent establishment, the rate of non-resident withholding shall not exceed
15 percent of the dividend. Where the dividends are received by a United States
person carrying on business in Canada through a Canadian permanent establishment
and the shares in respect of which the dividends are paid are effectively
connected with that permanent establishment the dividends are generally subject
to Canadian tax as business profits, generally without limitation under the 1980
Convention.

Article XIII of the 1980 Convention provides that gains
realized by a United States resident on the disposition of shares of a Canadian
company may not generally be taxed in Canada unless the value of those shares is
derived principally from real property situated in Canada or the shares form
part of the business property of a permanent establishment which the United
States shareholder has or had in Canada within the 12 month period preceding the
date of disposition. Canada also retains the right to tax gains on property
owned at the time of departure from Canada if it is sold by a person who was
resident in Canada for 120 months in any 20 consecutive years preceding the sale
and who was a resident in Canada at any time in the 10 years preceding sale.

United States Federal Income Tax Consequences

The following is a general discussion of all material United
States federal income tax consequences, under current law, generally applicable
to a U.S. Holder (as hereinafter defined) of shares of the Corporation. This
discussion does not address individual consequences to persons subject to
special provisions of federal income tax law, such as those described below as
excluded from the definition of a U.S. Holder. In addition, this discussion does
not cover any state, local or foreign tax consequences. (See Canadian Federal
Tax Consequences).

The following discussion is based upon the sections of the Internal
  Revenue Code of 1986, as amended (the Code), Treasury Regulations,
  published Internal Revenue Service (IRS) rulings, published
  administrative positions of the IRS and court decisions that are currently applicable,
  any or all of which could be materially and adversely changed, possibly on a
  retroactive basis, at any time. This discussion does not consider the potential
  effects, both adverse and beneficial, of any recently proposed legislation which,
  if enacted, could be applied, possibly on a retroactive basis, at any time.
  This discussion is for general information only and it is not intended to be,
  nor should it be construed to be, legal or tax advise to any holder or prospective
  holder of Common Shares and no opinion or representation with respect to the
  United States federal income tax consequences to any such holder or prospective
  holder is made. Accordingly, holders and prospective holders of Common Shares
  are urged to consult their own tax advisors about the federal, state, local,
  and foreign tax consequences of purchasing, owning and disposing of Common Shares.

57

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U.S. Holders

As used herein, a U.S. Holder means a holder of Common
Shares who is a citizen or individual resident of the United States, a
corporation or partnership created or organized in or under the laws of the
United States or of any political subdivision thereof or a trust whose income is
taxable in the United States irrespective of source. This summary does not
address the tax consequences to, and U.S. Holder does not include, persons
subject to specific provisions of federal income tax law, such as tax-exempt
organizations, qualified retirement plans, individual retirement accounts and
other tax-deferred accounts, financial institutions, insurance companies, real
estate investment trusts, regulated investment companies, broker-dealers,
non-resident alien individuals, persons or entities that have a functional
currency other than the U.S. dollar, shareholders who hold Common Shares as
part of a straddle, hedging or a conversion transaction, and shareholders who
acquired their Common Shares through the exercise of employee stock options or
otherwise as compensation for services. This summary is limited to U.S. Holders
who own Common Shares as capital assets. This summary does not address the
consequences to a person or entity holding an interest in a Common Share or the
consequences to a person of the ownership, exercise or disposition of any
options, warrants or other rights to acquire Common Shares.

Distribution on Common Shares

U.S. Holders receiving dividend distributions (including
constructive dividends) with respect to Common Shares are required to include in
gross income for United States federal income tax purposes the gross amount of
such distributions equal to the U.S. dollar value of such dividends on the date
of receipt (based on the exchange rate on such date) to the extent that the
Corporation has current or accumulated earnings and profits, without reduction
for any Canadian income tax withheld from such distributions. Such Canadian tax
withheld may be credited, subject to certain limitations, against the U.S.
Holders federal income tax liability or, alternatively, may be deducted in
computing the U.S. Holders federal taxable income by those who itemize
deductions. (See more detailed discussion at Foreign Tax Credit below). To the
extent that distributions exceed current or accumulated earnings and profits of
the Corporation, they will be treated first as a return of capital up to the
U.S. Holders adjusted basis in the Common Shares and thereafter as gain from
the sale or exchange of the Common Shares. Preferential tax rates for long-term
capital gains are applicable to a U.S. Holder which is an individual, estate or
trust. There are currently no preferential tax rates for long-term capital gains
for a U.S. Holder which is a corporation.

In the case of foreign currency received as a dividend that is
not converted by the recipient into U.S. dollars on the date of receipt, a U.S.
Holder will have a tax basis in the foreign currency equal to its U.S. dollar
value on the date of receipt. Generally any gain or loss recognized upon a
subsequent sale or other disposition of the foreign currency, including the
exchange for U.S. dollars, will be ordinary income or loss. However, an
individual whose realized gain does not exceed $200 will not recognize that
gain, to the extent that there are no expenses associated with the transaction
that meet the requirement for deductibility as a trade or business expense
(other than travel expenses in connection with a business trip) or as an expense
for the production of income.

Dividends paid on the Common Shares will not generally be
eligible for the dividends received deduction provided to corporations receiving
dividends from certain United States corporations. A U.S. Holder which is a
corporation may, under certain circumstances, be entitled to a 70% deduction of
the United States source portion of dividends received from the Corporation
(unless the Corporation qualifies as a foreign personal holding company or a
passive foreign investment company, as defined below) if such U.S. Holder owns
Common Shares representing at least 10% of the voting power and value of the
Corporation. The availability of this deduction is subject to several complex
limitations which are beyond the scope of this discussion.

58

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Dividends paid on the Common Shares and the proceeds of a sale
of the Common Shares, in the U.S. through a U.S., or U.S. related, paying agent
(including a broker) will be subject to U.S. information reporting requirements
and may also be subject to the 28% U.S. backup withholding tax, unless the
paying agent is furnished with a duly completed and signed Form W-9. Any amounts
withheld under the U.S. backup withholding tax rules will be allowed as a refund
or a credit against the U.S. Holders U.S. federal income tax liability,
provided the required information is furnished to the IRS.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions)
Canadian income tax with respect to the ownership of Common Shares may be
entitled, at the option of the U.S. Holder, to either receive a deduction or a
tax credit for such foreign tax paid or withheld. Generally, it will be more
advantageous to claim a credit because a credit reduces United States federal
income taxes on a dollar-for-dollar basis, while a deduction merely reduces the
taxpayers income subject to tax. This election is made on a year-by-year basis
and applies to all foreign taxes paid by (or withheld from) the U.S. Holder
during that year. There are significant and complex limitations which apply to
the credit, among which is the general limitation that the credit cannot exceed
the proportionate shareholding of the U.S. Holders United States income tax
liability that the U.S. Holders foreign sources income bears to his or its
worldwide taxable income. In the determination of the application of this
limitation, the various items of income and deduction must be classified into
foreign and domestic sources. Complex rules govern this classification process.
In addition, this limitation is calculated separately with respect to specific
classes of income such as passive income, high withholding tax interest,
financial services income, shipping income, and certain other
classifications of income. Dividends distributed by the Corporation will
generally constitute passive income or, in the case of certain U.S. Holders,
financial services income for these purposes. The availability of the foreign
tax credit and the application of the limitations on the credit are fact
specific, and U.S. Holders of Common Shares should consult their own tax
advisors regarding their individual circumstances.

Disposition of Common Shares

A U.S. Holder will recognize gain or loss upon the sale of
Common Shares equal to the difference, if any, between (i) the amount of cash
plus the fair market value of any property received, and (ii) the shareholders
tax basis in the Common Shares. Preferential tax rates apply to long-term
capital gains of U.S. Holders who are individuals, estates or trusts. This gain
or loss will be capital gain or loss if the Common Shares are a capital asset in
the hands of the U.S. Holder, which will be long-term capital gain or loss if
the Common Shares are held for more than one year. Lower long-term capital gain
rates will apply if the U.S. Holder is an individual, estate or trust and such
U.S. Holder has held the Common Shares for more than 12 months. Deductions for
net capital loss may be carried over to be used in later tax years until such
net capital loss is thereby exhausted. For U.S. Holders that are corporations
(other than corporations subject to Subchapter S of the Code), an unused net
capital loss may be carried back three years and carried forward five years from
the loss year to be offset against capital gains until such net capital loss is
thereby exhausted.

Other Considerations

In the following circumstances, the above sections of this
discussion may not describe the United States federal income tax consequences
resulting from the holding and disposition of Common Shares:

Passive Foreign Investment Company

Certain United States income tax legislation contains rules governing
  passive foreign investment companies (PFIC) which
  can have significant tax effects on U.S. Holders of foreign corporations. These
  rules do not apply to non-U.S. Holders. Section 1296 of the Code defines a PFIC
  as a corporation that is not formed in the United States and, for any taxable
  year, either (i) 75% or more of its gross income is passive income,
  which includes interest, dividends and certain rents and royalties or (ii) the
  average percentage, by fair market value (or, if the Corporation is a controlled
  foreign corporation or makes an election, adjusted tax basis) of its assets
  that produce or are held for the production of passive income is
  50% or more. The Corporation does not believe that it is a PFIC. Each U.S. Holder
  of the Corporation is urged to consult a tax advisor with respect to how the
  PFIC rules affect their tax situation.

59

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A U.S. Holder who holds stock in a foreign corporation during
any year in which such corporation qualifies as a PFIC is subject to United
States federal income taxation under one of two alternative tax regimes at the
election of each such U.S. Holder. The following is a discussion of such two
alternative tax regimes applied to such U.S. Holders of the Corporation. In
addition, special rules apply if a foreign corporation qualifies as both a PFIC
and a controlled foreign corporation (as defined below) and a U.S. Holder
owns, directly or indirectly, ten percent (10%) or more of the total combined
voting power of classes of Common Shares of such foreign corporation (See more
detailed discussion at Controlled Foreign Corporation below).

A U.S. Holder who elects in a timely manner to treat the
Corporation as a QEF (an Electing U.S. Holder) will be subject,
under Section 1293 of the Code, to current federal income tax for any taxable
year in which the Corporation qualifies as a PFIC on his pro rata share
of the Corporations (i) net capital gain (the excess of net long-term capital
gain over net short-term capital loss), which will be taxed as long-term capital
gain to the Electing U.S. Holder and (ii) ordinary earnings (the excess of
earnings and profits over net capital gain), which will be taxed as ordinary
income to the Electing U.S. Holder, in each case, for the shareholders taxable
year in which (or with which) the Corporations taxable year ends, regardless of
whether such amounts are actually distributed.

The effective QEF election also allows the Electing U.S. Holder
to (i) generally treat any gain realized on the disposition of their Common
Shares (or deemed to be realized on the pledge of their Common Shares) as
capital gain; (ii) treat his share of the Corporations net capital gain, if
any, as long-term capital gain instead of ordinary income; and (iii) either
avoid interest charges resulting from PFIC status altogether, or make an annual
election, subject to certain limitations, to defer payment of current taxes on
his share of the Corporations annual realized net capital gain and ordinary
earnings subject, however, to an interest charge. If the Electing U.S. Holder is
not a corporation, such an interest charge would be treated as personal
interest that is not deductible.

The procedure a U.S. Holder must comply with in making an
effective QEF election will depend on whether the year of the election is the
first year in the U.S. Holders holding period in which the Corporation is a
PFIC. If the U.S. Holder makes a QEF election in such first year, i.e., a timely
QEF election, then the U.S. Holder may make the QEF election by simply filing
the appropriate documents at the time the U.S. Holder files his tax return for
such first year. If, however, the Corporation qualified as a PFIC in a prior
year, then in addition to filing documents, the U.S. Holder must elect to
recognize (i) under the rules of Section 1291 of the Code (discussed below), any
gain that he would otherwise recognize if the U.S. Holder sold his stock on the
qualification date or (ii) if the Corporation is a controlled foreign
corporation, the U.S. Holders pro rata share of the Corporations
post-1986 earnings and profits as of the qualification date. The qualification
date is the first day of the Corporations first tax year in which the
Corporation qualified as a qualified electing fund with respect to such U.S.
Holder. The elections to recognize such gain or earnings and profits can only be
made if such U.S. Holders holding period for the Common Shares includes the
qualification date. By electing to recognize such gain or earnings and profits,
the U.S. Holder will be deemed to have made a timely QEF election. A U.S. Holder
who made elections to recognize gain or earnings and profits after May 1, 1992
and before January 27, 1997 may, under certain circumstances, elect to change
such U.S. Holders qualification date to the first day of the first QEF year.
U.S. Holders are urged to consult a tax advisor regarding the availability of
and procedure for electing to recognize gain or earnings and profits under the
foregoing rules. In addition, special rules apply if a foreign corporation
qualifies as both a PFIC and a controlled foreign corporation (as defined
below) and a U.S. Holder owns, directly or indirectly, ten percent (10%) or more
of the total combined voting power of classes of shares of such foreign
corporation (See more detailed discussion at Controlled Foreign Corporation
below).

60

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If the Corporation no longer qualifies as a PFIC in a
subsequent year, a timely QEF election will remain in effect, although not
applicable, during those years that the Corporation is not a PFIC. Therefore, if
the Corporation re-qualifies as a PFIC, the QEF election previously made is
still valid, and the U.S. Holder is required to satisfy the requirements of that
election. Furthermore, a QEF election remains in effect with respect to a U.S.
Holder, although dormant, after a U.S. Holder disposes of its entire interest in
the Corporation. Upon the U.S. Holders reacquisition of an interest in the
Corporation, the QEF election will apply to the newly acquired stock of the
Corporation.

Effective for tax years of U.S. Holders beginning after
December 31, 1997, U.S. Holders who hold (actually or constructively) marketable
stock of a foreign corporation that qualifies as a PFIC, may annually elect to
mark such stock to the market (a mark-to-market election). If such an
election is made, such U.S. Holder will not be subject to the special taxation
rules of Section 1291 described below for the taxable year for which the
mark-to-market election is made. A U.S. Holder who makes such an election will
include in income for the taxable year for which the election was made in an
amount equal to the excess, if any, of the fair market value of the Common
Shares as of the close of such tax year over such U.S. Holders adjusted basis
in such Common Shares. In addition, the U.S. Holder is allowed a deduction for
the lesser of (i) the excess, if any, of such U.S. Holders adjusted tax basis
in the Common Shares over the fair market value of such Common Shares as of the
close of the tax year, or (ii) the excess, if any, of (A) the mark-to-market
gains for the Common Shares in the Corporation included by such U.S. Holder for
prior tax years, including any amount which would have been included for any
prior tax year but for Section 1291 interest on tax deferral rules discussed
below with respect to Non-Electing U.S. Holders, over (B) the mark-to-market
losses for Common Shares that were allowed as deductions for prior tax years.
U.S. Holders adjusted tax basis in the Common Shares will be increased to
reflect the amount included or deducted as a result of a mark-to-market
election. A mark-to-market election only applies to the taxable year in which
the election was made. A separate election must be made by a U.S. Holder for
each subsequent taxable year. Because the Internal Revenue Service has not
established procedures for making a mark-to-market election, U.S. Holders should
consult their tax advisor regarding the manner of making such an election.

If a U.S. Holder does not make a timely QEF election during a
year in which it holds (or is deemed to have held) the Common Shares in question
and the Corporation is a PFIC (a Non-electing U.S. Holder), then
special taxation rules under Section 1291 of the Code will apply to (i) gains
realized on the disposition (or deemed to be realized by reasons of a pledge) of
his Common Shares and (ii) certain excess distributions, as specifically
defined, by the Corporation.

A Non-electing U.S. Holder generally would be required to pro
rate all gains realized on the disposition of his Common Shares and all excess
distribution of his Common Shares and all excess distributions over the entire
holding period for the Corporation. All gains or excess distributions allocated
to prior years of the U.S. Holder (other than years prior to the first taxable
year of the Corporation during such U.S. Holders holding period and beginning
after January 1, 1987 for which it was a PFIC) would be taxed at the highest tax
rate for each such prior year applicable to ordinary income. The Non-electing
U.S. Holder also would be liable for interest on the foregoing tax liability for
each such prior year calculated as if such liability had been due with respect
to each such prior year. A Non-electing U.S. Holder that is not a corporation
must treat this interest charge as personal interest which, as discussed
above, is wholly non-deductible. The balance of the gain of the excess
distribution will be treated as ordinary income in the year of the disposition
or distribution, and no interest charge will be incurred with respect to such
balance.

If the Corporation is a PFIC for any taxable year during which
  a Non-electing U.S. Holder holds Common Shares, then the Corporation will continue
  to be treated as a PFIC with respect to such Common Shares, even if it is no
  longer definitionally a PFIC. A Non-electing U.S. Holder may terminate this
  deemed PFIC status by electing to recognize a gain (which will be taxed under
  the rules discussed above for Non-electing U.S. Holders) as if such Common Shares
  had been sold on the last day of the last taxable year for which it was a PFIC.

61

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Under Section 1291(f) of the Code, the IRS has issued proposed
  regulations that, subject to certain exceptions, would treat as taxable certain
  transfers of PFIC stock by Non-Electing U.S. Holders that are generally not
  otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations,
  and transfers at death. Generally, in such cases the basis of the Corporation
  Common Shares in the hands of the transferee and the basis of any property received
  in the exchange for those Common Shares would be increased by the amount of
  gain recognized. An Electing U.S. Holder would not be taxed on certain transfers
  of PFIC stock, such as gifts, exchanges pursuant to corporate reorganizations,
  and transfers at death. The transferees basis in this case will depend
  on the manner of the transfer. In a transfer at death, for example, the transferees
  basis is equal to (i) the fair market value of the Electing U.S. Holders
  Common Shares, less (ii) the excess of the fair market value of the Electing
  U.S. Holders Common Shares reduced by the U.S. Holders adjusted
  basis in these Common Shares at death. The specific tax effect to the U.S. Holder
  and the transferee may vary based on the manner in which the Common Shares are
  transferred. Each U.S. Holder of the Corporation is urged to consult a tax advisor
  with respect to how the PFIC rules affect their tax situation.

Certain special, generally adverse, rules will apply with
respect to Common Shares while the Corporation is a PFIC whether or not it is
treated as a QEF. For example under Section 1298(b)(6) of the Code, a U.S.
Holder who uses PFIC stock as security for a loan (including a margin loan)
will, except as may be provided in regulations, be treated as having made a
taxable disposition of such Common Shares.

Controlled Foreign Corporation

If more than 50% of the voting power of all classes of Common
Shares or the total value of the Common Shares is owned, directly or indirectly,
by citizens or residents of the United States, United States domestic
partnerships and corporations or estates or trusts other than foreign estates or
trusts, each of whom own 10% or more of the total combined voting power of all
classes of Common Shares (a US 10% Shareholder), the Corporation will
be a controlled foreign corporation under Subpart F of the Code. This
classification would create many complex results one of which is the inclusion
of certain income of a CFC which is subject to current U.S. tax. The United
States generally taxes a US 10% Shareholder of a CFC currently on their pro
rata Common Shares of the Subpart F income of the CFC. Such U.S.
shareholders are generally treated as having received a current distribution out
of the CFCs Subpart F income and are also subject to current U.S. tax on their
pro rata Common Shares of the CFCs earnings invested in U.S. property. The
foreign tax credit described above may reduce the U.S. tax on these amounts. In
addition, under Section 1248 of the Code, gain from the sale or exchange of
Common Shares by a U.S. Holder of Common Shares who is or was a United States
10% Shareholder at any time during the five-year period ending with the sale or
exchange is treated as dividend income to the extent of earnings and profits of
the Corporation attributable to the Common Shares sold or exchanged. If a
foreign corporation is both a PFIC and a CFC, the foreign corporation generally
will not be treated as a PFIC with respect to United States shareholders of the
CFC. This rule generally will be effective for taxable years of US 10%
Shareholders beginning after 1997 and for taxable years of foreign corporations
ending with or within such taxable years of US 10% Shareholders. Special rules
apply to United States shareholders subject to the special taxation rules under
Section 1291 discussed above with respect to a PFIC. Because of the complexity
of Subpart F, and because it is not clear that Subpart F would apply to U.S.
Holders of Common Shares, a more detailed review of these rules is outside of
the scope of this discussion.

F.DIVIDENDS AND PAYING AGENTS

Not applicable.

62

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G.STATEMENTS BY EXPERTS

Not applicable.

H.DOCUMENTS ON DISPLAY

The documents concerning the Corporation referred to herein may
be viewed at Suite 1880, 1055 West Georgia Street, Vancouver, British Columbia,
Canada during normal business hours.

I.SUBSIDIARY INFORMATION

Not required.

ITEM
11           QUANTITATIVE AND
QUALITATIVEDISCLOSURE ABOUT MARKET RISK

The only form of significant market risk that applies to the
Corporation is gold price fluctuation. The Corporations gold sales and purchase
transactions are denominated in Canadian dollars, therefore, there is little
market risk from currency exchange fluctuations and that which does exist is
essentially a part of the gold price fluctuations. The Corporation does not have
any hedging or similar program for the management of its exposure to gold price
fluctuations.

Changes in the market prices of gold are due to numerous
factors such as demand, global mine production levels, forward selling by
producers, central bank sales and purchases by investors. Inherent in the gold
price risk is a component of exchange rate risk affected by factors such as
supply and demand for Canadian and United States currencies and economic
conditions in each country. In fiscal 2004 the gold prices ranged from Cdn$ 467
to Cdn$ 559. For the purpose of the sensitivities presented in the table below,
the Corporation assumed that gold is valued at Cdn$ 530 per ounce.

The following table shows the estimated impact on income per
share of a 10% change in assumed metal prices and exchange rates. A 10% change
in each variable was considered in isolation while holding all other assumptions
constant.

A 10% Change in
      Will have an Impact on Earnings per Share
        ofGold price
    $0.03


ITEM
12DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable.

PART II

ITEM
13DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

There has not been:

|(1) | a material default in the payment of principal, interest,
      a sinking or purchase fund instalment, or
|--- | ---------------------------------------------------------------------------------------------------------
|    |                                                                                                          
|(2) | any other material default not cured within 30
    days,                                                 

63

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relating to the Corporations indebtedness where the amount of
the indebtedness exceeds 5% of its total assets on a consolidated basis.

ITEM
14           MATERIAL
MODIFICATIONS TO
THERIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Neither the Corporation nor anyone else has modified
materially:

|(1) | the instruments defining the rights of holders of any
      class of its registered securities; or                                         
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                            
|(2) | qualified the rights evidenced by any class of its
      registered securities by issuing or modifying any other class of
      securities.

Neither the Corporation nor anyone else has withdrawn or
substituted a material amount of the assets securing any class of the
Corporations securities.

Neither the trustees nor pay agents for any registered
securities have changed during the last financial year.

ITEM
15CONTROLS AND PROCEDURES

Disclosure controls and procedures

Disclosure controls and procedures are controls and other
procedures designed to ensure that information required to be disclosed in the
Corporations reports filed or submitted under the United States Securities
Exchange Act of 1934 (the Exchange Act) is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commissions rules and forms. These include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in the Corporations reports filed under the Exchange Act is
accumulated and communicated to management, including the Corporations Chief
Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure.

The Corporation has evaluated the effectiveness of the design
and operation of its disclosure controls and procedures as of April 30, 2004,
being the date of the Corporations fiscal year end for which year this Annual
Report has been prepared. This evaluation was carried out under the supervision
and with the participation of the Corporations Chief Executive Officer and
Chief Financial Officer. Based upon that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that as of the end of that fiscal year the
Corporations disclosure controls and procedures were not effective since they
did not result in the Corporations Annual Reports on Form 20-F for fiscal 2004
and 2005 being filed with the SEC within the time periods specified in the SECs
rules and forms. Nevertheless the disclosure controls and procedures did operate
to ensure that information required to be disclosed by the Corporation in
reports that it files or submits under the Exchange Act (and in all other
jurisdictions) was (i) recorded, processed and summarized within the time
periods specified in the SECs rules and forms, and (ii) accumulated and
communicated to the Corporations management, including its Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure. The 2004 filing is being rectified with this filing and the
2005 filing is expected to be rectified at approximately the same time. The
Corporation has confirmed its intention to make all future filings within the
prescribed time periods.

The design of any system of control is based in part on certain
  assumptions about the likelihood of future events and there can be no assurance
  that any design will succeed in achieving its stated goals under all potential
  future conditions, regardless of how remote. A control system, no matter how
  well conceived or operated, can provide only reasonable, not absolute, assurance
  that the objectives of the control system are met.

64

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Managements Annual Report on Internal Control over Financial
Reporting

Not applicable.

Attestation Report

Not applicable.

65

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Changes in Internal Control over Financial Reporting

During the Corporations fiscal year ended April 30, 2004,
there were no changes in its internal control over financial reporting that have
materially affected, or are reasonably likely to affect, the Corporations
internal control over financial reporting.

The term internal control over financial reporting is defined
as a process designed by, or under the supervision of, the registrant's
principal executive and principal financial officers, or persons performing
similar functions, and effected by the registrant's board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:

|(1) | pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      the assets of the Corporation;                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that
      receipts and expenditures of the Corporation are being made only in
      accordance with authorizations of management and directors of the
      registrant; and
|    |                                                                                                                                                                                                                                                                                                                                                                                 
|(3) | provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of the
      registrant's assets that could have a material effect on the financial
      statements.                                                                                                                                               

ITEM 16AAUDIT COMMITTEE FINANCIAL EXPERT

The Corporations Board of Directors has determined that
  the Corporation does not have an audit committee financial expert
  in its Audit Committee and has not sought out and attracted a person with the
  qualifications of an audit committee financial expert to sit on its Board of
  Directors and be a member of its Audit Committee. Nevertheless, the Board is
  of the view that the members of the Audit Committee have collective experience
  sufficient to meet many of the requirements of an audit committee financial
  expert. The members have served as directors and officers of numerous
  publicly traded companies in the same business as the Corporation during which
  time they have overlooked the preparation, audit and evaluation of financial
  statements.

For the purposes hereof an audit committee financial expert
is a person having the following attributes:

|(1) | An understanding of generally accepted accounting
      principles and financial statements;                                                                                                                                                                                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                
|(2) | The ability to assess the general application of such
      principles in connection with the accounting for estimates, accruals and
      reserves;                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                
|(4) | Experience preparing, auditing, analyzing or evaluating
      financial statements that present a breadth and level of complexity of
      accounting issues that are generally comparable to the breadth and
      complexity of issues that can reasonably be expected to be raised by the
      Corporations financial statements, or experience actively supervising one
      or more persons engaged in such activities;
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                
|(5) | An understanding of internal controls and procedures for
      financial reporting; and                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                
|(6) | An understanding of audit committee
  functions.                                                                                                                                                                                                                                                                                                                                                                               

And that person must have acquired such attributes through any
one or more of the following:

66

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|(1) | Education and experience as a principal financial
      officer, principal accounting officer, controller, public accountant or
      auditor or experience in one or more positions that involve the
      performance of similar functions;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                              
|(2) | Experience actively supervising a principal financial
      officer, principal accounting officer, controller, public accountant,
      auditor or person performing similar functions;                                                      
|    |                                                                                                                                                                                                                                              
|(3) | Experience overseeing or assessing the performance of
      companies or public accountants with respect to the preparation, auditing
      or evaluation of financial statements; or                                                        
|    |                                                                                                                                                                                                                                              
|(4) | Other relevant experience, as described
  above.                                                                                                                                                                                             

The SEC has indicated that the designation of an individual as
an audit committee financial expert does not make that person an expert for
any purpose, impose any duties, obligations or liability on that person greater
than those imposed on the other members of the audit committee and board of
directors who do not carry this designation or affect the duties, obligations or
liability of any other member of the audit committee.

ITEM 16BCODE
  OF ETHICS

The Corporation has adopted a Code of Ethics that applies to
its chief executive officer, chief financial officer, principal accounting
officer or controller, or persons performing similar functions as well as its
Board of Directors and senior officers. A copy of the Code is attached to this
Annual Report as an Exhibit.

There has not been any amendment to a provision of the Code of
Ethics that applies to the Corporations chief executive officer, chief
financial officer, principal accounting officer or controller, or persons
performing similar functions during the Corporations fiscal year for which this
Annual Report is filed. Furthermore, the Corporation has not granted a waiver,
including an implicit waiver (through failing to take action within a reasonable
period of time), from a provision of its Code of Ethics to any of such persons
during such fiscal year.

The term code of ethics means written standards that are
reasonably designed to deter wrongdoing and to promote:

|(1) | honest and ethical conduct, including the ethical
      handling of actual or apparent conflicts of interest between personal and
      professional relationships;                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                          
|(2) | full, fair, accurate, timely, and understandable
      disclosure in reports and documents that the Corporation files with, or
      submits to, the SEC and in other public communications made by the
      registrant;
|    |                                                                                                                                                                                                                          
|(3) | compliance with applicable governmental laws, rules and
      regulations;                                                                                                                                               
|    |                                                                                                                                                                                                                          
|(4) | the prompt internal reporting of violations of the code
      to an appropriate person or persons identified in the code; and                                                                                            
|    |                                                                                                                                                                                                                          
|(5) | accountability for adherence to the
  code.                                                                                                                                                                              

ITEM 16CPRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees billed to the Corporation by its principal
  accountant (auditor), PricewaterhouseCoopers LLP, in each of the last two fiscal
  years for various services are as follows:

67

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Audit Fees

For the audit of the Corporations annual financial statements
or services that are normally provided by the auditor in connection with
statutory and regulatory filings or engagements for those fiscal years were:

2004:     $138,350 ****2003:     $91,900

Audit-Related Fees

For assurance and related services reasonably related to the
performance of the audit or review of the Corporations financial statements and
are not reported under the heading Audit Fees above were:

2004:     $0 ****2003:    $1,000

The services provided were related to the Corporations
  preparation of quarterly financial statements.

Tax Fees

For tax compliance, tax advice, and tax planning were:

2004:    
$10,000 ****2003:     $10,400

The services provided were in connection with the filing of the
Corporations annual tax returns.

All Other Fees

For all other services were:

2004:    
$0 ****2003:     $0

Fee Pre-Approval Policies of the Audit Committee

As required under Regulation S-X, the independence of the
Corporations principal accountant (auditor), PricewaterhouseCoopers LLP, is
maintained by the Audit Committee reviewing and pre-approving all audit-related
services, and any non-audit services, to be provided by, and the estimated fees
and other compensation related thereto to be paid to (or establishing a limit
for such fees and compensation), the principal accountant. One or more
independent members of the Committee may give such pre-approval to the principal
accountant to perform non-audit services if notice of such pre-approval is
subsequently presented to the Audit Committees next scheduled meeting for
ratification and is ratified by the Committee.

In accordance with these procedures, the Audit Committee
approved all of the services described above in this Item.

During the 2004 fiscal year the Corporation did not rely on the
  exemption in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X in respect
  of the non-audit services rendered by the Corporations principal accountant
  (auditor). That section exempts the Corporations principal accountant
  (auditor) from the requirement to be independent of the Corporation and not
  provide any non-audit services for the Corporation if the total fees paid to
  the principal accountant for the non-audit related services does not exceed
  5% of the principal accountants fees to the Corporation for the fiscal
  year, such services were not recognized by the Corporation to be non-audit related
  at the time the principal accountant was retained to perform them and such services
  were promptly brought to the attention of, and approved by, the Audit Committee
  before the completion of the audit for that fiscal year.

68

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To the best of the Corporations knowledge, the percentage of
hours expended on the principal accountants (auditor) engagement to audit the
Corporations financial statements for the 2004 fiscal year which was
attributable to work performed by persons other than the principal accountants
(auditor) full-time permanent employees was less than 50%.

ITEM 16DEXEMPTIONS
  FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

The Common Shares are not listed on a national securities
exchange in the United States of America, therefore, it is not necessary for
the Corporation to rely on the exemption from the listing standards of such an
exchange for its audit committee.

ITEM 16EPURCHASES OF EQUITY SECURITIES BY THE
ISSUER& AFFILIATED PURCHASERS

During the 2004 fiscal year there were not any purchases made
  by or on behalf of the Corporation or any affiliated purchaser of
  the Corporations equity securities.

PART III

ITEM
17FINANCIAL STATEMENTS

The following financial statements for the years ended April
30, 2004, 2003 and 2002 are included herein.

Number
      Description
      Page No.(i)  Independent Auditors
        Report of PricewaterhouseCoopers LLP, Chartered Accountants, dated June
        25, 2004 except as noted
      F-2(ii)  Consolidated Balance Sheets
        as at April 30, 2004 and 2003
      F-3(iii)  Consolidated Statements of
        Operations and Deficit for the years ended April 30, 2004, 2003, and 2002
      F-4(iv)  Consolidated Statements of
        Cash Flow for the years ended April 30, 2004, 2003, and 2002
      F-5(vi)  Notes to Consolidated Financial
        Statements
      F-6


The Corporations consolidated financial statements for
  the year ended April 30, 2004 are reported on by the Corporations auditor,
  PricewaterhouseCoopers LLP, Chartered Accountants. The financial statements
  were prepared in accordance with Canadian GAAP and are presented in Canadian
  dollars. The significant measurement differences between United States and Canadian
  GAAP are set forth in Note 19 of the annual financial statements.

69

---

Kirkland Lake Gold Inc.

Financial Statements April 30, 2004 and 2003(expressed in Canadian dollars)

F-1

---

Independent Auditors Report

To the Shareholders of 
  Kirkland Lake Gold Inc.

We have audited the balance sheets of Kirkland Lake Gold Inc.
  as at April 30, 2004 and 2003 and the statements of operations and deficit and
  cash flows for each of the years in the three year period ended April 30, 2004.
  These financial statements are the responsibility of the companys management.
  Our responsibility is to express an opinion on these financial statements based
  on our audits.

We conducted our audits in accordance with Canadian generally
  accepted auditing standards and standards of the Public Company Accounting Oversight
  Board (United States). 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 financial statements present fairly, in
  all material respects, the financial position of the company as at April 30,
  2004 and 2003 and the results of its operations and its cash flows for each
  of the years in the three year period ended April 30, 2004 in accordance with
  Canadian generally accepted accounting principles.

PricewaterhouseCoopers LLP

Chartered Accountants

Vancouver, B.C., Canada

June 25, 2004 
  (except as to notes 1 and 20, which is as of August 25, 2004)

Comments by Auditor for U.S. Readers on Canada-U.S. Reporting
  Difference

In the United States, reporting standards for auditors require
  the addition of an explanatory paragraph (following the opinion paragraph) when
  the financial statements are affected by conditions and events that cast substantial
  doubt on the companys ability to continue as a going concern, such as
  those described in note 1 to the financial statements. Our report to the shareholders
  dated June 25, 2004 is expressed in accordance with Canadian reporting standards
  which do not permit a reference to such events and conditions in the auditors
  report when these are adequately disclosed in the financial statements.

PricewaterhouseCoopers LLP

Chartered AccountantsVancouver, B.C., Canada

June 25, 2004

F-2

---

|Kirkland Lake Gold Inc.            
|-----------------------------------
|Balance Sheets                     
|As at April 30,
      2004 and 2003
|                                   
|(expressed in Canadian dollars)    

|                                                        |  | 2004        |   |  | 2003       |  
|------------------------------------------------------- |  | ----------- | - |  | ---------- | -
|                                                        |  | $           |   |  | $          |  
|Assets                                                  |  |             |   |  |            |  
|Current assets                                          |  |             |   |  |            |  
|Cash and cash equivalents                               |  | 11,720,591  |   |  | 3,664,607  |  
|Short-term investments (note 4)                         |  | 190,000     |   |  | 190,000    |  
|Accounts receivable                                     |  | 435,006     |   |  | 313,168    |  
|Inventories (note 5)                                    |  | 1,527,553   |   |  | 583,290    |  
|Prepaid expenses and deposits                           |  | 323,194     |   |  | 444,220    |  
|                                                        |  | 14,196,344  |   |  | 5,195,285  |  
|Deferred finance charges(note 9)                        |  | 233,591     |   |  | 6,250      |  
|Mineral properties(note 6)                              |  | 14,118,836  |   |  | 8,117,495  |  
|Property, plant and equipment(note
      7)             |  | 9,937,904   |   |  | 5,971,094  |  
|Mine closure bonds(note10)                              |  | 2,043,435   |   |  | 2,043,435  |  
|                                                        |  | 40,530,110  |   |  | 21,333,559 |  
|Liabilities                                             |  |             |   |  |            |  
|Current liabilities                                     |  |             |   |  |            |  
|Accounts payable and accrued liabilities                |  | 7,474,220   |   |  | 3,464,472  |  
|Current portion of notes payable (note 8)               |  | -           |   |  | 1,926,849  |  
|Convertible loans (note 9)                              |  | 3,088,818   |   |  | 2,176,622  |  
|                                                        |  | 10,563,038  |   |  | 7,567,943  |  
|Mortgage payable                                        |  | 84,000      |   |  | -          |  
|Provision for reclamation and site restoration(note 10) |  | 2,043,435   |   |  | 2,043,435  |  
|                                                        |  | 12,690,473  |   |  | 9,611,378  |  
|Shareholders Equity                                    |  |             |   |  |            |  
|Capital stock(note 11)                                  |  |             |   |  |            |  
|Authorized                                              |  |             |   |  |            |  
|Unlimited common shares
      without par value         |  |             |   |  |            |  
|Issued                                                  |  |             |   |  |            |  
|36,479,606 (2003 -
      24,076,166) common shares      |  | 51,956,501  |   |  | 17,757,582 |  
|Options(note 12)                                        |  | 170,451     |   |  | 112,362    |  
|Warrants(note 13)                                       |  | 4,983,765   |   |  | 696,270    |  
|Equity component of convertible loans                   |  | 271,839     |   |  | 82,728     |  
|Contributed surplus                                     |  | 18,010      |   |  | 18,010     |  
|Deficit                                                 |  | (29,560,929 | ) |  | (6,944,771 | )
|                                                        |  | 27,839,637  |   |  | 11,722,181 |  
|                                                        |  | 40,530,110  |   |  | 21,333,559 |  
|Nature of operations and going concern(note 1)          |  |             |   |  |            |  
|Subsequent events(note 20)                              |  |             |   |  |            |  

Approved by the Board of Directors

|Brian E. Bayley | Director | Paul Kostuik | Director
|----------------- | -------- | -------------- | --------

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

F-3

---

|Kirkland Lake Gold Inc.                                  
|---------------------------------------------------------
|Statements of Operations and Deficit                     
|For the years ended
      April 30, 2004, 2003 and 2002  
|                                                         
|(expressed in Canadian dollars, except per share amounts)

|                                            |  | 2004        |   |  | 2003       |   |  | 2002        |  
|------------------------------------------- |  | ----------- | - |  | ---------- | - |  | ----------- | -
|                                            |  | $           |   |  | $          |   |  | $           |  
|                                            |  |             |   |  |            |   |  |             |  
|Mining revenue                              |  | 9,807,106   |   |  | 11,704,639 |   |  | -           |  
|Operating costs                             |  | 25,045,418  |   |  | 10,787,637 |   |  | -           |  
|Amortization and depletion                  |  | 1,229,508   |   |  | 785,337    |   |  | 225,593     |  
|                                            |  |             |   |  |            |   |  |             |  
|                                            |  | (16,467,820 | ) |  | 131,665    |   |  | (225,593    | )
|                                            |  |             |   |  |            |   |  |             |  
|General and administrative                  |  | 1,889,778   |   |  | 2,264,735  |   |  | 1,333,405   |  
|Royalties                                   |  | 280,105     |   |  | 236,216    |   |  | -           |  
|Exploration                                 |  | 3,124,589   |   |  | 1,798,836  |   |  | 473,830     |  
|Amortization of finance charges             |  | 520,472     |   |  | 237,016    |   |  | -           |  
|Interest and bank charges                   |  | 419,807     |   |  | 598,488    |   |  | 159,925     |  
|Foreign exchange loss (gain)                |  | 642         |   |  | 142        |   |  | (14,166     | )
|Interest and other income                   |  | (87,055     | ) |  | (68,789    | ) |  | -           |  
|                                            |  |             |   |  |            |   |  |             |  
|                                            |  | 6,148,338   |   |  | 5,066,644  |   |  | 1,952,994   |  
|                                            |  |             |   |  |            |   |  |             |  
|Loss for the year                           |  | (22,616,158 | ) |  | (4,934,979 | ) |  | (2,178,587  | )
|                                            |  |             |   |  |            |   |  |             |  
|Deficit - Beginning of year                 |  | (6,944,771  | ) |  | (2,009,792 | ) |  | (14,429,101 | )
|                                            |  |             |   |  |            |   |  |             |  
|Reduction of stated capital against deficit |  |             |   |  |            |   |  |             |  
|(note 11)                                   |  | -           |   |  | -          |   |  | 14,597,896  |  
|                                            |  |             |   |  |            |   |  |             |  
|Deficit - End of year                       |  | (29,560,929 | ) |  | (6,944,771 | ) |  | (2,009,792  | )
|                                            |  |             |   |  |            |   |  |             |  
|Basic and diluted loss per share            |  | (0.76       | ) |  | (0.25      | ) |  | (0.16       | )
|                                            |  |             |   |  |            |   |  |             |  
|Weighted average number of shares           |  |             |   |  |            |   |  |             |  
|outstanding                                 |  | 29,693,146  |   |  | 19,942,514 |   |  | 13,387,544  |  

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

F-4

---

|Kirkland Lake Gold Inc.                                
|-------------------------------------------------------
|Statements of Cash Flows                               
|For the years ended
      April 30, 2004, 2003 and 2002
|                                                       
|(expressed in Canadian dollars)                        

|                                                |  | 2004        |   |  | 2003       |   |  | 2002       |  
|----------------------------------------------- |  | ----------- | - |  | ---------- | - |  | ---------- | -
|                                                |  | $           |   |  | $          |   |  | $          |  
|                                                |  |             |   |  |            |   |  |            |  
|Cash flows from operating activities            |  |             |   |  |            |   |  |            |  
|Loss for the year                               |  | (22,616,158 | ) |  | (4,934,979 | ) |  | (2,178,587 | )
|Items
      not affecting cash                  |  |             |   |  |            |   |  |            |  
|Amortization and depletion                      |  | 1,229,508   |   |  | 785,337    |   |  | 225,593    |  
|Accretion of interest and amortization
      of |  |             |   |  |            |   |  |            |  
|finance charges                                 |  | 694,930     |   |  | 606,163    |   |  | 187,671    |  
|Stock-based compensation                        |  | 81,515      |   |  | 22,133     |   |  | 128,168    |  
|                                                |  |             |   |  |            |   |  |            |  
|                                                |  | (20,610,205 | ) |  | (3,521,346 | ) |  | (1,637,155 | )
|Changes in non-cash working capital items       |  |             |   |  |            |   |  |            |  
|Accounts
      receivable                       |  | (121,838    | ) |  | (183,118   | ) |  | (128,520   | )
|Inventories                                     |  | (944,263    | ) |  | (583,290   | ) |  | -          |  
|Prepaid
      expenses and deposits             |  | 121,026     |   |  | (313,422   | ) |  | (121,831   | )
|Accounts payable
      and accrued liabilities  |  | 4,009,748   |   |  | 2,498,277  |   |  | 877,937    |  
|                                                |  |             |   |  |            |   |  |            |  
|                                                |  | (17,545,532 | ) |  | (2,102,899 | ) |  | (1,009,569 | )
|                                                |  |             |   |  |            |   |  |            |  
|Cash flows from financing activities            |  |             |   |  |            |   |  |            |  
|Net proceeds from issuance of capital stock     |  | 37,715,175  |   |  | 9,981,917  |   |  | 8,274,369  |  
|Proceeds from issuance of convertible loans     |  | 1,000,000   |   |  | 2,500,000  |   |  |            |  
|Finance charges                                 |  | -           |   |  | (25,000    | ) |  | -          |  
|Payment of notes payable and convertible loans  |  | (2,000,000  | ) |  | (3,312,500 | ) |  | -          |  
|                                                |  |             |   |  |            |   |  |            |  
|                                                |  | 36,715,175  |   |  | 9,144,417  |   |  | 8,274,369  |  
|                                                |  |             |   |  |            |   |  |            |  
|Cash flows from investing activities            |  |             |   |  |            |   |  |            |  
|Purchase of property, plant and equipment       |  | (4,839,072  | ) |  | (857,584   | ) |  | -          |  
|Purchase of short-term investments              |  | -           |   |  | -          |   |  | (190,000   | )
|Additions to mineral properties                 |  | (6,274,587  | ) |  | (6,188,717 | ) |  | (1,556,084 | )
|Mine closure bonds                              |  | -           |   |  | -          |   |  | (2,043,435 | )
|                                                |  |             |   |  |            |   |  |            |  
|                                                |  | (11,113,659 | ) |  | (7,046,301 | ) |  | (3,789,519 | )
|                                                |  |             |   |  |            |   |  |            |  
|Increase (decrease) in cash and                 |  |             |   |  |            |   |  |            |  
|cash
      equivalents                          |  | 8,055,984   |   |  | (4,783     | ) |  | 3,475,281  |  
|                                                |  |             |   |  |            |   |  |            |  
|Cash and cash equivalents -                     |  |             |   |  |            |   |  |            |  
|Beginning of year                               |  | 3,664,607   |   |  | 3,669,390  |   |  | 194,109    |  
|                                                |  |             |   |  |            |   |  |            |  
|Cash and cash equivalents - End of year         |  | 11,720,591  |   |  | 3,664,607  |   |  | 3,669,390  |  
|                                                |  |             |   |  |            |   |  |            |  
|Supplemental cash flow information(note 18)     |  |             |   |  |            |   |  |            |  

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

F-5

---

|1 | Nature of operations and going concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | Kirkland Lake Gold Inc. (formerly Foxpoint Resources
        Ltd.) (the company) owns gold mining and milling operations in Kirkland
        Lake, Canada, which were inactive when acquired in December 2001. The
        continued operations of the company are dependent upon the existence of
        economically recoverable reserves, the ability of the company to obtain
        financing as required to sustain the development, and upon future profitable
        production.                                                                                                                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | At April 30, 2004, the company had working capital of
        $3,633,306. Included in this balance are convertible loans of $3,088,818,
        which were extended for another year at the companys option. Subsequent
        to year-end, the company raised $14.2 million net proceeds in a private
        placement (note 20).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | Management estimates that these funds, together with
        funds from operations will be sufficient to meet the companys obligations
        for the coming year. Actual funds available from operations may vary significantly
        from managements estimates, due to changes in gold prices and foreign
        exchange rates, which are outside the control of management, and the success
        in achieving future production volumes and production costs which the
        company has not been able to achieve to date. Differences between actual
        results and managements estimates will occur, and these differences
        may be material. Accordingly, there is no assurance that operations will
        result in sufficient funds being available to the company to continue
        in the normal course.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | The companys ability to continue as a going concern
        is dependent on future financings until the attainment of profitable and
        cash-generating operations sufficient to sustain the company. These financial
        statements do not include any adjustments to the recoverability and classification
        of recorded asset amounts and classification of liabilities that might
        be necessary, should the company be unable to continue as a going concern.                                                                                                                                                                                                                                                                                                                                                       
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2 | Significant accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | Generally accepted accounting principles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | These financial statements have been prepared in accordance
        with generally accepted accounting principles (GAAP) in Canada. The significant
        measurement differences between these principles and those that would
        be applied under United States GAAP, as they affect the company are disclosed
        in note 19.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  | The preparation of financial statements in conformity
        with GAAP requires management to make estimates and assumptions that affect
        the reported amounts of assets and liabilities and the disclosure of contingent
        assets and liabilities at the date of the financial statements and the
        reported amounts of revenues and expenses during the year. Actual results
        could differ from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                  

F-6

---

Cash and cash equivalents

Cash and cash equivalents include cash
  and short-term investments with maturity of 90 days or less at the date of acquisition.

Short-term investments

Short-term investments represent term
  deposits with an initial maturity of greater than 90 days. Short-term investments
  are restricted to deposits with major Canadian banks and/or commercial paper
  of investment grade issuers. Short-term investments are carried at the lower
  of cost and market value.

Inventories

Dore bars and gold in process are recorded
  at the lower of average production cost and net realizable value. Production
  costs include all direct costs plus fixed costs associated with the mine site.
  The company uses a rolling period average cost to value the inventory of gold
  on hand and in process. Mine operating supplies are valued at average cost less
  allowance for obsolescence.

Mineral properties and deferred exploration
  costs

The company expenses exploration expenditures
  and near term ore development costs as incurred. Property acquisition costs
  and longer term mine development costs incurred to expand ore reserves are deferred
  and depleted on a units-of-production basis over proven and probable reserves
  which are currently accessible by the company. Managements estimate of
  gold price, recoverable proven and probable reserves, operating, capital and
  reclamation costs are subject to risk and uncertainties affecting the recoverability
  of the companys investment in mineral properties. The company assesses
  capitalized costs for recoverability on an annual basis or more frequently if
  changes in circumstances warrant. When the carrying value is less than its net
  recoverable value as determined on an undiscounted basis, an impairment loss
  is recognized to the extent that its fair value, measured as the discounted
  cash flows over the life of the asset is below the assets carrying value.

Property, plant and equipment

Property, plant and equipment are recorded
  at cost and amortized on a straight-line basis over the following terms:

Computer equipment
      3 yearsMine and mill equipment
      10 yearsVehicles
      5 yearsBuildings
      10 years


F-7

---

Reclamation and site restoration liabilities

Ongoing reclamation and site restoration
  costs are charged to operations in the year incurred. Post-closure costs for
  reclamation and site restoration are estimated based on current federal and
  provincial regulatory requirements.

It is reasonably possible that the companys
  estimates of its ultimate reclamation and site restoration liability could change
  as a result of changes in regulations or cost estimates. The effects of changes
  in estimated costs, which could be material, are recognized on a prospective
  basis.

Revenue recognition

The company sells its gold bullion in
  the spot market. Revenue is recognized on title transfer of the gold to purchasers
  which occurs when the gold is received by the purchaser. Adjustments to accounts
  receivable, if any, between the date of title transfer and the settlement date
  are recorded when determined.

Foreign currency translation

The company generally seeks to sell its
  gold in Canadian dollars. To the extent these transactions are denominated in
  foreign currencies, they are translated into their Canadian dollar equivalents
  at exchange rates prevailing at the transaction date. Gains and losses arising
  from restatement of foreign currency monetary assets and liabilities and transactions
  are included in earnings.

Stock-based compensation

The company has elected not to follow
  the fair value method of accounting for stock options granted to directors and
  employees, and, as permitted under the standard, no compensation cost is recorded
  on the granting of stock options to employees and directors as the exercise
  price is equal to or greater than the market price at the date of grant. Consideration
  paid on exercise of stock options is credited to capital stock.

Stock-based compensation on options granted
  to non-employees is recorded as an expense at the earlier of the completion
  of performance or vesting of the options granted, based upon the estimated fair
  value on the grant date.

Income taxes

The company uses the liability method
  of accounting for future income taxes. Under this method of tax allocation,
  future income tax assets and liabilities are determined based on the differences
  between the financial reporting and tax basis of assets and liabilities and
  are measured using the substantively enacted tax rates and laws that are expected
  to be in effect in the periods in which the future income tax assets or liabilities
  are expected to be settled or realized. A valuation allowance is provided to
  the extent that it is more likely than not that future income tax assets will
  not be realized.

F-8

---

Flow-through shares

The company from time-to-time issues
  flow-through shares to finance a portion of its Canadian exploration program.
  Pursuant to the terms of flow-through share agreements, the tax deductions associated
  with the expenditures are renounced to the subscribers. Accordingly, to the
  extent that the company does not have unrecognized loss carryforwards to offset
  any firm liabilities, share capital is reduced and a future tax liability is
  recorded equal to the estimated amount of the future income tax liability of
  the company as a result of the renunciations are made.

Loss per common share

The company follows the treasury stock
  method in the calculation of diluted earnings per share. Loss per share is calculated
  using the weighted average number of common shares issued and outstanding during
  the year.

|3 | Acquisition of mineral properties and property, plant
        and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  | On December 14, 2001, the company acquired various mining
        properties and mining assets located in and around Kirkland Lake, Ontario.
        These assets included five contiguous gold mining properties known as
        the Macassa, Lake Shore, Wright-Hargreaves, Teck-Hughes and Kirkland Lake
        Gold properties and all plant and equipment located on the properties
        at the date of the purchase agreement. All of the mining properties were
        previously operating gold mines, the last of which suspended operations
        indefinitely in June of 1999. The mine had been allowed to flood to near
        surface by the vendor prior to the sale.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  | The terms of the acquisition were:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| | a) | Cash payments aggregating $5 million which have been
        made.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | b) | A net smelter royalty granted to the vendor which is
        payable on a sliding scale commencing at 2% if the price of gold sold
        is equal to or greater than US$300 per ounce and increasing to 4% if the
        price of gold sold is equal to or greater than US$500 per ounce. The royalty
        amount due, if any, is payable quarterly commencing on the third month
        anniversary of the commencement of commercial production from any of the
        properties and terminates upon a maximum aggregate payment of $15 million.
        During the year ended April 30, 2004, royalties under this agreement amounted
        to $264,974 (2003 - $233,216).
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | c) | Assumption of all existing environmental and rehabilitation
        costs of the mining properties, including the assumption of mining closure
        bonds previously posted by the vendor and aggregating $2,043,435.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | d) | The payment of certain care and maintenance costs incurred
        by the vendor from the time of the agreement to the closing date of December
        14, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

F-9

---

The properties acquired comprise an aggregate
  of 224 patented and unpatented mining claims and crown leases. Some of the mining
  interests are subject to royalty interests payable to parties other than the
  vendor. These royalty interests differ depending on the claim, and range from
  net smelter royalties of 1% to 2%, production royalties of $0.10 to $4.00 per
  ton of ore mined or net profit royalties from 2% to 5%, while some claims have
  a royalty of 1% of gross proceeds from production or a net profit royalty of
  20%. During the year ended April 30, 2004, these royalties amounted to $15,131
  (2003 - $3,000).

The purchase consideration has been recorded
  as follows:

$Consideration paidPresent value of
        $5 million cash payments due fromJune 2002 to December 2003 discounted
        at 10%
      
      4,453,699Cash provided to
        secure mine closure bonds
      
      2,043,435Closing
        adjustments and other direct costs
      
      314,389Total
      
      6,811,523Assets acquired and liabilities assumedMine closure bonds
      
      2,043,435Property,
        plant and equipment
      
      6,015,849Mineral properties
      
      795,674Provision
        for reclamation and site restoration
      
      (2,043,435
      )Total
      
      6,811,523


|4 | Short-term investments                                                                                                                                                                                                              
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                     
|  | The companys short-term investment is held as
        collateral to provide a letter of credit to the Independent Electricity
        Market Operator as security for payment in connection with ongoing electricity
        usage.
|  |                                                                                                                                                                                                                                     
|5 | Inventories                                                                                                                                                                                                                         

| |                         |  | 2004      |  |  | 2003    | 
| | ----------------------- |  | --------- |  |  | ------- | 
| |                         |  | $         |  |  | $       | 
| |                         |  |           |  |  |         | 
| | Mine operating supplies |  | 626,146   |  |  | 74,802  | 
| | Gold in process         |  | 719,232   |  |  | 508,488 | 
| | Dore bars               |  | 182,175   |  |  | -       | 
| |                         |  |           |  |  |         | 
| |                         |  | 1,527,553 |  |  | 583,290 | 

F-10

---

|6 | Mineral properties                                                                                                                        
|- | ------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                           
|  | The companys mineral properties comprise five
        contiguous mining properties in and around Kirkland Lake, Ontario (note
        3).

| |                                      |  | 2004       |   |  | 2003      |  
| | ------------------------------------ |  | ---------- | - |  | --------- | -
| |                                      |  | $          |   |  | $         |  
| |                                      |  |            |   |  |           |  
| | Balance - Beginning of year          |  | 8,117,495  |   |  | 2,037,369 |  
| |                                      |  |            |   |  |           |  
| | Rehabilitation and development costs |  | 6,274,587  |   |  | 6,188,717 |  
| | Depletion                            |  | (273,246   | ) |  | (108,591  | )
| |                                      |  |            |   |  |           |  
| | Balance - End of year                |  | 14,118,836 |   |  | 8,117,495 |  

| |                                            |  | 2004       |  |  | 2003      | 
| | ------------------------------------------ |  | ---------- |  |  | --------- | 
| |                                            |  | $          |  |  | $         | 
| |                                            |  |            |  |  |           | 
| | Acquisition allocation (note 3)            |  | 781,127    |  |  | 795,674   | 
| | Underground development                    |  | 10,427,302 |  |  | 4,412,246 | 
| | Underground pumping                        |  | 1,946,609  |  |  | 1,917,522 | 
| | Mill and surface facilities rehabilitation |  | 146,640    |  |  | 149,371   | 
| | Lakeshore underground access ramp          |  | 817,158    |  |  | 842,682   | 
| |                                            |  |            |  |  |           | 
| |                                            |  | 14,118,836 |  |  | 8,117,495 | 

|  |                              
|- | -----------------------------
|7 | Property, plant and equipment
|  |                              

| |                         |  |            |  |  |              |  |  | 2004      | 
| | ----------------------- |  | ---------- |  |  | ------------ |  |  | --------- | 
| |                         |  |            |  |  |              |  |  |           | 
| |                         |  |            |  |  | Accumulated  |  |  |           | 
| |                         |  | Cost       |  |  | amortization |  |  | Net       | 
| |                         |  | $          |  |  | $            |  |  | $         | 
| |                         |  |            |  |  |              |  |  |           | 
| | Computer equipment      |  | 162,724    |  |  | 75,075       |  |  | 87,649    | 
| | Mine and mill equipment |  | 11,366,457 |  |  | 1,762,758    |  |  | 9,603,699 | 
| | Vehicles                |  | 78,142     |  |  | 20,768       |  |  | 57,374    | 
| | Buildings               |  | 189,182    |  |  | -            |  |  | 189,182   | 
| |                         |  |            |  |  |              |  |  |           | 
| |                         |  | 11,796,505 |  |  | 1,858,601    |  |  | 9,937,904 | 

F-11

---

| |                         |  |           |  |  |              |  |  | 2003      | 
| | ----------------------- |  | --------- |  |  | ------------ |  |  | --------- | 
| |                         |  |           |  |  |              |  |  |           | 
| |                         |  |           |  |  | Accumulated  |  |  |           | 
| |                         |  | Cost      |  |  | amortization |  |  | Net       | 
| |                         |  | $         |  |  | $            |  |  | $         | 
| |                         |  |           |  |  |              |  |  |           | 
| | Computer equipment      |  | 115,359   |  |  | 29,040       |  |  | 86,319    | 
| | Mine and mill equipment |  | 6,712,710 |  |  | 865,971      |  |  | 5,846,739 | 
| | Vehicles                |  | 45,364    |  |  | 7,328        |  |  | 38,036    | 
| |                         |  |           |  |  |              |  |  |           | 
| |                         |  | 6,873,433 |  |  | 902,339      |  |  | 5,971,094 | 

|8 | Notes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  | The company signed notes payable in connection with
        the acquisition of the mining properties and mining assets in Kirkland
        Lake, Ontario (note 3(a)). The notes were non-interest bearing and were
        repayable on various dates from June 2002 through December 13, 2003. The
        notes have been discounted at 10% per annum, which is estimated to be
        consistent with similar borrowings which would have been available to
        the company.

| |                             |  | 2004       |   |  | 2003       |  
| | --------------------------- |  | ---------- | - |  | ---------- | -
| |                             |  | $          |   |  | $          |  
| |                             |  |            |   |  |            |  
| | Balance - Beginning of year |  | 1,926,849  |   |  | 4,641,370  |  
| |                             |  |            |   |  |            |  
| | Accretion of interest       |  | 73,151     |   |  | 285,479    |  
| | Less: Payments              |  | (2,000,000 | ) |  | (3,000,000 | )
| |                             |  |            |   |  |            |  
| | Balance - End of year       |  | -          |   |  | 1,926,849  |  

|9 | Convertible loans
|- | -----------------
|  |                  
|  | a)               
|  |                  
|  |                  

F-12

---

| |    | During the year ended April 30, 2003, the company repaid
        part of the convertible loans with a face value of $312,500. As a result
        of the redemption $11,818 of the value of the equity conversion feature
        of the convertible loans was transferred to contributed surplus leaving
        a balance of $82,728 as the equity component of convertible loans. Subsequent
        to the year ended April 30, 2004, the company repaid the balance of the
        convertible loans (note 20).                                                                                                                                                                                                                           
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The company has determined the value of the equity conversion
        feature of the convertible loans to be $94,546 using the Black-Scholes
        option pricing model. The remainder of $2,405,454 has been classified
        as debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The lenders received an aggregate of 125,000 special
        warrants exercisable at deemed value of $2.05 for 10 years, as a bonus
        for making the loans, which were recorded as finance charges at an estimated
        fair value of $218,266. The special warrants were converted into common
        shares on February 21, 2003.                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | On December 5, 2003, the lenders received 109,375 common
        shares, at a fair value of $4.78 per share to extend the maturity date
        of the $2,187,500 note payable to June 11, 2004. The fair value of the
        shares has been recorded as finance charges of $522,813 and will be amortized
        over the remaining term of the loan.                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | b) | On August 11, 2003, the company completed a loan financing
        of $1,000,000. The loan has a term of 18 months (expiring February 11,
        2005), which can be extended for 18 months at the companys option
        (see below), and bears interest at the rate of 10% per year.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The principal amount of the loan is convertible at the
        lenders option into common shares at the rate of $4.00 per common
        share and the accrued interest is convertible into common shares at the
        rate equal to the higher of $4.00 per common share or the then market
        price of the companys shares.                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The company has determined the value of the equity conversion
        feature of the convertible loans to be $189,111 using the Black-Scholes
        option pricing model. The remainder of $810,889 was classified as debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | The lender received an aggregate of 75,000 common shares
        at $3.00 per common share, as a bonus for making the loans, which have
        been determined to have a fair value of $225,000 and will be amortized
        over the initial term of the loan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | At the companys option, the maturity date of the
        loan may be extended to 36 months by the issuance of 75,000 common shares.
        The common shares, when issued, will be subject to a four-month hold period
        from issuance. If the loan is redeemed by the company within the first
        or second 18-month term, the lender shall receive warrants to purchase
        that number of common shares equal to 0.2875 times the amount of unpaid
        principal. The warrants would be exercisable at $4.00 per share until
        the next 18-month anniversary of the loan. The lender shall also receive
        the balance of the 18 months of interest to the end of the first or second
        18-month term.

F-13

---

| | c) | A summary of deferred finance charges incurred and amortization
        is shown below:
| | -- | ---------------------------------------------------------------------------------------

| |                             |  | 2004     |   |  | 2003     |  
| | --------------------------- |  | -------- | - |  | -------- | -
| |                             |  | $        |   |  | $        |  
| |                             |  |          |   |  |          |  
| | Balance - Beginning of year |  | 6,250    |   |  | -        |  
| |                             |  |          |   |  |          |  
| | Finance charges incurred    |  | 747,813  |   |  | 243,266  |  
| | Less: Amortization          |  | (520,472 | ) |  | (237,016 | )
| |                             |  |          |   |  |          |  
| | Balance - End of year       |  | 233,591  |   |  | 6,250    |  

|10 | Provision for reclamation and site restoration                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The company has assumed responsibility for the reclamation
        and site restoration plans originally filed with the Ontario Ministry
        of Northern Development and Mining (MNDM) in connection with the Macassa
        and the Lake Shore properties. The estimated total costs of reclamation
        and site restoration are $2,043,435 and financial assurance has been provided
        to the MNDM by way of mine closure bonds. The remaining properties will
        require geotechnical investigations and possible closure remediation to
        meet the MNDMs approval, the cost of which is not yet determinable,
        but which management does not believe to be significant on the basis of
        current legislation. The company recorded the estimated costs of reclamation
        and site restoration of $2,043,435 at the time of acquisition of the properties.

F-14

---

|11 | Capital stock
|-- | -------------

| |                                                  |  | Number     |  |  |             |  
| | ------------------------------------------------ |  | ---------- |  |  | ----------- | -
| |                                                  |  | of shares  |  |  | Amount      |  
| |                                                  |  |            |  |  | $           |  
| |                                                  |  |            |  |  |             |  
| | Balance - April 30, 2001                         |  | 9,559,239  |  |  | 14,545,449  |  
| |                                                  |  |            |  |  |             |  
| | Exercise of options                              |  | 7,500      |  |  | 10,125      |  
| | Exercise of warrants                             |  | 2,011,765  |  |  | 618,236     |  
| | Common shares issued for cash (c) and (b)        |  | 6,400,000  |  |  | 8,320,000   |  
| | Share proceeds allocated to warrants (c) and (b) |  | -          |  |  | (1,044,040  | )
| | Share issuance costs                             |  | -          |  |  | (673,992    | )
| | Reduction of stated capital (a)                  |  | -          |  |  | (14,597,896 | )
| |                                                  |  |            |  |  |             |  
| | Balance - April 30, 2002                         |  | 17,978,504 |  |  | 7,177,882   |  
| |                                                  |  |            |  |  |             |  
| | Exercise of options (note 12)                    |  | 97,500     |  |  | 184,721     |  
| | Exercise of warrants (note 13)                   |  | 2,375,162  |  |  | 4,270,874   |  
| | Private placements (d) and (e)                   |  | 3,625,000  |  |  | 7,075,000   |  
| | Share issuance costs                             |  | -          |  |  | (950,895    | )
| |                                                  |  |            |  |  |             |  
| | Balance - April 30, 2003                         |  | 24,076,166 |  |  | 17,757,582  |  
| |                                                  |  |            |  |  |             |  
| | Exercise of options (note 12)                    |  | 605,950    |  |  | 931,246     |  
| | Exercise of warrants (note 13)                   |  | 1,558,986  |  |  | 3,268,701   |  
| | Private placements ((f) through (k))             |  | 10,054,129 |  |  | 36,043,993  |  
| | Convertible loan                                 |  | 184,375    |  |  | 747,813     |  
| | Share issuance costs                             |  | -          |  |  | (2,052,186  | )
| | Share proceeds allocated to warrants             |  | -          |  |  | (4,740,648  | )
| |                                                  |  |            |  |  |             |  
| | Balance - April 30, 2004                         |  | 36,479,606 |  |  | 51,956,501  |  

| | a) | At the companys annual general meeting, held on
        October 17, 2001, shareholders approved a reduction of stated capital
        of $14,597,896.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | b) | On March 5, 2002, the company issued 1,500,000 units
        at a price of $1.30 per unit for gross proceeds of $1,950,000. Each unit
        comprised one common share and one-half of a share purchase warrant. Each
        whole warrant entitled the holder to purchase a further common share for
        a period of 24 months at a price of $1.60 per share. The company incurred
        commissions, fees and legal costs totalling $108,410 in connection with
        this share issuance. The share purchase warrants issued as part of these
        private placement units have been recorded at a fair value of $238,817.

F-15

---

| | c) | On December 12 and 14, 2001, the company issued 400,000
        flow-through common shares at $1.30 per share and 4,500,000 units at a
        price of $1.30 per unit for gross proceeds of $6,370,000. Each unit comprised
        one (non-flow-through) common share and one-half of a share purchase warrant.
        Each whole warrant entitled the holder to purchase a further (non-flow-through)
        common share for a period of 24 months at a price of $1.55 per share.
        The agent was issued warrants which entitled the agent to purchase 490,000
        shares for a period of 24 months at a price of $1.30 per share. The company
        incurred commissions, fees and legal costs totalling $565,582 in connection
        with these share issuances. The share purchase warrants issued as part
        of these private placement units have been recorded at a fair value of
        $805,223.                                                              
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | d) | On June 21, 2002, the company closed a brokered private
        placement of 1,000,000 shares at a price of $2.35 per share for gross
        proceeds of $2,350,000. The agent also received a compensation option
        to purchase 100,000 common shares for a period of 24 months at a price
        of $2.35 per share. The company incurred commissions, fees and legal costs
        totalling $169,851 in connection with this placement. The agents
        options have been recorded at a fair value of $81,276.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | e) | On December 30, 2002, the company closed a brokered
        private placement of 2,625,000 shares at a price of $1.80 per share for
        gross proceeds of $4,725,000. The agent also received 393,750 warrants
        exercisable at $2.05 until June 30, 2004 as compensation for the placement.
        The company incurred commissions, fees and legal costs totalling $465,834
        in connection with this placement. The agents warrants have been
        recorded at a fair value of $233,935.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | f) | On August 8, 2003, the company closed the first of two
        tranches of a private placement of 3,755,000 units. In the first tranche,
        the company sold 3,554,000 units at $2.60 per unit to raise gross proceeds
        of $9,240,400. On August 26, 2003, the company closed the second tranche
        and sold 201,000 units at $2.60 per unit to raise gross proceeds of $522,600.
        Each unit consisted of one common share and one-half of a share purchase
        warrant. Each whole warrant will entitle the holder to purchase a further
        common share for a period of two years (expiring August 8 and August 26,
        2005) at a price of $3.00 per share. The company incurred commissions,
        fees and legal costs totalling $538,080 in connection with this placement.
        The share purchase warrants issued as part of this placement have been
        recorded at a fair value of $2,150,084.                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | g) | On November 14, 2003, the company completed a flow-through
        private placement, raising $7,700,000 through the sale of 1,925,000 shares
        at $4.00 per share. The proceeds from the financing are being used to
        fund further exploration expenses on the companys Kirkland Lake,
        Ontario, mining properties. A fee of 5% of the proceeds raised was paid
        to the agents. The company also issued agents compensation warrants to
        purchase 96,250 shares, which are exercisable for a period of 24 months
        (expiring November 14, 2005) at a price of $3.60 per share. The company
        incurred commissions, fees and legal costs totalling $430,499 in connection
        with this placement. The compensation warrants issued as part of this
        placement have been recorded at fair value of $158,788. At April 30, 2004,
        the company has a commitment to incur $5,163,723 of eligible flow through
        expenditures.

F-16

---

| | h) | On December 2, 2003, the company completed a private
        placement of 2,200,000 units at a price of $3.90 per unit for gross proceeds
        of $8,580,000. Each unit consisted of one common share and one-half of
        a share purchase warrant. Each whole warrant is exercisable for a period
        of 18 months (expiring June 1, 2005) at a price of $4.40 per share. Two
        family trusts, the beneficiaries of which are the spouse and sister of
        the companys Chairman, D. Harry W. Dobson, subscribed for over 50%
        of the placement. The company incurred commissions, fees and legal costs
        totalling $406,819 in connection with this placement.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    | The share purchase warrants issued as part of this placement
        have been recorded at fair value of $1,659,959.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | i) | On December 5, 2003, the company issued 109,375 common
        shares, at a fair value of $4.78 per common share, to extend the maturity
        date of the $2,187,500 note payable to June 11, 2004 (note 9(a)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | j) | On August 11, 2003, the company issued 75,000 common
        shares at a fair value of $3.00 per common share, as a bonus on the $1,000,000
        convertible loan financing (note 9(b)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | k) | On April 29, 2004, the company completed a private placement
        of 2,174,129 units at a price of $4.60 per unit for gross proceeds of
        $10,000,993. Each unit consisted of one common share and one-half of a
        share purchase warrant. Each whole warrant will entitle the holder to
        purchase a further common share for a period of 15 months (expiring July
        29, 2005) at a price of $5.20 per share. The company incurred commissions,
        fees and legal costs totalling $475,000 in connection with this placement.
        The share purchase warrants issued as part of this placement have been
        recorded at a fair value of $930,606.        

|12 | Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The company has adopted a stock option plan. The plan
        allows the company to grant options to directors, senior officers and
        employees of or consultants to the company and its subsidiaries or employees
        of a corporation providing management services to the company. The aggregate
        number of shares which may be subject to issuance pursuant to options
        granted under this plan is 2,000,000 shares.                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The plan provides that the exercise price of an option
        granted under the plan shall not be less than the market price at the
        time of granting the option. Options have a maximum term of 10 years and
        terminate on the 90th day after the optionee ceased to be any of a director,
        officer, consultant or employee; on the 30th day after the optionee ceased
        to be an employee or consultant if the optionee was engaged in providing
        investor relations services for the company; or the earlier of the 90th
        day and the third month after the optionee ceased to be an employee or
        officer if the optionee is subject to the tax laws of the United States
        of America.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Notwithstanding that options can have a maximum term
        of 10 years it is presently the policy of the company to issue options
        for terms of five years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-17

---

The change in stock options issued during
  the years ended April 30 is as follows:

2004
      
      
      
      
      
      2003
      
      
      
      
      
      2002Weighted
      
      
      
      
      
      Weighted
      
      
      
      
      
      Weightedaverage
      
      
      
      
      
      average
      
      
      
      
      
      averageNumber
      
      
      exercise
      
      
      Number
      
      
      exercise
      
      
      Number
      
      
      exerciseof shares
      
      
      price
      
      
      of shares
      
      
      price
      
      
      of shares
      
      
      price$
      
      
      
      
      
      $
      
      
      
      
      
      $Options outstanding - Beginningof year
      
      1,735,000
      
      
      1.65
      
      
      1,173,000
      
      
      1.34
      
      
      350,000
      
      
      1.10Granted
      
      327,500
      
      
      3.60
      
      
      679,500
      
      
      2.20
      
      
      830,500
      
      
      1.44Exercised
      
      (605,950
      )
      
      1.50
      
      
      (97,500
      )
      
      1.57
      
      
      (7,500
      )
      
      1.35Forfeited
      
      (30,000
      )
      
      2.78
      
      
      (20,000
      )
      
      1.85
      
      
      -
      
      
      -Options outstanding - End of year
      
      1,426,550
      
      
      2.16
      
      
      1,735,000
      
      
      1.65
      
      
      1,173,000
      
      
      1.34Options exercisable - End of year
      
      846,550
      
      
      1.59
      
      
      1,077,500
      
      
      1.36
      
      
      882,500
      
      
      1.25


The following table summarizes information
  about stock options outstanding and exercisable at April 30, 2004:

Outstanding
      Exercisableoptions
      optionsweighted
      weightedaverage
      averageExercise
      Options
      Options
      remaining
      remainingprice
      outstanding
      exercisable
      life
      life(years)
      (years)1.10
      200,000
      200,000
      1.91
      1.911.35
      299,300
      299,300
      2.43
      2.431.60
      75,000
      75,000
      2.95
      2.952.05
      35,000
      35,000
      3.06
      3.062.20
      474,750
      202,250
      3.70
      3.702.45
      35,000
      35,000
      3.10
      3.102.80
      67,500
      -
      4.29
      -3.95
      240,000
      -
      4.58
      -1.10 - 3.95
      1,426,550
      846,550
      3.29
      2.71


F-18

---

The company grants all employee stock
  options with an exercise price equal to the market value of the underlying common
  shares on the date of grant. No compensation expense has been recognized on
  the employee stock option in the statements of operations. If compensation expense
  for all grants under the employee stock option plan had been determined by the
  fair value method, loss and loss per share would have been as follows:

| |                                  |  | 2004        |   |  | 2003       |  
| | -------------------------------- |  | ----------- | - |  | ---------- | -
| |                                  |  | $           |   |  | $          |  
| |                                  |  |             |   |  |            |  
| | Loss for the year                |  |             |   |  |            |  
| | As reported                      |  | (22,616,158 | ) |  | (4,934,979 | )
| | Pro forma                        |  | (23,280,332 | ) |  | (5,096,965 | )
| |                                  |  |             |   |  |            |  
| | Basic and diluted loss per share |  |             |   |  |            |  
| | As reported                      |  | (0.76       | ) |  | (0.25      | )
| | Pro forma                        |  | (0.78       | ) |  | (0.26      | )

The fair value of each option at the
  date of grant was estimated using the Black-Scholes option-pricing method with
  the following assumptions:

| |                                        | 2004    | 2003   
| | -------------------------------------- | ------- | -------
| |                                        |         |        
| | Expected life of options               | 5 years | 5 years
| | Risk-free interest rate                | 3 - 4%  | 3 - 5% 
| | Expected stock price volatility        | 70%     | 70%    
| | Expected dividend yield                | -       | -      
| | Weighted-average fair value of options | $2.75   | $2.18  

Option pricing models require the input
  of highly subjective assumptions including the expected price volatility. Changes
  in the subjective input assumptions can materially affect the fair value estimate,
  and therefore, the existing models do not necessarily provide a reliable measure
  of the fair value of the companys stock option.

During the year ended April 30, 2004,
  the fair value recorded for stock options granted to non-employees for consulting
  services is $81,515 (2003 - $22,133). The fair value of these options is estimated
  using the Black-Scholes option pricing model.

F-19

---

The value ascribed to unexercised options
  recorded as a component of equity is as follows:

| |                                  |  | 2004    |   |  | 2003    |  
| | -------------------------------- |  | ------- | - |  | ------- | -
| |                                  |  | $       |   |  | $       |  
| |                                  |  |         |   |  |         |  
| | Balance - Beginning of year      |  | 112,362 |   |  | 128,168 |  
| |                                  |  |         |   |  |         |  
| | Options granted to non-employees |  | 81,515  |   |  | 22,133  |  
| | Exercise of options              |  | (23,426 | ) |  | (31,747 | )
| | Options forfeited                |  | -       |   |  | (6,192  | )
| |                                  |  |         |   |  |         |  
| | Balance - End of year            |  | 170,451 |   |  | 112,362 |  

|13 | Warrants                                           
|-- | ---------------------------------------------------
|   |                                                    
|   | The changes in warrants outstanding are as follows:

2004
      
      
      
      
      
      2003
      
      
      
      
      
      2002Weighted
      
      
      
      
      
      Weighted
      
      
      
      
      
      Weightedaverage
      
      
      
      
      
      average
      
      
      
      
      
      averageNumber
      
      
      exercise
      
      
      Number
      
      
      exercise
      
      
      Number
      
      
      exerciseof shares
      
      
      price
      
      
      of shares
      
      
      price
      
      
      of shares
      
      
      price$
      
      
      
      
      
      $
      
      
      
      
      
      $Warrants outstanding - Beginningof year
      
      1,721,823
      
      
      1.63
      
      
      3,478,235
      
      
      1.53
      
      
      2,000,000
      
      
      0.30Granted
      
      4,160,810
      
      
      3.96
      
      
      618,750
      
      
      2.10
      
      
      3,490,000
      
      
      1.53Exercised
      
      (1,558,986
      )
      
      1.70
      
      
      (2,375,162
      )
      
      1.43
      
      
      (2,011,765
      )
      
      0.31Warrants outstanding - Endof year
      
      4,323,647
      
      
      3.88
      
      
      1,721,823
      
      
      1.63
      
      
      3,478,235
      
      
      1.53


The value ascribed to unexercised warrants
  recorded as a component of equity is as follows:

| |                                                 |  | 2004      |   |  | 2003      |  
| | ----------------------------------------------- |  | --------- | - |  | --------- | -
| |                                                 |  | $         |   |  | $         |  
| |                                                 |  |           |   |  |           |  
| | Balance - Beginning of year                     |  | 696,270   |   |  | 1,044,040 |  
| |                                                 |  |           |   |  |           |  
| | Unit proceeds allocated to warrants             |  | 4,740,649 |   |  | -         |  
| | Agents warrants issued in private placements    |  | 158,788   |   |  | 315,211   |  
| | Bonus warrants on issuance of convertible loans |  | -         |   |  | 218,266   |  
| | Exercise of warrants                            |  | (611,942  | ) |  | (881,247  | )
| |                                                 |  |           |   |  |           |  
| | Balance - End of year                           |  | 4,983,765 |   |  | 696,270   |  

F-20

---

|14 | Financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The companys financial instruments consist
        of cash and cash equivalents, short-term investments, accounts receivable,
        accounts payable and accrued liabilities, notes payable and convertible
        loans. At April 30, 2004, the carrying values of these instruments approximate
        their fair values based on the nature of these instruments. Unless otherwise
        noted, it is managements opinion that the company is not exposed
        to significant interest, currency or credit risks arising from these financial
        instruments.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|15 | Related party transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The following related party transactions occurred
        during the year:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | These transactions were in the normal course
        of operations and were measured at the exchange value which represented
        the amount of consideration established and agreed to by the related parties.                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|16 | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| |                                   |  | 2004        |   |  | 2003       |   |  | 2002       |  
| | --------------------------------- |  | ----------- | - |  | ---------- | - |  | ---------- | -
| |                                   |  | $           |   |  | $          |   |  | $          |  
| |                                   |  |             |   |  |            |   |  |            |  
| | Loss before income taxes recovery |  | (22,616,158 | ) |  | (4,934,979 | ) |  | (2,178,587 | )
| |                                   |  |             |   |  |            |   |  |            |  
| | Expected income taxes recovery    |  | (8,232,282  | ) |  | (1,870,357 | ) |  | (862,720   | )
| | Losses for which an income tax    |  |             |   |  |            |   |  |            |  
| | benefit
      has not recognized  |  | 6,603,085   |   |  | 1,472,291  |   |  | 862,720    |  
| | Resource allowance and            |  |             |   |  |            |   |  |            |  
| | non-deductible
      items        |  | 1,629,197   |   |  | 398,066    |   |  | -          |  
| |                                   |  |             |   |  |            |   |  |            |  
| |                                   |  | -           |   |  | -          |   |  | -          |  

F-21

---

| | b) | Future income taxes reflect the net tax effects of non-capital
        loss carry-forwards and temporary differences between the carrying amounts
        of assets and liabilities for financial reporting purposes and the amounts
        used for income tax purposes. The significant components of the companys
        future tax assets are as follows:
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                   |  | 2004        |   |  | 2003       |   |  | 2002       |  
| | --------------------------------- |  | ----------- | - |  | ---------- | - |  | ---------- | -
| |                                   |  | $           |   |  | $          |   |  | $          |  
| |                                   |  |             |   |  |            |   |  |            |  
| | Net operating loss carry-forwards |  | 7,365,758   |   |  | 1,040,125  |   |  | 1,105,309  |  
| | Mineral properties                |  | 1,646,470   |   |  | 1,845,256  |   |  | 234,886    |  
| | Property, plant and equipment     |  | 762,848     |   |  | 269,879    |   |  | (253,958   | )
| | Share issuance costs              |  | 1,001,596   |   |  | 361,076    |   |  | 191,952    |  
| |                                   |  |             |   |  |            |   |  |            |  
| |                                   |  | 10,776,672  |   |  | 3,516,336  |   |  | 1,278,189  |  
| | Less: Valuation allowance         |  | (10,776,672 | ) |  | (3,516,336 | ) |  | (1,278,189 | )
| |                                   |  |             |   |  |            |   |  |            |  
| | Net future tax assets             |  | -           |   |  | -          |   |  | -          |  

| | c) | The company has non-capital losses, which may be carried
        forward and applied against taxable income in future years. These losses
        expire during the following years:
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

$2005
      
      58,8822006
      
      162,6612007
      
      123,2492008
      
      412,7802009
      
      916,6242010
      
      4,150,8792011
      
      14,578,68520,403,760


|17 | Segmented information                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                              
|   | The company has one operating segment consisting of
        a mining and mill operation located in Kirkland Lake, Canada. During the
        years ended April 30, 2004 and 2003, all of the companys capital
        assets, revenues earned and operations were in Canada.

F-22

---

|18 | Supplemental cash flow information                                                                                                         
|-- | -------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                            
|   | Cash and cash equivalents comprise cash on deposit with
        Canadian chartered banks.                                                  
|   |                                                                                                                                            
|   | During the years ended April 30, 2004, 2003 and 2002,
        the company conducted non-cash financing and investing activities as follows:

| |                                             |  | 2004    |  |  | 2003    |  |  | 2002      | 
| | ------------------------------------------- |  | ------- |  |  | ------- |  |  | --------- | 
| |                                             |  | $       |  |  | $       |  |  | $         | 
| |                                             |  |         |  |  |         |  |  |           | 
| | Mineral property, plant and equipment       |  |         |  |  |         |  |  |           | 
| | acquired under note payable                 |  | -       |  |  | -       |  |  | 4,453,699 | 
| | Warrants issued as share issuance costs     |  | 158,788 |  |  | 312,500 |  |  | 1,044,040 | 
| | Warrants issued as finance charges for loan |  | 747,813 |  |  | 218,266 |  |  | -         | 
| | Value assigned to options/warrant exercised |  | 635,367 |  |  | 912,994 |  |  | -         | 

|19 | Material differences between Canadian and United
        States GAAP                                                                                                                                                                                                                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                
|   | The financial statements of the company have been prepared
        in accordance with Canadian GAAP, which differs in some respects from
        U.S. GAAP. The significant measurement differences between GAAP in Canada
        and the United States and their effect on these financial statements are
        as follows:

| |                                            |  | 2004        |   |  | 2003       |   |  | 2002       |  
| | ------------------------------------------ |  | ----------- | - |  | ---------- | - |  | ---------- | -
| |                                            |  | $           |   |  | $          |   |  | $          |  
| |                                            |  |             |   |  |            |   |  |            |  
| | Loss for the year                          |  |             |   |  |            |   |  |            |  
| | Loss for the year following Canadian GAAP  |  | (22,616,158 | ) |  | (4,934,979 | ) |  | (2,178,587 | )
| | Accretion of convertible loan (a)          |  | 101,307     |   |  | 83,668     |   |  | -          |  
| |                                            |  |             |   |  |            |   |  |            |  
| | Loss for the year following U.S. GAAP      |  | (22,514,851 | ) |  | (4,851,311 | ) |  | (2,178,587 | )
| |                                            |  |             |   |  |            |   |  |            |  
| | Basic and diluted loss per share following |  |             |   |  |            |   |  |            |  
| | U.S. GAAP                                  |  | (0.76       | ) |  | (0.24      | ) |  | (0.16      | )
| |                                            |  |             |   |  |            |   |  |            |  
| | Convertible loans                          |  |             |   |  |            |   |  |            |  
| | Convertible loans following Canadian GAAP  |  | 3,088,818   |   |  | 2,176,622  |   |  | -          |  
| | Equity component of convertible loan (a)   |  | 283,657     |   |  | 94,546     |   |  | -          |  
| | Accretion of convertible loan (a)          |  | (184,975    | ) |  | (83,668    | ) |  | -          |  
| |                                            |  |             |   |  |            |   |  |            |  
| | Convertible loans following U.S. GAAP      |  | 3,187,500   |   |  | 2,187,500  |   |  | -          |  
| |                                            |  |             |   |  |            |   |  |            |  
| | Shareholders Equity                       |  |             |   |  |            |   |  |            |  
| | Shareholders equity following             |  |             |   |  |            |   |  |            |  
| | Canadian
      GAAP                        |  | 27,839,637  |   |  | 11,722,181 |   |  | 6,340,298  |  
| | Equity component of convertible loan (a)   |  | (283,657    | ) |  | (94,546    | ) |  | -          |  
| | Accretion of convertible loan (a)          |  | 184,975     |   |  | 83,668     |   |  | -          |  
| |                                            |  |             |   |  |            |   |  |            |  
| | Shareholders equity following U.S. GAAP   |  | 27,740,955  |   |  | 11,711,303 |   |  | 6,340,298  |  

F-23

---

| | a) | Convertible loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | On June 11, 2002 and August 11, 2003, the company issued
        convertible loans (note 9). Under Canadian GAAP, the fair value of the
        equity conversion feature is valued and recorded as a component of shareholders
        equity and the carrying amount of the loans are accreted over the term
        to maturity through a charge to interest expense. Under U.S. GAAP, the
        full face value of the convertible loans is classified as a liability
        and any accretion charges under Canadian GAAP are reversed.                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | b) | Asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Effective May 1, 2003, the company has adopted the new
        accounting standard for asset retirement obligations, FAS 143. The standard
        requires that the fair value of a liability for an asset retirement obligation
        be recognized in the period in which it is incurred if a reasonable estimate
        of fair value can be made. The associated asset retirement costs are capitalized
        as part of the carrying amount of the long-lived asset. The adoption of
        this standard did not have any impact on the companys financial
        position or results.                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | c) | Reduction of stated capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Canadian GAAP allows for the deficit of a company to
        be offset against the recorded amount of share capital upon approval of
        the shareholders such as the reduction of $14,597,896 approved by the
        shareholders on October 17, 2001. U.S. GAAP does not generally allow such
        an offset to be given accounting recognition. Accordingly, under U.S.
        GAAP, the amounts recorded for each of share capital and deficit would
        be increased by $14,597,896 to eliminate the reductions recorded by the
        company under Canadian GAAP.                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | d) | Flow-through shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Under U.S. GAAP, the premium or discount to the market-trading
        price of the shares, if any, related to the flow-though feature should
        be accounted for separately. At the time the qualifying expenditures are
        made, the related premium or discount is reversed and offset against the
        tax provision and the deferred tax liability is adjusted by a like amount.
        There was no premium on the issuance of flow-through shares and therefore
        no measurement differences occurred.                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | e) | Impact of Recently Issued Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The Canadian Institute of Chartered Accountants (CICA)
        has released amendments to Section 3870, Stock-based Compensation
        and Other Stock-based Payments, which require an expense to be recognized
        in financial statements for all forms of employee stock-based compensation,
        including stock options, effective for periods beginning on or after January
        1, 2004, for public companies. The company will be required to adopt the
        standard retroactively on May 1, 2004. The impact on adoption will be
        an adjustment to opening retained earnings of $826,010.

F-24

---

In 2004, the CICA issued EIC 146 Flow-through
  shares which establishes standards of accounting for the issuance of flow
  through securities. It establishes when future income tax liabilities must be
  recognized and the treatment of the benefits of the loss carryforward. EIC 146
  is applicable for all flow-through financing agreements entered into after March
  19, 2004.

The CICA issued Accounting Guideline
  AcG-15, Consolidation of Variable Interest Entities, to provide
  guidance for applying the principles in Handbook Section 1590, Subsidiaries,
  to certain entities. Although the CICA is contemplating amendments to the guideline,
  it is expected to be effective for the companys 2005/2006 fiscal year.
  The FASB amended Interpretation No. 46, Consolidation of Variable Interest
  Entities (FIN 46R), The FIN 46R requires that a variable interest entity
  (VIE) be consolidated by a company if that company is subject to a majority
  of the risk of loss from the VIEs activities and/or is entitled to receive
  a majority of the VIEs residual returns. The company does not expect the
  adoption of these guidelines to have a material impact on its financial statements.

The CICA finalized amendments to Accounting
  Guideline AcG-13, Hedging Relationships that clarified certain of
  the requirements in AcG-13 and provided additional application guidance. AcG-13
  is applicable for the companys 2004/2005 fiscal year. The company does
  not expect the adoption of this guideline to have a material impact on its financial
  statements.

|20 | Subsequent events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On June 10, 2004, the company obtained a $2,406,250
        convertible loan from an arms length lender. The loan bears interest
        at 10% per year, matures in six months, and is convertible into common
        shares at $4.40 per share. The lender was issued a bonus of 60,156 common
        shares for making the loan. The proceeds from the loan were used to repay
        the outstanding convertible loan which was due on June 11, 2004 and was
        convertible into common shares at $4.00 per share.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On July 29, 2004, the company closed a private placement
        of 3,987,730 common shares and raised net proceeds of $14,280,553.                                                                                                                                                                                                                                                                                                                                                                                            

F-25

---

ITEM
18FINANCIAL STATEMENTS

The Corporation has elected to provide financial statements
pursuant to Item 17.

ITEM 19EXHIBITS

The following exhibits are included herein:

70

---

Number
      Description
      Page No.1.01
      Certificate of Continuance
          dated July 27, 1988
      Note (1)1.02
      Articles of Continuance
          dated July 14, 1988
      Note (1)1.03
      Certificate of Amendment
          dated May 19, 1994 together with Articles of Amendment dated April 22,
          1994
      Note (1)1.04
      Certificate of Amendment
          dated October 1, 1996 together with Articles of Amendment dated September
          24, 1996
      Note (1)1.05
      Certificate of Amendment
          dated November 26, 1996 together with Articles of Amendment dated November
          18, 1996
      Note (1)1.06
      Certificate of Amendment
          dated October 21, 1999 together with Articles of Amendment dated September
          27, 1999
      Note (1)1.07
      By-laws dated July 27, 1988
      Note (1)2
      Not applicable
      3
      Not applicable
      4(a).01
      Loan Agreements dated May
          22, 2002 with RAB Europe Fund Ltd. and RAB Europe Partners L.P. in respect
          of loans totalling $2.5 million
      Note (1)4(a).02
      Investor Relations Agreement
          dated May 30, 2002 with DSK Consulting Ltd.
      Note (1)4(a).03
      Agency Agreement dated June
          21, 2002 with Fahnestock Canada Inc. with respect to a private placement
          of 1 million Common Shares
      Note (1)4(a).04
      Subscription Agreement in
          the form executed on June 21, 2002 with respect to a private placement
          of 1 million Common Shares
      Note (1)4(a).05
      Agency Agreement dated December
          30, 2002 with Octagon Capital Corporation and Fahnestock Canada Inc.
          with respect to a private placement of 2.625 million Common Shares
      Note (2)4(a).06
      Subscription Agreement in
          the form executed on December 30, 2002 with respect to a private placement
          of 2.625 million Common Shares
      Note (2)4(a).07
      Listing
          Agreement dated March 5, 2003 with the Toronto Stock Exchange
      EX014(a).08
      Publicity Agreement dated
          March 27, 2003 with Jefferson Financial, LLC
      Note (2)4(a).09
      Loan Agreement dated June
          10, 2003 with CBG Compagnie Bancaire Genève in respect of loan
          for $1 million
      Note (2)4(a).10
      Subscription Agreement in
          the form executed on August 8, 2003 and August 26, 2003 with respect
          to a private placement of 3.755 million Units
      Note (2)4(a).11
      Agency Agreement dated November
          14, 2003 with Fort House Inc. and Octagon Capital Corporation with respect
          to a private placement of 1.925 million flow-through Common
          Shares
      Note (2)4(a).12
      Subscription Agreement in
          the form executed on November 14, 2003 with respect to a private placement
          of 1.925 million flow-through Common Shares
      Note (2)4(a).13
      Agency Agreement dated December
          1, 2003 with Fort House Inc. and Octagon Capital Corporation with respect
          to a private placement of 2.2 million Units
      Note (2)4(a).14
      Subscription Agreement in
          the form executed on December 1, 2003 with respect to a private placement
          of 2.2 million Units
      Note (2)4(a).15
      Subscription
          Agreement in the form executed on April 29, 2004 with respect to a private
          placement of 2,174,129 Units
      EX02


71

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Number
      Description
      Page No.4(a).16
      Loan
          Agreement dated June 2, 2004 with Middlemarch Partners Limited in respect
          of loan for $2,406,250
      EX034(a).17
      Nominated
          Advisor and Broker Agreement dated June 24, 2004 with Canaccord Capital
          (Europe) Limited
      EX044(a).18
      Agency
          Agreement dated July 29, 2004 with Canaccord Capital (Europe) Limited
          with respect to a private placement of 3,987,730 Common Shares
      EX054(a).19
      Subscription
          Agreement in the form executed on July 29, 2004 with respect to a private
          placement of 3,987,730 Common Shares
      EX064(a).20
      Agency
          Agreement dated November 16, 2004 with Canaccord Capital (Europe) Limited
          with respect to a private placement of 1,950,292 Common Shares
      EX074(a).21
      Subscription
          Agreement in the form executed on November 16, 2004 with respect to
          a private placement of 1,950,292 Common Shares
      EX084(a).22
      Agency
          Agreement dated December 22, 2004 with Canaccord Capital (Europe) Limited
          with respect to a private placement of 500,000 flow-through
          Common Shares
      EX094(a).23
      Subscription
          Agreement in the form executed on December 22, 2004 with respect to
          a private placement of 500,000 flow-through Common Shares
      EX104(a).24
      Subscription
          Agreement in the form executed on August 25, 2005 with respect to a
          private placement of 1,250,000 Units
      EX114(a).25
      Subscription
          Agreement in the form executed on September 26, 2005 with respect to
          a private placement of 1 million units
      EX124(a).26
      Subscription
          Agreement in the form executed on October 12 and 14, 2005 with respect
          to a private placement of 555,500 flow-through Common Shares
      EX134(a).27
      Subscription
          Agreement in the form executed on May 24 and 25 and June 2, 2006 with
          respect to a private placement of 1,793,500 Units
      EX144(a).28
      Broker
          Agreements dated June 1, 2006 with Mirabaud Securities Limited and Ocean
          Equities Ltd.
      EX154(c).01
      Consulting Agreement dated
          March 15, 2001 with the Corporations President and Chief Executive
          Officer
      Note (1)4(c).02
      Form of Stock Option Agreement
      Note (1)5
      Not applicable
      6
      Not applicable
      7
      Not applicable
      8
      Not applicable
      9
      Not applicable
      10
      Not applicable
      11
      Code
          of Ethics dated June 30, 2005
      EX1612.01
      Certification
          of the Chief Executive Officer of the Corporation pursuant to Rule 13a-
          14(a) of the Securities Exchange Act of 1934
      EX1712.02
      Certification
          of the Chief Financial Officer of the Corporation pursuant to Rule 13a-
          14(a) of the Securities Exchange Act of 1934
      EX1813.01
      Certification
          of the Chief Executive Officer of the Corporation pursuant to Rule 13a-
          14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter
          63 of Title 18 of the United States Code
      EX19


72

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Number
      Description
      Page No.13.02
      Certification
          of the Chief Financial Officer of the Corporation pursuant to Rule 13a-
          14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter
          63 of Title 18 of the United States Code
      EX2014
      Not applicable
      15
      Not applicable
      


|(1) | Incorporated herein by reference from the Corporations
      Registration Statement on Form 20-F dated June 28, 2002 and filed with the
      Securities and Exchange Commission on July 1, 2002.          
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                             
|(2) | Incorporated herein by reference from the Corporations
      Annual Report (amended) on Form 20-F dated January 14, 2004 and filed with
      the Securities and Exchange Commission on February 3,
  2004.

73

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SIGNATURES

The Corporation hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this Annual Report on its behalf.

Date: June 30, 2006



| |      | **KIRKLAND LAKE GOLD INC.**        
| | ---- | -----------------------------------
| |      |                                    
| |      |                                    
| |      |                                    
| | Per: | (signed) Brian A. Hinchcliffe      
| |      | BRIAN A. HINCHLIFFE                
| |      | President & Chief Executive Officer

74

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