UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB/A

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001

Golden Phoenix Minerals, Inc

(Exact name of registrant as specified in its charter)



Minnesota
                                    
    0-22905

3595 Airway Dr. Suite 405

Reno, Nevada 89511

(775) 853-4919

Securities registered pursuant to section 12(g) of the Act:

Common Shares

Preferred Shares

Shares Underlying the Options

(Title of each class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period as the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes [X]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or other information statements
incorporated by reference in Part III of this Form 10-K or any amendments to this Form
10-K.[ ]

State issuer's revenues for its most recent fiscal year: $343,038.

The aggregate market value of the voting stock held by non-affiliates,
computed by reference to the average of the bid and asked prices for such stock as of
March 4, 2002, was $8,427,104.

The total number of common shares outstanding at March 4, 2002 was
46,817,243.





DOCUMENTS INCORPORATED BY REFERENCE

None.



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CONTENTS





PagePART IItem 1.BUSINESS
    3Item 2.  PROPERTY
    7Item 3.  LEGAL PROCEEDINGS
    14Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS
    14PART IIItem 5.  MARKET FOR REGISTRANTS COMMON EQUITY
    AND RELATEDSTOCKHOLDER MATTERS
    14Item 6. MANAGEMENTS DISCUSSION AND
    ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS
    15Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    16Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND FINANCIAL DISCLOSURE
    16PART IIIItem 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE
    REGISTRANT
    16Item 10. EXECUTIVE COMPENSATION
    18Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    ANDMANAGEMENT
    19Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    20Item 13. FINANCIAL STATEMENTS, EXHIBITS, AND REPORTS ONFORM 8-K
    21




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PART I



Item 1. - BUSINESS

Golden Phoenix Minerals, Inc. (the "Company") was formed in
Minnesota on June 2, 1997 and has had limited operations. The Company **is
headquartered in Reno, Nevada.**

The Company plans to produce economically valuable minerals from the
mineral properties it currently controls, and from mineral properties that it will acquire
in the future. The Company intends to concentrate its exploration efforts in the Western
United States.

The Company's four corporate directors and officers are comprised of
former management who were specialized in exploration and development with large and small
mining companies. These same individuals have also gained significant small start up
company experience, which has resulted in a very entrepreneurial and innovative approach
to business success. This experienced management team has in excess of ninety years of
major company mineral exploration, development, and gold production experience, which
ranges from entry to corporate levels, and new start up company experience with
significant growth potential.

The **Company is a mineral-property development company and it specializes in
acquiring and consolidating large, advanced-stage properties with near-term production and
good exploration potential. Acquisition and development emphasis is focused on properties
containing gold, silver, copper, and other strategic minerals that are located in Nevada.**

The Companys future growth will be from transforming from an
exploration/development company to one that operates its own mines. It also plans to
provide joint venture opportunities to mining companies to conduct exploration or
development on mineral properties the Company owns or controls. The Company and its joint
venture partners will explore and develop selected properties to a stage of proven and
probable reserves, at which time the Company will then decide whether to sell its interest
in a property or take the property into production with its joint venture partner. By
joint venturing its properties, and thereby reducing its share of the costs for
exploration of those properties, the Company can maintain, while continuing to acquire, an
interest in a portfolio of gold and base metals properties in various stages of mineral
exploration and development. This corporate strategy will minimize financial risk that the
Company would incur by assuming all the exploration costs associated with developing any
one property, while maximizing the potential of success and growth.

The Company believes that it has created the basis for a competitive
minerals exploration/development and operational company through assembling a unique group
of individuals with experience in target generation, ore discovery, resource evaluation,
mine development, and mine operations.

There are at least five sources of land for exploration by the Company:
public lands, private fee lands, tribal lands, unpatented mining claims, and patented
mining claims. The primary sources for acquisition of these lands are the United States
government, through the Bureau of Land Management and the U. S. Forest Service, through
state governments, through tribal governments, and through individuals or entities who
currently hold title to or lease government and private lands.

There are numerous levels of government regulation associated with the
activities of exploration and mining companies. The only two types of permitting which the
Company should have to be concerned with in the near future are "Notice of
Intent" and "Plan of Operation." Both of these types of procedures will be
necessary in the next twelve months. The Company has filed for one of these permits and
has received approval of a notice at Contact. However, there is no guarantee that the
regulatory agency will timely approve, if at all, the necessary permits for other
operations. Further, it will be necessary to obtain or post a bond for the reclamation of
the proposed surface disturbance.

The total cost and effects on the Companys operations of the
permitting and bonding process cannot be estimated at this time. The cost will vary for
each project when they are initiated.

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JOINT VENTURES

The following section describes several agreements that the Company
entered into in order to gain an operating interest or provide an opportunity for another
company to earn an interest in our properties.

Contact

Golden Phoenix Minerals has two agreements in place on the Contact
property in northern Nevada. The

Borealis

In 1997 the Company had signed an acquisition agreement ("Welsh
Agreement") with J. D. Welsh & Associates ("Welsh") to acquire 100
percent of Welsh's leasehold interest in the Borealis mine project in Mineral
County, Nevada. Prior to terminating the Welsh Agreement, the Company paid Welsh cash and
stock valued at US$1,187,000 and was vested with a 65 percent ownership in the Borealis
Mine project. The Company and Welsh also jointly signed a joint venture agreement with
Cambior Exploration USA, Inc. in late 1997. Cambior was to earn a 70 percent interest in
the project by spending US$7million over the next 7 years. Cambior completed their first
years work commitment, and then because of company-wide budget reductions, they terminated
their interest on December 31, 1998. The Company then signed a simple joint venture
agreement with J. D. Welsh & Associates on December 31, 1999, which increased
leasehold ownership of the project to 68% and further outlined operating relationships
between the parties. In late 2000 the Company signed a letter agreement with Newmex
Nevada, Inc. to buy the remaining 32% of the Borealis leasehold interest, which Newmex had
acquired from Welsh in a separate agreement. On February 9, 2001 the final agreement with
Newmex was signed. The terms of the purchase provide for the issuance of restricted common
stock units at a strike price of $.20 per share with warrants attached having a strike
price of $.13. The purchase price of the undivided 32% interest was $600,000. The Company
now controls 100 % leasehold interest on the Borealis project.

FUNDING

The Company plans to finance its operations through gold production
from the Mineral Ridge mine, private placement memorandums (PPM) and the exercising of
common stock options controlled by the directors of the Company. The current PPM the
Company is offering is dated May 15, 2001 and offers Units of shares and warrants. The
total amount of the PPM is $1,000,000 with the initial price set at $0.10 per Unit of the
first $200,000 subscribed; the remaining $800,000 will be priced in $200,000 increments at
80% of the average bid price of the five trading days preceding receipt of each $200,000
increment, but not less than $0.10 per share. The warrant conversion price will be equal
to the share price, initially $0.10 per share. The Company will also offset some of its
cost by joint-venturing its properties with other mining groups for exploration and
development while paying fees to Golden Phoenix Minerals, Inc. for the right to certain
interest in the property.

COMPETITION

Over the last ten years imposition of numerous regulatory requirements
and claim rental policies by the United States Government and the general exodus of major
gold corporations from the U.S. to pursue mineral exploration in foreign countries has
allowed large areas of very

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prospective mineral ground to become open for location
and acquisition. Due to the continued decline in the gold price in 2001, the number of
companies aggressively acquiring claims and properties has declined during the year. Gold
prices in 2001 dropped to $256 per ounce and briefly rose to $293.10 in September, and
then dropping off to $276.50 at the end of the year. All these aspects essentially
resulted in very little exploration activity and a decrease in claim activity during 2001.

SEASONAL EFFECTS

The Company has positioned itself to handle any seasonal aspect of the
exploration business by locating properties in differing climatic zones, thus allowing
fieldwork on a near year-round basis. Problems of access and inclement weather will be
minimized through strategic planning of fieldwork.

CAPITAL EQUIPMENT

The only capital equipment the Company plans to purchase or lease in
the next twelve months will be used mining equipment including a bulldozer, front-end
loader, road grader, and two field vehicles. There will be some additional capital
equipment purchased for the Mineral Ridge Mine but the extent of these purchases is not
known at this time. The field vehicles will be for staff professionals only. All
contractors will provide their own vehicles.

STAFFING

The Company has a staffing level of two key professionals described in
Item 9 below, and a full time CPA. The Company has four full time employees and
anticipates adding other permanent staff at the Mineral Ridge operation in the next twelve
months. The Company will employ independent contractors to fulfill short-term needs and
obligations.

ENVIRONMENTAL CONTROLS

The Company is required to comply with numerous environmental laws and
regulations imposed by federal and state authorities. At the federal level, legislation
such as the Clean Water Act, the Clean Air Act, the RCRA, CERCLA and the National
Environmental Policy Act impose effluent and waste standards, performance standards, air
quality and emissions standards and other design or operational requirements for various
components of mining and mineral processing, including gold ore mining and processing. In
January 2001, the BLM amended its surface management regulations to require bonding of all
hardrock and exploration operations greater than casual use. Impacts on bonding the
Mineral Ridge Mine has been significant.

Many states, including the State of Nevada (where all of the
Companys properties are located), have also adopted regulations that establish
design, operation, monitoring, and closing requirements for mining operations. Under these
regulations, mining companies are required to provide a reclamation plan and financial
assurance to insure that the reclamation plan is implemented upon completion of mining
operations. Additionally, Nevada and other states require mining operations to obtain and
comply with environmental permits, including permits regarding air emissions and the
protection of surface water and groundwater.

The Companys compliance with federal and state environmental laws
may necessitate significant capital outlays or delays, may materially and adversely affect
the economics of a given property, or may cause material changes or delays in the
Companys intended exploration, development and production activities. Further, new
or different environmental standards imposed by governmental authorities in the future
could adversely affect the Companys business activities.

PROPOSED LEGISLATION AFFECTING THE MINING INDUSTRY

During the past several years, the United States Congress considered a
number of proposed amendments to the General Mining Law of 1872, as amended (the
"General Mining Law") which governs mining claims and related activities on
federal lands. In 1992, a holding fee of US$100 per claim was imposed upon unpatented
mining claims located on federal lands. Beginning in October 1994, a moratorium on
processing of new patent applications was approved. In addition, a variety of legislation
is now pending before the United States Congress to amend further the General Mining Law.
The proposed legislation would, among other things, change the current patenting
procedures, limit the rights obtained in



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a patent, impose royalties on unpatented claims, and
enact new reclamation, environmental controls and restoration requirements. The royalty
proposal ranges from a two percent royalty on "net profits" from mining claims
to an eight percent royalty on modified gross income/net smelter returns. The extent of
any such changes that may be enacted is not presently known, and the potential impact on
the Company as a result of future congressional action is difficult to predict. If
enacted, the proposed legislation could adversely affect the economics of development of
operating mines on the federal unpatented mining claims held by the Company because many
of the Companys properties consist of unpatented mining claims on federal lands. The
Companys financial performance could therefore be materially and adversely affected
by passage of all or pertinent parts of the proposed legislation.

UNCERTAINTY OF DEVELOPMENT AND PROPERTY ECONOMICS

Exploration for and production of minerals is highly speculative and
involves greater risks than are inherent in many other industries. Many exploration
programs do not result in the discovery of mineralization, and any mineralization
discovered may not be of sufficient quantity or quality to be profitably mined. Also,
because of the uncertainties in determining metallurgical amenability of any minerals
discovered, the mere discovery of mineralization may not warrant the mining of the
minerals on the basis of available technology.

The Company's decision as to whether any of the mineral development
properties it now holds or which it may acquire in the future contain commercially
mineable deposits, and whether such properties should be brought into production, depends
upon the results of its exploration programs and/or feasibility analyses and the
recommendations of engineers and geologists. The decision will involve the consideration
and evaluation of a number of significant factors, including, but not limited to, the: (i)
receipt of government permits; (ii) costs of bringing the property into production,
including exploration and development work, preparation of feasibility studies and
construction of production facilities; (iii) availability and costs of financing; (iv)
ongoing costs of production; (v) market prices for the metals to be produced; and (vi)
estimates of reserves or mineralization. No assurance can be given that any of the
development properties the Company owns, leases or acquires contain (or will contain)
commercially mineable mineral deposits, and no assurance can be given that the Company
will ever generate a positive cash flow from production operations on such properties.

UNCERTAINTY OF TITLE

A majority of the Company's properties consist of unpatented mining
claims, which the Company owns or leases. These claims are located on federal land or
involve mineral rights that are subject to the claims procedures established by the
General Mining Law. Under this law, if a claimant complies with the statute and the
regulations for the location of a mining claim or mill site claim, the claimant obtains a
valid possessory right to the land or the minerals contained therein. To preserve an
otherwise valid claim, the claimant must also make certain additional filings with the
county in which the land or mineral is situated and with the Bureau of Land Management and
pay an annual holding fee of $100 per claim. If a claimant fails to make the annual
holding payment or make the required filings, the mining claim is void or voidable.

Because mining claims are self- initiated and self-maintained rights,
they are subject to unique vulnerabilities not associated with other types of property
interests. It is difficult to ascertain the validity of unpatented mining claims from
public property records and, therefore, it is difficult to confirm that a claimant has
followed all of the requisite steps for the initiation and maintenance of a claim. The
General Mining Law requires the discovery of a valuable mineral on each mining claim in
order for such claim to be valid, and mining claims may be challenged by rival mining
claimants and the United States. Under judicial interpretations of the rule of discovery,
the mining claimant has the burden of proving that the mineral found is of such quality
and quantity as to justify further development, and that the deposit is of such value that
it can be mined, removed and disposed of at a profit. The burden of showing that there is
a present profitable market applies not only to the time when the claim was located, but
also to the time when such claim's validity is challenged. It is therefore conceivable
that, during times of falling metal prices, claims that were valid when they were located
could become invalid if challenged.

Title to unpatented claims and other mining properties in the western
United States typically involves certain other inherent risks due to the frequently
ambiguous conveyance history of those properties, as well as the frequently ambiguous or
imprecise language of mining leases, agreements and royalty obligations. No generally
applicable title insurance is available for mining. As a result, some of the titles to the
Company's properties may be subject to challenge. The Company has performed title searches
of its properties by registered land agents to insure that no legal problems exist.

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MINING RISKS AND INSURANCE

The Company's operations are subject to all of the operating hazards
and risks normally incident to exploring for and developing mineral properties, such as
unusual or unexpected geological formations, environmental pollution, personal injuries,
flooding, cave-ins, changes in technology or mining techniques, periodic interruptions
because of inclement weather and industrial accidents. Although the Company currently
maintains insurance within ranges of coverage consistent with industry practice to
ameliorate some of these risks, no assurance can be given that such insurance will
continue to be available at economically feasible rates, or that the Company's insurance
is adequate to cover the risks and potential liabilities associated with exploring, owning
and operating its properties. Insurance against environmental risks is not generally
available to the Company or to other companies in the mining industry.

UNKNOWN ENVIRONMENTAL LIABILITIES FOR PAST ACTIVITIES

Mining operations involve a potential risk of releases to soil, surface
water and groundwater of metals, chemicals, fuels, liquids having acidic properties and
other contaminants. In recent years, regulatory requirements and improved technology have
significantly reduced those risks. However, those risks have not been eliminated, and the
risk of environmental contamination from present and past mining activities exists for
mining companies. Companies may be liable for environmental contamination and natural
resource damages relating to properties, which they currently own or operate or at which
environmental contamination occurred while or before they owned or operated the
properties. However, no assurance can be given that potential liabilities for such
contamination or damages caused by past activities at these properties do not exist.

DEPENDENCE ON KEY PERSONNEL

The Company is dependent on the services of certain key executives,
including Michael R. Fitzsimonds, President and Chairman of the Board of Directors; and
Steven D. Craig Vice President and Director. The loss of any of these individuals could
have a material adverse effect on the Company's business and operations. The Company
currently does not have key person insurance on these individuals.

RISKS ASSOCIATED WITH POSSIBLE ACQUISITIONS

The Company periodically considers the acquisition of mining claims,
properties and businesses. In connection with any such future acquisitions, the Company
may incur indebtedness or issue equity securities, resulting in dilution of the percentage
ownership of existing stockholders. The Company intends to seek stockholder approval for
any such acquisitions only to the extent required by applicable law, regulations or stock
market listing rules.



Item 2. - PROPERTY

NEVADA MINING PROPERTIES AND PROJECTS

The following describe the existing mining or development projects
found in Nevada that are owned or controlled by the Company. The Companys primary
and most important mining property asset is the operating Mineral Ridge gold mine. The
other two key projects are development properties and are the Contact copper-silver
project and the Borealis gold-silver project.

|Property                | Location             | Acres | Metal
|----------------------- | -------------------- | ----- | -----
|Mineral Ridge Gold Mine | Esmeralda County, NV | 2,685 | Au-Ag
|Contact Copper Project  | Elko County, NV      | 3,080 | Cu-Ag
|Borealis Gold Project   | Mineral County, NV   | 2,480 | Au-Ag



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MINERAL RIDGE GOLD MINE, ESMERALDA COUNTY, NV

Summary

The Mineral Ridge gold mine is located 4 miles northwest of the town of
Silver Peak and 32 miles west of Tonopah in Esmeralda County, Nevada. The property
consists of 54 patented and 110 unpatented mining claims totaling nearly 2,685 acres, or
4.2 square miles.

On November 8, 2000 Golden Phoenix Minerals purchased the Mineral Ridge
gold mine by making a purchase payment of $225,000. The purchase acquired the gold reserve
for $1.03 per ounce of gold (the total minable gold reserve is 209,200 ounces.) Prior mine
operators had spent about $30 million on the property, which include about $18 million in
office, process, and ancillary facilities, about $2 million in engineering and feasibility
studies, about $6 million in drilling and assays, $2 million in past permitting costs, and
the remainder in site preparation. The property comes with an active leach pad and ore
exposed in the Drinkwater pit.

The Mineral Ridge property holds 4 separate economically minable gold
deposits. The mine reserve, at a 0.035 opt Au cut off grade, is 2,658,340 tons averaging
0.079 opt for 209,226 contained ounces of gold. This reserve is contained in a total
resource of 8,314,000 tons averaging 0.061 opt gold (at a 0.02 opt Au cutoff grade) for a
total of 506,000 ounces gold. Additionally, the leach pad contains an approximate 50,000
ounces of gold that remains to be recovered by cyanide and gravity washing. The property
further holds excellent exploration potential with identified targets containing potential
gold resources of up to a possible 3 to 4.5 million additional ounces.

When the Company obtains the operating capital it needs, then the
following operating plan will be initiated in the sequence presented. This plan will
realize 1) gold production from the leach pad through addition of new cyanide to the
regular leach fluids to increase gold recovery, 2) significant new gold production from
initiating open pit and possibly underground mining, which will be processed through a new
gravity-cyanide gold recovery plant, and 3) recovery of salable byproduct industrial
minerals derived from the gold-bearing alaskite and quartz rocks. The Company has prepared
a business plan that lays out this new operating plan.

The total value of the gold and industrial mineral sales over nine-year
mine life, at a $275 gold price, is estimated to be $141,555,000. The total operating
cost, which includes royalty payments, refining costs, mining costs, milling costs,
reclamation costs, and operating expenses is estimated to be $108,161,000. The average
gold production cost is estimated to be $158 per ounce for the nine-year mine life. The
net income after taxes is estimated to be $33,394,000.

Location

The Mineral Ridge Mine is found on the northeastern flank of the Silver
Peak Range on Mineral Ridge. The mine is located 4 miles northwest of the town of Silver
Peak and 32 miles west of Tonopah in Esmeralda County, Nevada. Elevations vary from 4,300
feet at the town of Silver Peak at the western edge of Clayton Valley salt flat and to
8,390 feet at the northwest end of Mineral Ridge. The mine facilities lie at 7200 feet.

The Acquisition Opportunity for Golden Phoenix Minerals in 2000

Golden Phoenix Minerals identified the Mineral Ridge gold mining
property as a potentially superior acquisition opportunity in April 2000. At the time, a
Federal bankruptcy court in Reno was responsible for selling all the assets to settle
claims against Mineral Ridge Resources, Inc., the last operator of the mine. Golden
Phoenix had found four aspects of the project that were attractive and include: 1.) A
fully permitted mining property in Nevada with on-going gold production from the leach
pad, 2.) Potential for expansion of the resource already known on the property, 3.) A
proven gold reserve of 209,000 ounces, and 4.) Potential cash flow for Golden Phoenix
Minerals, if the Company was successful in winning the bid for the property. The Company
had evaluated the issues surrounding the past operators decline into bankruptcy and
had determined that the property remained economically viable when both operational and
processing changes were instituted.

On November 8, 2000 Golden Phoenix Minerals purchased the Mineral Ridge
gold mine by making the winning bid of $225,000. The purchase of the property essentially
acquired the gold reserve for $1.03 ounce of gold (the total mineable gold reserve is
209,226 ounces.) Prior mine operators had spent about $30 million on the property, which
included about $18 million in office, process, and ancillary facilities, about $2 million
in engineering and feasibility studies, about $6 million in drilling and assays, $2
million in past permitting costs, and the remainder in site preparation. The property came
with an active leach pad with room to hold the current ore reserve, exposed ore on the
last mine bench, and permits that were transferable once a new reclamation plan and bond
was in place.

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Production Plans

After purchase of the Mineral Ridge Mine, the company proceeded with
trying to raise some operating capital to put the mine back into operation by open pit
mining, crushing, and leaching of the ores. The company also had to submit a new
reclamation plan and bond before mining could take place. The new reclamation bond that
was required doubled from $1.64 million to $3.16 million, and it had to be posted before
mining could proceed.

The Company suffered a set back in May, 2001 when commitments for the
operating capital and reclamation bond were withdrawn. Because of this, a new operating
plan had to be designed in order to bring Mineral Ridge gold mine back into operation. The
original production plans, which included open pit mining, crushing of ore, and placement
of the ore on the heap leach pad, was deferred because of difficulties in obtaining both
$2 million operational financing and the $3.16 million reclamation bond.

When the Company obtains the operating capital it needs, then the
following operating plan will be initiated in the sequence presented. This plan will
realize 1) gold production from the leach pad through addition of new cyanide to the
regular leach fluids to increase gold recovery, 2) significant new gold production from
initiating open pit and possibly underground mining, which will be processed through a new
gravity-cyanide gold recovery plant, and 3) recovery of salable byproduct industrial
minerals derived from the gold-bearing alaskite and quartz rocks. The Company has prepared
a business plan that lays out this new operating plan.

The total value of the gold and industrial mineral sales over nine-year
mine life, at a $275 gold price, is estimated to be $141,555,000. The total operating
cost, which includes royalty payments, refining costs, mining costs, milling costs,
reclamation costs, and operating expenses is estimated to be $108,161,000. The average
gold production cost is estimated to be $158 per ounce for the nine-year mine life. The
net income after taxes is estimated to be $33,394,000.

Exploration and development of numerous and highly prospective targets
on the 2,685-acre property will be conducted once mining is initiated. It is expected that
this work will produce significant additional reserves for both open pit and underground
deposits and ultimately extend the life of the mine.

Land and Royalties

The property consists of 54 patented and 110 unpatented mining claims
totaling nearly 2,685 acres or 4.2 square miles. The Company also controls three private
land parcels, which are located outside the main mine area. These are the abandoned Blair
town site, the Silver Peak mill site, and deeded land west of Mineral Ridge over some
springs. These private lands total about 430 acres.

The Company is obligated to honor two prior royalty agreements. The
first is to Mary Mining Company, which includes annual advanced royalty payments of
$60,000, and a sliding scale production royalty (NSR) based on gold price divided by 100
in $50 increments. The other agreement, which originated from Benquet Corp., is with
private individuals on several patented claims. This agreement includes a 1.0% NSR royalty
on production when gold prices are below $300 per ounce and 2.0% when gold prices are
above $300 per ounce.

Early Mine History and Gold Production

Gold was discovered in the Mineral Ridge area in 1864. Intermittent
mining operations have occurred from that date to the present. Early production was from
underground high-grade gold ores that averaged from 0.243 opt Au to 1.45 opt Au. In 1989
open pit mining was initiated in the district with ores ranging from 0.074 opt Au to 0.12
opt Au. The total production of the district before open pit mining took place was 576,000
ounces of gold.

Recent Mine and Property Ownership and Discussion of Past Results

Modern exploration interest in the Mineral Ridge District commenced in
the mid-1970s when Sunshine Mining Company, Homestake Mining Company, and Zephyr Resources
became involved in exploring for low-grade ores that could be mined economically through
open pit mining. In the early 1980s, a number of companies conducted geologic
investigations and exploration programs on the Mary and Drinkwater claims at Mineral Ridge
including Houston Oil and Minerals, Occidental Minerals and the Sunshine Mining Company.
During this same period Sunshine Mining and FMC Gold Co. conducted exploration programs on
the Oromonte claims.

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During the 1980s Sunshine Mining Company operated the 16 to 1
silver mine southwest of Silver Peak, processing the ores in a 750-ton per day cyanide
leach mill. By the late-1980s silver prices were so low that the 16 to 1 ores were
no longer economic and Sunshine leased the Mineral Ridge property from the Mary Mining
Trust with a view to feeding their mill with gold ore from this area. Sunshine ultimately
elected to discontinue operations in the Silver Peak area and leased their 16 to 1 mill to
Zephyr Resources Inc., a Reno-based company.

During 1989 and 1990, Zephyr opened the Mineral Ridge mine as an
open-pit, trucking ore 17 miles to the 16 to 1 mill. In mid-1990, Homestead Minerals
Corp., another Reno-based mining company, purchased Zephyrs interests in the area
and continued mining at Mineral Ridge until early-1992. Unfortunately the cost of trucking
the ore to the 16 to 1 mill proved to be uneconomic and Homestead declared bankruptcy in
mid-1992. From 1989-1992, Zephyr and Homestead mined 1.4 millions tons of ore grading
0.082 oz/ton (113,961 ounces of contained gold). With Homesteads bankruptcy, the
leased Mineral Ridge property reverted back to the Mary Mining Trust.

In the meantime, both Sunshine Mining and FMC Gold had dropped their
respective options on the Oromonte claims. Subsequently, Benguetcorp, USA Inc. (BUSA), a
subsidiary of the Philippine mining conglomerate Benguet Corp., purchased the Oromonte
claims from the underlying property owners. BUSA undertook extensive exploration programs
at Oromonte during the 1991 and 1992 field seasons before a corporate decision to curtail
activities in North America brought exploration activities to a halt.

In July 1993 Cornucopia entered into a mining lease on the Mary and
Drinkwater claims with the Mary Mining Trust. In May 1995 they entered into an option
agreement with BUSA on the Oromonte claims, which generally cover the land on top of the
ridge where the crusher is now located. Commencing in July 1993, Cornucopia conducted
extensive exploration and development programs on the Mineral Ridge Property, which
culminated in the feasibility study prepared by Behre Dolbear in February 1996. The
feasibility study, performed at a gold price of $385/oz Au, was positive, although not
robust, and, in its executive summary, stressed two main risks: (1) grade control during
mining and (2) maintaining the permeability of the heaps by agglomerating with sufficient
cement.

A mining contractor did Cornucopias mining, which is notoriously
not a good omen for exacting ore control procedures. In any event the operation ran for
just under a year and failed, reportedly, from a combination of the following:

- Delivery of a lower than planned grade of ore to the leach pad;
- Slower than planned recovery of the gold that was delivered to the leach pads;
- Periodic water shortages due to the one well and inadequate storage capacity;
- Falling gold prices; and
- A lack of working capital to cover the lag in gold recovery from the heaps.

In 1998 the property was transferred to Vista Gold, whose general
operating plan included increased placement of ore on the pads, albeit at a somewhat lower
grade, and mining of both ore and waste with large equipment (to keep mining costs low),
which Vista had available at their Hycroft Mine. The new operations by Vista also ran
somewhat less than a year, and also failed at the end of 1999, reportedly from a
combination of the following:

- Excessive dilution of the ore (in the last month of operation the delivered grade was
    0.04 versus the planned 0.054) due to mining on 15-foot high benches; mining from the foot
    wall rather than the hanging wall direction; and using the 23 cubic yard hydraulic shovel
    for loading ore. (The dipper bucket on the shovel was too large for selective mining);
- The use of insufficient cement for agglomeration, causing poor heap permeability and
    thus slow gold recovery;
- A 10-year low for gold prices;
- A lack of working capital to buy time to fix the operating problems, and
- The large number of personnel on the payroll for the size of the operation. Vista
    employed between 89 and 125 people, which could have been operated with no more than 50 to
    55 people.
- And, a lack of available cash to service the large construction debt to the bank, which
    was assumed from Cornucopias transfer of the property to Vista.

In January 2000 Mineral Ridge Resources, a subsidiary of Vista Gold,
filed for Chapter 11 bankruptcy. A Trustee of the court maintained the property until
Golden Phoenix Minerals acquired the ownership of the mine on November 8, 2000.

Changes for Future Operational Success

During the year 2001 while the company was attempting to close on a
reclamation bond, numerous studies were conducted to better understand the reasons for
past failures at the mine. The results of these studies were startling in their
conclusions and are listed by impact to the mining and recovery operation.

1. Gold Recovery. Past operators placed ore containing about 100,000 ounces of gold onto
    the leach pad. Since 1997 when leaching was initiated, only about 54,000 ounces of gold
    was recovered. Our metallurgical studies have discovered that the deposit contains a large
    quantity of visible, chunky gold along with micron gold. Golden Phoenix initially plans to
    recover most of the approximate 46,700 ounces remaining on the pad by adding cyanide to
    the crushed ore on the leach pad. Any remaining coarse gold will be recovered at a later
    date. Future processing, when mining is underway, will require a mill with a flow sheet
    that recovers the large gold before the ore goes into a cyanide vat leach recovery plant.
    The leach pad will no longer be used other than waste rock storage.
2. Ore Crushing. Our evaluation of the crushing plant, which crushes rocks as large as 3
    feet in diameter down to 1/8-inch particles, found that numerous design problems exist in
    the plant. The biggest problem is that the plant has an internal 60% recycle load, which
    means that rock that was properly sized was not removed from the flow stream, but had to
    be carried along with rocks requiring additional crushing. Furthermore, the plant had no
    internal storage pile capacity, so that if a piece of equipment required repair, the
    entire plant had to be shut down. Golden Phoenix plans to reconfigure the entire crusher
    so that it operates efficiently and cost effectively. Crushed products will go directly to
    the new mill that will be constructed nearby.
3. Mining Grade Control. Past operators used oversized equipment to mine the ore zone, and
    up to 40% dilution of the ore with waste rock occurred. Golden Phoenix plans to conduct
    mining with properly sized equipment that will reduce dilution and maintain the grade of
    the ore that goes to the crushing plant and mill.

Geology of Mineral Ridge

Mineral Ridge is an anticlinal dome found on the eastern flank of the
Silver Peak Range. It has been interpreted as an uplifted metamorphic core complex where
unmetamorphosed and unfolded Cambrian strata are in detachment-fault contact with
underlying deformed granitoids and Precambrian metamorphic rocks of the core complex.
Auriferous quartz lenses of the central gold-quartz district are concordant with foliation
in the Precambrian Wyman Formation host rock. Transitional contacts were observed between
quartz and alaskite (commonly pegmatitic), and between alaskite and peraluminous two-mica
granite, strongly suggesting that the alaskite, quartz, and ore metals were derived
hydrothermally from residual granite melt and aqueous fluids.

Gold occurs as free disseminations and in clots associated with pyrite,
galena, sphalerite, and arsenopyrite. The local shallow abundance of quartz lenses permits
underground or open-pit mining. Considering the scattered gold distribution, coarse nature
of the gold, and common absence of visible ore controls within quartz lenses, the most
economically viable method is to mine and process large volumes of quartz-rich rock from
mineralized areas. Scattered Tertiary epithermal breccias of hot-spring origin also
represent potential mineralization targets to be examined.

The granitoid intrusion appears to have been approximately coeval with
deformation and metamorphism of Precambrian strata, probably during late Cretaceous time.
The presence of magmatic muscovite suggests that minimum physical conditions during
initial granitoid crystallization were placed at the depth of 10 to 11 km. The melt rose
slightly before emplacement into Precambrian rocks now exposed at the surface, causing
contact metamorphism and later weak hydrothermal alteration. Wyman rocks show variable
dynamic and thermal metamorphic effects of lower amphibolite and hornblende-hornfels
facies, respectively. The uplift of Mineral Ridge probably occurred after Mesozoic ductile
deformation and metamorphism, but before late Tertiary extensional faulting.

---

The apparent genetic link between granitoids and metalliferous quartz
bodies on Mineral Ridge supports similar theories documented in recent papers. Numerous
peraluminous two-mica plutons affiliated with Cordilleran core complexes have also been
documented, at least two (Mineral Ridge and Gold Basin-Lost Basin, Arizona) of which are
linked genetically with auriferous quartz bodies. The other peraluminous plutons and
associated quartz bodies thus represent potential gold targets.

The remainder is covered by scattered exposures of Cambrian sedimentary
rocks, lower to middle Tertiary epithermal breccias and hornblende-rich to
plagioclase-rich intrusives, Miocene to Pliocene sedimentary and volcanic rocks, and minor
Quaternary to recent alluvium. Mineral Ridge has the broad structure of an anticlinal
dome, and folds in the metamorphosed Wyman Formation indicate that at least two
deformation events occurred prior to middle Tertiary time. During late Tertiary time, the
northeast flank of the dome was cut by a northwest-trending, range-front normal fault. The
dome and range-front fault were subsequently cut by northeast-striking high-angle faults
that are younger than 6.9 million years.

Gold Mineralization

Gold mineralization is controlled by the shearing structures that are
sub-parallel to the intrusive and metasediment contact. These mineralized shear structures
are commonly located within the lower unit of the Wyman Formation near the contact and are
generally conformable to the foliation in the host rock. Gold-bearing white milky quartz
in filling these shear structures and other fractures forms the primary targets of gold
mining in the Mineral Ridge district. Several gold-bearing shear structures could be
over-stacking each other, forming a broad mineralized zone over 100 feet in thickness.
These mineralized shear zones generally dip at shallow angle on the northeastern side of
the metamorphic/intrusive complex, such as the Brodie and the Gold Wedge deposits.

The gold-bearing milky quartz veins contain only small amounts of
sulfides, including pyrite, sphalerite, galena and minor amounts of chalcopyrite and
arsenopyrite, or their oxidation products. Gold is present as native gold or electrum and
occurs as rounded, angular, and elongated inclusions in quartz. Gold is also associated
with goethite, sometimes with relict pyrite, and intergrown with sphalerite, galena, and
pyrite. Encapsulation of gold by quartz makes it necessary to crush the ore to a
relatively smaller size before cyanide heap leaching. For the most part gold and electrum
are fine-grained with particle size less than 50 microns.

Gold Deposits

The Mineral Ridge project consists of several gold deposits, which have
been defined by drilling and some have been partially mined.

- The Drinkwater Deposit is the largest known ore deposit and is located on the
    northeastern side of the metamorphic and intrusive core complex. It was partially mined by
    underground methods from the 1860s to the early 1940s and by open pit methods from 1989 to
    1999. The ore zones in the Drinkwater deposit have a general strike of N45W and dips about
    20 to 25 degrees to the northeast. Drill defined ore zones have a strike length of more
    than 2500 feet and down dip width of 2000 feet. Two or more gold-bearing shear zones are
    present at the central portion of the deposit with an individual ore zone thickness of 5
    to 40 feet and an overall thickness of more than 100 feet.

- The Mary deposit is also located on the northeastern side of the metamorphic and
    intrusive complex and east of the Drinkwater deposit. It is the second largest known
    deposit on Mineral Ridge. This deposit was partially mined by underground methods before
    the 1940s along with the Drinkwater deposit, but it was not touched by the recent open-pit
    mining operations. Ore zones in the Mary deposit have a similar strike and dip as those in
    the Drinkwater deposit with a drill controlled strike length of over 2000 feet and
    down-dip with of 1500 feet. These ore zones are thinner and less continuous, but tend to
    be higher in gold grade than those in the Drinkwater deposit.

- The Gold Wedge deposit is located at the top of the Mineral Ridge and the metamorphic
    and intrusive core complex, and southwest of the Drinkwater deposit. It consists of
    several small and nearly horizontal orebodies, which have been mined by both underground
    and open-pit methods. Any remaining resources in this deposit are not available for
    further mining as the location has been utilized for the leach pads and processing
    facilities.

- The Brodie deposit is also located on the top of the Mineral Ridge and the metamorphic
    intrusive core complex, and south of the Gold Wedge deposit. It is a small deposit with
    nearly horizontal ore zones. The deposit has been partially mined in the past, but there
    still remains a small drill-defined reserve. Ore zones in this deposit are still open in
    several directions, which indicates a potential to increase the reserve.

- The Solberry and Blue Lite deposits are small satellite deposits located southwest of
    the Gold Wedge deposit. There is a small drill defined reserve in these deposits.

Total Gold Resource of All Drilling

An evaluation of all the drill holes on the Mineral Ridge property
returned a significant gold resource. The following table summarizes the resource at both
a 0.005 opt Au cutoff grade and 0.035 opt Au cutoff grade.

Deposit
    Cutoff
    Tons of Ore
    Average Au Grade
    Total Au ouncesAll Drilling
    0.005 opt
    11,722,400
    0.047opt
    551,245 ounces Au0.035 opt
    5,332,600
    0.080 opt
    426,971 ounces Au


Ore Reserves

The Mineral Ridge gold mine has several small gold deposits that form
the reserve base. The following table summarizes each deposit. The cut off grade for the
reserve calculation is 0.035 opt gold. The

Deposit
    Cutoff
    Tons of Ore
    Average Au Grade
    Total Au ouncesDrinkwater
    0.035 opt
    1,618,247 tons
    0.074 opt
    119,746 ounces AuMary
    0.035 opt
    773,996 tons
    0.095 opt
    73,368 ounces AuBrodie
    0.035 opt
    120,712 tons
    0.059 opt
    7,127 ounces AuSolberry/Blu
    0.035 opt
    145,385 tons
    0.062 opt
    8,985 ounces AuTotal
    
    2,658,340 tons
    0.079 opt
    209,226 ounces Au


Exploration Potential

The Mineral Ridge gold property has produced over 626,000 ounces of
gold from two distinctly different types of deposits. The most important is the
mesothermal gold quartz veins and adjacent silicified zones that historically have been
recognized as the only gold producing system on the property. The mesothermal veins
generally lie conformably at or above the granite contact with the lower Wyman formation.
The early miners exploited these high-grade veins by underground mining methods and more
recently by open pit mining.

The second most important gold producing system is the recently
recognized epithermal quartz-sulfide veins, breccias and related mineralization that
overprints the earlier mesothermal veins. The epithermal quartz-sulfide veins and breccias
occupy late cross structures formed while the Mineral Ridge core complex was being
uplifted from the ductile to the brittle environment. These veins have not been previously
recognized, but are distinct and have probably made significant contributions to the total
gold inventory of the district.

---

An analysis of the various favorable geological features associated
with the two types of veins has been completed. These include defining the different types
of gold veins and when they formed, performing a structural reconstruction of the host
rocks through time, and identifying the extent of the favorable geological environment
that gold deposits could be found. This work then allowed certain conclusions for
discovering significant new gold mineralization in previously unrecognized targets.

The exploration potential was analyzed by identifying both mesothermal
and epithermal targets. The 5 targets that were identified have potential for the
discovery of 3.0 to 4.7 million ounces of gold. These targets are 1) the down dip
extension of the Mary Drinkwater zone, 2) the up dip extension of the Mary Drinkwater zone
under Deep Springs Hill, 3) The NNE structural zone trending through the Drinkwater
deposit, 4) the Brodie NNE structural zone to Oro Monte, and 5) the Brodie-Missouri WNW
structural zone. By drilling these targets, the minable ore reserves held on the property
will increase significantly.

CONTACT PROJECT, ELKO COUNTY, NV

Summary:

The Contact copper-silver project is located in northeastern Nevada
over a Jurassic granodiorite stock and flanking Paleozoic sedimentary rocks. Early
explorers discovered the district in about 1870 and modern exploration was begun in about
1967. Calta Mines, Coralta Resources, Phelps Dodge, and finally Golden Phoenix Minerals
have diligently explored the district for copper since then.

Copper mineralization occurs in association with high-grade quartz
veins hosted in fault zones in the granodiorite or sediments, as disseminations in
potassically altered granodiorite, and fracture controlled stock works and skarns in the
sediments. The district does not host a classic-style porphyry copper deposit.

A revised resource evaluation of the Banner Zone was completed in the
spring of 2000 following the late 1999-drilling program, where most of the drilling in the
district has been done. This study produced a measured and indicated resource of
61,513,000 tons grading 0.77% copper at a 0.2% cutoff for a total of 953,271,000 pounds of
copper. This new resource evaluation increased the overall tonnage 56% and pounds of
copper by 27% from the 1998 resource evaluation. Furthermore, a 0.1% copper cutoff grade
was used to evaluate the potential heap leach resource. At this lower cutoff, the deposit
contains 97,427,000 tons grading 0.54% copper for a total of 1,050,613,000 pounds of
copper. Additional drilling is required to fill in some of the gaps in the reserve.

Internal to the Banner deposit are several continuous high-grade zones
that range from five to forty feet in width and dip from 55 to 80 degrees to the south.
Some of these zones have been followed down dip at least 2000 feet below the surface by
deep core drilling. By using a 3% cutoff grade on these zones, Golden Phoenix calculated
an indicated and measured resource of 1,777,000 tons grading 7.17% copper for a total of
254,789,000 pounds of copper. In-fill and step out drilling will improve this underground
resource significantly.

In summary, the Banner deposit has considerable potential for expanding
both open-pittable and underground ore reserves. Ore types include SX-EW leaching of
shallow oxide ores, and milling and concentrating of the deeper high-grade sulfide ores
for smelting at another facility.

Additionally, other areas on the property have abundant oxide copper
mineralization, which have not been previously explored. These highly prospective areas
offer tremendous potential for discovery of other valuable copper deposits.

Golden Phoenix Objectives:

Golden Phoenix acquired the Contact property because of the potentially
large resource defined in older drill holes and the numerous unexplored ore-grade
occurrences of copper found throughout the district. The Companys objectives are to
develop an open-pittable deposit that can produce low-cost copper metal and/or an
underground mineable, high-grade copper deposit that can also produce low-cost copper
metal. The mines will initially use an SX-EW technology on the oxide ores, then as sulfide
ores are developed and extracted, milling and concentrating technologies will develop the
deeper high-grade ores.

---

Location and Land:

The Contact copper-silver project is located about 50 miles north of
Wells in Elko County, Nevada. The property covers about eleven-square miles and is
controlled by both 152 patented and 2 unpatented mining claims. The best mineralization is
located on the private patented claims, which Golden Phoenix controls through a joint
venture agreement with International Enexco Limited and a lease with option to purchase
with F. W. Lewis, Inc.

History of District:

Copper mineralization was discovered in the area in 1870, and the first
copper showings to be prospected by shafts were east of the Salmon Falls River near China
Mountain, approximately eight miles to the east of Contact. Sporadic prospecting, staking,
development and production took place from 1876 to 1908 when the population of Contact
reached 300 people. In 1918 work on the Vivian tunnel was started near the Banner Zone
immediately north of the old town of Contact. At about the same time, Gray Mining Company
drove the Helen B. Smith tunnel 2300 feet under the Mammoth mine, located at the base of
Ellen D Mountain.

Copper production from the district peaked during World War I, again in
1928 and during World War II. Production was derived from ten to fifteen different
workings, mainly from the area north and west of Contact along the main Banner zone. An
unofficial estimate in 1970 puts the overall production from the Contact district at
300,000 tons of ore at an average grade of 5% copper (equal to 30 million pounds of
copper). A partial estimate for the period 1918-1949 was 34,404 tons averaging 4.85% Cu,
0.2 ounces per ton (opt) of gold and 1.7 ounces per ton of silver.

Historical records state that 129 shipments from the Marshall (Delano)
Mine in 1928 averaged 5.3% Cu. The Palo Alto Mine, also in this zone, produced 300 tons at
32%

Modern Exploration History:

In 1967 Calta Mines Limited and other companies started modern
exploration programs for copper. Work concentrated along the north contact zone between
the granodiorite and Paleozoic sedimentary rocks and west of the town of Contact. By 1970
Calta had completed geological mapping, IP surveys, trenching and 37,000 feet of diamond
drilling. That same year a feasibility study was completed on the copper deposits of
Caltas property. Coralta Nevada Inc., a subsidiary of Vancouver-based Coralta
Resources Ltd., took over the Calta property and carried out additional diamond drilling,
IP-surveys, trenching, geological mapping and petrographic work.

From 1973 to 1975 the property was under option to Phelps Dodge
Corporation and work during this period included IP-surveys and diamond drilling of
sixteen holes. Significant fissure vein, fracture filling and disseminated-type
copper-molybdenum mineralization with gold and silver values were encountered in several
holes. Their work, along with Coralta, delineated 8 million tons of mineralization
averaging 2.3 % copper.

From 1977 to 1989 the property lay essentially dormant, and
International Enexco Inc. of Vancouver acquired many of the patented claims. The majority
of the unpatented claims were allowed to lapse during this period. Interest in the
property and its potential for large tonnage porphyry-type copper-molybdenum
mineralization was awakened again in 1989 when Enexco staked much of the mineralized trend
along the north contact zone of the granodiorite intrusive. These claims were likewise
soon dropped.

In early 1998 Golden Phoenix Minerals staked 216 unpatented mining
claims that cover approximately 4320 acres of BLM administered lands and established a
buffer around, and covered gaps between the land positions of International Enexco Limited
and the F. W. Lewis, Inc. claims. The company acquired the right to earn a 60 percent
interest in the Enexco patented mining claims through a combination of work commitments
and payments over seven years. In July 1998 the Company signed a separate exploration
license and purchase option for the F. W. Lewis Contact Project. The License to
Explore/Option to Purchase was acquired for payments of cash and common stock over the
four and one-half year option term.

---

Golden Phoenix Minerals received encouraging assay results from the
17-hole drill program, which totaled 9445 feet total, and was completed in July 1998.
Results of the drilling program by the Company raised a portion of the combined resource
(mineral inventory) from a drill-inferred to the drill-indicated category. The physical
area of the resource has also been expanded as a result of this program. These encouraging
results and the mineralization that is exposed along strike for greater than one mile was
justification for the Company to plan a 1999 Phase II drilling program.

In late 1999 the Company initiated its second drilling program and
completed it late January 2000. Sixteen holes were drilled for a total of 5,035 feet into
the Banner zone and into three previously untested targets. Nine of these holes were
drilled into the western portion of the Banner zone, while seven holes tested the
Brooklyn, Allan and Bluebird targets to the north and east of the Banner zone. Drill
assays returned good to excellent results from the western extension of the Banner zone
and the previously undrilled Brooklyn and Bluebird targets.

A third drilling program, which was scheduled for start up in August,
was begun in early December and terminated following severe winter weather and mechanical
break downs. A total of four reverse-circulation holes for a total of 1850 feet were
drilled: two into the center of the Banner zone and two on peripheral targets. The best
hole reported was CRC-00-3, which intercepted 60 feet of 0.78% Cu. This interval contained
a high assay of 5 feet of 3.24% copper, and the hole had other short intervals of copper
mineralization.

Geology:

The Contact mining district lies within the Paleozoic miogeosyncline of
western Nevada. This thick sequence of sedimentary rocks has been domed and tilted by the
intrusion of a Jurassic granodiorite stock. The stock is 16-miles in an east-west
direction and 8-miles in a north-south direction. Paleozoic sediments, which consist of
siltstone, limestone and sandstone have been mineralized and metamorphosed to skarn and
hornfels up to 2000 feet away from the granodiorite. Young Tertiary volcanic flows, tuffs,
and sediments overlie these rocks on the distant flanks of the uplift.

The mineral deposits of the district occur principally in the contact
zone of the granodiorite and within the granodiorite in association with sodium and
potassium metasomatized alteration zones. The two main areas of mineralization are the
"North Zone" and the "West Zone". The North Zone extends from the town
of Contact for seven miles to the west along the granodiorite-sedimentary contact and the
West Zone extends along the western contact of the batholith for approximately four miles
in a north south direction. Both zones are at least one-mile wide. Golden Phoenix controls
all of the North Zone and part of the West Zone. Copper is the main commodity, but the
deposits also contain some gold and silver, and locally enough molybdenum, zinc and lead
to be of interest and value.

Drilling, Metallurgy and Other Work Programs Completed:

Golden Phoenix has conducted two reverse circulation (RC) rotary
drilling programs on the property since 1998. The first program was completed in July 1998
and it returned positive assay results. The program consisted of 17-drill holes for a
total of 9445 feet. The assay results of this drilling program raised a portion of the
combined resource (mineral inventory) from a drill-inferred to a drill-indicated category.
The physical area of the copper resource was also expanded as a result of this program.

Drilling results in the Delano area extended and confirmed
mineralization encountered in the earlier Calta and Phelps Dodge drill programs both along
strike and down-dip. The drill holes in the west extension area found that copper
mineralization is still open to the west and down-dip. These encouraging drill results and
the mineralization that crops out along strike for greater than one mile are justification
for a 1999 Phase II drilling program.

The Company initiated its second drilling program in late December of
1999 and completed it in late January 2000. Sixteen holes were drilled for a total of
5,035 feet into the Banner zone and three previously untested targets. Nine of these holes
were drilled into the western extension of the Banner zone, while seven holes tested the
Brooklyn, Allan and Bluebird targets to the north and east of the Banner zone.

Overall, drill assays returned good to excellent results from the
western extension of the Banner zone and the previously undrilled Brooklyn and Bluebird
targets. Mineralization was extended another 400 feet to the west along the Banner
mineralized zone, which is now over 4000 feet in



---

strike length. Highlights of the Banner drilling program include hole
#3 which returned 140 feet of 0.37% copper beginning at 90 feet, and hole #11 with 90 feet
of 0.32% copper starting at the surface. In the newly discovered Brooklyn zone, hole #6
intercepted 85 feet of 1.02% copper beginning at 15 feet and hole #7 returned 215 feet of
0.504% copper beginning at 10 feet. Both holes contained additional mineralized intervals
deeper in the holes. In the new Bluebird zone, hole #15 returned 50 feet of 0.41% copper
beginning at the surface. This hole and nearby hole #16, which contained numerous short
intervals of copper mineralization, suggests that Bluebird could develop into a
significant resource with further drilling.

Metallurgical work was completed from samples taken from two other
targets found three miles to the west and one mile to the southwest. Samples from several
mine dumps were collected, crushed, and placed into separate leach columns. A weak
sulfuric acid solution was circulated and measured for 63 days, which resulted in
projected recoveries of 88% in one sample and 82% in the second. These results suggest
that copper mineralization hosted in granodiorite rocks can be readily leached. This work
provides strong support for drilling in these highly prospective areas.

The third drilling program that the Company undertook was begun at the
end of November 2000. The plan was to drill 15 to 20 holes in targets on the south side of
the Banner zone, the Bluebird target, and the Brooklyn target. The drilling company
encountered numerous mechanical difficulties, which slowed the progress of the program
considerably. Numerous winter snowstorms also added to the overall difficulty of the
overall work load that was laid out in front of the Company. With only four
reverse-circulation holes completed before the Christmas holidays, it was decided to delay
drilling the remaining holes until better conditions existed. The four holes totaled 1850
feet with two into the center of the Banner zone and two on peripheral targets. The best
hole reported was CRC-00-3, which intercepted 60 feet of 0.78% Cu. This interval contained
a high assay of 5 feet of 3.24% copper, and the hole had other short intervals of copper
mineralization.

During 2001 the Vivian warehouse, located next to the Vivian tunnel was
cleaned out of debris, shored up with extra lumbar, a concrete floor poured, new plastic
windows installed, numerous holes in the sheet metal filled. It is planned that the
building will become the long-term storage area for drill core and cuttings.

Copper Resource Inventories Completed:

Golden Phoenix has completed several resource inventories since it took
over the property in 1998. These evaluations were done following each of the two drill
programs that the company completed in 1998 and 1999. This work also brought together the
new reverse circulation drill holes drilled by Golden Phoenix with the older 61 core holes
drilled in the 1960s and 1970s. This previous drilling totaled over 60,000 feet.

The first evaluation, which was completed in 1998, included
calculations on three different types of mineral inventories from all the compiled drill
data. These included 1) a manual cross-sectional inventory based on composite samples, 2)
a block model mineral inventory, and 3) a preliminary economic dipper pit resource. The
following table shows the comparison of the cross-sectional model and the block model
mineral inventory.

Source
    Tons
    Percent Cu
    Pounds of CuCross-sectional Model
    39.5 million
    0.952
    752 millionBlock Model
    51.4 million
    0.703
    723.6 million


The final evaluation completed in the 1998 study was the development of
a preliminary economic open pit. The floating cone was run on the model at a series of
copper prices to get an idea of the sensitivity to price. These sensitivities to price are
needed when capitalization of the project is included to determine profitability. The
preliminary capital cost, quoted but not confirmed, is approximately $28 million for the
processing plant and $15 to $20 million for mining equipment. Our work evaluated several
copper prices; the results of two of the floating cones are presented in the following
table.

Copper Price
    Tons Ore
    Cu Grade %
    Pounds of Cu
    Net Revenue$0.75
    14.7 million
    0.752
    221,000,000
    $48 million$1.00
    27.9 million
    0.672
    346,000,000
    $140.8 million




---

The floating cone was based on a mining cut off of 0.2% Cu, waste cost
of $0.75, ore cost of $1.85, processing cost of $0.18 and a pit slope of 45 degrees.

An updated mineral inventory, based on adding the results of the 1999
drilling program to the earlier work, was completed on June 20, 2000. This new work also
included the results of the channel sampling across the Banner zone in old bulldozer
trenches. This new evaluation reported a measured and indicated resource of 61,513,000
tons grading 0.77% copper at a 0.2% cutoff for a total of 953,271,000 pounds of copper.
This new resource evaluation has increased the overall tonnage by 56% and pounds of copper
by 27% from the 1998 resource evaluation. A 0.1% copper cutoff grade was further used to
evaluate the overall heap leach resource. This evaluation also indicates the deposit
contains 97,427,000 tons grading 0.54% copper for a total of 1,050,613,000 pounds of
copper.

The following table summarizes the combined indicated and measured resource using
different cut off grades.

Incremental Cu
    CumulativeCutoff %
    Tons
    Ave Cu %
    Pounds
    Tons
    Cu %
    Pounds Cu0.10
    35,914,001
    0.14
    97,342,783
    97,427,202
    0.54
    1,050,613,4710.20
    39,050,375
    0.30
    232,631,056
    61,513,201
    0.77
    953,270,6880.50
    9,898,288
    0.67
    132,528,340
    22,462,826
    1.60
    720,639,6321.00
    10,787,607
    1.54
    333,322,316
    12,564,538
    2.34
    588,111,2913.00
    1,776,931
    7.17
    254,788,975
    1,776,931
    7.17
    254,788,975Totals
    97,427,202
    0.54
    1,050,613,471


A second economic open pit model based on the addition of the 1999
drilling program assay data was completed in September of 2000. As before a floating cone
was run on the model at a series of copper prices to get an idea of the sensitivity to
price. These sensitivities to price are needed when capitalization of the project is
included to determine profitability. This work evaluated several copper prices; the
results of two of the floating cones are presented in the following table.

Copper Price/lb
    Tons Ore
    Cu Grade %
    Pounds of Cu
    Net Revenue$0.90
    14.8 million
    0.947
    280,000,000
    $199 million$1.20
    21.0 million
    0.816
    344,000,000
    $265.5 million


The floating cone was based on a mining cut off of 0.2% Cu, waste cost of $0.75, ore
cost of $1.85, processing cost of $0.18 and a pit slope of 45 degrees.

Underground Mining Resource:

The potential to develop an underground high-grade mine is considered
to be excellent. By using a copper cut-off grade of 3%, the Company calculated an
indicated and measured resource of 1,777,000 tons grading 7.17% copper for a total of
254,789,000 pounds of copper. Part of this resource is held up by drill hole PD-4, which
intercepted 12 feet of 20.75 % Cu at 1842 feet and another 30 feet of 13.6 % Cu at 2160
feet. These high-grade copper intercepts also have molybdenum values up to 0.19 % and
silver up to 12.8 ounces per ton.

Exploration Potential:

The potential to find additional copper resources on Golden Phoenix
Minerals properties at Contact is considered to be excellent. For instance, the
Banner zone deposit is currently defined by about 75 drill holes with only 8 other holes
testing nearby targets. Little, if any, drilling has tested the other prospective areas of
the property. Approximately only about 5 to 10 percent of the entire property has been
tested. Currently, field and data review has identified at least 15 other targets that
could add significant tonnage for a mine with a long producing life. By projecting beyond
the current Banner zone deposit to these other highly prospective targets, the Contact
project may have up to 3 or 4 billion pounds of copper that could be identified through
drilling.

---

BOREALIS PROJECT, MINERAL COUNTY, NEVADA

Summary:

The Borealis gold-silver property lies within the Aurora-Borealis
mineral belt in west central Nevada. Echo Bay Minerals and their predecessors mined the
property from eight pits beginning in 1981. The mine processed 10.7 million tons of gold
ore that averaged 0.059 ounces per ton of gold, which yielded 635,000 ounces of gold. Echo
Bay terminated oxide ore mining in 1991, even though they knew that the property still had
numerous unmined oxide and sulfide deposits

Golden Phoenix Minerals began acquiring operating rights to the
Borealis Project in 1997 and in October of 2000 it had increased its ownership of the
underlying lease to 100%. After gaining control in early 1998, the company began an
extensive evaluation of the property, which mostly focused on building a digital
drill-hole database. This work developed a new understanding of the remaining gold
resource and the potential to find significant new deposits. In total the Company
identified a measured and indicated resource of 33,396,100 tons averaging 0.044 ounces
gold per ton containing 1,454,700 ounces of gold, and 0.22 ounces of silver per ton
containing 7,612,100 ounces of silver. This resource is contained in the Borealis, Freedom
Flats, Graben, Polaris, East Ridge, Northeast Ridge and Orion Belt targets. Furthermore,
in the seven target areas studied, numerous areas of open mineralization were evident, and
the overall resource will increase once step-out drilling is performed.

Location, Land, Operating Interest:

The Borealis gold property is located approximately 12 miles southwest
of the town of Hawthorne in the prolific Walker Lane gold belt. The property lies at
approximately 7100 feet on the western side of the southern Wassuk Range. The current land
position consists of 326 unpatented mining claims in two blocks encompassing approximately
6,520 acres (ten square miles).

The company originally acquired a 65% leasehold interest in the
Borealis gold property from J. D. Welsh & Associates in late 1997. At that time Welsh
had joint ventured the property with Quebec-based Cambior Exploration USA Inc., but they
dropped out at the end of 1998 as a result of internal budget cuts. At the end of 1999 the
Company increased its leasehold interest in the project three per cent to 68% by diluting
the portion owned by Welsh. The company previously was buying Welshs interest, but
had to defer completing the entire purchase due to its budgetary constraints in
1998. Furthermore, in early 2000 Welsh optioned his 32% leasehold interest to Newmex
Nevada Inc. This move was positive for Golden Phoenix as Newmex became a willing seller of
their 32%. On October 17, 2000 Golden Phoenix announced the purchase of Newmexs 32
percent interest, which brought its interest to 100% in the underlying lease
originally signed with J. D. Welsh and Associates. The property is subject to a small net
smelter return royalty when mine production is achieved.

Mining History:

Houston Oil and Minerals Company made the original Borealis gold
discovery in 1978. The Borealis mine was placed into production in 1981 by Tenneco
Resources as an oxide-ore, low-cost, heap-leach mining operation. Tenneco Resources and
its successor, Echo Bay Minerals, Inc., produced a total of 10.7 million tons of ore at an
average grade 0.059 ounce per ton (opt) gold for 635,000 ounces of gold. The sulfides were
never mined, although significant sulfide-hosted gold resources were encountered.

After mine closure in 1991, Santa Fe Pacific Gold Corp. conducted
additional sulfide exploration and development on the property. More recently, J. D. Welsh
and Associates and Golden Phoenix Minerals joint ventured the property with Cambior
Exploration. Cambior was operator of the property, and was earning a 70 percent interest
in the project by spending US$7 million over seven years. Cambior terminated the joint
venture agreement effective December 31, 1998 due to internal budget cuts and downsizing.
In 1999 and 2000 Golden Phoenix Minerals continued its effort to building the digital
database and evaluating the remaining deposits on the property.

Geology:

The Borealis property hosts an epithermal gold system marked by large
areas of silicification, hydrothermal brecciation and advanced argillic alteration in
Tertiary volcanic rocks. The volcanic stratigraphy consists of andesite flows, breccias,
and tuffs. The gold deposits are structurally controlled along a series of
north-easterly-trending normal faults that dip steeply to the northwest. Gold occurs as
micron-sized particles in highly altered andesite and tuff. Fissure-type quartz veining is
not present. The average silver to gold ratio is five to one.

---

Mineralized Zones:

The Borealis property can be divided into three separate mineralized
zones called Borealis, Polaris and Orion. The Borealis zone has three separate targets, of
which two were previously mined. These targets include the Borealis mine proper, Freedom
Flats mine, and Graben deposit.

The second mineralized zone is Polaris, and it consists of Northeast
Ridge, East Ridge, and Polaris deposits, all of which were previously mined. Gold
mineralization is found over 12,000 feet along the entire length of the Polaris zone.

The third zone is the Orion Belt and it consists of Jaimes Ridge,
Cerro Duro and Purdys Peak deposits. The first two areas were mined, and both
contain deeper, open-ended mineralization.

Finally, the overall Borealis project area holds a number of other
areas that have not been properly explored and has potential to add significantly to
overall gold resource base.

Resource Evaluation:

In 1999 and 2000 the Company compiled the entire historical drill hole
and assay data into a digital spreadsheet containing over 2000 drill holes. This
information was evaluated to determine remaining gold resources on the Borealis property.
A professional engineer using Meds system software calculated these new resource tonnages
and gold/silver grades.

The cumulative measured and indicated gold and silver resource for the
project, which includes the resource studies over the main Borealis, Polaris, and Orion
Belt Zones total 33,396,100 tons averaging 0.044 ounces gold per ton containing 1,454,700
ounces of gold, and 0.22 ounces of silver per ton containing 7,612,100 ounces of silver.
No attempt was made to convert these resources into engineered mine reserves.

Resource Summary Table: The following table summarizes the unmined gold and silver
resources each deposit.

|Measured        | Tons       | Au Grade | Au Oz     | Ag Grade | Ag Oz    
|--------------- | ---------- | -------- | --------- | -------- | ---------
|Graben          | 6,404,000  | 0.06     | 433,600   | 0.21     | 1,363,400
|Freedom         | 1,702,000  | 0.063    | 107,800   | 0.58     | 989,800  
|Borealis        | 2,896,000  | 0.042    | 122,300   | 0.22     | 630,500  
|Polaris         | 1,540,000  | 0.024    | 37,000    | 0.41     | 630,000  
|East Ridge      | 5,923,500  | 0.018    | 109,000   | 0.112    | 664,900  
|Northeast Ridge | 2,708,000  | 0.021    | 56,600    | 0.11     | 295,500  
|Orion Belt      | 1,738,000  | 0.032    | 55,600    | 0.267    | 463,900  
|Indicated       | Tons       | Au Grade | Au oz     | Ag Grade | Ag Oz    
|Graben          | 5,934,000  | 0.067    | 394,700   | 0.2      | 1,176,000
|Freedom         | 723,000    | 0.05     | 36,100    | 0.55     | 399,500  
|Borealis        | 1,569,000  | 0.033    | 51,100    | 0.18     | 288,400  
|Polaris         | 711,300    | 0.02     | 14,400    | 0.41     | 291,600  
|East Ridge      | 123,800    | 0.016    | 2,000     | 0.112    | 138,600  
|Northeast Ridge | 637,800    | 0.023    | 14,400    | 0.11     | 70,200   
|Orion Belt      | 785,700    | 0.026    | 20,500    | 0.267    | 209,800  
|Totals          | 33,396,100 | 0.044    | 1,454,700 | 0.228    | 7,612,100



---

Mineral Zone Resource Summary Table:The following table summarizes each mineral
zone.

Borealis Zone:

Measured
    Tons
    Au Grade
    Au Oz
    Ag Grade
    Ag OzGraben
    6,404,000
    0.06
    433,600
    0.21
    1,363,400Freedom
    1,702,000
    0.063
    107,800
    0.58
    989,800Borealis
    2,896,000
    0.042
    122,300
    0.22
    630,500IndicatedGraben
    5,934,000
    0.067
    394,700
    0.2
    1,176,000Freedom
    723,000
    0.05
    36,100
    0.55
    399,500Borealis
    1,569,000
    0.033
    51,100
    0.18
    288,400Total
    19,228,000
    0.060
    1,145,600
    0.25
    4,847,600


Polaris Zone:

Measured
    Tons
    Au Grade
    Au Oz
    Ag Grade
    Ag OzPolaris
    1,540,000
    0.024
    37,000
    0.41
    630,000East Ridge
    5,923,500
    0.018
    109,000
    0.112
    664,900Northeast Ridge
    2,708,000
    0.021
    56,600
    0.11
    295,500IndicatedPolaris
    711,300
    0.02
    14,400
    0.41
    291,600East Ridge
    123,800
    0.016
    2,000
    0.112
    13,900Northeast Ridge
    637,800
    0.023
    14,400
    0.11
    70,200Total
    11,644,400
    0.02
    233,400
    0.169
    1,966,100


Orion Belt:

Measured
    Tons
    Au Grade
    Au Oz
    Ag Grade
    Ag OzOrion Belt
    1,738,000
    0.032
    55,600
    0.267
    463,900IndicatedOrion Belt
    785,700
    0.026
    20,500
    0.267
    209,800Total
    2,523,700
    0.03
    76,100
    0.267
    673,700


ALASKA

Background:

The Company had originally focused on Nevada and Alaska following its
formation in 1997. Its activities were fairly aggressive in that it acquired numerous
properties in both states. In late 1998 the Company created an Alaskan subsidiary to
enable it to better focus on its two separate regions. In September of 1999 the Company
sold its interests in the Alaskan company to Great American Minerals and Exploration
(GAME) in order to complete its restructuring and to better focus on its Nevada
properties. As part of the sale, the Company retained the Cirque base metal property and
the net smelter return royalties in the Uncle Sam and the Glory Creek gold prospects,
along with some other minor exploration properties. As of the end of 2001, the
companys remaining Alaskan assets consisted of its royalty interests in Glory Creek
and Uncle Sam. The Company is carried on any financial obligations in Alaska and no work
is required on the part of Golden Phoenix Minerals in the coming year.

---

Alaskan Royalties

The Company has retained a one- percent net smelter return royalty on
the following properties.

1. Glory Creek. This property is 100% controlled by GAME. It is located in the Bonnifield
    district and about 60 miles south of Fairbanks. Exploration work on the property has
    defined an anomalous zone of gold mineralization that requires drilling for the next phase
    of work.
2. Uncle Sam. This property is 100% controlled by GAME. The property is located in the
    Richardson Gold District about 60 miles southeast of Fairbanks. Their work has defined a
    strongly anomalous gold zone that requires drilling for the next phase of work.

Item 3. - LEGAL PROCEEDINGS

None

Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company's shareholders during 2001.

PART II

Item 5. - MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

(a) The Companys common stock has been traded since August 6,
1997. There was no prior activity. The securities are traded on the over -the-counter
market, and quoted on the NASD Electronic Bulletin Board. The following table sets forth
for the periods indicated the range of high and low closing bid quotations per share as
reported by the over-the-counter market. These quotations represent inter-dealer prices,
without retail markups, markdowns or commissions and may not necessarily represent actual
transactions.

Price per ShareHigh
    LowFirst Quarter 1998 (January
    1-March 30)
    $1.44
    $0.50Second Quarter 1998 (March
    30-June 30)
    $0.81
    $0.18Third Quarter 1998 (June
    30-September 30)
    $0.60
    $0.18Fourth Quarter 1998
    (September 30-December 31)
    $0.32
    $0.12First Quarter 1999 (January
    1-March 31)
    $0.13
    $0.10Second Quarter 1999 (April
    1-June 30)
    $0.13
    $0.115Third Quarter 1999 (July
    1-September 30)
    $0.13
    $0.08Fourth Quarter 1999
    (September 30-December 31)
    $0.23
    $0.09First quarter 2000 (January
    1-March 31)
    $0.40
    $0.20Second Quarter 2000 (April
    1-June 30)
    $0.24
    $0.15Third Quarter 2000 (July
    1-September 30)
    $0.19
    $0.14Fourth Quarter 2000
    (September 30-December 31)
    $0.17
    $0.11First quarter 2001 (January
    1-March 31)
    $0.15
    $0.09Second Quarter 2001 (April
    1-June 30)
    $0.21
    $0.10Third Quarter 2001 (July
    1-September 30)
    $0.16
    $0.10Fourth Quarter 2001
    (September 30-December 31)
    $0.13
    $0.09First quarter 2002 (January
    1-March 30)
    $0.25
    $0.09


(b) There are in excess of 500 holders of the common and 3 holders of preferred stock
of the Company.

1. The Company has paid no dividends.



---

Recent Sales of Unregistered
Securities

Following is a summary of sales of unregistered securities for the
fourth quarter of 2001. All securities were issued as restricted common shares, which are
subject to Rule 144 of the Securities and Exchange Commission. Generally, Rule 144
requires shareholders to hold the shares for a minimum of one year before sale. In
addition, officers, directors and more than 10% shareholders are further restricted in
their ability to sell such shares. There have been no underwriters of these securities and
no underwriting commissions or discounts have been paid.

Shares
    ValueIssued
    ReceivedPrivate placement for cash
    3,717,647
    $ 445,000Consulting and other
    services
    3,000,894
    387,635Total
    6,718,541
    $ 832,635


The above transactions qualified for exemption from registration under
Sections 3(b) or 4(2) of the Securities Act of 1933. Private placements for cash were
non-public transactions. The Company believes that all such investors are either
accredited or, either alone or with their purchaser representative, have such knowledge
and experience in financial and business matters that they are capable of evaluating the
merits and risks of the prospective investment.

Item 6. - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Summary.

Section 21E of the Securities Exchange Act of 1934 provides a
"safe harbor" for forward-looking statements. Certain information included
herein contains statements that are forward-looking, such as statements regarding
management's expectations about future production and development activities as well as
other capital spending, financing sources and the effects of regulation. Such
forward-looking information involves important risks and uncertainties that could
significantly affect anticipated results in the future and, accordingly, such results may
differ from those expressed in any forward-looking statements made herein. These risks and
uncertainties include, but are not limited to, those relating to the market price of
metals, production rates, production costs, the availability of financing, the ability to
obtain and maintain all of the permits necessary to put and keep properties in production,
development and construction activities and dependence on existing management. The Company
cautions readers not to place undue reliance on any such forward-looking statements, and
such statements speak only as of the date made.

RESULTS OF OPERATIONS

At the end of year 2001 the Company had generated $343,038 in
operational revenue, which had been derived from the production of gold from the Mineral
Ridge gold mine. Previous to this, all Company activities had been directed toward
development and exploration activities. The Company has three active exploration
properties in Nevada.

Exploration costs have been incurred in connection with just the
properties in Nevada. These costs have been incurred for drilling, the location of mining
claims, and field examinations to determine the potential occurrence of economic
mineralization on the different properties. Other exploration costs include the
compilation of historic data on the properties to assist in the evaluation of the
properties and the planning of further exploration.

Operating expenses totaled $1,548,982 for 2001, compared to $1,092,940
for 2000. The increase is due primarily to an increased exploration activities at Borealis
and Contact and the purchase of the Mineral Ridge gold mine and its related maintenance
costs. These changes resulted in an operating loss of $1,662,762, compared to a loss of
$1,134,354 for 2000.



---

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2001, the Company had current assets of $121,225
compared to current liabilities of $1,801,331. Total current liabilities increased
approximately $160,000 due primarily to the debt related to the acquisition of the Mineral
Ridge Mine.

During fiscal 2001, liquidity needs were met from: (i) private
placement of 144 restricted shares of $445,000, (ii) issuance of stock to vendors and
employees for goods and services of $387,635, and (iii) conversion of outstanding debt to
common stock of $10,000.

As of December 31, 2001, the company had $343 in cash.

The Company anticipates total expenditures for fiscal 2002 for general
and administrative expenses to be approximately $468,000 and for exploration and property
holding cost to be approximately $850,000. Exploration and holding expenditures include
$100,000 for the Mineral Ridge gold mine, $300,000 for the Lewis Contact Property,
$150,000 for the International Enexco Contact joint venture, $200,000 for the Borealis
project, $50,000 for future Nevada land holding costs and $40,000 for generative
exploration. These amounts could increase or decrease significantly, at any time during
the fiscal year, based on exploration results and decisions about releasing or acquiring
additional properties, among other factors.

The Company will continue to explore and develop its properties and
intends to acquire new properties, all with the view to enhancing the value of such
properties prior to possible joint ventures with major mining company partners.

The ability of the Company to satisfy the cash requirements of its
development and operations will be dependent upon future financing and cash flow from the
Mineral Ridge gold mine. The Company anticipates that additional financing will be
obtained, although no assurance can be made that funds will be available on terms
acceptable to the Company.

INVESTING AND FINANCING ACTIVITIES

The Company is investigating potential financing sources and is in
discussions with potential joint venture partners. In 2001 the Company continued to
receive $20,000 per month from a stock option agreement signed in 1999, which was enough
to meet its basic operating needs. The status of this agreement is discussed in Note 15 on
page 43 of this report.

The Company is currently offering an equity Private Placement to raise
approximately $1.0 million. The total amount to be raised may change, based on varying
conversion prices set from time to time during the offering period. The offering is a
restricted stock equity placement on a minimum investment of $10,000. The initial offering
price was $0.10 per share for the first $200,000 and will be adjustable to 80% of the bid
price of the stock in $200,000 increments but will not be less than $0.10 per share. No
assurance can be given that the Company will obtain all of the financing required to
maintain its property positions.

Item 7. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements are attached
  following Item 13.

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

No change was made in the Company's auditors from the prior year.

To the Company's and its management's knowledge, there is no accounting
or financial disclosure dispute involving any present or former accountant.

PART III

Item 9. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

---

I. Summary Information.

The following are the directors and executive officers of the Company:

Name
    Age
    PositionMichael R. Fitzsimonds
    46
    President, DirectorSteven D. Craig
    54
    Vice President, Corporate Secretary, DirectorAllan J. Marter
    54
    DirectorDavid A. Caldwell
    42
    Director


All officers and directors have served in the stated capacities since
the inception of the Company, with the exceptions of Mr. Craig, who became secretary and a
director in September 1998, and Mr. Marter, who became a director in February 1998. For
directors, the term of office is until the next annual meeting of shareholders. For
officers, the term of office is until the next annual meeting of the Board of Directors,
presently scheduled to be held immediately following the annual meeting of the
shareholders.

II. Narrative Information Concerning the Directors and Executive
Officers

Michael R. Fitzsimonds  President, Director

Mr. Fitzsimonds is the President and a Director of the Company. He is
an experienced geological engineer with over 24 years of mining industry work. Previously,
he was with Santa Fe Pacific Gold Corporation for 10 years with responsibilities for all
of Santa Fes initial resource evaluations and due diligence work of all mine
operations and acquisition projects worldwide. Overall, he has experience in the minerals
industry with project development ranging from grass roots exploration, project
development and mine startup. Mr. Fitzsimonds current responsibilities with Golden
Phoenix includes handling all administrative aspects of the company, which include SEC
liaison, corporate finance, human relations, as well as directing the current Mineral
Ridge operations and predevelopment work including all resource evaluations and permitting
requirements.

Steven D. Craig  Vice President, Secretary and Director

Mr. Craig is Vice President, Corporate Secretary and Director. Mr.
Craig is an experienced economic geologist with 28 years of diversified exploration work.
He previously spent 23 years of his career with Kennecott Exploration Company and their
affiliates including Bear Creek Mining Co., BP Minerals America, and RTZ Ltd. His
experience was mostly gained in the western United States as both an exploration geologist
and manager of a successful gold exploration team based in Reno. He also has international
experience in such places as Papua New Guinea, South America, and Mexico. He previously
served as an officer and trustee with the Northwest Mining Association and as President of
the Geological Society of Nevada. Mr. Craigs current responsibilities with Golden
Phoenix include directing all exploration aspects of the Companys projects and
assisting the President with administrative duties as required.

Allen J. Marter  Director

Mr. Marter is a Director and is Chief Financial Officer for Golden Star
Resources in Denver, Colorado. Previously, he was a financial advisor in the mining
industry and Principal of Waiata Resources of Littleton, Colorado. He has over 23 years
experience in the mining industry and previously served as chief financial officer for
several junior exploration and mining companies in Denver and Vancouver. He has been
active in mining industry activities and in 1993 was President of the Northwest Mining
Association. He is also a director of Minera Andes Inc. and Addwest Minerals
International, Limited. Mr. Marter is responsible as an outside director to ensure that
the company achieves success by proper utilization of its resources.

David A. Caldwell  Director

Mr. Caldwell is a Director with professional experience as a geologist
and geophysicist. He has more than 15 years experience in the minerals exploration
industry with work in sulfur, base metal and gold exploration and development. He
previously had roles in project management and development at Santa Fe Pacific Gold
Corporation and Gold Fields Mining Company. He is currently an Officer and Director with
Nevada Pacific Gold (US), Inc. in Elko, Nevada. Mr. Caldwell is responsible as an outside
director to ensure that the company achieves success by proper utilization of its
resources.

---

Section 16(a) Beneficial Ownership Reporting Compliance

Based on available information, it is believed that all filings with
respect to Section 16(a) are now current. Forms 5 for Mr. Fitzsimonds, Mr. Craig and Mr.
Caldwell were not timely filed. Forms 3 and 5 for Mr. Whitney were not timely filed. A
total of 11 Form 4's, representing 29 transactions, were not timely filed for Mr. Whitney.

Item 10. - EXECUTIVE COMPENSATION.

Summary of Cash and Certain Other Compensation

The following table sets forth information as to the compensation of
the Chief Executive Officer whose compensation for the year ended December 31, 2001 did
not exceeded $100,000:

|                            |      |                         |           |                                | Long Term
    Compensation |                                                
|--------------------------- | ---- | ----------------------- | --------- | ------------------------------ | -------------------------- | -----------------------------------------------
|                            |      | Annual
    Compensation | Awards    | Payouts                        |                           
|(a)                         | (b)  | (c)                     | (d)       | (e)                            | (f)                        | (g)                                            
|Name and Principal Position | Year | Salary ($)              | Bonus ($) | Other Annual Compen-sation ($) | Restricted Stock Award(s)  | Securities Under-lying Options/
    SARs (#)(1)
|CEO Michael Fitzsimonds     | 2001 | $60,000                 |           | $35,000                        |                            | 2,543,940(5)                                   
|                            | 2000 | $60,000(4)              |           | $35,000                        |                            |                                                
|                            | 1999 | $60,000(3)              |           | $35,000                        |                            |                                                
|                            | 1998 | $60,000(2)              |           | $35,000                        |                            | 375,000                                        
|                            | 1997 | $30,000                 |           |                                |                            |                                                

There is no employee that was paid as much as $100,000 per year in cash
compensation. Executive compensation contracts for the payment of a salary were initiated
in May of 1998. A copy of the base contract is attached as 14.1. The Company has agreed to
pay Mr. Fitzsimonds the sum of $60,000 per year in cash compensation and deferred
compensation of $35,000.

(1) Mr. Fitzsimonds was granted options representing a total of
1,925,000 common shares in 1997. As part of restructuring the Company's finances, options
representing a total of 780,000 common shares were relinquished, leaving a balance of
options for 1,145,000 common shares which expired in June 2000. In 1998 Mr. Fitzsimonds
was granted a replacement option for 375,000 common shares at $0.69, the fair market value
of the stock on the date of grant. In 2000 Mr. Fitzsimonds was granted options 1,145,000
common shares at $0.22 which replaced the expired option granted in 1997. He was also
granted 250,000 in new options at $0.22 in 2000. In addition to these options, Mr.
Fitzsimonds owns 100,000 shares of convertible preferred stock, which are convertible at
ten shares of common stock for each share of preferred, at a price of $0.10 per common
share.

(2) Of the $60,000 in 1998 annual compensation, $30,000 was accrued at
December 31, 1998 and remains unpaid as of the date of this report.

(3) Of the $60,000 in 1999 annual compensation, $30,000 was accrued at
December 31, 1999 and remains unpaid as of the date of this report.

(4) Of the $60,000 in 2000 annual compensation, $30,000 was accrued at
December 31, 2000 and remains unpaid as of the date of this report.

---

(5) in addition to the options replaced and granted in note 1 Mr.
Fitzsimonds was granted the right to convert his unpaid salary during 1998 and 1999 into
options for 1,148,940 common shares at $0.147.

Option Grants in Last Fiscal Year

Number of
    % of TotalSecurities
    Granted toUnderlying
    Employees in
    Exercise or
    ExpirationName
    Options Granted
    Fiscal Year
    Base Price
    DateMichael R. Fitzsimonds
    none


Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

Options Exercised:

Shares AcquiredName
    On Exercise(#)
    Value RealizedMichael R. Fitzsimonds
    None
    N/A


Options Unexercised:

|                       | Number of
    Securities   | Value of
    Unexercised
|---------------------- | -------------------------- | ------------------------
|                       | Underlying
    Unexercised | In-the-Money
    Options
|                       | Options at
    12/31/01    | At 12/31/01             
|Name                   | Exercisable                | Unexercise.             
|Michael R. Fitzsimonds | 2,543,940                  | 375,000                 

Item11. -SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

a) Security Ownership of Certain Beneficial Owners.

The following table sets forth certain data with respect to those
persons known to the Company, as of March 22, 2000, to be the beneficial owners of more
than 5% of the outstanding shares of common stock of the Company:

Amount and Nature of
    Beneficial OwnershipCommon SharesName and
    
    Which May Be
    
    PercentAddress of
    Common Shares
    Acquired Within
    
    ofBeneficial Owner
    Presently Held
    60 days
    Total
    ClassJohn W. Whitney
    4,291,034
    3,950,000
    8,241,034(1)
    19.81%P.O. Box 10725Reno, NV 89510Michael R. Fitzsimonds
    992,550
    2,543,940
    3,536,490(2)
    7.55%3595 Airway Dr., Ste 405Reno, NV 89511Newmex Minerals Inc.
    6,000,000
    6,000,000
    12,000,000
    25.63%603 7th Ave., Suite 500Calgary, AB T2P 2T5




---

(1) Included in Mr. Whitney's shares are 2,789,244 restricted common
shares owned by Whitney & Whitney, Inc.(WWI). Mr. Whitney is president of WWI and
president and more than 10% shareholder of its parent company, Itronics Inc. Mr. Whitney's
options and warrants are at $0.10 per share.

(2) Mr. Fitzsimonds has conversion rights on preferred stock for
1,000,000 common shares at $0.10 per share and options for 1,395,000 common shares at
$0.22, 1,148,940 common shares at $0.147. During 2001 options for 375,000 common shares at
$0.69per share expired.

b) Security Ownership of Management

The following tables set forth, as of March 22, 2002, certain
information with respect to director and executive officer ownership of common and
preferred stock in the Company:



Common Stock

Amount and Nature of
    Beneficial OwnershipCommon SharesName and
    
    Which May Be
    
    PercentAddress of
    Common Shares
    Acquired Within
    
    ofBeneficial Owner
    Presently Held
    60 days
    Total
    ClassMichael R. Fitzsimonds
    992,550
    2,543,940
    3,536,490(1)
    7.55%3595 Airway Dr., Ste 405Reno, NV 89511Steven D Craig
    
    1,319,349
    1,319,349(2)
    2.82%3595 Airway Dr., Ste 405Reno, NV 89511David Caldwell
    
    100,000
    100,000(3)
    0.21%3595 Airway Dr., Ste 405Reno, NV 89511Allan Marter
    
    50,000
    50,000(4)
    0.11%3595 Airway Dr., Ste 405Reno, NV 89511All directors and executiveofficers as a group ( 4 persons)
    992,550
    4,013,289
    5,005,839
    10.69%


(1) Mr. Fitzsimonds has conversion rights on preferred stock for
1,000,000 common shares at $0.10 per share and options for 1,395,000 common shares at
$0.22, 1,148,940 common shares at $0.147. During 2001 375,000 common shares at $0.69 per
share expired.

(2) Mr. Craig holds options for, 335,049 common shares at $0.22 per
share and 984,300 common shares at $0.147 . During 2001 344,000 common shares at $0.20,
153,907 common shares at $0.27 and 287,000 common shares at $0.69 per share expired.

(3) Mr. Caldwell holds options for 100,000 common shares at $0.22 per
share. During 2001 70,000 common shares at $0.20 expired.

(4) Mr. Marter holds options for 50,000 common share at $0.22. During
2001 100,000 common shares at $0.20 expired.



---

The following table sets forth certain information as of
March 22, 2002 as to the beneficial ownership of the Companys preferred stock by all
directors, the named executive officers, and all directors and executive officers as a
group.

Preferred Stock

PercentPreferred
    ofShares
    ClassMichael R. Fitzsimonds
    100,000
    63.3%All directors and executive
    officersas a group ( 1
    persons)
    100,000
    63.3%




---



Item 12. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Officers and directors have loaned the Company a total of $422,100 as of December 31,
2000. The notes payable are unsecured and accrue interest at 8% per annum.



---

Item 13. - FINANCIAL STATEMENTS, EXHIBITS, AND REPORTS ON FORM 8-K

I.

1. List of Financial Statements

(a) Consolidated Balance Sheets at December 31, 2001 and 2000

(b) Consolidated Statements of Operations During the Development Stage
for the periods ended  December 31, 2001 and 2000 and Inception
          (June 2, 1997) to December 31, 2001

(c) Consolidated Statements of Stockholders Equity (Deficit) for
the periods ended December 31,  2001 and 2000 and Inception (June 2, 1997) to
         December 31, 2001

(d) Consolidated Statements of Cash Flows for the periods ended
December 31, 2001 and 2000 and Inception (June 2, 1997) to December 31,
         2001

(e) Notes to Consolidated Financial Statements

2. List of Exhibits

None



II. Reports on Form 8-K

None

INDEX TO FINANCIAL STATEMENTS

AND SUPPLEMENTAL DATA

DECEMBER 31, 2001

PageFINANCIAL STATEMENTSReport of Independent Certified Public
    Accountant
    33Balance Sheets at December 31, 2001 and
    2000
    34Statements of Operations During the
    Development Stage for the periods ended December 31, 2001 and 2000 and Inception (June 2,
    1997) to December 31, 2001
    36Statements of Stockholders Equity (Deficit) for the periods
    ended December 31, 2001 and 2000 and Inception (June 2, 1997) to December 31, 2001
    38Statements of Cash Flows for the periods
    ended December 31, 2001 and 2000 and Inception (June 2, 1997) to December 31, 2001
    43Notes to Consolidated Financial Statements
    46EXHIBITSNoneSTATEMENTS AND SCHEDULESSchedules not included are omitted for the
    reason they are not applicable or not required.




---

Albright, Persing&Associates, Ltd.

CERTIFIED PUBLIC ACCOUNTANTS

1025 Ridgeview Drive, Suite 300

Reno, Nevada 89509

To the Board of Directors and Stockholders

Golden Phoenix Minerals, Inc.

We have audited the accompanying balance sheets of Golden Phoenix
Minerals, Inc. (a development stage company) as of December 31, 2001 and 2000 and the
related statements of operations, stockholders equity (deficit), and cash flows for
the years ended December 31, 2001 and December 31, 2000 and from inception (June 2, 1997)
to December 31, 2001. These financial statements are the responsibility of Golden Phoenix
Minerals, Inc.s management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about 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. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Golden Phoenix Minerals, Inc.
at December 31, 2001 and 2000 and from Inception (June 2, 1997) to December 31, 2001 and
the results of its operations and its cash flows for the years then ended, in conformity
with generally accepted accounting principles.

As discussed in Note 2 and Note 14 to the financial statements, the
Companys capitalized reclamation and reclamation obligation have been determined by
the Companys management on the basis of estimates of the future costs associated
with the closing of the Mineral Ridge Mine. While the approach to establishing the
reclamation estimate appears reasonable, there is an absence of a significant amount of
experience as to whether the Companys actual incurred costs will conform to the
assumptions inherent in the determination of the asset and liability. Accordingly, the
ultimate costs of reclamation may vary significantly from the estimated amounts included
in the accompanying financial statements.

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 1, the Companys
ability to generate sufficient cash flows to meet its obligations and sustain its
operations, either through future revenues and /or additional debt or equity financing,
cannot be determined at this time. These uncertainties raise substantial doubt about the
Companys ability to continue as a going concern. Managements plans in regard
to these matters are also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Reno, Nevada

April 13, 2002 /S/ Albright, Persing & Associates, Ltd.



---

GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

BALANCE SHEETS

DECEMBER 31, 2001 AND 2000



ASSETS2001
    2000Current AssetsCash
    $343
    $38,636Prepaid expenses
    35,876
    44,253Employee advances
    28,050
    24,524Receivables - other
    56,015
    -Stock subscription receivable
    -
    200,000Accrued interest receivable
    941
    -Total Current Assets
    121,225
    307,413Marketable equity securities
    3,138
    1,700Options
    25,000
    25,000Mining properties and claims
    1,860,591
    1,860,591Property and equipment, net of accumulated
    depreciation of $214,561 in 2001 and$68,899 in 2000
    738,771
    819,232Organization costs, net of accumulated
    amortization of $1,040 in 2001 and $809 in 2000
    115
    346Deposits
    26,251
    419,874Capitalized reclamation costs
    1,800,000
    1,300,000Deferred development costs
    462,709
    386,602Deferred tax assets, net of valuation
    allowance
    -
    -Total Assets
    $5,037,800
    $5,120,758


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

---

GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

BALANCE SHEETS

DECEMBER 31, 2001 AND 2000

LIABILITIES AND
    STOCKHOLDERS EQUITY (DEFICIT)2001
    2000Current LiabilitiesAccounts payable
    $411,125
    $254,281Accrued liabilities
    207,341
    149,567Accrued royalties
    30,000
    -Current portion of long term debt
    541,424
    431,114Accrued interest on note payable
    127,126
    22,203Utilities contract payable
    -
    316,654Amounts due to stockholders
    427,600
    422,100Accrued interest stockholder loans
    56,715
    43,997Total Current Liabilities
    1,801,331
    1,639,916Long-term LiabilitiesCapital lease obligations
    94,343
    3,755Long term debt
    61,271
    86,065Utilities contract payable
    -
    65,746Convertible notes payable
    485,000
    485,000Accrued interest convertible notes payable
    112,366
    54,165Reclamation liabilities
    1,819,874
    1,319,874Total Liabilities
    4,374,185
    3,654,521Stockholders Equity
    (Deficit)Preferred stock, no par
    value, 50,000,000 shares authorized, 426,300 and 441,700 shares issued and outstanding at
    December 31, 2001 and 2000
    1,708
    1,770Common stock, no par value,
    150,000,000 shares authorized, 44,172,662 and 36,750,121 issued and outstanding at
    December 31, 2001 and 2000, respectively (including 16,162,745 and 14,259,118 of 144
    restricted shares for organizational services at December 31, 2001)
    7,281,637
    6,394,272Additional paid in capital
    123,700
    108,300Deficit accumulated during
    the development stage
    (6,698,930)
    (5,037,605)708,115
    1,466,737Less: Stock Subscription
    Receivable
    (44,500)
    (500)Total Stockholders
    Equity
    663,615
    1,466,237Total Liabilities and
    Stockholders Equity
    $5,037,800
    $5,120,758


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

---

GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

DURING THE DEVELOPMENT STAGE

FOR THE PERIODS ENDED DECEMBER 31, 2001 AND 2000

AND INCEPTION (JUNE 2, 1997) TO DECEMBER 31, 2001

|                                                                              | Cumulative During
    Development Stage | 2001         | 2000        
|----------------------------------------------------------------------------- | --------------------------------------- | ------------ | ------------
|Revenues                                                                      |                                         |              |             
|Metal sales                                                                   | $344,941                                | $309,796     | $35,145     
|Other product sales                                                           | 33,242                                  | 33,242       | -           
|Joint Venture                                                                 | 34,400                                  | -            | -           
|Options                                                                       | 2,000                                   | -            | -           
|Property and claims                                                           | 60,811                                  | -            | 57,811      
|                                                                              | 475,394                                 | 343,038      | 92,956      
|                                                                              |                                         |              |             
|Cost of metal sales                                                           | 313,651                                 | 286,601      | 27,050      
|                                                                              |                                         |              |             
|Gross profit                                                                  | 161,743                                 | 56,437       | 65,906      
|                                                                              |                                         |              |             
|Expenses                                                                      |                                         |              |             
|Exploration                                                                   | 2,669,467                               | 243,923      | 311,733     
|General and administrative                                                    | 3,878,629                               | 1,305,059    | 781,207     
|                                                                              | 6,548,096                               | 1,548,982    | 1,092,940   
|                                                                              |                                         |              |             
|Loss from Operations                                                          | (6,386,353)                             | (1,492,545)  | (1,027,034) 
|                                                                              |                                         |              |             
|Other Income (Expense)                                                        |                                         |              |             
|Interest income                                                               | 21,143                                  | 19,277       | 1,596       
|Interest expense                                                              | (420,077)                               | (189,392)    | (127,179)   
|Gain on sale of stock in affiliate                                            | 10,016                                  | -            | -           
|Gain (loss) on sale of fixed assets                                           | 2,551                                   | -            | -           
|Other income                                                                  | 13,847                                  | 195          | 3,100       
|Other expense                                                                 | (4,001)                                 | (297)        | (2,414)     
|Rent income                                                                   | 40,176                                  | -            | 17,577      
|Loss Before Provision for
    Income Taxes                                    | (6,722,698)                             | (1,662,762)  | (1,134,354) 
|                                                                              |                                         |              |             
|Income Tax Benefit
    (Expense)                                              |                                         |              |             
|Current                                                                       | -                                       | -            | -           
|Deferred                                                                      | -                                       | -            | -           
|                                                                              | -                                       | -            | -           
|                                                                              |                                         |              |             
|Net Loss before
    Extraordinary Item                                        | (6,722,698)                             | (1,662,762)  | (1,134,354) 
|                                                                              |                                         |              |             
|Extraordinary Item - Gain
    on Settlement of Debt (net of income tax of $0) | 22,331                                  | -            | 22,331      
|                                                                              |                                         |              |             
|Net Loss                                                                      | $(6,700,367)                            | $(1,662,762) | $(1,112,023)

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

---

GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

DURING THE DEVELOPMENT STAGE

FOR THE PERIODS ENDED DECEMBER 31, 2001 AND 2000

AND INCEPTION (JUNE 2, 1997) TO DECEMBER 31, 2001

|                                                                                   | Cumulative 
    During Development
    Stage | 2001         | 2000        
|---------------------------------------------------------------------------------- | -------------------------------------------- | ------------ | ------------
|Comprehensive Income
    (Loss):                                                   |                                              |              |             
|Net change in unrealized
    gain (loss) arising during the year ended December 31 | 1,437                                        | 1,437        | -           
|                                                                                   |                                              |              |             
|Net Comprehensive Loss                                                             | $(6,698,930)                                 | $(1,661,325) | $(1,112,023)
|                                                                                   |                                              |              |             
|Basic and Diluted Net Loss
    per Common Share Before Extraordinary Gain          | $(.27)                                       | $(.04)       | $(.04)      
|                                                                                   |                                              |              |             
|Extraordinary Gain on
    Extinguishment of Debt                                   | .001                                         | -            | .001        
|                                                                                   |                                              |              |             
|Basic and Diluted Net Loss
    per Common Share                                    | $(.27)                                       | $(.04)       | $(.04)      
|                                                                                   |                                              |              |             
|Shares Used in Computing
    Basic and Diluted Shares                              | 24,413,708                                   | 39,898,240   | 28,298,387  

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

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

STATEMENTS OF STOCKHOLDERS EQUITY

FOR THE PERIODS ENDED DECEMBER 31, 2001 AND 2000

AND INCEPTION (JUNE 2, 1997) TO DECEMBER 31, 2001



|                                                                                           |              |                  |         |             | Additional   |             | Stock      |            
|------------------------------------------------------------------------------------------ | ------------ | ---------------- | ------- | ----------- | ------------ | ----------- | ---------- | -----------
|                                                                                           | Common Stock | Preferred Shares | Paid-In | Accumulated | Subscription |            
|                                                                                           | Shares       | Amount           | Shares  | Amount      | Capital      | Deficit     | Receivable | Total      
|                                                                                           |              |                  |         |             |              |             |            |            
|Balances, June 2, 1997 (date of inception)                                                 | -            | $ -              | -       | $ -         | -            | $ -         | $ -        | $ -        
|                                                                                           |              |                  |         |             |              |             |            |            
|Issuance of common stock for cash                                                          | 10,465,000   | 1,139,000        | -       | -           | -            | -           | -          | 1,139,000  
|                                                                                           |              |                  |         |             |              |             |            |            
|Issuance of common stock for services - Sec.144 restricted shares                          | 2,000,000    | 2,000            | -       | -           | -            | -           | -          | 2,000      
|                                                                                           |              |                  |         |             |              |             |            |            
|Issuance of preferred stock for services - Sec.144 restricted shares                       | -            | -                | 500,000 | 2,000       | -            | -           | -          | 2,000      
|                                                                                           |              |                  |         |             |              |             |            |            
|Sale of common stock for cash Sec.504 exempt                                               |              |                  |         | 424,480     | 843,657      | -           | -          | -          
|                                                                                           |              |                  |         |             |              |             |            |            
|Issuance of common stock for joint venture option purchase Sec.144
      restricted shares |              |                  | 50,000  | 100,000     | -            | -           | -          | -          
|                                                                                           |              |                  |         |             |              |             |            |            
|Net loss for the period from June 2, 1997 through December 31, 1997                        | -            | -                | -       | -           | -            | (1,461,837) | -          | (1,461,837)

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

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

STATEMENTS OF STOCKHOLDERS EQUITY

FOR THE PERIODS ENDED DECEMBER 31, 2001 AND 2000

AND INCEPTION (JUNE 2, 1997) TO DECEMBER 31, 2001



|                                                                               |              |                  |         |             | Additional   |             | Stock      |            
|------------------------------------------------------------------------------ | ------------ | ---------------- | ------- | ----------- | ------------ | ----------- | ---------- | -----------
|                                                                               | Common Stock | Preferred Shares | Paid-In | Accumulated | Subscription |            
|                                                                               | Shares       | Amount           | Shares  | Amount      | Capital      | Deficit     | Receivable | Total      
|Balance at December 31, 1997                                                   | 12,939,480   | 2,084,657        | 500,000 | 2,000       | -            | (1,461,837) | -          | 624,820    
|                                                                               |              |                  |         |             |              |             |            |            
|Issuance of common stock to vendors and employees for goods and
      services | 721,000      | 187,000          | -       | -           | -            | -           | -          | 187,000    
|                                                                               |              |                  |         |             |              |             |            |            
|Issuance of common stock for stock options exercised                           | 510,000      | 109,315          | -       | -           | -            | -           | -          | 109,315    
|                                                                               |              |                  |         |             |              |             |            |            
|Issuance of common stock in exchange for debt pay off                          | 431,486      | 383,113          | -       | -           | -            | -           | -          | 383,113    
|                                                                               |              |                  |         |             |              |             |            |            
|Issuance of common stock for cash                                              | 1,727,627    | 685,890          | -       | -           | -            | -           | -          | 685,890    
|                                                                               |              |                  |         |             |              |             |            |            
|Conversion of outstanding debt to common stock                                 | 346,667      | 195,000          | -       | -           | -            | -           | -          | 195,000    
|                                                                               |              |                  |         |             |              |             |            |            
|Net loss for the year ended December 31, 1998                                  |              | -                | -       | -           | -            | (1,750,898) | -          | (1,750,898)

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

---

GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

STATEMENTS OF STOCKHOLDERS EQUITY

FOR THE PERIODS ENDED DECEMBER 31, 2001 AND 2000

AND INCEPTION (JUNE 2, 1997) TO DECEMBER 31, 2001

|                                                                         |              |                  |         |             | Additional   |             | Stock      |          
|------------------------------------------------------------------------ | ------------ | ---------------- | ------- | ----------- | ------------ | ----------- | ---------- | ---------
|                                                                         | Common Stock | Preferred Shares | Paid-In | Accumulated | Subscription |            
|                                                                         | Shares       | Amount           | Shares  | Amount      | Capital      | Deficit     | Receivable | Total    
|Balance December 31, 1998                                                | 16,676,260   | 3,644,975        | 500,000 | 2,000       | -            | (3,212,735) | -          | 434,240  
|                                                                         |              |                  |         |             |              |             |            |          
|Issuance of common stock to vendors and employees for goods and services | 5,522,680    | 587,647          | -       | -           | -            | -           | -          | 587,647  
|                                                                         |              |                  |         |             |              |             |            |          
|Issuance of common stock in exchange for debt pay off                    | -            | -                | -       | -           | -            | -           | -          | 109,315  
|                                                                         |              |                  |         |             |              |             |            |          
|Issuance of common stock for cash                                        | 2,375,000    | 237,500          | -       | -           | -            | -           | -          | 237,500  
|                                                                         |              |                  |         |             |              |             |            |          
|Acquisition of Treasury Stock                                            | (500,000)    | -                | -       | -           | -            | -           | -          | -        
|                                                                         |              |                  |         |             |              |             |            |          
|Sale of Treasury Stock                                                   | 500,000      | -                | -       | -           | 50,000       | -           | -          | 50,000   
|                                                                         |              |                  |         |             |              |             |            |          
|Net loss for the year ended December 31, 1999                            |              | -                | -       | -           | -            | (712,847)   | -          | (712,847)

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

---

GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

STATEMENTS OF STOCKHOLDERS EQUITY

FOR THE PERIODS ENDED DECEMBER 31, 2001 AND 2000

AND INCEPTION (JUNE 2, 1997) TO DECEMBER 31, 2001

|                                                                                                  |              |                  |          |             | Additional   |              | Stock      |            
|------------------------------------------------------------------------------------------------- | ------------ | ---------------- | -------- | ----------- | ------------ | ------------ | ---------- | -----------
|                                                                                                  | Common Stock | Preferred Shares | Paid-In  | Accumulated | Subscription |             
|                                                                                                  | Shares       | Amount           | Shares   | Amount      | Capital      | Deficit      | Receivable | Total      
|Balance December 31, 1999                                                                         | 24,573,940   | $4,470,122       | 500,000  | $ 2,000     | $ 50,000     | $(3,925,582) | -          | $ 596,540  
|                                                                                                  |              |                  |          |             |              |              |            |            
|Issuance of common stock to vendors for goods and services Sec. 144 restricted shares             | 2,554,974    | 415,118          | -        | -           | -            | -            | -          | 415,118    
|                                                                                                  |              |                  |          |             |              |              |            |            
|Issuance of common stock inexchange for debt pay off.Sec.144 restricted shares                    | 33,207       | 8,302            | -        | -           | -            | -            | -          | 8,302      
|                                                                                                  |              |                  |          |             |              |              |            |            
|Issuance of common stock for notes/stock subscriptions receivable Sec.144 restricted
      shares | 1,005,000    | 200,500          | -        | -           | -            | -            | (500)      | 200,000    
|                                                                                                  |              |                  |          |             |              |              |            |            
|Issuance of stock for purchase of mining properties and claims Sec.144 restricted
      shares    | 3,000,000    | 600,000          | -        | -           | -            | -            | -          | 600,000    
|                                                                                                  |              |                  |          |             |              |              |            |            
|Issuance of common stock for cash                                                                 | 5,000,000    | 700,000          | -        | -           | 50,000       | -            | -          | 700,000    
|                                                                                                  |              |                  |          |             |              |              |            |            
|Preferred stock converted to common shares                                                        | 583,000      | 230              | (58,300) | (230)       | 58,300       | -            | -          | 58,300     
|                                                                                                  |              |                  |          |             |              |              |            |            
|Net loss for the year ended December 31, 1999                                                     |              | -                | -        | -           | -            | (1,112,023)  | -          | (1,112,023)

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

---

GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

STATEMENTS OF STOCKHOLDERS EQUITY

FOR THE PERIODS ENDED DECEMBER 31, 2001 AND 2000

AND INCEPTION (JUNE 2, 1997) TO DECEMBER 31, 2001

|                                                                  |              |                  |          |             | Additional   |              | Stock      |            
|----------------------------------------------------------------- | ------------ | ---------------- | -------- | ----------- | ------------ | ------------ | ---------- | -----------
|                                                                  | Common Stock | Preferred Shares | Paid-In  | Accumulated | Subscription |             
|                                                                  | Shares       | Amount           | Shares   | Amount      | Capital      | Deficit      | Receivable | Total      
|Balance December 31, 2000                                         | 36,750,121   | $6,394,272       | 441,700  | $ 1,770     | $ 108,300    | $(5,037,605) | $ (500)    | $ 1,466,237
|                                                                  |              |                  |          |             |              |              |            |            
|Issuance of common stock to vendors for goods and services        | 3,000,894    | 387,635          | -        | -           | -            | -            | -          | 387,635    
|                                                                  |              |                  |          |             |              |              |            |            
|Issuance of common stock inexchange for debt pay off.             | 50,000       | 10,000           | -        | -           | -            | -            | -          | 10,000     
|                                                                  |              |                  |          |             |              |              |            |            
|Issuance of common stock for notes/stock subscriptions receivable | 500,000      | 44,500           | -        | -           | -            | -            | (44,000)   | 500        
|                                                                  |              |                  |          |             |              |              |            |            
|Issuance of common stock for cash                                 | 3,717,647    | 445,000          | -        | -           | -            | -            | -          | 445,000    
|                                                                  |              |                  |          |             |              |              |            |            
|Preferred stock converted to common shares                        | 154,000      | 230              | (15,400) | (62)        | 15,400       | -            | -          | 15,568     
|                                                                  |              |                  |          |             |              |              |            |            
|Net loss for the year ended December 31, 2000                     |              | -                | -        | -           | -            | (1,661,325)  | -          | (1,661,325)
|                                                                  |              |                  |          |             |              |              |            |            
|Balance December 31, 2001                                         | 44,172,662   | $7,281,637       | 426,300  | $ 1,708     | $ 123,700    | $(6,698,930) | $ (44,500) | $ 663,615  

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

---

GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED DECEMBER 31, 2001 AND 2000

AND INCEPTION (JUNE 2, 1997) TO DECEMBER 31, 2001

Cumulative
    During Development Stage
    2001
    2000Cash Flows From Operating ActivitiesNet Loss
    $ (6,700,367)
    (1,662,762)
    (1,112,023)Adjustments to reconcile net loss to net cash used in operating
        activitiesDepreciation and amortization
    228,471
    145,893
    36,804(Loss) gain on sale of fixed assets
    (2,551)
    -
    -Common stock issued for goods and services
    1,731,002
    397,635
    423,420Preferred stock issued for goods and services
    2,000
    -
    -(Increase) Decrease in accounts receivable
    (75,694)
    (56,015)
    6,000(Increase) Decrease in prepaid expenses
    (35,877)
    8,377
    (42,153)(Increase) Decrease in employee advances
    (2,371)
    (3,526)
    1,155(Increase) Decrease in accrued interest receivable
    (941)
    (941)
    -(Increase) Decrease in deposits
    (6,377)
    393,623
    (400,000)Increase (Decrease) in accounts payable
    398,794
    156,844
    9,324Gain on extinguishment of debt
    22,331
    -
    22,331Increase in accrued liabilities
    327,707
    57,774
    90,882Increase in accrued interest payable
    58,201
    58,201
    -Increase in accrued royalties
    30,000
    30,000
    -(Decrease) in incorporation costs
    (1,155)
    -
    -Fixed assets exchanged for goods and services
    55,982
    -
    -(Increase) in deferred exploration and development costs
    (462,710)
    (76,107)
    (322,385)(Increase) in options
    (25,000)
    -
    -Deferred income tax (benefit)
    -
    -
    -Net Cash (Used) in Operating Activities
    (4,458,555)
    (551,004)
    (1,286,645)Cash Flows (Used) Provided by Investing
    ActivitiesPurchase of property and equipment
    (665,165)
    (65,201)
    (430,703)Proceeds from fixed asset sales
    34,965
    -
    -Purchase of mining properties and claims
    (212,291)
    -
    -Purchase of joint venture
    (550,000)
    -
    -Net Cash (Used) by Investing Activities
    (1,392,491)
    (65,201)
    (430,703)




---

GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED DECEMBER 31, 2001 AND 2000

AND INCEPTION (JUNE 2, 1997) TO DECEMBER 31, 2001

Cumulative During
    Development Stage
    2001
    2000Cash Flows From (For)
    Financing ActivitiesProceeds from convertible
    notes payable
    485,000
    -
    485,000Principal payments on
    capital lease obligations
    (15,986)
    (7,229)
    (4,278)Proceeds from notes payable
    - stockholders
    728,900
    105,500
    -Payments on notes payable -
    stockholders
    (16,300)
    (10,000)
    -Payments on long-term debt
    (501,746)
    (384,859)
    -Proceeds from notes payable
    732,756
    220,100
    512,656Additional paid in capital
    73,700
    15,400
    58,300Net proceeds from sale of
    common stock
    4,365,065
    639,000
    700,000Net Cash Provided by
    Financing Activities
    5,851,389
    577,912
    1,751,678Net Increase in Cash
    343
    (38,293)
    34,330Cash at Beginning of Period
    -
    38,636
    4,306Cash at End of Period
    $ 343
    $ 343
    $ 38,636




SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cumulative During
    Development Stage
    2001
    2000Cash Paid for Interest
    $ 292,612
    $ 219,480
    $ 46,516Cash Paid for Income Taxes
    $ -
    $ -
    $ -




---

GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

FOR THE PERIODS ENDED DECEMBER 31, 2001 AND 2000

AND INCEPTION (JUNE 2, 1997) TO DECEMBER 31, 2001

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

During the year ended December 31, 2001, the net change in unrealized
gains (losses) of available-for-sale securities was $1,437.



Cumulative During
    Development Stage
    2001
    2000Reduction in debt due to renegotiation of joint venture contract
    $ 200,000
    $ -
    $ -Common stock issued for debt payment
    401,415
    10,000
    8,302Common stock issued for stockholder debt payment
    195,000
    -
    -Common stock issued for joint venture purchase
    100,000
    -
    -Common stock issued for mining property purchase
    600,000
    -
    600,000Property plant and equipment purchased through debt
      assumed
    382,400
    -
    382,400


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

---

GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 1 - DESCRIPTION OF BUSINESS AND FINANCING REQUIREMENTS

Organization

Golden Phoenix Minerals. Inc. was incorporated under the laws of
Minnesota on June 2, 1997. The company is engaged in the exploration of minerals and its
primary activities are the exploration and development of precious and base metals in the
western United States and Alaska. Golden Phoenix Minerals, Inc. controls its exploration
properties through ownership, leases, mining claims and joint ventures. The Company is
planning exploration and development of selected properties to positive feasibility. The
Company will also provide joint ventures to other large mining companies.

The Company is in the development stage and has generated little
revenue. It has been funded primarily through stock sales and loans from officers and
shareholders. The Companys prospects are subject to the risks, expenses and
uncertainties frequently encountered in the mining exploration industry. These risks
include the volatility of mineral prices and the ability to explore and develop profitable
mining properties.

The Company has experienced losses since its inception in 1997 and had
an accumulated deficit at December 31, 2001. The Companys ability to accomplish its
business strategy and to ultimately achieve profitable operations is dependent upon its
ability to obtain additional financing and execute its business plan. The Company intends
to have an ongoing program to obtain outside financing for its exploration and development
activities. Failure to raise additional capital when needed could have a material adverse
effect on the Companys business, results of operations and financial condition.
Ultimately, the Company will need to achieve profitable operations in order to continue as
a going concern. The company incurred a net loss of $1,662,762 and $1,112,023 for the
years ended December 31, 2001 and 2000, respectively, and has an accumulated deficit of
$6,700,367 as of December 31, 2001.

These conditions raise substantial doubt about the Companys
ability to continue as a going concern. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that may result
from the outcome of this uncertainty.

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

Cash and cash equivalents consist of cash balances and instruments with
maturities of three months or less at the time of purchase.

Concentrations

Concentration of Credit Risk - Financial instruments which
potentially subject the Company to credit risk consist primarily of cash in bank. The
Company maintains its cash in a bank deposit account insured by the Federal Deposit
Insurance Corporation (FDIC) up to $100,000. The Companys account at times, may
exceed federally insured limits.

Concentration of Operations - The Companys operations are all
related to the minerals exploration and mining industry. A reduction in mineral prices or
other disturbances in the minerals market could have an adverse effect on the
Companys operations.

During 2001 36% (31% in 2000) of revenues consisted of gold sales to
one party.

Financial Statement Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from these
estimates.

Property and Equipment

Property and equipment are stated at cost. Depreciation, which includes
amortization of assets recorded under capital leases, is calculated using the straight
line method over lives ranging from three (3) to forty (40) years.

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - Continued

Stock Options

The Company adopted SFAS No. 123, Accounting for Stock Based
Compensation, which is effective for fiscal years beginning after December 15, 1995,
or earlier as permitted. As provided by SFAS No. 123, the Company will continue to account
for employee stock options under Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees. The Company has disclosed the proforma net loss
and earnings per share effect as if the Company had used the fair value based method
prescribed under SFAS No. 123 in Note 19.

Property Acquisition and Deferred Mine Costs

Property acquisition and deferred mine costs are recorded at cost. On
the commencement of commercial production, depletion of each mining property will be
provided on the units of production basis using estimated proven and probable reserves as
the depletion basis.

Properties in Development

Upon determination that a mineral property can be economically
developed, costs incurred are capitalized until the assets are put in service, at which
time the capitalized costs are depreciated in accordance with the policies described
above.

Financing costs, including interest, are capitalized on the basis of
expenditures incurred for the acquisition and development of projects, without restriction
to specific borrowings for these projects, while the projects are actively being prepared
for proposed production. Capitalization is discontinued when the asset is ready for its
intended use.

Exploration Properties

Mineral exploration expenditures are expensed as incurred. Property
acquisition costs relating to exploration properties and expenditures incurred on
properties identified as having development potential are deferred on a project basis
until the viability of the project is determined. Costs associated with economically
viable projects are depreciated and amortized in accordance with the policies described
above. If a project is not viable, the accumulated project costs are charged to operations
in the year in which that determination is made.

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - Continued

Reclamation and Remediation Costs

Estimated future reclamation and remediation costs are based
principally on legal and regulatory requirements. Such costs related to active mines are
accrued and charged over the expected operating lives of the mines using the
unit-of-production method. Future reclamation and remediation costs for inactive mines are
accrued based on managements best estimate at the end of each period of the
undiscounted costs expected to be incurred at a site. Such cost estimates include, where
applicable, ongoing care, maintenance and monitoring costs.Changes in estimates
are reflected in earnings in the period an estimate is revised.

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, which established a uniform methodology for accounting for
estimated reclamation and abandonment costs. The statement will be adopted January 1,
2003, when the Company will record the estimated present value of reclamation liabilities
and increase the carrying amount of the related asset. Subsequently, the reclamation costs
will be allocated to expense over the life of the related assets and will be adjusted for
changes resulting from the passage of time and revisions to either the timing or amount of
the original present value estimate. The Company is in the process of quantifying the
effect of adoption.

Property Evaluations

The Company reviews and evaluates the recoverability of its properties
when events or changes in circumstances indicate that the carrying amount of a property
may not be recoverable. Estimated future net cash flows, on an undiscounted basis, from a
property are calculated using estimated recoverable ounces of minerals (considering
current proven and probable reserves and mineralization expected to be classified as
reserves); estimated future mineral price realization (considering historical and current
prices, price trends and related factors); and operating, capital and reclamation costs.
Reduction in the carrying value of property, plant and equipment, with a corresponding
charge to earnings, are recorded to the extent that the estimated future net cash flows
are less than the carrying value.

Estimates of future cash flows are subject to risks and uncertainties.
It is reasonably possible that changes in circumstances could occur which may affect the
recoverability of the Companys properties.

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - Continued

Income Taxes

The Company accounts for income taxes by the asset/liability approach
in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes.
Under this pronouncement, deferred income taxes, if any, reflect the estimated future tax
consequences when reported amounts of assets and liabilities are recovered or paid.
Deferred income tax assets and liabilities are determined based on differences between the
financial reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that are scheduled to be in effect when the differences are
expected to reverse. The provision for income taxes, if any, represents the total income
taxes paid or payable for the current year, plus the change in deferred taxes during the
year. The tax benefits related to operating loss carryforwards are recognized if
management believes, based on available evidence, that it is more likely than not that
they will be realized.

Net Loss Per Share

In February, 1997, the Financial Accounting Standards Board issued SFAS
No. 128, Earnings per Share. SFAS No. 128 simplifies the standards for computing
earnings per share ("EPS") and was effective for financial statements issued for
periods ending after December 15, 1997, with earlier application not permitted. Upon
adoption, all prior EPS data was restated.

Basic EPS is determined using net income divided by the weighted
average shares outstanding during the period. Diluted EPS is computed by dividing net
income by the weighted average shares outstanding, assuming all dilutive potential common
shares were issued.

Since the fully diluted loss per share for the years ended December 31,
2001 and 2000 was antidilutive, basic and diluted earnings per share are the same.
Accordingly options to purchase common stock at December 31, 2001 and 2000, of 4,395,764
and 5,840,671 shares, warrants to purchase common stock of 14,359,747 and 9,950,000 shares
and common shares potentially issuable upon conversion of preferred stock existing at the
end of 2001 of 4,263,000 and 2000 of 4,417,000 shares, were not included in the
calculation of diluted earnings per common share.

New Accounting Standards

In June, 1997, the Financial Accounting Standards Board issued SFAS No.
130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for
reporting and presentation of comprehensive income and its components in a full set of
general-purpose financial statements. This statement does not, however, require a specific
format for the disclosure but requires the Company to display an amount representing total
comprehensive income for the period in its financial statements. Comprehensive income is
determined by adjusting net income by other items not included as a component of net
income, such as the unrealized loss on marketable securities. The Company implemented SFAS
No. 130 for the year ended December 31, 1998. During 2001 and 2000, the Company did not
generate transactions considered part of "other comprehensive income."

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - Continued

New Accounting Standards - Continued

In June, 1997, the Financial Accounting Standards Board issued SFAS No.
131, Disclosures about Segments of an Enterprise and Related Information. SFAS No.
131 establishes standards for the manner in which public business enterprises report
information about operating segments in annual financial statements and requires that
those enterprises report selected information about operating segments in interim
financial reports issued to shareholders. This statement also requires that a public
business enterprise report financial and descriptive information about its reportable
operating segments. The Company has determined that segment disclosures are not
appropriate because the Company operates in only one segment.

In June 1999 and 2000, the Financial Accounting Standards Board issued
SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities-Deferral of
the Effective Date of FASB Statement No. 133, and SFAS No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities, respectively. These
statements require companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes in the values
of those derivatives would be accounted for depending on the use of the derivative and
whether it qualifies for hedge accounting. The adoption of these statements will have no
significant impact on the Companys financial position or results of operations.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101
("SAB 101"), Revenue Recognition in Financial Statements. SAB 101
provides guidance on the recognition, presentation, and disclosure of revenues in
financial statements of all public registrants. In October 2000, the SEC issued a
Frequently Asked Questions document related to SAB 101 which provides interpretive
guidance. The Company has adopted SAB 101 as it is a public registrant, however, the
adoption of SAB 101 is not expected to have a significant impact on the Companys
financial position or results of operations.

In June 2001, the FASB issued SFAS No. 141, Business Combinations.
SFAS No. 141 addresses the initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination. SFAS No. 141 is applicable to
business combinations beginning July 1, 2001. The adoption of this statement will have no
significant impact on the Companys financial position or results of operations.

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 addresses the recognition and measurement of goodwill
and other intangible assets subsequent to their acquisition. SFAS No. 142 also addresses
the initial recognition and measurement of intangible assets acquired outside of a
business combination whether acquired individually or with a group of other assets. This
statement provides that intangible assets with finite useful lives be amortized and that
intangible assets with indefinite lives and goodwill will not be amortized, but will
rather be tested at least annually for impairment. SFAS No. 142 will be effective for the
Companys fiscal year 2002.

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - Continued

New Accounting Standards - Continued

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, that established a single accounting
model, based on the framework of SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, for long-lived assets
to be disposed of by sale. The statement was adopted on January 1, 2002 and there was no
impact upon adoption.



NOTE 3 - BUSINESS ACQUISITIONS

Golden Phoenix Alaska, Inc., was incorporated on September 15, 1998
under the laws of the State of Nevada. Golden Phoenix Minerals, Inc. (the Company)
conveyed all of its property interests in Alaska to Golden Phoenix Alaska, Inc., in return
for 2,500,000 shares of stock of which 500,000 shares were resold in 1998.

In October of 1999, the Company exchanged 100% of its equity ownership
(approximately 72%) in Golden Phoenix Alaska, Inc., for an equity interest in the Cirque
Property (a joint venture with Camnor Resources). The Cirque Property has been recorded at
historical cost and no gain or loss was realized as part of the transaction. As part of
the agreement with Golden Phoenix Alaska, Inc., Dennis McDowells 500,000 shares in
Golden Phoenix Minerals, Inc., were purchased as Treasury Stock and later resold.

On November 7, 2000 the Company purchased the Mineral Ridge gold mine
located near Silver Peak, Nevada. The Company purchased the mine for $225,000 in cash and
assumed debt of approximately $382,400. The company had sales of minerals produced from
the prior operation of the mine of $35,145 in 2000. The Company plans to mine 648,000 tons
of ore production annually and estimates a total of 180,406 ounces of gold over the life
of the mine which is estimated to be 4.4 years with leaching scheduled for 6 years. The
Company assumed reclamation deposits of $900,000 and $19,874 for future reclamation when
they purchased the mine. They are currently negotiating a new reclamation bond for
approximately $3.1 million and have prepared a new reclamation plan which was accepted by
the Nevada Department of Environmental Protection and the Bureau of Land Management in
March, 2001. Golden Phoenix hopes to have all requirements for re-starting the mine
resolved by mid-2002.

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 4 - OPERATIONS - JOINT VENTURES

On September 19, 1997 the Company entered into a joint venture
agreement with Kennecott Exploration on its High Grade property located in Modoc County,
California. During 1998 the Company incurred $133,986 in exploration work. This project
was abandoned December 1998.

The Company entered into an agreement on August 21, 1997 with J. D.
Welsh & Associates to purchase an interest in a mineral property, situated in Mineral
County, Nevada, known as the Borealis property ("Borealis Property"). The Welsh
interest in the Borealis property was in a joint venture with Cambior Exploration USA,
Inc. ("Cambior"). Cambior has elected to terminate the joint venture due to
budgetary constraints on their US exploration program. The Company had the option to
purchase all of Welshs interest in Borealis over three years for a total of
$1,250,000 in payments. The purchase price for 65% ownership in the joint venture was
reduced to $1,050,000 in December of 1998 and the balance has been paid in full.

The Company, along with J. D. Welsh and Associates, Inc. signed a
simple joint operating agreement on December 31, 1999 which also increased the
Companys interest to 68%. On October 25, 2000 J. D. Welsh assigned its 32%
interest in Borealis to Newmex Nevada, Inc. In October 2000 Golden Phoenix Minerals, Inc.
acquired from Newmex Nevada Inc. its 32% interest in the Borealis project for
3,000,000 shares of Golden Phoenix Minerals Inc. common stock, and 3,000,000 of two year
warrants to purchase one additional share at a strike price of $0.13 per share. The shares
are restricted under SEC Rule 144.

As part of the agreement Newmex has purchased an additional 3,000,000
common shares and 3,000,000 two year $0.13 warrants for $600,000. The agreement requires
that the $600,000 be used for the purchase and operations of the Mineral Ridge Mine.
$600,000 was deposited in escrow account. At December 31, 2001 the Company has drawn
$600,000.

The Company acquired on September 18, 1997, an option to purchase 100%
of the issued and outstanding stock of F. W. Lewis, Inc. and Mina Gold Mine, Inc.
(Collectively "Lewis Companies") for an option payment of $250,000. The option
expired December 31, 1997 and was renewed on January 6, 1998 for an additional $250,000.
The Lewis Companies control in excess of 25,000 acres of mining properties consisting of
patented and unpatented mining claims, patented and unpatented mill sites, and fee lands
in Nevada, Colorado, and certain oil and gas interests in California. The purchase price
for the Lewis Companies and all their real and personal property assets was $20,000,000.
The option to purchase was terminated due to the inability to secure financing for the
$20,000,000 exercise price. F.W. Lewis, Inc., then granted Golden Phoenix Minerals, Inc.
an exploration license granting the Company the exclusive right and license to explore the
property terminating December 31, 2002. The agreement requires stock distributions of
$2,200,000 of Golden Phoenix, Inc., common stock and minimum work requirements totaling
$750,000. During 1999, the Company distributed $200,000 in Golden Phoenix, Inc. common
stock and incurred $358,374 in work requirements. The Company incurred $177,349 in work
requirements during 2000. F. W. Lewis has suspended the required stock distributions for
the current time.

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 4 - OPERATIONS - JOINT VENTURES - Continued

The Company has retained their interest in the Contact copper property
which is part of the F. W. Lewis portfolio. On January 28,1998 the Company entered into a
joint venture agreement with International Enexco Ltd. ("Enexco"). The Company
has the option to purchase 60% of the properties and the Contact Venture for a total of
$2,600,000 in Work Requirements and $313,000 in payments over a six year period. The
company paid $25,000 in option costs for the agreement in 1998. During 1999, the Company
incurred $387,820 in work requirements and $24,000 in cash and issued 24,000 shares of
stock for mining lease payments. During 2000, the Company incurred $177,349 in work
requirements and $48,000 in mining lease payments. During 2001, the Company incurred
$50,006 in work requirements and $32,000 in mining lease payments.

NOTE 5 - DEFERRED DEVELOPMENT COSTS

During 1999, the Company evaluated their Contact and Borealis
properties and determined, based on identified mine deposits, that these properties are
now in the development stage. Costs incurred after September 30, 1999, will be
capitalized. Such costs will be depreciated upon the commencement of commercial
production.

NOTE 6 - MARKETABLE SECURITIES

The Companys securities investments that are bought and held
principally for the purpose of selling them in the near term are classified as trading
securities. Trading securities are recorded at fair value on the balance sheet in current
assets, with the change in fair value during the period included in earnings.

Securities investments that the Company has the positive intent and
ability to hold to maturity are classified as held-to-maturity securities and recorded at
amortized cost in investments and other assets. Securities investments not classified as
either held-to-maturity or trading securities are classified as available-for-sale
securities. Available-for-sale securities are recorded at fair value in investments and
other assets on the balance sheet, with the change in fair value during the period
excluded from earnings and recorded net of tax as a separate component of equity. All
marketable securities held by the Company have been classified as available-for-sale
securities.

Investments in securities are summarized as follows at December 31,
2001:

|                               | Gross      | Gross      | Fair   
|------------------------------ | ---------- | ---------- | -------
|                               | Unrealized | Unrealized | Market 
|                               | Gain       | Loss       | Value  
|Available-for-sale securities: |            |            |        
|Common stock                   | $ 1,437    | $ -        | $ 3,138

There were no realized gains or losses on securities classified as
available for sale during 2001 and 2000.

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 7 - NOTES PAYABLE TO RELATED PARTIES

Short term notes payable to related parties consisted of the following
amounts at December 31:

|                                                                                                                                                    | 2001     | 2000    
|--------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------
|                                                                                                                                                    |          |         
|Notes payable to stockholders,
    non-interest bearing, interest imputed at 8%, principal and unpaid accrued interest due on
    demand, unsecured | $422,100 | $422,100
|                                                                                                                                                    |          |         
|Other notes payable to employees and
    stockholders                                                                                               | 5,500    | -       
|                                                                                                                                                    | $427,600 | $422,100

The Company incurred related party interest expense of $28,140 and
$28,140 for the years ended December 31, 2001 and 2000, respectively.

NOTE 8 - OPTIONS

The Company had the following options at December 31:

|                                                    | 2001    | 2000   
|--------------------------------------------------- | ------- | -------
|                                                    |         |        
|International Enexco Inc. Contact joint
    venture | $25,000 | $25,000





NOTE 9 - MINING PROPERTIES AND CLAIMS

The Company had the following mineral rights and claims at December 31:

|                                      | 2001       | 2000      
|------------------------------------- | ---------- | ----------
|                                      |            |           
|Cirque Propert - Alaska               | $ 210,591  | $ 212,591 
|Borealis                              | $1,650,000 | $1,650,000
|Borealis - deferred development costs | $ 108,400  | $ 82,299  
|Contact - deferred development costs  | $ 354,309  | $ 304,303 



---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 10 - PROPERTY AND EQUIPMENT

Property and Equipment consisted of the following at December 31:

|                               | 2001      | 2000     
|------------------------------ | --------- | ---------
|                               |           |          
|Land                           | $ 57,600  | $ 57,600 
|Computer equipment             | 43,083    | 43,083   
|Trucks                         | 136,656   | 136,656  
|Office furniture and equipment | 16,516    | 16,516   
|Equipment under capital lease  | 48,892    | 17,032   
|Mining equipment               | 550,585   | 517,244  
|Building                       | 100,000   | 100,000  
|                               | 953,332   | 888,131  
|Less: Accumulated Depreciation | (214,561) | (68,899) 
|                               | $ 738,771 | $ 819,232



The following property and equipment, included above, was for the
Mineral Ridge Mine operation at December 31:

|                               | 2001      | 2000     
|------------------------------ | --------- | ---------
|                               |           |          
|Land                           | $ 57,600  | $ 57,600 
|Trucks                         | 136,656   | 136,656  
|Mining equipment               | 550,585   | 517,244  
|Building                       | 100,000   | 100,000  
|                               | 781,244   | 747,903  
|Less: Accumulated Depreciation | (165,305) | (16,386) 
|                               | $ 615,939 | $ 731,517



---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 11 - ORGANIZATION COSTS

Organization costs are being amortized over five years. The balance at
December 31 is as follows:

|                              | 2001    | 2000   
|----------------------------- | ------- | -------
|                              |         |        
|Organization costs            | $ 1,155 | $ 1,155
|Less accumulated amortization | (1,040) | (809)  
|                              | $ 115   | $ 346  

Amortization expense for the years ended December 31, 2001 and 2000
amounted to $231 each year.

NOTE 12 - ACCRUED LIABILITIES

Accrued liabilities consisted of the following at December 31:

|                                         | 2001      | 2000     
|---------------------------------------- | --------- | ---------
|                                         |           |          
|Accrued payroll and related
    expenses | $ 207,341 | $ 133,678
|Other accrued liabilities                | -         | 15,889   
|                                         | $ 207,341 | $ 149,567

NOTE 13 - LONG TERM DEBT

Long term debt consisted of the following:

|                                                                                                                                                                                                                                                                                    | 2001      | 2000     
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ---------
|                                                                                                                                                                                                                                                                                    |           |          
|Convertible notes payable
    dated January - April, 2000, interest at 12% per annum with accrued interest and principal
    due 2005, five years from issue date. The notes are convertible into restricted common
    shares of Golden Phoenix Minerals, Inc. at $0.20 per share. | $ 485,000 | $ 485,000
|Note payable to NewMex Nevada, Inc. dated
    November 7, 2000, interest at 24% per annum, interest and principal due February 5, 2001,
    with option to extend due date.                                                                                                         | 400,000   | 400,000  
|Capital lease payable to IKON Capital
    Resources, dated October 15, 1997 payable at $250.38 per month, including interest imputed
    at 15.2% per annum, maturity November, 2002, secured by certain computer equipment,
    personally guaranteed by a shareholder.            | 5,130     | 8,277    



---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 13 - LONG TERM DEBT - Continued

|                                                                                                                                                                                                                                                                  | 2001      | 2000     
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ---------
|                                                                                                                                                                                                                                                                  |           |          
|Capital lease payable to
    Compaq Financial Services, dated August 1, 2001, payable at $1,596.75 per month, including
    taxes and fees and interest imputed at 17.18% per annum, maturity August 1, 2005, secured
    partially by certain computer equipment | $ 49,937  | $ -      
|Capital lease payable to CIT Financial
    Services, dated August 21, 2001, payable at $1,409.19 per month, including interest
    imputed at 20.481% per annum, maturity August 5, 2005, secured partially by certain
    computer equipment                     | 44,660    | -        
|Capital lease payable to Heller Financial
    Leasing, dated July 5, 2001, payable at $1,195.41 per month, including interest imputed at
    18.9% per annum, maturity July 5, 2006, secured by certain computer equipment                                        | 18,501    | -        
|Note payable to GMAC, dated November 17,
    2000, payable at $672.58 per month including interest at 3.9% per annum through December,
    2004, secured by a 2001 GMC Sierra truck                                                                               | 23,491    | 29,798   
|Note payable to GMAC, dated November 17,
    2000, payable at $672.58 per month including interest at 3.9% per annum through December,
    2004, secured by a 2001 GMC Sierra truck.                                                                              | 23,491    | 29,799   
|Note payable to GMAC, dated November 17,
    2000, payable at $599.51 per month including interest at 3.9% per annum through December,
    2004, secured by a 2001 GMC Sierra truck.                                                                              | 20,939    | 26,561   
|Note payable to Craig & Diana Drossel,
    dated August 28, 2001, payable at $8133..26 per month, including interest at 15% per annum
    through August 31, 2002.                                                                                                | 90,000    | -        
|Note payable to GMAC, dated November 17,
    2000, payable at $598.08 per month including interest at 3.9% per annum through December,
    2004, secured by a 2000 GMC Sierra truck.                                                                              | 20,889    | 26,498   
|                                                                                                                                                                                                                                                                  | 1,182,038 | 1,005,933
|Less: Current portion of long term debt                                                                                                                                                                                                                           | (541,424) | (431,114)
|                                                                                                                                                                                                                                                                  | 640,614   | 574,820  



---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 13 - LONG TERM DEBT - Continued

Maturities on long term debt are as follows:

Year Ended
    December 31,2002
    $541,4242003
    53,5072004
    59,9272005
    519,1402006 and thereafter
    8,040$1,182,038




NOTE 14 - COMMITMENTS

Leases

The Company leases its facilities under a non-cancelable operating
lease expiring July 31, 2002. The following is a schedule, by years, of the future minimum
lease payments under operating leases, together with the net minimum lease payments as of
December 31, 2001.



Year ended December 31, 2002
             $ 16,720

Rental expense for all operating leases was $26,274 and $45,742 for
the years ended December 31, 2001 and 2000, respectively.

The Company sub-leased a portion of its office space to Whitney &
Whitney, Inc., a related party under a non-cancelable operating lease which expired July
31, 2000. Sub-lease income was $17,577 for the year ended December 31, 2000.

Capital Leases

The Company has computer equipment with a net book value of $30,977
(accumulated depreciation of $6,881) under capital leases at December 31, 2001. Deposits
made on the new capital leases in 2001, were $5,611.

The Company also has a copier with a net book value of $5,430
(accumulated depreciation of $11,602) under capital leases at December 31, 2001.

Minimum future lease payments under the capital leases as of December
31, 2001, is as follows:



---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 14 - COMMITMENTS - Continued



Year Ended
    December 31,2002
    $ 54,2412003
    50,2182004
    49,4132005
    42,0552006 and thereafter
    10,759206,686Less: amount representing interest
    (88,457)Present value of minimum lease payments
    $ 118,229


Mining Lease - Borealis Project

The Company leases mining property in Mineral County, Nevada, known as
the Borealis Property. The lease is cancelable within 90 days. Future lease payments as of
December 31, 2001 are as follows:

2002
                                  
$ 96,000

For years after 2002, the lease continues at $8,000 per month with
adjustments based upon the consumer price index, with no expiration of the lease.

Mining Lease - F.W. Lewis Contact Property

The Company leases mining property in Elko County, Nevada, known as the
Contact Property, as part of a joint venture agreement. The lease is cancelable within 30
days. Future lease payments as of December 31, 2001 are as follows:

2002
                                    
$ 30,000

Mining Lease - International Enexco Limited - Contact

The Company also leases mining property in Elko County, Nevada, known
as the Contact Property as part of a joint venture agreement with International Enexco.
The lease is cancelable within thirty days. Future lease payments as of December 31, 2001
were as follows:

Years Ended

December 31,

2002
                                                                  
$ 48,000

2003
                                                                     
48,000

2004
                                                                     
48,000



---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 14 - COMMITMENTS - Continued

Royalty Agreement - Mary Mining Company, Inc.

As part of the purchase of the Mineral Ridge Mine, the Company
assumed a net smelter returns royalty agreement with Mary Mining Company, Inc. The
agreement calls for a production royalty of the net smelter returns. The royalty
percentage rate is based on the price of gold per troy ounce.

Price of Gold per Troy Ounce                                                       
Royalty Percentage Rate

Less than or equal to $300 U.S.
                                                                   
2.5%

Greater than $300, but less than or equal to $325
                                           3%

Greater than $325, but less than or equal to $350
                                           3.5%

Greater than $350, but less than or equal to $375
                                           4%

Greater than $375, but less than or equal to $400
                                           4.5%

Greater than $400, but less than or equal to $500
                                           5%

Greater than $500, but less than or equal to $600
                                           5.5%

Greater than $600, but less than or equal to $800
                                           6%

Greater than $800, but less than or equal to $1,000
                                        7%

Greater than $1,000
                                                                                       8%

The Company is required to pay a minimum advance royalty of $60,000 per
year due July of each year, which shall be credited cumulatively against the production
royalty payments.

The Company paid $43,562 for its pro-rata share for 2000/2001. The
minimum advance royalty for 2001/2002 is currently outstanding.

Electric Service Agreement - Mineral Ridge Mine

On November 7, 2000, the Company assumed the electric services and
utilities agreement between Mineral Ridge Resources, Inc. and Sierra Pacific Power Company
in conjunction with the purchase of the Mineral Ridge Mine. The original agreement was
dated July 11, 1997. The agreement calls for monthly payments of $24,358 through July,
2002. The Company has deposited $400,000 with Sierra Pacific Power Company to guarantee
payment of the contract. The total amount due was paid during 2001, through application of
the deposited amount.

Environmental Obligations

As part of the purchase of the Mineral Ridge Mine, the Company is
responsible for future reclamation costs. The Company has prepared a reclamation plan for
$1.8 million dollars which was approved by the Nevada Department of Environmental
Protection and the Bureau of Land Management in March of 2001. The estimated future
reclamation and remediation cost are accrued and will be charged over the expected
operating life of the mine using the unit-of-production method.



---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 15 - STOCKHOLDERS EQUITY

Common Stock

As of December 31, 2001, the Company has reserved a total of
5,005,839 shares of common stock pursuant to outstanding stock options. No options were
exercised during 2000 or 2001.

Preferred Stock

The authorized number of preferred shares is 50,000,000 of which
426,300 of section 144 restricted shares were issued and outstanding as of December 31,
2001. Preferred stock is convertible to ten restricted common shares for every one
preferred share at a conversion rate of .10 shares per common share for a period of ten
years from June 12, 1997. At December 31, 2001 the Company was offering to buy back the
preferred shares from the shareholders. During 2000, 58,300 shares were converted to
583,000 shares of common stock. During 2001, 15,400 shares were converted to 154,000
shares of common stock.

Redeemable Common Stock Warrants

Warrants for the purchase of common shares that were issued and
outstanding as of December 31, 2001 are summarized below:

Number of Warrants
    Exercise Price
    Year of Expiration2,100,000
    0.10
    20026,000,000
    0.13
    2002750,000
    0.10
    2003175,000
    0.15
    2003117,647
    0.85
    2004967,100
    0.10
    200414,359,747




NOTE 16 - RELATED PARTY TRANSACTIONS

During 1998, various employees and shareholders exercised 1,095,642
of options for $118,405. Notes payable to stockholders at December 31, 2001 and 2000,
consisted of unsecured short-term notes at 8% interest in the amount of $422,100.

The Company sub-leased part of its office space to Whitney &
Whitney, Inc. The sublease expired in July, 2000. The Company has a consulting agreement
with Whitney & Whitney which has a term of three years beginning March 1, 1999 and may
be extended for an additional three years.

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 16 - RELATED PARTY TRANSACTIONS- Continued

The agreement calls for payments by Golden Phoenix Minerals, Inc.
of a minimum of $2,500 per month in restricted Golden Phoenix common shares. The agreement
may be terminated by either party upon 90 days written notice. Total services from Whitney
& Whitney were $149,628 for 2001 and $148,168 for 2000.

The President of Whitney & Whitney, Inc., Dr. Whitney, is a
shareholder of Golden Phoenix Minerals, Inc. At December 31, 2001, he owned approximately
11% of outstanding stock. Dr. Whitney has an agreement to acquire up to 10,000,000 common
shares of the Company. He has agreed to purchase up to 5,000,000 restricted common shares
at $0.10, each share accompanied by a 3 year warrant to purchase one additional share at
$0.10. Dr. Whitney has the right to transfer these options to others.

On November 7, 2000, the Company borrowed $400,000 from Newmex Nevada,
Inc., a shareholder in the Company. See Note 12.

NOTE 17 - INCOME TAXES

The income tax provision consists of the following at December 31:

|                                       | 2001 | 2000
|-------------------------------------- | ---- | ----
|                                       |      |     
|Current Federal Tax
    Expense        | $ -  | $ - 
|Deferred Federal Tax Benefit (Expense) | -    | -   
|Total Provision for Income Taxes       | $ -  | $ - 

Deferred income taxes are provided for the temporary differences
between the financial reporting basis and the tax basis of the Companys assets and
liabilities. The major temporary differences that give rise to the deferred tax
liabilities and assets are depreciation, net operating loss carryforwards and accrued
salaries.

The total deferred tax liabilities and assets are as follows:

|                                                                                   | 2001      | 2000     
|---------------------------------------------------------------------------------- | --------- | ---------
|                                                                                   |           |          
|Deferred tax assets                                                                | $ (3,004) | $ (2,261)
|Deferred tax assets                                                                | 985,053   | 734,895  
|Total valuation allowance recognized for deferred tax assets and
      liabilities | (982,049) | (732,634)
|Net Deferred Tax (Liability) Asset                                                 | $ -       | $ -      

Deferred income taxes arise from timing differences resulting from
income and expense items reported for financial accounting and tax purposes in different
periods. Deferred taxes are classified as current or noncurrent, depending on the
classification of the assets and liabilities to which they relate. Deferred taxes arising
from timing differences that are not related to an asset or liability are classified as
current or noncurrent depending on the periods in which the timing differences are
expected to reverse.

---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 17 - INCOME TAXES - Continued

The Company has available at December 31, 2001, unused operating
loss carryforwards, which may be applied against future taxable income, that expire as
follows:

Amount of Unused Operating
    Loss Carryforwards
    Expiration During Year Ended
    December 31$ 1,662,762
    20161,139,999
    2015658,624
    20141,648,493
    20131,452,185
    2012$ 6,560,626




The principal reasons for the difference between the effective
income tax rate and the federal statutory rate are as follows:

|                                               | 2001         | 2000       
|---------------------------------------------- | ------------ | -----------
|                                               |              |            
|Federal benefit expected
    at statutory rate | $ (249,414)  | $ (171,303)
|Operating losses with no current
    benefit   | 249,414      | 171,000    
|Accrued salaries                               | 315          | 938        
|Depreciation                                   | -            | (302)      
|Non-deductible expenses                        | (315)        | (333)      
|                                               | $          - | $         -



---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107,
"Disclosures About Fair Value of Financial Instruments" (SFAS No. 107), requires
disclosure of the fair value of financial instruments. The estimated fair value amounts
have been determined by the Company using available market value information and
appropriate methodologies. However, considerable judgement is required to interpret market
data to develop the estimates of fair value. Accordingly, the estimates may not be
indicative of the amount the Company could realize in a current market exchange. Estimated
fair values of the Companys financial instruments as of December 31, 2001 and
December 31, 2000 are the same as their carrying amount.

The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to estimate such
values:

For cash and cash equivalents, accounts receivable, notes payable and
capital leases, the carrying amount reported in the consolidated balance sheets is
considered to be a reasonable estimate of fair value based on interest rates of similar
financial instruments in the marketplace.



NOTE 19 - STOCK OPTIONS

The Company applies APB Opinion 25 in accounting for its stock
options. Compensation cost charged to operations was $0 in 2001 and 2000. Had compensation
cost been determined on the basis of fair value pursuant to FASB Statement No. 123, net
income (loss) and earnings per share would have been impacted as follows:

|                                     | 2001              | 2000             
|------------------------------------ | ----------------- | -----------------
|                                     |                   |                  
|Net Income (Loss)                    |                   |                  
|As
    reported                      | $
    (1,662,762) | $
    (1,112,023)
|Pro forma                            | $
    (1,662,762) | $
    (1,362,923)
|Basic and Diluted Earnings Per Share |                   |                  
|As reported                          | $ (.04)           | $ (.04)          
|Pro forma                            | $ (.04)           | $ (.05)          



---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 19 - STOCK OPTIONS - Continued

The pro forma amounts were estimated using the Black-Scholes option
pricing model with the following assumptions for 2001:

2001Dividend Yield
    0%Risk-Free Interest Rate
    6.50%Expected Life
    1-2.5 yearsExpected Volatility
    47.96%


Expected lives are equal to the remaining option terms for both
years, dividend yields are 0% since the Company does not intend to pay dividends on its
common stock in the near term.

Compensation expense that would have been charged to operations had the
provisions of FASB 123 been applied were $0 in 2001 and $250,900 in 2000.

Following is a summary of the status of options outstanding during the
years ended December 31, 2001 and 2000:

|                                       | YEAR ENDED 12-31-01 | YEAR ENDED 12-31-00         
|-------------------------------------- | ------------------- | ----------------------------
|                                       | #
    of Shares     | WeightedAverageExercisePrice
|Outstanding
    at January 1           | 5,840,671           | 0.25                        
|Granted                                | -                   |                             
|Canceled                               | -                   |                             
|Expired                                | (1,444,907)         | 0.46                        
|Exercised                              | -                   |                             
|                                       |                     |                             
|Outstanding at December 31             | 4,395,764           | 0.17                        
|Options
    exercisable at December 31 | 4,395,764           | 0.17                        
|                                       |                     |                             
|Weighted
    average fair value        |                     |                             
|of
    options granted during          |                     |                             
|2001 and
    2000                      | -                   | -                           



---



GOLDEN PHOENIX MINERALS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND 2000



NOTE 19 - STOCK OPTIONS - Continued

The following table summarizes information regarding stock options
outstanding at December 31, 2001:

Exercisable Options
    Outstanding OptionsExercise Price Range
    Number
    Weighted Average Remaining Contractual Life
    Weighted Average Exercise Price
    Number
    Weighted Average Exercise Price$
    0.15
    2,465,715
    *
    $ 0.15
    2,465,715
    $ 0.150.22
    1,930,049
    2.50
    years
    0.22
    1,930,049
    0.224,395,764
    
    
    4,395,764


* The term of these options is from the date of grant until six
months after all loans, advances or other debts due to the employees granted these options
have been paid in full.



NOTE 20 - CHANGES IN CLASSIFICATION AND COMPARABILITY

Certain reclassifications of amounts shown in previously issued financial
statements have been made to enhance comparability with current financial statements. None
of the reclassifications made resulted in a material change to any financial statement
amounts.



NOTE 21 - SUBSEQUENT EVENTS

In April 2002, the Company obtained a new letter of credit with Sunwest Bank for
$1.8 million which is fully collateralized by cash. This letter of credit is security
against the new bond obtained from the Department of the Interiors Bureau of Land
Management. The bond relates to the reclamation and remediation costs. See Note 14.

---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



GOLDEN
PHOENIX MINERALS, INC.

Date: July 22, 2002 
                                                                                        By:
/s/ Michael R. Fitzsimonds

Michael
R. Fitzsimonds

President
and Director

(Principal
Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.

Date: July 22, 2002 
                                                                                         By:
/s/ Michael R. Fitzsimonds

Michael
R. Fitzsimonds

President
and Director

(Principal
Executive, Financial and

Accounting
Officer)

Date: July 22, 2002 
                                                                                          By:/s/ Steven D. Craig

Steven
D. Craig

Vice
President, Secretary, and

Director

Date: July 22, 2002 
                                                                                         By:
/s/ Allen J. Marter

Allen
J. Marter

Director

Date: July 22, 2002
                                                                                           By:
/s/ David A. Caldwell

David
A. Caldwell

Director



---