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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 to

FORM 20-F

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

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

For the fiscal year ended December 31, 2002

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

For the transition period from            to

Commission file number 0-26854

METALLICA RESOURCES INC.

(Exact name of Registrant as specified in its charter)


METALLICA RESOURCES INC.

(Translation of Registrants name into English)


Canada

(Jurisdiction of incorporation or organization)


36 Toronto Street, Suite 1000, Toronto, Ontario, Canada M5C 2C5

(Address of principal executive offices)


Securities registered or to be registered pursuant to Section 12(b) of the Act.

|                         |  |                                               
|------------------------ |  | ----------------------------------------------
|Title of each
Class
NONE |  | Name of each exchange
on which registered
NONE
|                         |  |                                               

Securities registered or to be registered pursuant to Section 12(g) of the Act.

COMMON SHARES WITHOUT PAR VALUE

(Title of Class)


Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act.

NONE

(Title of Class)






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The number of outstanding shares of the issuers Common Shares, no par value,
as of May 5, 2003 was 42,555,010.

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

|        |  |        
|------- |  | -------
|Yes [X] |  | No [  ]

Indicate by check mark which financial statement item the registrant has elected to follow:

|            |  |             
|----------- |  | ------------
|Item 17 [X] |  | Item 18 [  ]

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GLOSSARY

advance royalty- The prepayment of a designated amount (the advance royalty)
prior to actual mine production. The advance royalty payments may be
deductible from future production royalties.

assay- an analysis to determine the presence, absence, and quantity of one or
more metallic components.

assessment report- reports on work performed on a property during a prior
period that is filed by companies and prospectors to keep claims in good
standing.

bedding- means the layering of sediments preserved in sedimentary rocks.

breccia- rock consisting of fragments, more or less angular, in a matrix of
finer-grained material or of cementing material.

brecciation- the breaking up of rock by geological forces.

buy-out- an option to the company to buy the prospectors interest in a
property for a specified sum of money or number of shares. Often a
prospectors retained interest is subject to a sizeable buy-out clause if the
property goes into production.

cretaceous- a period of geological time ranging from approximately 150 to 95
million years before present.

dacite- igneous rock which is fine grained or volcanic equivalent of
granodiorite and quartz diorite.

diamond drill (or core hole)- a type of rotary drill in which the cutting is
done by abrasion rather than by percussion. The drill cuts a core of rock
which is recovered in long cylindrical sections.

dyke- a tabular intrusion, meaning it is sheet or slab-like, and which cuts
across or through the host rocks. Dykes vary from a few centimeters to many
tens of meters in thickness and may extend for several kilometers.

ejido- an association of individuals who communally own and manage the rural
lands surrounding their village. Thousands of Ejidos were established in
Mexico in the 1920s as part of the Agrarian Reform Movement.

epigenetic- late formed.

exploration concession- a right granted by a governmental entity to explore a
prescribed area for minerals for a specified period. In the case of
exploration concessions granted by the Mexican Government, the grant is for a
non-extendable six-year term.

exploitation concession- a right granted by a governmental entity to exploit
or develop a prescribed area for a specified period. In the case of
exploitation concessions granted by the Mexican Government, the grant is for a
fifty-year period, which can be extended for an additional fifty years.

extractable metal- the part of the total content of a metal in a sample that
can be extracted by a given chemical treatment.

fault(s)- a break, or breaks in rocks with noticeable movement or displacement
of the rocks on either side of the break.

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fault breccia- refers to the crushed, angular rock fragments found in a fault
zone.

feasibility study- detailed engineering study to determine if a property can
be mined at a profit and the best way to mine it.

feldspar- a whitish mineral with a high aluminum and sodium or calcium
content, common in igneous and volcanic rocks.

floating cone evaluation- A computer-aided means of designing an open pit mine
based on a given set of economic parameters which include metal price, metal
recoveries, and operating costs.

folds- when forces are applied gradually to rocks over a long period of time,
the rocks fold instead of breaking or faulting.

g/t- grams per tonne

heap-leaching- a process whereby gold is recovered from ore by heaping broken
ore on sloping impermeable pads, repeatedly spraying the heaps with a diluted
cyanide solution which dissolves the gold content in the ore, collecting the
gold-laden solutions, and stripping the solution of gold.

hectare- a square of 100 meters on each side, or 2.471 acres.

igneous- means a rock formed by the cooling of molten material.

intrusion- general term for a body of igneous rock formed below the surface.

leach- the dissolution of soluble constituents from a rock or orebody by the
natural or artificial action of percolating solutions.

limestone- sedimentary rock that is composed mostly of mineral calcite.
Limestones are commonly grey, white, or off-white, and less commonly brownish,
red or black.

manto- a mineralized horizon controlled by and/or contained within the
sedimentary layering.

massive- means the rock or mineral specimen is essentially a mass without
other particular characteristics.

massive deposit- a deposit that contains a very high percentage of a mineral
or minerals and usually has an irregular to compact shape.

mineralization- material containing minerals of value.

mineralized deposit- a mineralized body which has been physically delineated
by drilling, underground work, surface trenching and other workings or drill
holes and found to contain a sufficient amount of mineralized material with an
average grade sufficient to warrant further evaluation. Such deposit does not
qualify as a commercially minable (or viable) ore body until technical,
economic and legal factors have been sufficiently satisfied to classify the
mineralized material as a reserve.

monzonite and quartz monzonite- fairly common members of the granite family
defined as having certain proportions of quartz, orthoclase, and plagioclase.

net profit interest- percent of profit earned after all costs to produce and
market the commodity.

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net smelter return (NSR)- a return based on the actual sale price received
less the cost of refining at an off-site refinery.

NSR- net smelter return.

open pit- a surface working open to daylight, such as a quarry.

open pit mining- the process of mining an ore body from the surface in
progressively deeper steps. Sufficient waste rock adjacent to the ore body is
removed to maintain mining access and to maintain the stability of the
resulting pit.

option agreement- an agreement with a company or another party who can
exercise certain options and increase their interest in a property by making
periodic payments to the optionor or by exploring, developing, or producing
from the optionors property.

ordinary kriging- A mathematical calculation procedure for estimating the
metal content of certain areas based on a data base of metal values and their
location.

ore- a natural aggregate of one or more minerals which, at a specified time
and place, may be mined and sold at a profit, or from which some part may be
profitably separated.

ounce (troy)- 31.103 grams.

ounces- troy ounces; in this report production figures refer to gold having a
fineness of at least 995 parts per 1,000 parts; other references to ounces in
this report do not refer to a specific fineness.

outlier restricted kriging- A special type of kriging which limits the
influence of higher data base values.

placer- a surficial mineral deposit (e.g., a gold deposit) formed by
mechanical concentration of mineral particles from weathered debris.

porphyry- a common igneous rock type that contains relatively large crystals
in a fine-grained ground mass.

probable ore- term used to describe ore where the mineralization has been
extensively explored and the size, shape, grade and tonnage are reasonably well
known.

probable reserves- reserves for which quantity and grade and/or quality are
computed from information similar to that used for proven reserves, but the
sites for inspection, sampling and measurement are farther apart or are
otherwise less adequately spaced. The degree of assurance, although lower than
that for proven reserves, is high enough to assume continuity between points of
observation.

proved ore- term used to describe ore where the mineralization has been
thoroughly explored and sampled so that the size, shape, grade and tonnage are
known accurately.

proven/probable reserves- reserves in which the difference in degree of
assurance between proven and probable cannot be reliably defined.

proven reserves- reserves for which quantity is computed from dimensions
revealed in outcrops, trenches, workings or drill holes; grade and/or quality
are computed from the results of detailed sampling; and the sites for
inspection, sampling and measurement are spaced so closely and the geologic
character is so well defined that size, shape, depth and mineral content of
reserves are well established.

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reclamation bond- usually required when mechanized work is contemplated. Used
to reclaim any workings or put right any damage, if the reclamation does not
satisfy applicable regulatory requirements. The amount of the bond is set
largely on the basis of the amount of surface disturbance proposed; the bond is
returned, plus accumulated interest, if the clean-up is satisfactory.

reserve- the estimated quantity of ore that can be economically mined and
legally extracted.

reverse circulation drill- a rotary percussion drill in which the drilling mud
and cuttings return to the surface through the interior of the drill pipe.

royalty interest- generally, a percentage interest that is tied to some
production unit such as tonne of concentrate or ounce of gold produced. A
common form of royalty interest is based on the net smelter return.

run-of-mine- a mining method whereby ore is placed on the heap leach pads
without being crushed.

sample- small amount of material that is supposed to be typical or
representative of the object being sampled.

sedimentary- a rock formed from cemented or compacted sediments.

sediments- the debris resulting from the weathering and breakup of
pre-existing rocks.

shale- a sedimentary rock consisting of silt or clay-sized particles cemented
together.

stock- an intrusion which has an exposed surface area of less than 100 square
kilometers (40 square miles).

stockworks- a large number of cross-cutting veins and veinlets.

strip ratio- the ratio of waste removed to ore processed.

tons- dry short tons (2,000 pounds).

Tonne- 1.102 tons (2,204 pounds).

tuff- a finer grained pyroclastic rock made up mostly of ashes.

variography study- A statistical evaluation of drill assay data to determine
the variability of assay results by their spatial relationships.

vein- generally, a fissure in the earth containing a body of minerals.

vein deposit- a deposit that is narrow compared to its length and depth and
usually occurs in fault openings or in fault or shear zones.

Whittle pit- A specific brand of computer software used for Floating Cone
evaluations.

working option- an agreement to do specified exploration work or spend a
specified amount of time or money on exploration, usually in several stages.
It can take a number of forms; a common one involves increasing cash payments
to the prospector and increased expenditures by the company at each stage. In
return the company increases its interest in the subject property. Working
options usually cover several stages through to production.

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TABLE OF CONTENTS



|                                                 |                                                                                      |  |  |  |  |  |  | 
|------------------------------------------------ | ------------------------------------------------------------------------------------ |  |  |  |  |  |  | 
|PART I                                          
|                                                 | ITEM 1 Identity of Directors, Senior Management and Advisors                        
|                                                 | ITEM 2 Offer Statistics and Expected Timetable                                      
|                                                 | ITEM 3 Key Information                                                              
|                                                 | ITEM 4 Information on the Company                                                   
|                                                 | ITEM 5 Operating and Financial Review and Prospects                                 
|                                                 | ITEM 6 Directors, Senior Management and Employees                                   
|                                                 | ITEM 7 Major Shareholders and Related Party Transactions                            
|                                                 | ITEM 8 Financial Information                                                        
|                                                 | ITEM 9 The Offer and Listing                                                        
|                                                 | ITEM 10 Additional Information                                                      
|                                                 | ITEM 11 Quantitative and Qualitative Disclosures About Market Risk                  
|                                                 | ITEM 12 Description of Securities Other than Equity Securities                      
|PART II                                         
|                                                 | ITEM 13 Defaults, Dividend Arrearages and Delinquencies                             
|                                                 | ITEM 14 Material Modifications to the Rights of Security Holders and Use of Proceeds
|                                                 | ITEM 15 Controls and Procedures                                                     
|                                                 | ITEM 16 Reserved                                                                    
|PART III                                        
|                                                 | ITEM 17 Financial Statements                                                        
|                                                 | ITEM 18 Financial Statements                                                        
|                                                 | ITEM 19 Exhibits                                                                    
|SIGNATURES                                      
|EX-1.2 Certificate of Continuance               
|EX-1.3 Articles of Continuance                  
|EX-1.4 By-Laws dated July 16, 2002              
|EX-4.11 Share Purchase Agreement                
|EX-8 Subsidiaries of the Company                
|EX-99.1 Certification of Chief Executive Officer
|EX-99.2 Certification of Chief Financial Officer



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TABLE OF CONTENTS

|                                  |  |                                                                              |  |     
|--------------------------------- |  | ---------------------------------------------------------------------------- |  | ----
|                                  |  |                                                                              |  | PAGE
|                                  |  |                                                                              |  |     
|PART I                            |  |                                                                              |  |     
|ITEM 1                            |  | Identity of Directors, Senior Management and Advisors                        |  | 1   
|ITEM 2                            |  | Offer Statistics and Expected Timetable                                      |  | 1   
|ITEM 3                            |  | Key Information                                                              |  | 1   
|ITEM 4                            |  | Information on the Company                                                   |  | 7   
|ITEM 5                            |  | Operating and Financial Review and Prospects                                 |  | 38  
|ITEM 6                            |  | Directors, Senior Management and Employees                                   |  | 42  
|ITEM 7                            |  | Major Shareholders and Related Party Transactions                            |  | 49  
|ITEM 8                            |  | Financial Information                                                        |  | 50  
|ITEM 9                            |  | The Offer and Listing                                                        |  | 51  
|ITEM 10                           |  | Additional Information                                                       |  | 53  
|ITEM 11                           |  | Quantitative and Qualitative Disclosures About Market Risk                   |  | 64  
|ITEM 12                           |  | Description of Securities Other than Equity Securities                       |  | 64  
|PART II                           |  |                                                                              |  |     
|ITEM 13                           |  | Defaults, Dividend Arrearages and Delinquencies                              |  | 64  
|ITEM 14                           |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 64  
|ITEM 15                           |  | Controls and Procedures                                                      |  | 65  
|ITEM 16                           |  | [Reserved]                                                                   |  | 65  
|PART III                          |  |                                                                              |  |     
|ITEM 17                           |  | Financial Statements                                                         |  | 66  
|ITEM 18                           |  | Financial Statements                                                         |  | 66  
|ITEM 19                           |  | Exhibits                                                                     |  | 66  
|Consolidated Financial Statements |  | F-1                                                                         
|Signatures                        |  | 68                                                                          

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PART I

Forward-Looking Statements

The statements in this document that relate to future plans, events or
performance are forward-looking statements. Actual results could differ
materially due to a variety of factors, including the factors described under
Risk Factors and the other risks described below. Metallica Resources Inc.
(the Company) undertakes no obligation to publicly update these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.




ITEM 1 Identity of Directors, Senior Management and Advisors

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this Item.




ITEM 2 Offer Statistics and Expected Timetable

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this Item.




ITEM 3 Key Information

A) Selected Financial Data

The following financial information has been extracted from the Companys
consolidated financial statements for the periods indicated and is expressed in
U.S. dollars. The information should be read in conjunction with Item 5.
Operating and Financial Review and Prospects  A. Results of Operations and 
 B. Liquidity and Capital Resources, and the consolidated financial
statements of the Company filed herewith.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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|                                                                       |  |      |         |      |  |                                       |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|---------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ------------------------------------- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                       |  |      |         |      |  | Year Ended December 31,               |         |      |  |     
|                                                                       |  |      |         |      |  | (in thousands, except per share data) |         |      |  |     
|                                                                       |  | 2002 |         | 2001 |  | 2000                                  |         | 1999 |  | 1998
|                                                                       |  |      |         |      |  |                                       |         |      |  |     
|Working capital                                                        |  | $    | 4,403   |      |  | $                                     | 2,318   |      |  | $    | 2,125   |   |  | $ | 3,208   |   |  | $ | 2,285   |  
|Investment                                                             |  |      |        |      |  |                                       |        |      |  |      |        |   |  |   |        |   |  |   | 1,555   |  
|Mineral properties and
deferred exploration                            |  |      | 12,587  |      |  |                                       | 11,787  |      |  |      | 14,551  |   |  |   | 23,607  |   |  |   | 24,220  |  
|Fixed assets, net                                                      |  |      | 92      |      |  |                                       | 93      |      |  |      | 199     |   |  |   | 234     |   |  |   | 273     |  
|Total assets                                                           |  |      | 17,491  |      |  |                                       | 14,769  |      |  |      | 17,475  |   |  |   | 27,606  |   |  |   | 31,980  |  
|Long-term note
payable                                                 |  |      |        |      |  |                                       |        |      |  |      | 25      |   |  |   | 200     |   |  |   | 450     |  
|Long-term provision for
reclamation reserve                            |  |      |        |      |  |                                       |        |      |  |      | 75      |   |  |   | 75      |   |  |   |        |  
|Deferred tax liability                                                 |  |      |        |      |  |                                       |        |      |  |      |        |   |  |   | 2,386   |   |  |   | 2,386   |  
|Net assets                                                             |  |      | 17,088  |      |  |                                       | 14,304  |      |  |      | 16,911  |   |  |   | 24,411  |   |  |   | 25,666  |  
|Share capital                                                          |  |      | 43,068  |      |  |                                       | 38,964  |      |  |      | 37,745  |   |  |   | 37,646  |   |  |   | 36,488  |  
|Deficit                                                                |  |      | (25,980 | )    |  |                                       | (24,660 | )    |  |      | (20,834 | ) |  |   | (13,235 | ) |  |   | (10,822 | )
|Interest income                                                        |  |      | 65      |      |  |                                       | 70      |      |  |      | 153     |   |  |   | 177     |   |  |   | 288     |  
|General and
administrative expenses                                    |  |      | 924     |      |  |                                       | 743     |      |  |      | 722     |   |  |   | 1,013   |   |  |   | 1,041   |  
|Exploration expense                                                    |  |      | 247     |      |  |                                       | 199     |      |  |      | 214     |   |  |   | 249     |   |  |   | 517     |  
|Reclamation and property
closure costs                                 |  |      | 199     |      |  |                                       | 51      |      |  |      |        |   |  |   |        |   |  |   |        |  
|Write-down of mineral
properties and deferred
exploration
expenditures |  |      | 21      |      |  |                                       | 2,892   |      |  |      | 6,670   |   |  |   | 21      |   |  |   | 90      |  
|Write-down of investment                                               |  |      |        |      |  |                                       |        |      |  |      | 143     |   |  |   | 1,303   |   |  |   |        |  
|Loss for the year                                                      |  |      | (1,320  | )    |  |                                       | (3,826  | )    |  |      | (7,599  | ) |  |   | (2,413  | ) |  |   | (1,371  | )
|Basic and diluted loss per share                                       |  |      | (0.04   | )    |  |                                       | (0.14   | )    |  |      | (0.28   | ) |  |   | (0.10   | ) |  |   | (0.06   | )
|Dividends per share                                                    |  |      |        |      |  |                                       |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|Weighted average number of
shares outstanding                          |  |      | 31,295  |      |  |                                       | 27,291  |      |  |      | 27,016  |   |  |   | 24,685  |   |  |   | 24,347  |  

The consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles (GAAP), which differ in
certain respects from those principles that the Company would have followed had
its consolidated financial statements been prepared in accordance with United
States GAAP. Significant measurement differences that materially affect these
consolidated financial statements are as follows:



| |  |  | For United States GAAP, the Company has elected to continue to
account for stock options using the intrinsic value method allowed by
existing accounting pronouncements effective both in Canada and in the
United States. As such, there are no differences in accounting for
stock options.                                                                                                                                                                                                                                                                  
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Canadian GAAP allows for the deferral of exploration expenditures.
For United States GAAP, the Company expenses, as incurred, costs
relating to unproven mineral properties. When proven and probable
reserves are determined for a property and a feasibility study has been
prepared, then subsequent exploration and development costs of the
property would be capitalized. The capitalized costs of such
properties would then be measured periodically for recoverability of
carrying values under Statement of Financial Accounting Standard (SFAS)
144.

2



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| |  |  | Under United States GAAP, available-for-sale securities are
recorded at fair value and unrealized gains and losses are recorded as
a separate component of shareholders equity. Losses are realized
within earnings when the unrealized loss is considered to be a result
of an other than temporary movement in the value of the investment.
Under Canadian GAAP, investments in long-term marketable securities are
not written down to fair value unless the impairment is considered
other than temporary; however, investments in short-term marketable
securities are written down to their fair value with a charge to
income. At December 31, 1998, the Companys investment in equity
securities was classified as a long-term investment under Canadian GAAP
and carried at its historical cost of $1,555,032 since the decline in
fair value was considered by management to be temporary. Under United
States GAAP the investment was recorded at its fair value of $986,241
with the unrealized loss recorded within equity. During 1999 the
Company reclassified its long-term investment to a current asset and
under Canadian GAAP recorded the investment at its fair value, which
resulted in a write-down of $1,303,351 for the year ended December 31,
1999. An equivalent amount has been included within the loss under
United States GAAP as the Company considers the reduction in the
investment to be other than temporary. The investment was sold during
2000.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Canadian GAAP provides for write-downs on the carrying value of the
Companys mineral properties and deferred exploration expenditures on a
non-discounted cash flow basis when these assets have become impaired.
At December 31, 2000, due to depressed gold and silver prices the
Company determined that a $6,670,194 write-down to the carrying value
of the Cerro San Pedro project was required. Under United States GAAP,
which requires write-downs for impairment to be on a discounted cash
flow basis, the carrying value of the Cerro San Pedro project was
written down to the estimated present value of the projects future
cash flows of $3,559,787, resulting in a United States GAAP write-down
of $14,110,407. During the year ended December 31, 2002, the Company
wrote-off $99,762 of mineral property acquisition costs on unproven
mineral properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  |  | Canadian GAAP provides for investments in jointly controlled
entities to be accounted for using proportionate consolidation. Under
United States GAAP, investments in incorporated joint ventures are to
be accounted for using the equity method. Under an accommodation of
the United States Securities and Exchange Commission, the accounting
for joint ventures need not be reconciled from Canadian to United
States GAAP. The different accounting treatment affects only the
display and classification of financial statement items and not net
income or shareholders equity. Details of the Companys share of the
assets, liabilities and cash flows of the MSX joint venture are set out
in Note 3(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Had the Company followed United States GAAP, certain items in the statements of
operations and deficit and balance sheets would have been reported as follows:

|                                                                       |  |                                       |        |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        |  
|---------------------------------------------------------------------- |  | ------------------------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------- | - |  | - | ------ | - |  | - | ------ | -
|                                                                       |  | Year Ended December 31,              
|                                                                       |  | (in thousands, except per share data)
|                                                                       |  | 2002                                  |        | 2001 |  | 2000 |        | 1999 |  | 1998
|                                                                       |  |                                       |        |      |  |      |        |      |  |     
|Mineral properties and
deferred exploration
expenditures               |  | $                                     | 3,689  |      |  | $    | 3,476  |      |  | $    | 4,589   |   |  | $ | 19,023 |   |  | $ | 18,944 |  
|Shareholders equity                                                   |  |                                       | 8,045  |      |  |      | 5,849  |      |  |      | 6,804   |   |  |   | 19,827 |   |  |   | 21,459 |  
|Write-down of mineral
properties and deferred
exploration expenditures |  |                                       | 8      |      |  |      | 927    |      |  |      | 12,071  |   |  |   |       |   |  |   |       |  
|Exploration expense                                                    |  |                                       | 848    |      |  |      | 564    |      |  |      | 335     |   |  |   | 1,260  |   |  |   | 1,388  |  
|Loss for the year                                                      |  |                                       | (1,908 | )    |  |      | (2,175 | )    |  |      | (13,121 | ) |  |   | (3,424 | ) |  |   | (2,242 | )
|Loss per share                                                         |  |                                       | ($0.06 | )    |  |      | ($0.08 | )    |  |      | ($0.49  | ) |  |   | ($0.14 | ) |  |   | ($0.09 | )

3



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Currency and Exchange Rates

All dollar amounts set forth in this report are in United States dollars,
except where otherwise indicated. The following tables set forth (i) the high
and low exchange rate for the Canadian dollar, expressed in U.S. dollars, for
each of the six months ended December 2002 based on the noon buying rate in New
York City for cable transfers in Canadian dollars as certified for customs
purposes by the Federal Reserve Bank of New York; and (ii) the average exchange
rate for the Canadian dollar, expressed in U.S. dollars, during each of the
periods indicated based on the rates in effect on the last day of each month
during such periods.

|          |  |  |          |  |  |          |       |         |  |           |       |        |  |      |       |  |  |  |       |  |  |  |       | 
|--------- |  |  | -------- |  |  | -------- | ----- | ------- |  | --------- | ----- | ------ |  | ---- | ----- |  |  |  | ----- |  |  |  | ----- | 
|          |  |  | December |  |  | November |       | October |  | September |       | August |  | July |      
|          |  |  | 2002     |  |  | 2002     |       | 2002    |  | 2002      |       | 2002   |  | 2002 |       | 
|          |  |  |          |  |  |          |       |         |  |           |       |        |  |      |       | 
|High Rate |  |  | .6448    |  |  |          | .6440 |         |  |           | .6407 |        |  |      | .6433 |  |  |  | .6442 |  |  |  | .6603 | 
|Low Rate  |  |  | .6329    |  |  |          | .6288 |         |  |           | .6272 |        |  |      | .6304 |  |  |  | .6264 |  |  |  | .6297 | 

|                           |  |      |       |      |  |      |       |      |  |      |       |  |  |  |       |  |  |  |       | 
|-------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | ----- |  |  |  | ----- | 
|                           |  | 2002 |       | 2001 |  | 2000 |       | 1999 |  | 1998
|                           |  |      |       |      |  |      |       |      |  |     
|Average Rate During Period |  |      | .6369 |      |  |      | .6462 |      |  |      | .6732 |  |  |  | .6833 |  |  |  | .6714 | 

On May 5, 2003 the noon exchange rate in New York City for cable transfer in
United States dollars as certified for customs purposes by the Federal Reserve
Bank of New York was $0.7075 U.S. = $1.00 Canadian.

B) Capitalization and Indebtedness

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this Item.

C) Reasons for the Offer and Use of Proceeds

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this Item.

D) Risk Factors

The discovery, development and acquisition of mineral properties are in many
instances unpredictable events and involve numerous risks. A summary of
significant risks is presented below:

No Current Production of Mining Properties; Possible Inability to Obtain
Additional Funding.Exploration for minerals is a speculative business
necessarily involving a high degree of risk. Few properties that are explored
are ultimately developed into producing mines. There is no assurance that the
expenditures made by the Company on its mineral properties will result in
discoveries of commercial quantities of ore or that such properties will become
future mines. If the Companys exploration efforts are not successful at
individual properties, the expenditures at those properties will be written
off. If the Companys programs are successful, additional funds may be
required for the development of an economic ore body and to place it into
commercial production. As described in Item 4. Information on the Company 
A. History and Development of the Company  Major Projects  The Cerro San
Pedro Project, the Company must raise approximately $40 million of financing
to complete development the Cerro San Pedro Project and to complete its
purchase of Glamis Gold Ltd.s (Glamis) 50% interest in the Cerro San Pedro
Project. Although the Company has sufficient cash balances to satisfy the
required initial cash payments to Glamis, there is no assurance that the
Company will be able to obtain sufficient debt financing, equity financing or
other financing necessary to complete development of the Cerro San Pedro
project, or that $40 million will be adequate to complete development of the
Cerro San Pedro Project. Exploration and

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future development of the Companys other properties will depend upon the
Companys ability to obtain adequate financing through the joint venturing of
projects, debt financing, equity financing or other means. There is no
assurance that the Company will be successful in obtaining the required
financing. Failure to obtain such financing would result in the delay or
indefinite postponement of exploration and future development work on the
Companys properties, as well as the possible loss of the properties.

Regulation.Mining operations and exploration activities are subject to
various federal, state, provincial and local laws and regulations governing
prospecting, development, mining, production, importing and exporting of
minerals; taxes; labor standards; occupational health; waste disposal;
protection of the environment; mine safety; toxic substances; and other
matters. In many cases, licenses and permits are required to conduct mining
operations. There is no assurance that such permits will be granted.
Furthermore, once a permit is granted, compliance with the permit requirements
must be maintained, otherwise the permit could be revoked. The application
process for such permits can take from months to years, depending upon the
backlog of applications and other conditions affecting the regulatory agencies
in countries where the Company conducts operations, i.e., Mexico, Brazil and
Chile. Environmental legislation is evolving in a manner which will require
stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed properties
and a heightened degree of responsibility for companies and their officers,
directors and employees. Amendments to such legislation, as well as other laws
and regulations governing operations and activities of mining companies or more
stringent implementation thereof could have a material adverse impact on the
Companys operations. The Company believes that it is substantially in
compliance with all applicable laws and regulations affecting its activities
and operations. Under certain circumstances, the Company may be required to
close an operation until a particular problem is remedied or to undertake other
remedial actions.

Operational and Environmental Risks; Reclamation Obligations.Mining
operations generally involve a high degree of risk. Hazards such as
environmental exposures, industrial accidents, labor disruptions and unusual or
unexpected geological formations and other conditions may be encountered. Such
risks could result in damage to or destruction of mineral properties or
producing facilities, personal injury, environmental damage, delays in mining,
monetary losses and possible legal liability. The Company may become subject
to liability for environmental pollution, cave-ins or hazards against which it
cannot insure or against which it may elect not to insure because of high
premium costs or other reasons. The payment of such liabilities may have a
material adverse effect on the Companys financial position. The Company does
not currently carry any liability insurance relating to these types of risks.

Reclamation requirements vary depending on the location and the managing
regulatory agency, but they are similar in that they aim to minimize long-term
effects of exploration and mining disturbance by requiring the operating
company to control possible deleterious effluents and to re-establish to some
degree predisturbance landforms and vegetation. The cost of reclamation and
property closure costs associated with the Companys Mara Rosa project in
Brazil has been estimated at $150,000 as of December 31, 2002. The Company is
not aware of any other material reclamation obligations relating to its other
projects.

Market Factors and Volatility.The marketability of mineralized material which
may be acquired or discovered by the Company will be affected by numerous
factors beyond the control of the Company. These factors include market
fluctuations in the prices of minerals sought, which are highly volatile, the
proximity and capacity of natural resource markets and processing equipment,
and government regulations, including regulations relating to prices, taxes,
royalties, land tenure, land use, importing and exporting of minerals and
environmental protection. The effect of these factors cannot be accurately
predicted, but may result in the Company not receiving an adequate return on
invested capital. Prices of certain minerals have fluctuated widely,
particularly in recent years, and are affected by numerous factors beyond the
control of the Company. Future mineral prices cannot be accurately predicted.
A severe decline in the price of a mineral being produced or expected to be
produced by the Company would have

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a material adverse effect on the Company, and could result in the suspension of
mining operations by the Company.

Title to Properties.While the Company has verified title to its properties
according to usual industry standards for the stage of exploration of such
properties, these procedures do not guarantee the Companys title. Such
properties may be subject to prior unregistered agreements or transfers, and
title may be affected by undetected defects which could be material and adverse
to the Company.

International Business Risks.The Companys present activities are in Mexico,
Chile and Brazil. As with all types of international business operations,
currency fluctuations, exchange controls, restrictions on foreign investment,
changes to tax regimes, civil unrest or political action could impair the value
of the Companys investments.

Most of the Companys activities are transacted in U.S. dollars. On the other
hand, most of the Companys fund raising activities are in Canadian dollars.
Fluctuations in relative currency values between the Canadian dollar and the
U.S. dollar may adversely affect the Companys financial position and results
of operations. The Company manages its foreign currency risk by maintaining
maximum cash balances in the currency in which most of the Companys
expenditures are made, the US dollar.

The Cerro San Pedro project is located in Mexico, and the Companys other
property interests are located in Brazil and Chile. The Companys mineral
exploration and development and mining activities may be affected in varying
degrees by political stability and governmental regulations relating to the
mining industry. Any changes in regulations or shifts in political attitudes
in Mexico or the other countries where the Companys properties are located are
beyond the control of the Company and may adversely affect its business.
Operations may be affected in varying degrees by government regulations with
respect to, among other things, the restrictions on production, price controls,
export controls, income and withholding taxes, expropriation of property,
environmental legislation, land use, water use and mine safety. A
deterioration in economic conditions or other factors could result in a change
in government policies. Moreover, if social unrest develops in the future,
this could have a material adverse effect on the Companys activities.

Competition. Significant and increasing competition exists for the limited
number of mineral acquisition opportunities available in North and South
America. As a result of this competition, some of which is with large,
established mining companies with substantial capabilities and greater
financial and technical resources than the Company, the Company may be unable
to acquire potential mineral properties on terms it considers acceptable. The
Company also competes with other mining companies in the recruitment and
retention of qualified employees.

Estimates of Reserves, Mineral Deposits and Production Costs.Although the
reserve figures included in this annual report have been carefully prepared,
these amounts are estimates only and no assurance can be given that any
particular level of recovery of metals from ore reserves will in fact be
realized. The grade of ore ultimately mined may differ from that indicated by
drilling results. There can be no assurance that metals recovered in a small
scale laboratory test will be duplicated in large scale test under on-site
conditions or in production-scale heap leaching. Material changes in ore
reserves, grades, stripping ratios or recovery rates may affect the economic
viability of projects. Also, the commercial viability of mineral deposits of
the kind located and believed to be located on the Cerro San Pedro project is
dependent upon a number of factors, including particularly the quality, size,
grade and other attributes of the deposits and the proximity to, and
availability of, infrastructure necessary to develop and exploit minerals on a
commercial scale.

Limited Operating History.The Company has limited operating history in the
mineral exploration and development business. Investors must rely upon the
ability, expertise, judgment, discretion and integrity of management of the
Company.

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Non-Canadian Assets; Risks of Enforcing Judgments Obtained in Canadian Courts.
Virtually all of the Companys assets are located outside of the Companys home
jurisdiction, Canada, and are held through subsidiaries incorporated under the
laws of Barbados, the British Virgin Islands, Chile, Brazil, the United States
and Mexico. It may be difficult or impossible to enforce judgments obtained in
Canadian courts predicated upon the civil liability provisions of the
securities laws of the various provinces against the portion of the Companys
assets located outside of Canada.

Reliance on Management.The Company is heavily reliant on the experience and
expertise of its senior officers, specifically Richard J. Hall, President and
Chief Executive Officer, Fred H. Lightner, Senior Vice President and Chief
Operating Officer, and Bradley J. Blacketor, Chief Financial Officer and
Secretary. If any of these individuals should cease to be available to manage
the affairs of the Company, its activities and operations could be adversely
affected.

Conflicts of Interest.Certain directors and officers of the Company are
associated with other companies which may acquire interests in mineral
properties. Craig J. Nelsen, Chairman of the board of directors, is the
Executive Vice President of Exploration for Gold Fields Ltd., a gold mining
company. Dennis M. Marsh, a director of the Company, is the Senior Vice
President of Beutel, Goodman & Company Ltd., an investment counseling firm. J.
Alan Spence, a director of the Company, is President of Spence Resource
Management Inc., a mineral resource consulting firm. Ian A. Shaw, a director
of the Company, is an independent financial consultant to the mining industry.
Oliver Lennox-King, a director of the Company, is Chairman of Southern Cross
Resources Inc., a uranium mining company. Such associations may in the future
give rise to conflicts of interest from time to time.




ITEM 4  Information on the Company

A) History and Development of the Company

Metallica Resources Inc. (Metallica or the Company) is a mineral
exploration company with core areas of activity in Mexico and South America.

The Company was incorporated in Canada under the Business Corporations Act
(Ontario) on June 23, 1977 under the name Temple Explorations Inc. On July 10,
1987, the Company reorganized and changed its name to Burgess Point Resources
Inc. On January 14, 1994, the Company reorganized and changed its name to
Metallica Resources Inc. Both Temple Explorations Inc. and Burgess Point
Resources Inc. were in the business of oil and gas exploration. Following the
change of the Companys name to Metallica Resources Inc., the Company disposed
of its oil and gas interests and has since been engaged in mineral exploration
and development activities. On July 16, 2002, the Company was continued from
the provincial Business Corporations Act (Ontario) to the federal Canada
Business Corporations Act.

The registered office of the Company is located at 36 Toronto Street, Suite
1000, Toronto, Ontario M5C 2C5. The Companys U.S. subsidiary, Metallica
Management Inc., has agreements in place to provide management services to the
Company and various subsidiaries at arms-length rates. Metallica Management
Inc.s offices are located at 12200 East Briarwood Avenue, Suite 165,
Centennial, Colorado 80112, tel. (303) 796-0229.

Principal Capital Expenditures/Divestitures Over Last Three Fiscal Years

In the past three fiscal years, the Company has had four principal exploration
projects that have required capital expenditures by the Company totaling $1.1
million (Cerro San Pedro, Mexico - $0.1 million; El Morro,
Chile - $0.1
million; MIMK, Chile - $0.6 million and Mara Rosa, Brazil - $0.3 million). The
majority of capital expenditures made over the past three fiscal years on the
Companys Cerro San Pedro and El Morro projects have been incurred by the
Companys joint venture partners pursuant to earn-in requirements. At December
31, 2001 the Company wrote-off its $2.9 million investment in the Mara Rosa

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project.

Current and Planned Capital Expenditures/Divestitures

Pursuant to an exploration agreement, Noranda Inc. is obligated to fund all
exploration costs on the El Morro project through September 14, 2005 until it
either makes a $10 million payment to the Company, that is due on or before
September 14, 2005, or forfeits its option to earn a 70% interest in the
project. The exploration agreement with Noranda provides that it must spend $10
million on exploration and development expenditures, in addition to other
requirements, in order to earn a 70% interest in the El Morro project. For
further information about this exploration agreement, please see   D.
Property, Plant and Equipment  The El Morro Project, Chile. As of December
31, 2002 Noranda had informed the Company that it had met its required $10
million expenditure on exploration and project development as required under
the exploration agreement. Noranda continues to be obligated to maintain the
El Morro project in good standing and fund all holding and exploration costs
until it makes the $10 million payment to the Company or forfeits its option.
Noranda has informed the Company that it intends to spend approximately $1.0
million on the El Morro project in 2003. The Company has not budgeted any
significant capital expenditures for the El Morro project in 2003. In the
event that Noranda elects to terminate its option to earn a 70% interest in the
El Morro project, the Company will then be required to fund any future
exploration costs associated with the project.

On February 12, 2003, the Company acquired its joint venture partners 50%
interest in the Cerro San Pedro project. For further information about this
exploration agreement, please see   D. Property, Plant and Equipment  The
Cerro San Pedro Project, Mexico. The Company now owns 100% of the Cerro San
Pedro project and is responsible for 100% of future development costs. In May
2003, the Companys initial project development budget for the Cerro San Pedro
project for 2003 is $2.3 million. The project feasibility study estimates an
initial capital requirement of $25 million plus $3 million for working capital.
Due to this capital requirement, the Company must raise additional equity,
debt and/or other financing in order to complete its development of the Cerro
San Pedro project. Subject to the Companys ability to secure such financing
by the end of 2003, approximately $24 million of capital expenditures will be
spent on the Cerro San Pedro project in 2004 during the projects nine to
twelve month construction period.

The Company has budged $0.3 million for exploration expenditures on its MIMK
project for 2003.

Public Takeover Offers

During the current and previous fiscal year, the Company has not received any
public takeover offers from third parties nor has the Company made any such
takeover offers.

B) Business Overview

The Company, through its subsidiaries, is presently engaged in the business of
exploring for precious and base metals in North and South America, principally
Mexico and Chile. Through its subsidiaries, the Company has held interests in
mineral exploration projects in Mexico, Chile and Brazil during the past three
years. The Companys mineral development and exploration activities are
currently focused on the Cerro San Pedro gold/silver project in Mexico, the El
Morro copper/gold project in Chile and the MIMK copper/gold project in Chile.
See   D. Property, Plant and Equipment for further information about these
projects.

The Company is focused on acquiring quality projects that have generally
undergone at least one stage of exploration, and therefore would be able to be
rapidly evaluated by the Company. If acquired, these properties effectively
would serve as anchor projects from which the Company could expand into new
mineral districts either through acquisition or early-stage project generation.

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The Companys business strategy is to acquire, explore and evaluate mineral
properties and either develop these properties or dispose of them when the
evaluation is completed. Potential prospects are examined by the Company
and/or by independent consultants. In most instances in which a decision is
made to acquire a property, preliminary exploration activities are conducted
directly by the Company and/or by persons specifically engaged for a particular
activity. Subcontractors, under the supervision of the Companys management,
or the Companys joint venture partners, are usually engaged to carry out the
more specialized aspects of the Companys exploration program such as drilling.

The Company does not have any properties in production and has never generated
any revenue from the sale of metals. There is no assurance that any of the
Companys projects will ever achieve the production stage or generate any metal
revenues.

A discussion of government regulation in Mexico relating to the Companys most
advanced stage project, the Cerro San Pedro project, is presented below:

Concessions in Mexico. In accordance with the Mexican constitution, the
subsoil and minerals found therein are the inalienable property of the nation.
All mining activity requires a concession from the federal government. A new
mining law liberalizing the mining industry was enacted and became effective on
September 25, 1992. The most important changes in this law are 1) exploration
concessions will be granted for a nonextendable six-year period; 2)
exploitation concessions have a 50-year term and are renewable for another
50-year term with 5 years prior notice; 3) concessions will not be granted
within areas that have been incorporated into the National Mining Reserves; and
4) regulations under the former law will remain in effect if they do not
conflict with the provisions of the new law and until new regulations are
issued.

Environmental Regulation in Mexico. The current environmental issues Mexico
faces include the scarcity of natural fresh water resources; water pollution;
raw sewage and industrial effluents polluting rivers in urban areas;
deforestation; widespread erosion; desertification; and air pollution.

The protection of the environment is currently a priority for the government of
Mexico. Although several environmental protection laws and regulations had
been issued since 1946, it was not until enactment of the General Law of
Ecological Balance and Environmental Protection in 1992 that important steps
were taken in this regard. The Ministry of Social Development and the Ministry
of Agriculture and Water Resources are mainly responsible for the protection
and preservation of the environment in Mexico. A number of permits and
authorizations with regard to environmental protection are required for mining
and exploration-related activities. The Ministry of Social Developments
authorization is required for all major exploration activities. Permits
required for mining and plant operation include the following: water discharge
permit, operating permit, water well usage permit, land use permit, explosives
permit, and hazardous materials handling permit. In addition, there are
regulations concerning noise, gas and dust emission, dumps, oil and fuel
storage, and electrical transformers. Please see   D. Property, Plant and
Equipment  The Cerro San Pedro Project, Mexico  Environmental for
information about environmental permitting in Mexico.

The Companys El Morro copper/gold project and MIMK copper/gold project are
located in Chile. Information about governmental regulation, including
environmental regulation, in Chile is included in  D. Property, Plant and
Equipment  The El Morro Project, Chile  Mineral Property Summary and  
Environmental Permitting.

C) Organizational Structure

The Company has four direct wholly owned subsidiaries: Metallica Management
Inc., a Colorado corporation; Metallica (Barbados) Inc. (MBI), a Barbados
company; Raleigh Mining International Limited, a Canadian company; and MMM
Exploraciones S.A. de C.V., a Mexican company. MBI has the following
subsidiaries: Datawave Sciences Inc. (100%), a British Virgin Islands company,
which in turn owns 100%

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of Minera Metallica Limitada (MML), a company organized under the laws of
Chile; De Re Holdings Inc. (100%), a British Virgin Islands company which in
turn owns 100% of Metallica Brasil S.A., a company organized under the laws of
Brazil; and 100% of Desarrollos Metallica C.A. (100%), a Venezuelan company.
Raleigh Mining International Limited increased its ownership interest in Minera
San Xavier S.A. de C.V. (MSX), a Mexican company from 50% to 100% on February
12, 2003. From May 2000 through February 12, 2003, Glamis Gold Ltd. held a 50%
interest in MSX. Except for MML, all of these companies, whether or not
denominated corporations in their jurisdictions of organization, are
considered corporations for U.S. tax purposes. MML is considered a partnership
for U.S. tax purposes but a corporation for Canadian tax purposes.

D) Property, Plant and Equipment

Mineral Reserves and Resources

The Company is federally incorporated in Canada. The mineral reserves and
resources described in this Form 20-F are estimates and have been prepared in
compliance with National Instrument 43-101 of the Canadian Securities
Administrators. The definitions of proven and probable reserves used in
National Instrument 43-101 differ from the definitions in SEC Industry Guide 7.
In addition, the terms mineral resource, measured mineral resource,
indicated mineral resource and inferred mineral resource are defined in and
required to be disclosed by National Instrument 43-101; however, these terms
are not defined terms under SEC Industry Guide 7 and normally are not permitted
to be used in reports and registration statements filed with the SEC.
Accordingly, information contained in this Form 20-F containing descriptions of
the Companys mineral deposits may not be comparable to similar information
made public by U.S. companies subject to the reporting and disclosure
requirements under the United States federal securities laws and the rules and
regulations thereunder.

The Cerro San Pedro Project, Mexico

Project Location

The Companys most advanced stage project is the Cerro San Pedro gold and
silver project, located approximately 20 km (12 miles) east-northeast of the
city of San Luis Potosi. The city of San Luis Potosi is located within the
state of San Luis Potosi, Mexico. The Cerro San Pedro project is owned by the
Companys indirect wholly owned subsidiary, Minera San Xavier, S.A. de C.V.
(MSX). See Figure 1 for the project location map.

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Location Map of Cerro San Pedro Project

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Project History

The Cerro San Pedro district has seen many production campaigns since its
discovery over four hundred years ago. There have been two major periods of
mining activity punctuated by long periods of intermittent, low-level activity.
There are no reliable records of production during the first period (1575 to
1660) of mining activity in the district. The second major period began in
1870 and continued through the early 1950s. By the early 1950s it is
estimated that approximately 2.5 million ounces of gold and 40 million ounces
of silver had been produced from the Cerro San Pedro district. Renewed
interest in the Cerro San Pedro district began in the 1970s with evaluations
by various companies to determine the districts potential as a large tonnage,
low-grade, bulk mineable deposit.

In 1995, the Company acquired an option to purchase Cerro San Pedro project and
began an exploration program to expand the work of recent exploration programs
conducted by other companies. MSX completed 11,970 meters of reverse
circulation drilling in 1995 and an additional 29,463 meters of core and
reverse circulation drilling in 1996. This data, along with 9,794 meters of
reverse circulation drilling performed by its predecessors, formed the basis
for a February 1997 feasibility study prepared by Kilborn International Inc.
The February 1997 feasibility study included a proven and probable reserve
estimate of 77.3 million tonnes averaging 0.60 g/t gold and 24.8 g/t silver,
with an overall waste to ore ratio of 1.51:1. The reserve estimate was
prepared by Mine Reserve Associates, Inc. and was calculated using a gold price
of $400/ounce and a silver price of $5.00/ounce.

The Company elected to seek a joint venture partner to develop the property in
late 1997, and in January 1998 entered into an agreement with Cambior, Inc. to
acquire a 50% interest in MSX. The agreement resulted in the issuance of
additional MSX shares to Cambior such that it would own 50% of the issued and
outstanding shares of MSX. Cambiors ability to retain its 50% interest in MSX
was contingent upon it spending $20 million on project development by December
31, 2000.

Cambior completed an additional 66 core drill holes totaling 7,612 meters
during 1998, and during its due diligence period in late 1997. This drill hole
data, along with the drill hole data used in the Kilborn feasibility study, was
the basis for a revised feasibility study released by Cambior in November 1999.
The Cambior feasibility study included a proven and probable reserve estimate
of 63.5 million tonnes grading 0.62 g/t gold and 24.5 g/t silver, with an
overall waste to ore ratio of 1.57:1. The reserve estimate was prepared by
Cambior, Inc. and was calculated using a gold price of $300/ounce and a silver
price of $5.50/ounce. Mine development, working capital and mine equipment
costs were estimated at $68 million.

In May 2000, Cambior sold its 50% interest in the Cerro San Pedro project to
Glamis Gold Ltd. In November 2000, Glamis published a revised feasibility
study for the project that eliminated the three-stage crushing circuit proposed
by Cambior, and instead utilized run-of-mine (ROM) leaching of ore. Under
ROM leaching, ore is mined and transported to the leach pad without being
crushed. The Glamis feasibility study included a proven and probable reserve
estimate of 49.2 million tonnes grading 0.57 g/t gold and 23.0 g/t silver, with
an overall waste to ore ratio of 1.45:1. The reserve estimate was prepared by
Mine Reserve Associates, Inc. and was calculated using a gold price of
$275/ounce and a silver price of $5.25/ounce. Mine development, working
capital and mine equipment costs were estimated at $45 million. The Glamis
feasibility study is discussed in further detail below.

On February 4, 2003, WLR Consulting, Inc. (WLR) prepared a technical report
on the Cerro San Pedro project that was based on the assumptions and
information included in the Glamis feasibility study with the following
exceptions:



| |  |  | Proven and probable reserves were calculated using a $325/ounce
gold price and a $4.62/ounce silver price.                    
| | - |  | ------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The addition of certain rock types into the definition of ore, due
to different prices used to calculate the reserve estimate.

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| |  |  | Higher mine operating costs were used to calculate the reserves due
to an anticipated change from owner mining to contract mining.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------

The WLR technical report included a proven and probable reserve estimate of
61.1 million tonnes grading 0.59 g/t gold and 24.0 g/t silver, with an overall
waste to ore ratio of 1.21:1. The reserve estimate was prepared by William L.
Rose of WLR and was calculated using a gold price of $325/ounce and a silver
price of $4.62/ounce. Mr. Rose is a Qualified Person, as that term is defined
in Canada National Instrument 43-101. The WLR technical report is discussed in
further detail below.

On February 12, 2003, the Company purchased Glamis 50% interest in the Cerro
San Pedro project for $18 million plus a sliding scale net smelter returns
royalty when monthly average gold prices equal or exceed $325/ounce. The
payment terms are as follows:



| |  |  | $2.0 million paid at closing.                                                  
| | - |  | -------------------------------------------------------------------------------
|
| |  |  | 50% of MSX working capital deficit totaling $58,000 paid to the Company.       
|
| |  |  | $5.0 million due on or before August 12, 2003.                                 
|
| |  |  | $6.0 million in cash or in the Companys common shares due on February 12, 2004
|
| |  |  | $2.5 million due at commencement of commercial production.                     
|
| |  |  | $2.5 million due one year from commencement of commercial production.          

Royalties are due and payable based on the following monthly average gold prices:

| |   |                    |  |  |     |  
| | - | ------------------ |  |  | --- | -
| |  | Below $325/ounce   |  |  | 0.0 | %
| |   |                    |  |  |     |  
| |  | $325 to $350/ounce |  |  | 0.5 | %
| |   |                    |  |  |     |  
| |  | $350 to $375/ounce |  |  | 1.0 | %
| |   |                    |  |  |     |  
| |  | $375 to $400/ounce |  |  | 1.5 | %
| |   |                    |  |  |     |  
| |  | Over $400/ounce    |  |  | 2.0 | %

The Company intends to make the August 2003 payment with its existing cash
balances. In the event that the Company should fail to make that payment when
due, the Company will return the acquired 50% interest in the project to
Glamis, plus an additional 1% interest in the project. The parties would also
amend certain terms of the previous shareholders agreement to reflect the 51%
interest that would be held by Glamis. In addition, Glamis would retain the
$2.0 million payment made at closing. With respect to the February 2004
payment, the agreement provides the Company with the option to make that
payment with common shares of the Company in the event it does not have
sufficient cash balances.

Mineral Property Summary

The mineral rights at the Cerro San Pedro project consist of 47 mineral
concessions, covering an area of 2,952 hectares or 7,294 acres. The mineral
concessions comprising the Cerro San Pedro project are divided into eleven
groups, as set forth below. The details of the concessions and groups
comprising the Cerro San Pedro project are as follows in Table A:

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TABLE A
CERRO SAN PEDRO MINERAL PROPERTY SUMMARY

Cerro San Pedro Mineral Concessions

|                                                             |  |                      |  |                 |  |              |  |         
|------------------------------------------------------------ |  | -------------------- |  | --------------- |  | ------------ |  | --------
|Group                                                        |  | Concession Name      |  | Concession Type |  | Title Number |  | Hectares
|                                                             |  |                      |  |                 |  |              |  |         
|Group
1. 100% Minera San Xavier                             
|1.                                                           |  | La Princesa          |  | Exploitation    |  | 180298       |  | 5.5916  
|2.                                                           |  | La Princesa Poniente |  | Exploitation    |  | 180366       |  | 0.0076  
|3.                                                           |  | Begoñia              |  | Exploitation    |  | 181179       |  | 10.0000 
|4.                                                           |  | Santa Ana            |  | Exploitation    |  | 180598       |  | 8.0000  
|5.                                                           |  | Santa Ana Sur        |  | Exploitation    |  | 180597       |  | 1.5076  
|6.                                                           |  | Los Blancos          |  | Exploitation    |  | 181180       |  | 9.0394  
|7.                                                           |  | Gorgorron            |  | Exploitation    |  | 180300       |  | 9.6250  
|8.                                                           |  | San Nicolas          |  | Exploitation    |  | 180608       |  | 6.9788  
|9.                                                           |  | San Nicolas Sur      |  | Exploitation    |  | 180610       |  | 1.4896  
|10.                                                          |  | San Nicolas Suroeste |  | Exploitation    |  | 180609       |  | 0.1923  
|11.                                                          |  | Los Riscos           |  | Exploitation    |  | 182282       |  | 4.3474  
|12.                                                          |  | La Concepcion        |  | Exploitation    |  | 182281       |  | 4.0000  
|                                                             |  |                      |  |                 |  | Subtotal     |  | 60.7793 
|                                                             |  |                      |  |                 |  |              |  |         
|Group
2. Optionor:
Roberto Alcalde Garcia  Cristina 2 Group
|13.                                                          |  | Cristina 2           |  | Exploitation    |  | 180938       |  | 0.5537  
|14.                                                          |  | Gama                 |  | Exploitation    |  | 179256       |  | 41.6391 
|15.                                                          |  | La Canoa 3           |  | Exploitation    |  | 184906       |  | 0.0051  
|16.                                                          |  | Omega 2              |  | Exploitation    |  | 180958       |  | 0.1687  
|17.                                                          |  | La Canoa 2           |  | Exploitation    |  | 180948       |  | 0.6649  
|18.                                                          |  | Cristina             |  | Exploitation    |  | 186321       |  | 93.6228 
|19.                                                          |  | La Canoa             |  | Exploitation    |  | 186370       |  | 3.4799  
|20.                                                          |  | Omega                |  | Exploitation    |  | 193390       |  | 2.0576  
|                                                             |  |                      |  |                 |  | Subtotal     |  | 142.1918
|                                                             |  |                      |  |                 |  |              |  |         
|Group 3. 100% Minera San Xavier                              |  |                      |  |                
|21.                                                          |  | San Salvador         |  | Exploitation    |  | 186268       |  | 12.9399 
|22.                                                          |  | Tribilin             |  | Exploitation    |  | 187088       |  | 18.2808 
|23.                                                          |  | La Victoria          |  | Exploitation    |  | 185387       |  | 10.3797 
|24.                                                          |  | Gabriel              |  | Exploitation    |  | 211849       |  | 18.0000 

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Cerro San Pedro Mineral Concessions

|                                                       |  |                      |  |                 |  |              |  |           
|------------------------------------------------------ |  | -------------------- |  | --------------- |  | ------------ |  | ----------
|Group                                                  |  | Concession Name      |  | Concession Type |  | Title Number |  | Hectares  
|                                                       |  |                      |  |                 |  |              |  |           
|Group 3(continued)                                     |  | Subtotal             |  | 59.6004        
|Group 4. 100% Minera San Xavier                        |  |                      |  |                
|25.                                                    |  | Barreno              |  | Exploitation    |  | 179603       |  | 11.2359   
|                                                       |  |                      |  |                 |  | Subtotal     |  | 11.2359   
|                                                       |  |                      |  |                 |  |              |  |           
|Group 5. 100% Minera San Xavier                        |  |                      |  |                
|26.                                                    |  | Porvenir IV Fracc. A |  | Exploration     |  | 201484       |  | 51.7965   
|27.                                                    |  | Porvenir IV Fracc. B |  | Exploitation    |  | 216926       |  | 1.3237    
|28.                                                    |  | Porvenir V           |  | Exploitation    |  | 218428       |  | 11.7876   
|                                                       |  |                      |  |                 |  | Subtotal     |  | 64.9078   
|                                                       |  |                      |  |                 |  |              |  |           
|Group 6. Optionor: Antonio Alvarez
Ruiz-Porvenir Group |  |                      |  |                
|29.                                                    |  | Porvenir             |  | Exploitation    |  | 214835       |  | 4.4241    
|30.                                                    |  | Porvenir I           |  | Exploitation    |  | 183925       |  | 12.0000   
|31.                                                    |  | Porvenir II          |  | Exploitation    |  | 186269       |  | 2.9981    
|32.                                                    |  | El Porvenir III      |  | Exploitation    |  | 212189       |  | 11.9902   
|                                                       |  |                      |  |                 |  | Subtotal     |  | 31.4124   
|                                                       |  |                      |  |                 |  |              |  |           
|Group 7. 100% Minera San Xavier                        |  |                      |  |                
|33.                                                    |  | Toro de Oro          |  | Exploitation    |  | 206548       |  | 99.5187   
|                                                       |  |                      |  |                 |  | Subtotal     |  | 99.5187   
|                                                       |  |                      |  |                 |  |              |  |           
|Group 9. 100% Minera San Xavier                        |  |                      |  |                
|34.                                                    |  | Pedro                |  | Exploitation    |  | 217859       |  | 1969.5069 
|35.                                                    |  | Pedro 2              |  | Exploitation    |  | 219079       |  | 421.4346  
|                                                       |  |                      |  |                 |  | Subtotal     |  | 2390.9415 
|                                                       |  |                      |  |                 |  |              |  |           
|Group 10. 100% Minera San Xavier                       |  |                      |  |                
|36.                                                    |  | La Loteria           |  | Exploitation    |  | 184377       |  | 3.8809    
|37.                                                    |  | San Fausto           |  | Exploitation    |  | 179722       |  | 1.5000    
|38.                                                    |  | Maria del Pilar      |  | Exploitation    |  | 179259       |  | 0.0049    
|39.                                                    |  | El Campeon           |  | Exploitation    |  | 179257       |  | 0.2072    
|                                                       |  |                      |  |                 |  | Subtotal     |  | 5.5930    
|                                                       |  |                      |  |                 |  |              |  |           
|Group 11. 100% Minera San Xavier                       |  |                      |  |                
|40.                                                    |  | Gitano 2004          |  | Exploration     |  | 208096       |  | 64.0000   
|41.                                                    |  | La Virgen 2004       |  | Exploration     |  | 208466       |  | 10.000    
|42.                                                    |  | Mark 2005            |  | Exploration     |  | 210667       |  | 0.0529    
|43.                                                    |  | Aracely 2005         |  | Exploration     |  | 210668       |  | 9.3396    
|44.                                                    |  | Davide 2006          |  | Exploration     |  | 211606       |  | 0.0788    
|45.                                                    |  | Maria Sofia 2007     |  | Exploration     |  | 215378       |  | 0.2470    
|46.                                                    |  | Laura Maria 2007     |  | Exploration     |  | 215499       |  | 1.0976    
|47.                                                    |  | Tania 2007           |  | Exploration     |  | 215896       |  | 0.6660    
|                                                       |  |                      |  |                 |  | Subtotal     |  | 85.4819   
|                                                       |  |                      |  |                 |  |              |  |           
|                                                       |  |                      |  |                 |  | Total        |  | 2,951.6627
|                                                       |  |                      |  |                 |  |              |  |           

All of the mining concessions have been acquired primarily through purchase
agreements, and to a lesser extent through staking. Approximately $6 million
has been spent to date to acquire the aforementioned mining concessions, and
other concessions that have subsequently been dropped due to their limited
strategic value.

The exploration concessions #40 through #47 are valid through various dates
from October 2004 through March 2008. MSX intends to submit applications to
Mexican regulatory authorities, the Director General of Mines (DGM), to
convert the exploration concessions into exploitation concessions prior to
their expiry. The only other exploration concession is the Porvenir IV Fracc.
A, concession #26. The

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application to convert this concession to an exploitation concession was
submitted on June 3, 2001. The delay in approval of the application results
from disputes with DGM regarding the payment of mineral taxes on the
concession. DGM recently requested proof that mineral taxes on this property
had been timely paid. This information was furnished the DGM in April 2003.
The Company anticipates that this matter will be resolved favorably during
2003.

All of the aforementioned exploitation concessions begin to expire in December
2036 through February 2053, subject to the timely filing of periodic reports
and the timely payment of taxes. The exploitation concessions may be extended
for an additional 50-year period upon five years notice. The Company does not
anticipate that extensions to the exploitation concessions will be required.
All of the exploitation and exploration concessions are held by MSX without any
encumbrances except for the following:



| |                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Group 2 Concessions #13 to #20: The Group #2 concessions are subject to
a revised note agreement with the optionor dated February 18, 2003 that
provides for a final payment of $200,100 on December 31, 2003. The note
bears interest at the rate of 1% per month, payable monthly.



| |                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Group 6 Concessions #29 to #32: The Group #6 concessions are subject to
a 2.5% royalty on net smelting income, subject to maximum cumulative
payments totaling $1 million. Minimum annual royalties in the amount of
$50,000 are due and payable beginning April 1, 2003.

Although the Company has investigated title to its exploration and exploitation
concessions at the Cerro San Pedro project, there is no guarantee that title to
such concessions will not be challenged. In addition, certain environmental
permitting requirements must be satisfied prior to commencing mining operations
under an exploitation concession.

Surface and Water Rights Acquisition

In order to begin construction of the Cerro San Pedro mine, surface rights
agreements must be in place for all land to be disturbed by, or immediately
adjacent to, the proposed operation. MSX began acquiring surface rights in
1996 from titled landowners, possessionary rights holders, and from the three
local Ejidos (Cuesta de Campa, Palma de la Cruz and Cerro San Pedro). (An
Ejido is an association of individuals who communally own and manage the rural
lands surrounding their village.) In the case of the Ejidos, MSX has obtained
surface occupation lease agreements with all three Ejidos that own property in
the Cerro San Pedro area. A total of 470 hectares are under lease agreements
with annual aggregate lease payments of approximately $45,000. The leases
grant MSX temporary occupancy for a period of 15 years (through January 2011),
and may be extended by MSX for an additional 15 years at the Mexican peso
denominated lease rate, adjusted for the percentage increase in the Mexican
minimum wage from February 1997 through February 2011. The increase should
approximate the rate of inflation in Mexico. The leases may be terminated by
MSX at any time, but with a penalty equal to one years lease payment.

On August 7, 2002, a lawsuit was filed in the Mexican Agrarian Court in which a
group of communal farmers claim to represent themselves as the rightful owners
of the Ejido Cerro San Pedro communal farmland. Their claim states that the
Ejido Cerro San Pedro lease agreement entered into with MSX in February 1997 is
not valid in that the individuals who executed the agreement were not the legal
representatives of Ejido Cerro San Pedro. In December 2002, the Agrarian Court
ruled in favor of the individuals who signed the lease agreement with MSX,
which allows these individuals to prove that they are the legal representatives
of Ejido Cerro San Pedro. MSX anticipates a favorable outcome from this
litigation.

The village of Cerro de San Pedro will remain open to the public when mining
activities commence. MSX will involve state and municipal authorities in a
joint effort to ensure that the proper safety precautions are taken to protect
the public, especially during blasting operations. MSX is not required, and
does not intend, to obtain control of all the property located within the
safety buffer zone; however, MSX will

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continue to acquire property within the safety buffer zone from owners that
choose to engage in private negotiations.

In May 2001, MSX relocated 20 families from the Village of La Zapatilla to a
new village approximately two kilometers to the southwest of Cerro San Pedro
mine site. La Zapatilla was located in the middle of the proposed leach pad
site and MSX constructed the new village as specified in the agreement with the
villagers. All of the required surface rights in the village of La Zapatilla
have been acquired at a cost of approximately $746,000. Construction costs
associated with building the new village totaled approximately $850,000.

Water rights are owned by Mexico and administered by an agency of the federal
government; the Comision Nacional de Agua (CNA). CNA has granted water
concessions to private parties throughout the defined San Luis Potosi
Hydrologic Basin (Basin). As no new water rights are being issued in the
Basin, new users of water must purchase rights from private parties. The Cerro
San Pedro project is forecast to use an average of approximately 500,000 cubic
meters of water per year. MSX has acquired pumping rights to 992,000 cubic
meters per year; however, a lease for 100,000 cubic meters per year must be
returned to the lessor in 2003.

In 2002, a lawsuit was filed against MSX alleging that water rights for 360,000
cubic meters per year were sold to MSX by individuals who did not legally own
the water rights. A judge is expected to rule on the matter in 2003. In the
event that the ruling, after appeals, is not in favor of MSX, MSX may be
required to purchase additional water rights from private owners.

MSXs water rights will begin to expire in October 2003 but may be extended for
an additional three years upon applying for an extension. MSX has applied for
extensions to all of its water rights. In the event that MSX begins mine
operations within three years of the date of the extension, MSX will not be
required to apply for any additional extensions through the end of the mine
life. If the applications for water rights extensions are not approved, MSX
will be required to purchase additional water rights from private owners.

The aggregate total of the acquired water rights will be transferred from eight
existing wells scattered throughout the Basin to a well at La Zapatilla. The
La Zapatilla well was constructed in July 1999 and has a total pumping capacity
of approximately two million cubic meters of water per year. The La Zapatilla
well is located 1.5 kilometers west of the proposed leach pad, which is where
most of the Cerro San Pedro project water consumption will take place.
Approximately $723,000 has been spent to date on the acquisition of water
rights.

Access; Infrastructure

Access to the project area is by paved and improved gravel roads from the city
of San Luis Potosi (SLP), a distance of approximately 20 kilometers. The
city of SLP has a population of approximately one million and has an adequate
airport with daily flights to Mexico City, Monterrey and other major cities.

A 115 kv power line will need to be constructed to supply the project with
electricity. The power line will be 11.3 kilometers in length and will run
from an existing substation to a location near the leach pad. The right of way
for the new power line will follow next to an existing power line, but a
separate right of way had to be negotiated with the affected landowners.
Approximately 98% of the 25.35 hectares of required right of way has been
acquired at a cost of $203,000. In 2002, MSX was notified by Mexican
authorities that it will not be required to purchase the remaining 2% of the
right-of-way. The cost to install the 115 kv power line and build the power
substation is estimated at $1.9 million.

Glamis Feasibility Study (November 2001)

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In May 2000, Cambior sold its 50% interest in MSX to Glamis Gold Ltd. Glamis
assumed Cambiors role as operator of the Cerro San Pedro project in charge of
all project activities and technical studies for the project. Glamis also
assumed Cambiors remaining obligation on its $20 million project development
funding commitment. Glamis attained the $20 million funding commitment by
making a $2.0 million cash contribution to MSX in January 2001.

In November 2000 Glamis issued a revision to the Cambior feasibility study
entitled Cerro San Pedro Project Feasibility Study (the Glamis Feasibility
Study). The Glamis Feasibility Study provides for the elimination of the
crushing plant from the process flow sheet resulting in the use of run-of-mine
(ROM) leaching to extract gold and silver from the mined ore. Under ROM
leaching, the mined ore is transported and deposited on the heap leach pads
without being processed through a crushing circuit. Metal recoveries from ore
processed under a ROM scenario are lower than if the ore is crushed; however, a
ROM scenario will also result in lower operating and capital costs.

The following is a summary of information contained in the Glamis Feasibility
Study:

Areas of study and primary sources of geologic and mining information contained
in the Glamis Feasibility Study are summarized in Table B.

TABLE B

Sources of Information for Geology and Mining Sections of the Glamis Feasibility Study

|        |  |                               |  |                                     
|------- |  | ----------------------------- |  | ------------------------------------
|Area    |  | Services Provided             |  | Name of Company/Consultant          
|        |  |                               |  |                                     
|Geology |  | Management                    |  | Minera San Xavier                   
|        |  | Assaying                      |  | Bondar Clegg                        
|        |  | Modeling, Resource Estimation |  | Minera San Xavier                   
|        |  | Deposit Geology               |  | Mark Petersen, Consultant           
|        |  | Mineralogy/Petrography        |  | Petrographic Consultants, Intl.     
|        |  | Ore Reserves/Mine Design      |  | Glamis / Mine Reserves Associates   
|        |  |                               |  | Independent Mining Consultants, Inc.
|Mining  |  | Model Verification            |  | GeoSight, Inc.                      
|        |  |                               |  | Glamis / Mine Reserves Associates   
|        |  | Previous Reserve Evaluations  |  | Cambior                             
|        |  | Slope Stability               |  | Brawner & Associates                

Geology and Mineralization

The Cerro San Pedro district lies along the boundary between the Sierra Madre
Oriental (Eastern Sierra Madre) fold belt and the Mesa Central volcanic plateau
physiographic provinces. Current exploration in this historic district has
resulted in the delineation of a large body of low-grade gold-silver
mineralization amenable to modern bulk mining and heap leach extraction
methods.

A complex deformation history, including of pre-mineral folding, thrusting,
normal, reverse, and wrench faulting, accompanied by porphyry dike intrusion
are considered to be the primary factors behind the localization of
mineralization at Cerro San Pedro. District geology is characterized by
complexly folded and faulted Cretaceous limestones that have been intruded by a
large dike or plug of diorite to quartz diorite porphyry of late Cretaceous to
early Tertiary age. Gold-silver mineralization occurs in association with
disseminated iron oxides and sulfides hosted within the porphyry intrusive
(Porphyry Oxide, Mixed and Sulfide) and its surrounding limestone host rocks
(from oldest to youngest  the Begonia, Hospital, and Barreno Limestones).
Porphyry Oxide-hosted mineralization is distributed in a well-developed zone

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of stockwork fracturing and pervasive hydrothermal alteration developed around
the intersection between several systems of cross-cutting north, east,
northeast, and northwest trending shear zones. These structures extend into
the surrounding limestone country rocks as higher grade veins, chimneys, and
mantos. A large body of Porphyry Mixed and Porphyry Sulfide-hosted Au-Ag-Zn
sulfide mineralization also underlies the main zone of Au-Ag Porphyry Oxide
mineralization. The bulk of the potentially economic mineralization is hosted
within the porphyry diorite rock type.

Mineral Resources

The mineral resource estimate uses the results of 36 reverse circulation holes
from exploration prior to MSX and 219 drill holes completed by MSX, 125 of
which are reverse circulation and 94 are core holes. The deposit has been
drilled overall on a 50-meter by 50-meter grid with a closer spacing in some
areas. Assay intervals, typically of 2 meters in length, which had less than 30
percent recovery were not used for grade estimation. In addition, a total of
2,153 channel samples representing about 4,600 meters were collected from
numerous accessible underground workings.

The geological block model for Cerro San Pedro was constructed with respect to
both structural and lithological (rock type) control. The assay results from
drill holes and channel samples were composited to 5-meter lengths by
respecting these rock and structural domain boundaries. Cambior used standard
industry practice to limit or cap the high-grade outliers and to develop
indicators to reflect the boundary between low-grade mineralization and
unmineralized or barren materials. Validation of the geological and assay
database was done using software tools, plots on sections and plan view maps to
ensure information stored in the database occurs in the correct position and
conforms with the geological interpretation. Verification of assay results
used in the database was also performed.

The mineral resource was evaluated using various estimation methods. The
Restrictive Kriging (RK) method was determined to be the best at
characterizing the grade distribution and was therefore used to calculate the
mineral resource. The mineral resource is presented by resource
classification and cut-off grades in the Table C.

The resource estimate is classified on the basis of these parameters:



| |  | Measured: All estimated blocks that
had a minimum of two drillholes within
one-half of the variogram range from
the block center.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Indicated: All estimated blocks that
had a minimum of two drillholes within
the variogram range from the block
center.           
| 
| |  | Inferred: All other estimated blocks.                                                                                            

Table C

Mineral Inventory By Classification

|          |  |             |         |             |  |             |      |         |  |    |       |    |  |         |         |    |  |    |      |  |  |  |       |  |  |  |         |  |  |  |      |  |  |  |       | 
|--------- |  | ----------- | ------- | ----------- |  | ----------- | ---- | ------- |  | -- | ----- | -- |  | ------- | ------- | -- |  | -- | ---- |  |  |  | ----- |  |  |  | ------- |  |  |  | ---- |  |  |  | ----- | 
|          |  | 0.20 g/t Au |         | 0.30 g/t Au |  | 0.40 g/t Au
|          |  |             |         |             |  |            
|Rock Type |  | Ktonnes     |         | Au          |  | Ag          |      | Ktonnes |  | Au |       | Ag |  | Ktonnes |         | Au |  | Ag
|          |  |             |         |             |  |             |      |         |  |    |       |    |  |         |         |    |  |   
|Measured  |  |             | 154,953 |             |  |             | 0.50 |         |  |    | 17.82 |    |  |         | 114,173 |    |  |    | 0.59 |  |  |  | 20.18 |  |  |  | 79,433  |  |  |  | 0.69 |  |  |  | 23.13 | 
|Indicated |  |             | 61,849  |             |  |             | 0.38 |         |  |    | 10.12 |    |  |         | 33,866  |    |  |    | 0.49 |  |  |  | 12.55 |  |  |  | 18,546  |  |  |  | 0.61 |  |  |  | 14.84 | 
|Inferred  |  |             | 21,584  |             |  |             | 0.37 |         |  |    | 8.20  |    |  |         | 11,649  |    |  |    | 0.48 |  |  |  | 9.07  |  |  |  | 6,917   |  |  |  | 0.57 |  |  |  | 10.18 | 
|Total     |  |             | 238,386 |             |  |             | 0.45 |         |  |    | 14.95 |    |  |         | 159,689 |    |  |    | 0.56 |  |  |  | 17.75 |  |  |  | 104,895 |  |  |  | 0.67 |  |  |  | 20.81 | 

These resources do not reflect economic pit designs, but rather are limited to
reporting a geologic resource.

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Mineable Reserves

Floating cone input parameters for the Glamis Feasibility Study used
metallurgical recoveries, processing and mining costs derived from the results
of Cambior metallurgical testing and historic Glamis operating parameters.
Recovery, commodity prices, and operating costs criteria were varied to test
the sensitivity of the reserve to the key operating parameters. The base case
commodity prices used were $275 per ounce gold and $5.25 per ounce silver.

Mintecs MEDSYSTEM software, using a Lerch-Grossmann (LG) algorithm, was used
to evaluate a ROM development alternative. In the ROM scenario, once the ore
is mined in the pit it is hauled directly to the leach pad with a stop in the
haul for lime addition. In the crusher scenarios, the ore is hauled to a
crusher facility near the pit to be single-stage crushed to 6 inches or
three-stage crushed to 3/4 inches. The crushed ore is then transported to a
load-out facility at the edge of the leach pad by conveyor and trucks are used
to stack the crushed ore on the leach pad. Appropriate costs and metallurgical
recovery differences were applied for each operating scenario. The ROM
scenario was substantially limited to two rock types for ore bearing material,
Porphyry Oxide and Begonia Limestone, while the crusher scenarios considered
all material above a breakeven equivalency cutoff. These two ore types are
considered to have sufficient metallurgical test data to support corresponding
ROM recovery estimates.

TABLE D
GLAMIS BASE CASE RUN-OF-MINE FLOATING CONE PARAMETERS

|                                       |                   |                                 |                                |  |  | 
|-------------------------------------- | ----------------- | ------------------------------- | ------------------------------ |  |  | 
|Gold (Au) Price                        |                   | $275  / troy ounce             
|Silver (Ag) Price                      |                   | $5.25 / troy ounce             
|Gross Receipts Royalty Charge          |                   | 1.95 % of gross revenue        
|Maximum Leaching Au Recoveries:        |                   |                                 |                                | 
|                                       | Begonia Limestone |                                 | 55 %                           |  | 
|                                       | Porphyry Oxide    |                                 | 75 %                           |  | 
|Maximum Leaching Ag Recoveries:        |                   |                                 |                                | 
|                                       | Begonia Limestone |                                 | 25  %                          | 
|                                       | Porphyry Oxide    |                                 | 40  %                          | 
|Mining Cost                            |                   | $0.65 / tonne of material mined
|Processing Cost, including pad capital |                   | $1.32 / tonne of ore           
|General & Administration Cost          |                   | $0.26 / tonne of ore           
|Overall Slope Angles:                  |                   | 45 - 55 degrees                
|Cutoff Grades:                         |                   |                                 |                                | 
|                                       | Breakeven         |                                 | 0.34 g/t Equivalent Au (Eq Au)
|                                       | Internal          |                                 | 0.24 g/t Equivalent Au (Eq Au)

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TABLE E

CERRO SAN PEDRO ESTIMATED PROVEN & PROBABLE RESERVES


Glamis Feasibility Study (November, 2000)

$275 per ounce gold/$5.25 per ounce silver

Gold/Silver ratio: 52.4:1

|                  |  |           |        |       |  |        |      |          |  |            |       |              |  |  |     |  |  |  |        |  |  |  |       | 
|----------------- |  | --------- | ------ | ----- |  | ------ | ---- | -------- |  | ---------- | ----- | ------------ |  |  | --- |  |  |  | ------ |  |  |  | ----- | 
|                  |  | Tonnes of |        | Gold  |  | Silver |      |          |  |            |       |              |  |  |     |  |  | 
|                  |  | Ore       |        | Grade |  | Grade  |      | Ozs Gold |  | Ozs Silver |       | Gold Eq. Ozs
|Rock Type         |  | (000's)   |        | (g/t) |  | (g/t)  |      | (000's)  |  | (000's)    |       | (000's)     
|                  |  |           |        |       |  |        |      |          |  |            |       |             
|Barreno Limestone |  |           | 284    |       |  |        | 1.40 |          |  |            | 100.6 |              |  |  | 13  |  |  |  | 920    |  |  |  | 31    | 
|Begonia Limestone |  |           | 7,057  |       |  |        | 0.61 |          |  |            | 23.0  |              |  |  | 139 |  |  |  | 5,218  |  |  |  | 238   | 
|Porphyry Oxide    |  |           | 41,906 |       |  |        | 0.55 |          |  |            | 22.5  |              |  |  | 748 |  |  |  | 30,310 |  |  |  | 1,326 | 
|Total             |  |           | 49,247 |       |  |        | 0.57 |          |  |            | 23.0  |              |  |  | 900 |  |  |  | 36,448 |  |  |  | 1,595 | 

Mine Tonnage and Grades:

The Glamis Feasibility Study assumes a total of 120.5 million tonnes of
material will be mined and 49.2 million tonnes of ore will be processed at
Cerro San Pedro over a mine life of 7.25 years, at an average processing rate
of 22,000 tonnes per day or approximately 6.8 million tonnes per year. The
grade of gold and silver is fairly stable over the life of the mine, as shown
in Table F. The mined grade and process recoveries have a major influence on
the overall operating cash cost per ounce of gold, silver and gold equivalent
produced. In addition, the waste/ore ratio varies somewhat over the life of
the mine, which also impacts the overall cash operating costs.

TABLE F
MINE PRODUCTION SCHEDULE

|               |        |         |     |        |              |       |                |         |       |         |       |       |       |  |       |        |  |  |       |         |  |  |   |     | 
|-------------- | ------ | ------- | --- | ------ | ------------ | ----- | -------------- | ------- | ----- | ------- | ----- | ----- | ----- |  | ----- | ------ |  |  | ----- | ------- |  |  | - | --- | 
|               |        |         | Ore |        | Gold Grade g |       | Silver Grade g |         | Waste |         | Total |       | Strip
|Project Period |        | ktonnes |     | Au/t   |              | Ag/ t |                | ktonnes |       | ktonnes |       | Ratio
|               |        |         |     |        |              |       |                |         |       |         |       |      
|Pre-production |        |         |    |        |              |       |               |         |       |         |      |       |       |  | 9,406 |        |  |  | 9,406 |         |  |  |  |    
|               | Year 1 |         |     | 5,845  |              |       |                | 0.650   |       |         |       | 24.65 |       |  |       | 14,512 |  |  |       | 20,357  |  |  |   | 2.5 | 
|               | Year 2 |         |     | 5,315  |              |       |                | 0.642   |       |         |       | 31.01 |       |  |       | 12,615 |  |  |       | 17,930  |  |  |   | 2.4 | 
|               | Year 3 |         |     | 6,655  |              |       |                | 0.511   |       |         |       | 29.62 |       |  |       | 12,752 |  |  |       | 19,407  |  |  |   | 1.9 | 
|               | Year 4 |         |     | 7,749  |              |       |                | 0.611   |       |         |       | 22.15 |       |  |       | 9,027  |  |  |       | 16,776  |  |  |   | 1.2 | 
|               | Year 5 |         |     | 7,540  |              |       |                | 0.488   |       |         |       | 19.59 |       |  |       | 8,630  |  |  |       | 16,170  |  |  |   | 1.1 | 
|               | Year 6 |         |     | 7,432  |              |       |                | 0.570   |       |         |       | 23.46 |       |  |       | 1,850  |  |  |       | 9,282   |  |  |   | 0.2 | 
|               | Year 7 |         |     | 7,641  |              |       |                | 0.574   |       |         |       | 16.04 |       |  |       | 2,433  |  |  |       | 10,074  |  |  |   | 0.3 | 
|               | Year 8 |         |     | 1,069  |              |       |                | 0.303   |       |         |       | 10.69 |       |  |       | 72     |  |  |       | 1,141   |  |  |   | 0.1 | 
|               | Total  |         |     | 49,246 |              |       |                | 0.57    |       |         |       | 23.02 |       |  |       | 71,297 |  |  |       | 120,543 |  |  |   | 1.4 | 

Gold and Silver Production:

A summary of gold, silver, and gold equivalent production from the Glamis
Feasibility Study by year is provided in Table G, with life-of-mine total
recovered ounces of 634,060 ounces of gold and 13 million ounces of silver
based on commodity prices of $275/ounce gold and $5.00/ounce silver. Gold
equivalent

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ounces are defined as gold ounces plus, silver ounces divided by 55 (Au Eq oz =
Au oz + (Ag oz/55)). Gold equivalent production ranges from a low of 47,981 to
a high of 143,143 and averages 108,799 ounces. Gold production as a proportion
of total gold equivalent production varies from 65 percent to 80 percent over
the years and averages 73 percent over the project life.

TABLE G
SUMMARY OF ANNUAL PRECIOUS METAL PRODUCTION

|                            |                    |        |         |         |         |       |            |            |           |          |           |         |         |  |    |             |    | 
|--------------------------- | ------------------ | ------ | ------- | ------- | ------- | ----- | ---------- | ---------- | --------- | -------- | --------- | ------- | ------- |  | -- | ----------- | -- | 
|                            |                    |        |         |         |         |       |            |            |           |          |           |         |         |  |    | % Au Ozs of
|                            |                    |        |         | Au Oz   |         | Ag Oz |            | Au Eq Oz   |           | Au Eq Oz
|                            |                    |        |         |         |         |       |            |            |           |         
|Total Contained Ounces      |                    |        | 899,345 |         |         |       | 36,448,197 |            |           |          | 1,506,983 |         |         |  | 60 |            
|Estimated Annual Production |                    |        |         |         |         |       |            |            |           |          |           |         |         |  |    |            
|                            |                    | Year 1 |         |         | 61,056  |       |            |            | 926,509   |          |           |         | 77,901  |  |    |             | 78 | 
|                            |                    | Year 2 |         |         | 77,337  |       |            |            | 1,889,095 |          |           |         | 111,684 |  |    |             | 69 | 
|                            |                    | Year 3 |         |         | 77,085  |       |            |            | 2,259,657 |          |           |         | 118,170 |  |    |             | 65 | 
|                            |                    | Year 4 |         |         | 107,368 |       |            |            | 1,967,636 |          |           |         | 143,143 |  |    |             | 75 | 
|                            |                    | Year 5 |         |         | 83,382  |       |            |            | 1,692,959 |          |           |         | 114,163 |  |    |             | 73 | 
|                            |                    | Year 6 |         |         | 95,980  |       |            |            | 1,998,662 |          |           |         | 132,319 |  |    |             | 73 | 
|                            |                    | Year 7 |         |         | 99,480  |       |            |            | 1,405.187 |          |           |         | 125,029 |  |    |             | 80 | 
|                            |                    | Year 8 |         |         | 32,373  |       |            |            | 858,464   |          |           |         | 47,981  |  |    |             | 67 | 
|                            | Total Project Life |        |         | 634,060 |         |       |            | 12,998,169 |           |          |           | 870,391 |         |  |    | 73          |   

A general layout of the Cerro San Pedro mine facilities as proposed under the
Glamis Feasibility Study is presented in Figure 3 (Figure 2 not used).

Figure 3. General Layout of the Mine and Facilities

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General Lay Out of Cerro San Pedro Project Finance

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WLR Consulting Inc. Technical
Report

The following is a summary of information contained in the WLR Consulting Inc.
dated February 4, 2003:

It should be noted that the detailed information from the Glamis Feasibility
Study has not been revised or amended. The only revisions have been the metal
prices, the addition of certain rock types into the definition of ore, and the
mine operating cost estimates used to calculate the mineable reserves. The
mineable reserves of the Glamis Feasibility Study were based on a $275 per
ounce gold price and a $5.25 per ounce silver price. The mineable reserves have
been recalculated in this technical report with revised prices of $325 per
ounce gold and $4.62 per ounce silver.

Revised Economic Parameters

The following revised economic parameters were provided by the Company and were
used to calculate the mineable reserve. The operating cost estimates provided
by the Company were based on preliminary estimates provided by The Washington
Group Inc., an international engineering and construction contractor, and
assume that contract mining will be utilized at the Cerro San Pedro project.

|                                     |  |                        
|------------------------------------ |  | -----------------------
|TABLE HRevised
Economic Parameters  
|                                     |  |                        
|Gold Price                           |  | $ 325 per ounce        
|Silver Price                         |  | $ 4.62 per ounce       
|Freight and Refining Cost for Gold   |  | $ 3.00 per ounce       
|Freight and Refining Cost for Silver |  | $ 0.15 per ounce       
|Mining Cost - Ore                    |  | $ 0.97 per tonne       
|Mining Cost - Waste                  |  | $ 0.85 per tonne       
|General and Administrative Costs     |  | $ 0.20 per tonne of ore

Mineable Reserves

Total mineable reserves at prices of $325/oz Au and $4.62/oz Ag are estimated
at 61.1 million tonnes grading 0.59 g/t Au and 24.0 g/t Ag. Waste stripping is
estimated at 74 million tonnes, resulting in a strip ratio of 1.21 tonnes of
waste per tonne of ore. The total material tonnage for the designed ultimate
pit is 135 million tonnes.

Table I shows the breakdown of the mineable reserves by classification. These
reserve estimates include both proven and probable material, which correspond
to measured and indicated resources within the designed economic (ultimate) pit
limits. All inferred material was treated as waste.

TABLE I

Mineable Reserve Summary by Classification
@ $325/ounce Gold and $4.62/ounce Silver


|               |          |         |       |        |    |       |      |         |       |         |       |      |  |  |        |        |  |  |        |         | 
|-------------- | -------- | ------- | ----- | ------ | -- | ----- | ---- | ------- | ----- | ------- | ----- | ---- |  |  | ------ | ------ |  |  | ------ | ------- | 
|               |          |         | Ore   |        | Au |       | Ag   |         | Waste |         | Total
|Classification |          | ktonnes |       | (g/t)  |    | (g/t) |      | ktonnes |       | ktonnes
|               |          |         |       |        |    |       |      |         |       |        
|               | Proven   |         |       | 58,857 |    |       |      | 0.59    |       |         |       | 23.9 |  |  |        | 46,154 |  |  |        | 105,011 | 
|Probable       |          |         | 2,199 |        |    |       | 0.61 |         |       |         | 26.6  |      |  |  | 14,763 |        |  |  | 16,962 |        
|               | Inferred |         |       |       |    |       |      |        |       |         |       |     |  |  |        | 13,071 |  |  |        | 13,071  | 
|               |          |         |       |        |    |       |      |         |       |         |       |      |  |  |        |        |  |  |        |         | 
|               | Total    |         |       | 61,056 |    |       |      | 0.59    |       |         |       | 24.0 |  |  |        | 73,988 |  |  |        | 135,044 | 
|               |          |         |       |        |    |       |      |         |       |         |       |      |  |  |        |        |  |  |        |         | 

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Conclusion

The results of this Technical Report illustrate that the use of a higher gold
price will result in an increase in mineable reserves for the Cerro San Pedro
deposit. The Glamis Feasibility Study used metal prices of $275 per ounce for
gold and $5.25 per ounce of silver and reported a mineable reserve of 49.2
million tonnes grading 0.57 g/t Au and 23.0 g/t Ag, with a strip ratio of 1.46
tonnes of waste per tonne of ore. At a gold price of $325 per ounce and a
silver price of $4.62 per ounce, the mineable reserves were increased to 61.1
million tonnes grading 0.59 g/t Au and 24.0 g/t Ag with a strip ratio of 1.21
tonnes of waste per tonne of ore.

Project Economics

The Company has hired The Washington Group, Inc., an international engineering
and construction contractor, to generate a cost proposal to construct the mine
and to generate a mine operating cost estimate for the project that assumes
contract mining. The cost data from these proposals, in addition to other data
currently available, will be the basis for the Company to perform financial,
economic and sensitivity analysis on the project. It is anticipated that The
Washington Group, Inc. cost estimates will be available to the Company in early
June 2003.

Environmental

Environmental Permitting Requirements

Mexican environmental regulations addressing permitting and operation of mines
have been subject to significant changes in recent years with new standards and
policies continuing to be developed. The General Law on Ecological Equilibrium
and Protection of the Environment (the General Law) requires certain types of
projects, including mining operations to complete a Manifestacion de Impacto
Ambiental (MIA) (Environmental Impact Statement), if the project has the
potential to cause an ecological imbalance or to exceed limits and conditions
in applicable environmental regulations. Although not required for any
previously permitted mining project in Mexico, an expanded MIA level does exist
and can, in certain situations, be mandated.

A major objective of the MIA process is to demonstrate that the project impacts
will be in compliance with principal environmental regulations for prevention
of water and air pollution, noise limits, hazardous waste use and transport,
and in compliance with the Normas Oficiales Mexicanos (NOMs).

Environmental Permitting Status

The MIA for the development of the Cerro San Pedro project was submitted to the
Secretaria de Medio Ambiente, Recursos Naturales y Pesca (SEMARNAT, Secretary
of Environment and Natural Resources) in October of 1997. An MIA approval
resolution was issued in March 1999 by SEMARNAT. The MIA approval order from
SEMARNAT provides a chronology of the permitting events and lists the terms and
conditions of the resolution. The MIA is the Mexican government equivalent of
an Environmental Impact Statement in the United States and is the primary
federal permit required for the approval of the proposed mine. The issuance of
the MIA is a precondition for the issuance of related state and local permits
necessary for mine construction.

In May 2000 MSX received the Land Use License for the Cerro San Pedro project
from the State of San Luis Potosi, Mexico and in July 2000, MSX received the
Construction License from the Cerro de San Pedro municipality. In August 2000,
MSX received the Change of Land Use License from SEMARNAT and with this
approval, MSX obtained the last significant milestone in the project permitting
process for the Cerro San Pedro project. Only minor local permits will be
required prior to initiating mine construction.

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As a result of the change in planned mine development from a three-stage
crushing circuit as contemplated under the Cambior Feasibility Study to the ROM
scenario as proposed by Glamis, amendments to the previously granted MIA and
the Construction License were required. After filing the modification request
in early 2001, MSX received approval for the Construction License modification
in October 2001 and approval for the MIA modification April 2002.

The MIA that was issued in 1999 is valid for a twelve-year period and includes
eight years for project exploitation and four years for reclamation. MSX
intends to apply for an extension of the MIA in 2003 to extend the MIA term to
adequately cover the proposed mining and reclamation period of approximately 11
years.

Environmental Permitting Compliance

The MIA includes certain conditions that must be met prior to commencing mine
construction and ongoing compliance that must be performed in order to maintain
the permit in good standing. The most significant conditions that must be met
prior to commencing mine construction are 1) stabilization of the Cerro de San
Pedro Apostle Church (the  CSP Church), 2) completion of an archeological
survey by a Mexican governmental agency and 3) negotiation of reclamation
bonding requirements for the project.

The CSP Church is over 200 years old and is located approximately 50 meters
from the proposed open pit. Numerous historical underground workings in the
area have raised issues regarding the stability of the CSP Church, particularly
during blasting periods at the mine. MSX submitted a proposal in early 2003 to
the Mexican governmental agency responsible for historic structures and to the
priest at the CSP Church, to stabilize the CSP Church and install
blast-monitoring equipment. The governmental agency has approved the
stabilization and monitoring proposal; however, approval is also needed from
the priest at the CSP Church before the project can begin. The priests
approval is anticipated within the next couple of months. MSX has budgeted
approximately six months and $252,000 for this program.

Prior to project construction, MSX must offer to relocate seven families with
homes in the immediate vicinity of the proposed mine pit limit. All of these
families will be offered new homes further away from mine pit. Two homes have
been built at a total cost of approximately $40,000. It is anticipated that an
additional five homes may be required at a total cost of approximately
$100,000. In the event that any of these families elect to remain in their
current homes during mine construction and operations, MSX, in conjunction with
Mexican regulatory authorities, must take measures to insure their safety. The
nature of the safety measures that may be required have not yet been
determined.

In January 2003, an archeological survey commenced in the area of the proposed
leach pads. The objective of the survey is to catalog any artifacts of
historical significance in the area. The survey is being conducted and funded
by a Mexican governmental agency. The agency has twelve months to complete its
work and issue a final report on its findings.

2003 Work Program

The 2003 MSX budget was revised in May 2003 to reflect total expenditures of
approximately $2.5 million. This includes approximately $1.2 million for
initial project construction activities such as the CSP Church stabilization
program, construction of five homes for CSP residents, construction of a
laboratory facility, initial project engineering and construction of an
explosive storage facility.

The Company intends to finance project construction, subject to market
conditions, using equity financing, debt financing and/or other financing
alternatives. The Company estimates that it will require approximately $40
million to complete construction of the mine, fulfill the terms of its Cerro
San Pedro purchase obligation to Glamis and to provide the Company with an
adequate level of working capital. Preliminary discussions have been held with
banks and other groups to determine the projects capacity

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for traditional debt and other financing. Subject to market conditions, the
Company intends to seek equity financing for the project in late 2003. Subject
to the Companys ability to secure adequate equity, debt and/or other
financing, the Company intends to proceed with construction of the project in
late 2003. The project has an estimated construction period of nine to twelve
months.

The El Morro Project,
Chile

Project Location

The El Morro copper-gold project comprises 23,599 hectares (ha) and is located
in the Municipality of Alto del Carmen, Huasco Province, Third Region of
Atacama in northern Chile. The project is about 650 km north of Santiago and
some 80 km east of the city of Vallenar.

FIGURE 4: EL MORRO PROJECT LOCATION
MAP

(EL MORRO PROJECT LOCATION MAP)

Project Ownership

The Company entered into an exploration agreement (the Exploration Agreement)
with Noranda to conduct an exploration program on the El Morro project in
September 1999. In February 2000 the agreement was amended and provides for
Noranda to earn up to a 70% interest in the project by making aggregate
exploration and development expenditures of $10 million over a five-year period
beginning September 1999 and a payment to the Company by September 14, 2005 of
$10 million. Noranda is also

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required to complete a bankable feasibility study for the project by September
2007. Furthermore, if requested by the Company, Noranda has the obligation to
provide 70% of the Companys 30% of the capital required to develop the project
at one percentage point over Norandas cost of financing.

Noranda has advised the Company that as of December 31, 2002, it had incurred
exploration and development costs on the project totaling approximately $10
million. Noranda continues to be obligated to maintain the property in good
standing and fund all holding and exploration costs until it either it makes
the $10 million payment to the Company that is due on or before September 14,
2005, or forfeits its option to earn a 70% interest in the project.

Mineral Property Summary

In Chile, mineral rights are granted by ordinary courts of justice in the form
of mining concessions. Any person, whether a Chilean national or a foreigner,
may apply for the granting of mining concessions subject to compliance with the
requirements provided for under Chilean law. The holder of a mining concession
is protected by the ownership right on such concession. The right over the
concession, which is independent from the ownership right on the surface land,
is transferable and may be subject to mortgage. The mining concession entitles
its holder to dispose of all mineral resources contained within its boundaries.

Mining concessions are of two types:

(i)  An Exploration Concession, whereby the holder is legally entitled to
explore for mineral substances in a certain area for a period of two years, at
the expiration of which the concession may be extended for an additional two
year period if the area covered by the concession is reduced by half and
provided the applicable annual tax is paid.

(ii)  An Exploitation Concession, whereby the holder is legally entitled to
exploit mineral substances contained therein for an indefinite period of time
subject to payment of the annual tax.

The holder of an Exploration Concession has the exclusive right to initiate the
procedure to obtain an Exploitation Concession within the boundaries and during
the time period of the Exploration Concession. The holder of each type of
mining concession is entitled by law to impose easements on the surface land in
order to facilitate mining exploration or exploitation activities. Any
compensation to be paid to the owner of the surface land for the easement is to
be determined by mutual agreement or, failing such agreement, by the court. The
acquisition of mineral interests in Chile is normally initiated either through
the filing of an application to the courts to obtain the granting of new mining
concessions or by acquiring existing mining concessions through option to
purchase agreements or other means.

The legal procedure to obtain the granting of a new mining concession is
regulated in detail in the Chilean Mining Code. A special characteristic of
this judicial procedure is that the applicant is required to be active and to
expedite the proceeding in order to comply with deadlines established in the
Chilean Mining Code for the performance of certain tasks to be fulfilled in
order to obtain the grant of the concession. The judge has an active role, and
the proceeding may become contentious in some cases (i.e., in the event of
third party opposition to the survey petition).

Of the total El Morro project area of 23,599 ha, mining concessions cover
16,549 ha at the following stage of the permit granting process:

|  |  |                                  |  |                                          
|- |  | -------------------------------- |  | -----------------------------------------
| |  | Mining Exploitation Concessions: |  | Metallica 1,160 ha                       
|  |  |                                  |  |                                          
| |  | Mining Exploitation Concessions: |  | Acquired 366.01 ha under Purchase Options
|  |  |                                  |  |                                          
| |  | Mining Exploitation Concessions: |  | BHP 1,849 ha                             
|  |  |                                  |  |                                          
| |  | Exploration Concessions:         |  | 13,400 ha                                

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|  |  |                                  |  |          
|- |  | -------------------------------- |  | ---------
| |  | Mining Exploitation Concessions: |  | 12,700 ha
|  |  |                                  |  |          
| |  | Mining Exploitation Concessions: |  | 300 ha   

Some of these groups of concessions form various protection layers that
overlap.

Surface rights at the El Morro project are held by the Los Huasco Altinos, a
grazing and livestock cooperative. Los Huasco Altinos has granted Noranda an
easement and right-of-way to conduct exploration work at the El Morro project.

2,215 Hectares at the El Morro project are controlled through five option to
purchase agreements, two of which were executed by the Company and three of
which were executed by Noranda. Since September 1999, all payments pursuant to
the option to purchase agreements have been made by Noranda pursuant to its
earn-in requirement under the Exploration Agreement. The option to purchase
agreements are summarized as follows:

1) Minera Metallica Limitada and
Rene Martin Jure Option to Purchase Agreement

Parties

Minera Metallica Limitada, a wholly-owned subsidiary of the Company, and Rene
Martin Jure on behalf of Legal Mining Companies Cantarito Uno de la Sierra
Juntas de Cantarito de la Estancia Huasco Alto and Tronquito uno de la Sierra
Portezuelo de Cantarito de la Estancia Huasco Alto (Martin)

Properties

The concessions comprising the Cantarito and Tronquito mining properties have a
combined area of approximately 305 hectares.

Term

On June 4, 1998, Metallica and Martin executed an option to purchase contract
whereby Martin agreed irrevocably, to sell, assign or transfer the mining
properties to Metallica.

Price

The total purchase price amounts to $1,500,000, payable in five installments,
according to the following schedule:

|                                     
|-------------------------------------
|$20,000, paid upon deed execution    
|$30,000, paid on June 4, 1999        
|$75,000, paid on June 4, 2000        
|$150,000, paid on June 4, 2001       
|$1,225,000, paid on December 28, 2001

Of the total purchase price of $1,500,000, $1,450,000 has been paid by Noranda
pursuant to its earn-in requirement under the Exploration Agreement and $50,000
has been paid by Metallica.

Rene Martin Jure has retained a 2% NSR royalty on any mining that occurs on the
Cantarito and Tronquito mining concessions. The Company may elect to purchase
one half of the NSR royalty for $500,000 at any time through June 4, 2003.

2) Minera Metallica Limitada and
BHP Chile Inc. Option to Purchase Agreement

Parties

Minera Metallica Limitada and BHP Chile Inc.

Properties

The concessions comprising the BHP Chile Inc. (BHP) properties have a
combined area of approximately 1,849 hectares.

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Term

On September 2, 1999, Metallica and BHP executed an option to purchase contract
whereby BHP agreed irrevocably, to sell, assign or transfer the mining
properties to Metallica. The term of the option is 4 years and will expire on
September 2, 2003.

Price

The total purchase price amounts to $1,690,000, payable in five installments,
according to the following schedule:

|                                     
|-------------------------------------
|$40,000, paid upon deed execution    
|$150,000, paid on July 31, 2000      
|$500,000, paid on July 31, 2001      
|$500,000, paid on July 31, 2002      
|$500,000, payable as of July 31, 2003

As of May 2003, $1,190,000 had been paid towards the option to purchase
agreement with a final payment of $500,000 due in July 2003. Of the $1,190,000
that has been paid to date, $1,150,000 has been paid by Noranda pursuant to its
earn-in requirement under the Exploration Agreement and $40,000 has been paid
by Metallica.

BHP Chile Inc. has retained a 2% NSR royalty on any mining that occurs on the
BHP Chile mining concessions.

3) Noranda Chile S.A. and Santiago del Carmen Cayo Salinas Option to Purchase
Agreement

Parties

Noranda Chile S.A. and Santiago del Carmen Cayo

Properties

Mr. Santiago del Carmen Cayo Salinas (Santiago Cayo) currently owns eleven
shares (representing a 33 1/3% ownership interest) of Legal Mining Company,
Santa Julia Uno de la Sierra Fortuna, which is the owner of the exploitation
concession Santa Julia 13 that has a combined area of approximately 61
hectares.

Term

On October 20, 2000, Santiago Cayo and Noranda executed an option to purchase
contract whereby Santiago Cayo agreed irrevocably, to sell, assign or transfer
one hundred percent of the eleven shares Santiago Cayo currently holds and
those it might acquire in the future in Legal Mining Company, Santa Julia Uno
de la Sierra Fortuna.

Price

The total purchase price amounts to $30,000 for the shares, payable according
to the following schedule:

|                                  
|----------------------------------
|$5,000, paid upon deed execution  
|$5,000, paid on October 19, 2001  
|$20,000, paid on October 19, 2001.

The $30,000 purchase price has been paid and the option exercised by Noranda.

Santiago Cayo will receive a production bonus equal to $133,333 within two
years of commencement of mining on the Santa Julia concessions 1-3.

4) Noranda Chile S.A. and Luis Alberto Cayo Salinas Option to Purchase
Agreement

Parties

Noranda Chile S.A. and Luis Alberto Cayo Salinas

30



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Properties

Mr. Luis Alberto Cayo Salinas (Luis Cayo) currently owns eleven shares
(representing a 33 1/3% ownership interest) in Legal Mining Company, Santa
Julia Uno de la Sierra Fortuna, which is the owner of the exploitation
concession Santa Julia 1-3 that has a combined area of approximately 61
hectares.

Term

On October 20, 2000, Luis Cayo and Noranda executed an option to purchase
contract whereby Luis Cayo agreed irrevocably, to sell, assign or transfer the
one hundred percent of the eleven shares Luis Cayo currently holds and those it
might acquire in the future in Legal Mining Company, Santa Julia Uno de la
Sierra Fortuna.

Price

The total purchase price offer amounts to $30,000 for the shares, payable
according to the following schedule:

|                                                                      
|----------------------------------------------------------------------
|$5,000, paid upon deed execution                                      
|$5,000, paid on October 19, 2001                                      
|$20,000, payable as of October 20, 2002, was paid on October 19, 2001.

The $30,000 purchase price has been paid and the option exercised by Noranda.

Luis Cayo will receive a production bonus equal to $133,333 within two years
of commencement of mining commences on the Santa Julia concessions 1-3.

5) Noranda Chile S.A. and Johnny Cayo Salinas and Others Option to Purchase
Agreement

Parties

Noranda Chile S.A. and Johnny Cayo Salinas and Others

Properties

Mr. Johnny Cayo Salinas and others (Cayo Villalba Brothers) currently own
eleven shares (representing a 33 1/3% ownership interest) in Legal Mining
Company, Santa Julia Uno de la Sierra Fortuna, which is the owner of the
exploitation concession Santa Julia 1-3 that has a combined area of
approximately 61 hectares.

Term

On February 5, 2001, Johnny Cayo Salinas and Noranda executed an option to
purchase contract whereby Johnny Cayo Salinas agreed irrevocably, to sell,
assign or transfer the one hundred percent of the eleven shares Cayo Villalba
Brothers currently hold and those it might acquire in the future in Legal
Mining Company, Santa Julia Uno de la Sierra Fortuna.

Price

The total purchase price offer amounts to $25,000 for the shares, payable
according to the following schedule:

|                                       
|---------------------------------------
|$4,000, paid upon deed execution       
|$3,000, payable as of February 5, 2002 
|$18,000, payable as of October 20, 2002

The $25,000 purchase price has been paid and the option exercised by Noranda.



|Cayo Villalba Brothers will receive a production bonus equal to $133,333
within two years of commencement of mining on the Santa Julia concessions 1-3.
|---------------------------------------------------------------------------------------------------------------------------------------------------------

Mineral Property Legal Issues

Ownership of nine concessions within the El Morro land package were in dispute
with Compañía Minera Hornitos (Hornitos). The Company filed five separate
lawsuits in August 2000 covering five concessions alleging that Hornitos
furnished false survey records in its court filings, and landmarks or boundary
stones

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were never constructed. All five lawsuits were ultimately resolved in favor of
the Company with Hornitos alleged rights to the concessions being revoked in
November 2001.

The Company filed four lawsuits in 2001 to annul Hornitos alleged ownership
claims to the four disputed concessions that were not covered in the original
lawsuits. During May and June 2002, the 1st Court of First Instance of
Vallenar disallowed the Companys four petitions for annulment. These
judgments were appealed by the Company, and in March 2003, the Court of Appeals
of Copiapó ruled in favor of the annulment lawsuits filed by the Company.
Hornitos subsequently filed an appeal to the Supreme Court in Santiago. A
ruling on the case is expected during 2003. The area of conflict does not
affect any of the known mineralized zones at the El Morro project.

On April 2002, a number of non-authorized small miners (pirquineros) found
their way into the Project area. They worked through the winter using a new
access road constructed by a bulldozer.

Norandas representatives submitted a claim before the Public Ministry in order
to solve this situation. In August 2002, the police visited the area, gathering
information, and subsequently detained 19 pick-up trucks and minerals at a
treatment plant in Copiapó. Noranda and the attorney of the miners held several
meetings with the local authorities in order to obtain a solution granting
Norandas rights. In October, an agreement between Noranda and 64 miners was
executed before the local authorities, setting the following conditions:



| |  |  | Noranda would suspend the criminal process against miners who
subscribed to the agreement.     
| | - |  | -----------------------------------------------------------------------------------------------
|
| |  |  | Noranda would allow the restitution of the minerals and equipment retained by the Court        
|
| |  |  | The miners would not go back to the project area.                                              
|
| |  |  | The new access road for the pirquineros would be closed.                                       
|
| |  |  | Court cases would continue against any of the miners that carry on with the illegal activities.

Claims before the Court of Vallenar were pursued against the miners who did not
sign the agreement mentioned above and who were still working at the El Morro
project.

In March 2003, government officials visited the illegal pirquineros mine
workings and requested that Noranda destroy the mine area citing environmental
concerns, safety and liability issues. The pirquineros mine area was
destroyed in late March 2003.

Environmental Permitting

The National Environmental Committee (CONAMA) and Regional Environmental
Committees (COREMAs) are the agencies responsible for environmental management
in Chile. For a project or activity to be environmentally evaluated, it must
be submitted into the Environmental Impact Evaluation System (SEIA), and the
CONAMA is responsible for administrating the environmental impact evaluation
procedures. Both exploration and mine development projects are included. The
type of assessment required for each project can be either of the following:



| |  |  | an Environmental Impact Assessment (EIA) 
| | - |  | -----------------------------------------
|
| |  |  | an Environmental Impact Declaration (DIA)

In broad terms, an EIA in Chile is comparable with international guidelines for
an EIA and is required if there is sufficient reason for speculating that the
project may produce certain specified environmental impacts. A DIA, on the
other hand, is a document that establishes, via a description of the project
and its surrounding environment, that the project will comply with current
norms and environmental standards. A DIA for the El

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Morro project was filed in Copiapo before the CONAMA  III Region on October 5,
2001. The scope of the permit was an advanced exploration and evaluation stage
by the use of drilling for a period of the next three years. A favorable
Environmental Qualification Resolution (RCA) was received on December 28, 2001.

There are currently no known environmental fatal flaws at the El Morro project
although an EIA has not been completed.

Geology

The El Morro district is located within a 16-kilometer wide north-south
trending graben structure that was uplifted by major reverse faults. The
western graben-fault could correspond to the south extension of the Domeyko
fault system, the main controlling feature for the northern Chile copper
porphyry belt, represented by the Collahuasi, Quebrada Blanca, El Abra,
Chuquicamata, La Escondida, El Salvador and Potrerillo mines. The El Morro-La
Fortuna copper-gold-molybdenum mineralization may represent the southernmost
extension of the classic Chilean Oligocene porphyry copper belt, more than 300
kilometers south of the Potrerillos district.

The basement rocks within the graben are made up of Paleozoic to Permo-Triassic
crystalline and volcanic rocks. The Permo-Triassic basement rocks are strongly
folded to the west, along the fault contact that thrusts these volcanic rocks
on top of Jurassic red beds. To the east the Permo-Triassic rocks are covered
in erosional unconformity by Triassic-Jurassic rocks. The Triassic-Jurassic
sediments as well as the overlying volcanic-pyroclastic Paleocene-Eocene
sequence have been intensely folded, forming overturned anticlines and
synclines. In the central part of the district, all the Permian to Eocene
sequences are intruded by a series of granodioritic to dioritic porphyrtic
stocks and dikes, possibly Oligocene in age. Miocene, dacitic ignimbrite flows
cover all the rock types described above. The ignimbrites are covered by a
thick sequence of Atacama Gravels, assigned to Miocene-Pliocene age.

El Morro Area

The El Morro project presently consists of two principal target areas: the El
Morro area and the La Fortuna area. Based on field observations, the
stratigraphy is grouped into three broad units: a Permo-Triassic basement,
Jurassic (possibly Cretaceous) and Tertiary rocks. The Permo-Triassic basement
rocks are composed mainly of rhyolitic crystal to lapilli tuffs and
ignimbrites, with minor interstratified dacite flows. The younger Jurassic (or
Cretaceous) rocks consist of a volcano-sedimentary package of interbedded
dacite tuffs, sandstones, conglomerates, and volcaniclastic rocks. To the west
of the project area, these units are covered with Tertiary dacitic ignimbrites
and andesitic tuffs, agglomerates and flows.

At least two major, northeast trending faults are visible along the contact
zone between the Jurassic and the Tertiary units.

Andesitic dikes, sills and small stocks intrude the Jurassic and Tertiary units
with frequent porphyritic texture, but of pre-mineral origin. Independently
from the andesites, a granodioritic porphyry of limited surface distribution
was identified in outcrop and in diamond drill core. This porphyry has been
described as a biotite  amphibole granodiorite. Besides the granodiorite
porphyry, petrographic studies on surface and core samples have also recognized
another intrusive unit in this area, a dacite porphyry (feldspar, biotite) of
difficult macroscopic identification because of the fine-grained texture and
high level of hydrothermal alteration of the rock.

Within the Triassic basement, local graben structures are filled with and have
preserved younger stratified rocks, going from marine sequences to continental
volcano sedimentary units. The El Morro area lies in one of these graben
basins, at the intersection of the main NS  NE system. A sheeted vein pattern
visible at the El Morro mineralized zone trends to the NW. Other intrusive
bodies like andesite and porphyry dykes, follow the same pattern, with NW and
NE directions.

33



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La Fortuna Area

La Fortuna is a classic copper/gold porphyry-type deposit, the first one of
this nature found in the Eocene-Oligocene Porphyry Copper Belt of northern
Chile. Mineralization is related to cylindrical, multistage subvolcanic
intrusions of granodioritic to dioritic composition, emplaced in a gently east
dipping sequence of andesitic conglomerate, tuffs and sediments.

Multistage intrusions are present at La Fortuna, related to Oligocene
sub-volcanic igneous activity, which is at the origin of all the mineralized
porphyries in the district.

Exploration

BHP Minerals, Metallica and Noranda have conducted drilling programs on the El
Morro project. A total of 43,796 meters consisting of 151 reverse circulation
and core holes have been drilled on the project through April 2003. Since
September 1999, all exploration drilling on the El Morro project has been
conducted by Noranda pursuant to its earn-in requirement under the Exploration
Agreement. As of December 31, 2002 Noranda had informed the Company that it
had spent approximately $10 million on exploration activities at the El Morro
project. A summary of drilling programs conducted on the El Morro project is
presented below in Table J:

TABLE J

SUMMARY OF DRILLING PROGRAMS  EL MORRO PROJECT
EXPLORATION TARGET AREA




|          |  |            |          |           |  |      |         |     |  |     |  |     |  |  |         |   |  |  |         |   |  |  |  | 
|--------- |  | ---------- | -------- | --------- |  | ---- | ------- | --- |  | --- |  | --- |  |  | ------- | - |  |  | ------- | - |  |  |  | 
|          |  |            |          |           |  |      |         |     |  |     |  |     |  |  |         |   |  |  |         |   |  |  |  | 
|          |  | La Fortuna |          | Cantarito |  | Camp
|          |  |            |          |           |  |     
|Company   |  | DDH        |          | RDH       |  | DDH  |         | RDH |  | DDH |  | RDH
|          |  |            |          |           |  |      |         |     |  |     |  |    
|          |  |            | 400.30   |           |  |      | (6      | )   |  |     |  |     |  |  | (10     | ) |  |  |         |   |  |  |  | 
|BHP 1993  |  |            | (1       | )         |  |      | 1327.90 |     |  |     |  |     |  |  | 997.00  |   |  |  |         |   |  |  |  | 
|          |  |            | 1071.15  |           |  |      | (7      | )   |  |     |  |     |  |  | (4      | ) |  |  |         |   |  |  |  | 
|BHP 1994  |  |            | (7       | )         |  |      | 768.00  |     |  |     |  |     |  |  | 379.00  |   |  |  |         |   |  |  |  | 
|Metallica |  |            |          |           |  |      | (4      | )   |  |     |  |     |  |  | (4      | ) |  |  |         |   |  |  |  | 
|1999      |  |            |          |           |  |      | 908.00  |     |  |     |  |     |  |  | 340.00  |   |  |  |         |   |  |  |  | 
|Noranda   |  |            | 1159.91  |           |  |      |         |     |  |     |  |     |  |  |         |   |  |  | 199.16  |   |  |  |  | 
|2000      |  |            | (4       | )         |  |      |         |     |  |     |  |     |  |  |         |   |  |  | (1      | ) |  |  |  | 
|Noranda   |  |            | 9384.93  |           |  |      |         |     |  |     |  |     |  |  |         |   |  |  | 904.40  |   |  |  |  | 
|2001      |  |            | (21      | )         |  |      |         |     |  |     |  |     |  |  |         |   |  |  | (3      | ) |  |  |  | 
|Noranda   |  |            | 8247.65  |           |  |      | (5      | )   |  |     |  |     |  |  | (1      | ) |  |  |         |   |  |  |  | 
|2002      |  |            | (16      | )         |  |      | 1538    |     |  |     |  |     |  |  | 394     |   |  |  |         |   |  |  |  | 
|Total (m) |  |            | 20263.94 |           |  |      | 4541.90 |     |  |     |  |     |  |  | 2110.00 |   |  |  | 1103.56 |   |  |  |  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|          |  |          |         |          |  |       |         |       |  |     |         |     |  |     |         |   |  |  |         |   |  |  |          |   |  |  |          |  
|--------- |  | -------- | ------- | -------- |  | ----- | ------- | ----- |  | --- | ------- | --- |  | --- | ------- | - |  |  | ------- | - |  |  | -------- | - |  |  | -------- | -
|          |  |          |         |          |  |       |         |       |  |     |         |     |  |     |         |   |  |  |         |   |  |  |          |   |  |  |          |  
|          |  | El Negro |         | El Morro |  | Other |         | Total
|          |  |          |         |          |  |       |         |      
|Company   |  | DDH      |         | RDH      |  | DDH   |         | RDH   |  | RDH |         | DDH |  | RDH
|          |  |          |         |          |  |       |         |       |  |     |         |     |  |    
|          |  |          |         |          |  |       |         |       |  |     |         |     |  |     |         |   |  |  |         |   |  |  | 400.30   |   |  |  | (16      | )
|BHP 1993  |  |          |         |          |  |       |         |       |  |     |         |     |  |     |         |   |  |  |         |   |  |  | (1       | ) |  |  | 2324.90  |  
|          |  |          |         |          |  |       | (1      | )     |  |     |         |     |  |     |         |   |  |  |         |   |  |  | 1071.15  |   |  |  | (12      | )
|BHP 1994  |  |          |         |          |  |       | 100.00  |       |  |     |         |     |  |     |         |   |  |  |         |   |  |  | (7       | ) |  |  | 1247.00  |  
|Metallica |  |          |         |          |  |       | (2      | )     |  |     | 500.10  |     |  |     | (7      | ) |  |  |         |   |  |  | 500.10   |   |  |  | (17      | )
|1999      |  |          |         |          |  |       | 418.00  |       |  |     | (1      | )   |  |     | 1547.00 |   |  |  |         |   |  |  | (1       | ) |  |  | 3213.00  |  
|Noranda   |  |          |         |          |  |       |         |       |  |     | 2949.32 |     |  |     |         |   |  |  |         |   |  |  | 4308.39  |   |  |  |          |  
|2000      |  |          |         |          |  |       |         |       |  |     | (11     | )   |  |     |         |   |  |  |         |   |  |  | (16      | ) |  |  |          |  
|Noranda   |  |          | 4971.65 |          |  |       |         |       |  |     |         |     |  |     |         |   |  |  |         |   |  |  | 15260.98 |   |  |  |          |  
|2001      |  |          | (16     | )        |  |       |         |       |  |     |         |     |  |     |         |   |  |  |         |   |  |  | (40      | ) |  |  |          |  
|Noranda   |  |          | 748.55  |          |  |       | (3      | )     |  |     |         |     |  |     | (3      | ) |  |  | (10     | ) |  |  | 8996.20  |   |  |  | (22      | )
|2002      |  |          | (3      | )        |  |       | 912     |       |  |     |         |     |  |     | 1094    |   |  |  | 2536    |   |  |  | (19      | ) |  |  | 6474.00  |  
|Total (m) |  |          | 5720.20 |          |  |       | 1430.00 |       |  |     | 3449.42 |     |  |     | 2641.00 |   |  |  | 2536.00 |   |  |  | 30537.12 |   |  |  | 13258.90 |  

Legend:

DDH - Diamond core drill hole

RDH - Reverse circulation drill hole

(*)- Represents number of holes drilled

An El Morro property map with general drilling locations is presented below in Figure 5::

34



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FIGURE 5: EL MORRO PROPERTY MAP AND
DRILLING AREAS

EL EMRRO PROPERTY MAP AND DRILLING AREAS

35



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##### Table of Contents



El Morro Area

During the first quarter of 1999, Metallica drilled seven wide-spaced reverse
circulation holes to test the El Morro property. One hole, RDM-2, encountered
mineralization averaging 0.64% Copper, 0.22 grams per tonne gold and 148 ppm Mo
over a 192-meter interval from 76 meters to 268 meters. During April 1999, a
500-meter deep core hole was drilled to twin reverse circulation hole RDM-2.
The copper and gold assays of the twin core hole were approximately 20% higher
when compared to the reverse circulation hole.

In early 2000, Noranda completed a 4,300-meter, 16-hole drilling program on the
El Morro project. On the El Morro property, Noranda drilled 11 core holes
totaling 2,949 meters. Although Norandas drilling did not intercept the
grades or widths of the Companys discovery hole RDM-2, the drilling results
did show persistent secondary copper mineralization grading in the 0.2% to 0.5%
range over widths ranging from 75 to 200 meters. Noranda reported that the
drilling intersected no intrusive porphyritic units, only rocks considered to
be wall rocks to the porphyry system. In November 2000, Noranda began a second
phase of drilling on the El Morro project, none of which took place at the El
Morro area.

The objective of Norandas 2002 drilling program at the El Morro area was to
test known mineralization and geophysical targets. In 2002 three new holes had
been drilled at the El Morro area. One of these holes, RDM-9, was drilled
within the northeast portion of a projected mineralized area approximately
1,000 meters in length by 400 meters in width. RDM-9 intersected a 50 meters
of secondary mineralization grading 0.91% copper and 0.58 g/t gold, and 170
meters of primary mineralization grading 0.45% copper and 0.27 g/t gold.

Cantarito, El Negro, Camp and Other Target Areas

From 1993 through 2002 approximately 58 holes totaling 12,900 meters had been
drilled to test target areas identified as Cantarito, El Negro, Camp and Other.
Although some of these holes encountered intercepts of encouraging
mineralization, additional drilling at these areas has failed confirm the
continuity of significant metal values.

La Fortuna Area

At La Fortuna area, consistent but sub-economic copper and gold mineralization
was encountered by BHP. During the spring of 1999, Metallicas initiated a
drilling program at La Fortuna proper that consisted of four holes totaling 594
meters and resulted in only anomalous metal values. In early 2000 Noranda
drilled a total of five core holes on the La Fortuna area totaling 1,350
meters. One hole (DDHF-04) intersected a 70-meter chalcocite enriched zone
grading 1.15% copper and 0.35 g/t gold. The remaining holes encountered lesser
amounts of mineralization and were mineralized at depth. In November 2000
Noranda began a second round of drilling in the La Fortuna area that included
23 holes at La Fortuna totaling 10,197 meters that encountered significant
continuity of metal values.

Based on the results from the 2000 and 2001 drilling programs, Noranda
calculated an inferred mineral resource estimate in accordance with CIM
Definitions on Mineral Resources and Mineral Reserves for the La Fortuna area
of 410,000 million tonnes of grading 0.61% copper and 0.56 grams of gold per
tonne, at a 0.4% copper cut-off grade.

The inferred resource estimate was diamond drill tested on approximately
200-meter centers by Noranda and was based on 10,545 meters of drilling in 25
holes. The resource, as currently defined, includes an area of approximately
600 meters by 800 meters of higher-grade mineralization that extends to a
vertical depth of more than 600 meters. The resource remains open to the
north, northwest and at depth.

The resource estimate study was conducted using Gemcom software under the
supervision of qualified Noranda professionals. The estimate is based on a
block model with a block size of 20 meters on a side. The copper and gold
values were interpolated using an inverse distance algorithm. The supergene
zone,

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also modeled in three dimensions, was interpolated separately from the primary
zone.

All drill core samples were assayed by Bondar Clegg, an independent laboratory
located in Coquimbo, Chile. Gannet certified standards were used to ensure
assay quality. The analytical method was assay analysis for the copper and
fire assay with an atomic absorption finish for the gold values. Norandas
Drill Core Sampling and Analysis Protocols, developed through Norandas Six
Sigma process, are employed to ensure quality assurance and quality control.
ALS Chemex in Vancouver, Canada analyzed selected bulk rejects and pulps as
part of the quality assurance program. The Qualified Person who supervised the
design and conduct of work performed on the El Morro property is Michael
Donnelly, Norandas General Manager Exploration-Southern Hemisphere.

The objective of Norandas 2002 drilling program at La Fortuna was to expand
the previously identified mineralized area, which remained open to the north,
northwest and at depth. Noranda drilled 21 holes totaling 9,786 meters in 2002.
One hole, DDHF-39, encountered mineralizaton averaging 0.65% copper and 0.53
grams of gold per tonne over its entire 970-meter length. Based on the
encouraging results from the 2002 drilling program at La Fortuna, Noranda Inc.
completed an update to its 2001 inferred mineral resource estimate for the La
Fortuna area as follows:

TABLE
KNoranda Inferred Mineral Resource Estimate  2002

|          |  |                    |         |                    |  |                    |      |         |  |        |      |       |  |         |         |        |  |       |      |  |  |  |      |  |  |  |         |  |  |  |      |  |  |  |      | 
|--------- |  | ------------------ | ------- | ------------------ |  | ------------------ | ---- | ------- |  | ------ | ---- | ----- |  | ------- | ------- | ------ |  | ----- | ---- |  |  |  | ---- |  |  |  | ------- |  |  |  | ---- |  |  |  | ---- | 
|          |  | 0.3% Copper Cutoff |         | 0.4% Copper Cutoff |  | 0.5% Copper Cutoff
|          |  |                    |         |                    |  |                   
|          |  | Tonnes             |         | Copper             |  | Gold               |      | Tonnes  |  | Copper |      | Gold  |  | Tonnes  |         | Copper |  | Gold 
|          |  | (000's)            |         | (%)                |  | (g/t)              |      | (000's) |  | (%)    |      | (g/t) |  | (000's) |         | (%)    |  | (g/t)
|          |  |                    |         |                    |  |                    |      |         |  |        |      |       |  |         |         |        |  |      
|Supergene |  |                    | 122,000 |                    |  |                    | 0.66 |         |  |        | 0.32 |       |  |         | 103,000 |        |  |       | 0.71 |  |  |  | 0.35 |  |  |  | 85,000  |  |  |  | 0.77 |  |  |  | 0.37 | 
|Primary   |  |                    | 468,000 |                    |  |                    | 0.53 |         |  |        | 0.50 |       |  |         | 362,000 |        |  |       | 0.58 |  |  |  | 0.54 |  |  |  | 255,000 |  |  |  | 0.64 |  |  |  | 0.56 | 
|Total     |  |                    | 590,000 |                    |  |                    | 0.56 |         |  |        | 0.46 |       |  |         | 465,000 |        |  |       | 0.61 |  |  |  | 0.50 |  |  |  | 340.000 |  |  |  | 0.67 |  |  |  | 0.51 | 

The 2002 inferred mineral resource estimate is calculated down to an elevation
of 3,400 meters, or 100 meters deeper than Norandas 2001 inferred resource
estimate. One diamond drill hole, DDHF-39, continues in strong mineralization
to an elevation of 3,073 meters or over 325 meters below the 2002 inferred
resource estimate.

Norandas 2002 Inferred Mineral Resource estimate for the La Fortuna area has
been determined in accordance with CIM Definitions on Mineral Resources and
Mineral Reserves.

The resource estimate study was conducted using Gemcom software under the
supervision of qualified Noranda professionals. The estimate is based on a
block model with a block size of 20 meters on a side and a 15 meters vertical
bench height. The copper and gold values were interpolated using an ordinary
kriging algorithm. The primary and supergene zones were interpolated
separately for copper and in combination for gold.

All drill core samples were assayed by ALS Chemex (Chile) S.A., an independent
laboratory located in Coquimbo, Chile. Gannet certified standards were used to
ensure assay quality. The analytical method was assay analysis for the copper
and fire assay with an atomic absorption finish for the gold values. Norandas
Drill Core Sampling and Analysis Protocols, developed through Norandas Six
Sigma process, were employed to ensure quality assurance and quality control.
Geoanalitica, another independent laboratory located in Coquimbo, Chile
analyzed selected bulk rejects and pulps as part of the quality assurance
program. The Qualified Persons who supervised the design and conduct of work
performed on the El Morro property were John Sullivan, Director of the El Morro
project and Stanley Clemmer, Senior International Geologist, both of Noranda
Chile Ltda.

2003 Work Program

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Although Noranda has spent the required $10 million on exploration and
development at the El Morro project as required under the Exploration
Agreement, Noranda is still required to maintain the project in good standing
and fund all project related costs until it either pays Metallica $10 million,
which is due on or before September 14, 2005, or forfeits its option to acquire
a 70% interest in the project. Noranda has informed the Company that it
intends to spend approximately $1 million on property option payments and
exploration at the El Morro project in 2003. No drilling is planned for the El
Morro project in 2003.

The MIMK Project, Chile

Project History and Exploration

In 2000 Metallica initiated the MIMK project in Chile. The purpose of the
program was to identify and acquire projects similar to the El Morro project by
expanding the satellite spectra information that had been gathered over the El
Morro project. Thirty-four anomalous zones were identified in an area
approximately 90 kilometers by 100 kilometers and located south and west of the
El Morro project. These anomalies were then prioritized based on size,
location, geological features and availability. Fifteen of these anomalies were
ultimately acquired by staking. Further evaluation and prioritization reduced
the number of properties to six.

During 2002, mapping and sampling continued on the six El Morro type anomalies.
As a result of this work, one of the properties was drilled, three were
abandoned resulting in a write-off of $21,000, and two were recommended for
further work.

Metallica obtained encouraging results at the Los Colorados property from its
detailed mapping, sampling and an induced polarization (IP) geophysical survey.
The Company proceeded with approximately 1,550 meters of combined core and
reverse circulation drilling in six widely spaced holes. Although the drilling
did not intersect economic copper or gold mineralization, the data collected
from the drill holes will assist Metallica in developing a better geological
understanding of the region.

2003 Work Program

Evaluation of existing, and identification of additional, El Morro type
porphyry copper-gold targets will be aggressively pursued in 2003. Based on
the considerable knowledge gained from the El Morro deposit and the MIMK
project, the Company intends to continue with its systematic evaluation of El
Morro-type targets with the objective of advancing priority targets to the
drilling stage. Approximately $250,000 has been budgeted for the MIMK
exploration program for 2003. This budget does not include a provision for
drilling.

The Mara Rosa Project,
Brazil

The Mara Rosa gold project was acquired from a subsidiary of Western Mining
Corporation in 1997 for $1.5 million. At December 31, 2001, the Company
wrote-off its $2.9 million investment in the project. In 2002, the Company
conducted a five-hole, 940-meter drilling program at Mara Rosa to test new
targets, but did not encounter any economic mineralization. Metallica will
continue with its efforts to sell or joint venture the property in 2003.




ITEM 5 Operating and Financial
Review and Prospects

The following discussion and analysis of results of operations and liquidity
and capital resources should be read in conjunction with the Metallica
Resources Inc. (the Company) Consolidated Financial Statements. The
Consolidated Financial Statements have been prepared in accordance with
Canadian generally accepted accounting principles (GAAP). For a
reconciliation to U.S. GAAP, see Note 13 to the

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Consolidated Financial Statements. See
also Item 3. Key Information  A.
Selected Financial Data, for a discussion of significant measurement
differences between U.S. and Canadian GAAP that materially affect the Companys
financial statements. All amounts stated herein are in U.S. dollars, unless
otherwise noted.

Some of the disclosures included in the 2002 annual report represent
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements, opinions and perspectives
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any actual future results, performance or
achievements expressed or implied by such forward-looking statements.

A) Operating Results

The Companys current business activity focus is on the exploration and, if
practicable, the development of precious and base metal deposits. All costs
relating to the Companys exploration activities, other than grass-roots
exploration, which is expensed as incurred, are capitalized until such time as
a decision is made to proceed with the development phase of each project. In
the event the Company elects to proceed with development of a project, the
capitalized exploration expenditures and subsequent development costs will be
depleted on the unit of production basis as the estimated total reserves are
mined. Management of the Company regularly reviews the carrying value of each
mineral property. Where information is available and conditions suggest
impairment, estimated future net cash flows from each property are calculated
using estimated future prices, proven and probable reserves, and operating,
capital and reclamation costs on an undiscounted basis. Reductions in the
carrying value of each property would be recorded to the extent that the net
book value of the property exceeds the estimated future netI assume this is
correct. It is how it has been referred to in the rest of the paragraph. cash
flows. Where estimates of future net cash flows are not available and where
other conditions suggest impairment, management assesses if the carrying value
can be recovered. As a result of these potential write-offs and write-downs
from exploration activities, the net income or loss of the Company may be
volatile.

The Company has incurred losses in each of the last five fiscal years due to
the lack of an operating property or other revenue generating activity.
Management anticipates that net losses of the Company will continue for at
least the next two years as a result of ongoing corporate general and
administrative, exploration and reclamation expenses, write-downs of mineral
properties and deferred exploration expenditures. With the acquisition of its
joint venture partners 50% interest in the Cerro San Pedro project subsequent
to year-end, the Company anticipates that the trend of losses may reverse if,
and when, gold and silver are produced from its now 100%-owned Cerro San Pedro
project in Mexico. A number of significant events, however, must occur before
commercial production at the Cerro San Pedro project can commence, including,
but not limited to, the fulfillment of certain conditions identified in its
regulatory permits and financing of the anticipated development costs.
Accordingly, there can be no assurance that commercial production from the
Cerro San Pedro project will be achieved or that such mining activities will be
profitable.

Since the Company does not own any interests in producing mineral properties or
have any other revenue generating activities, it does not have any operating
income or cash flow from operations. The Companys only significant source of
income is from interest earned on cash and cash equivalents. Interest income
for the year ended December 31, 2002, was consistent with the preceding year.
For the year ended December 31, 2001, interest income decreased to $0.07
million from $0.15 million for the year ended December 31, 2000. The $0.08
million decrease was primarily due to a decline in interest rates on short-term
investments. Interest income for 2003 will be higher than in 2002 due to higher
average invested cash balances, the result of a $9.59 million private placement
that closed on March 11, 2003.

General and administrative expenses for the year ended December 31, 2002, of
$0.92 million were $0.18 million more than the 2001 expenditures of $0.74
million. The increase was primarily attributable to the cost of management
bonuses, including payroll burden, totaling $0.17 million in 2002 versus nil
bonuses in 2001. General and administrative expenses for the year ended
December 31, 2001, of $0.74 million were consistent with 2000 expenditures of
$0.72 million.

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Exploration expenses for the year ended December 31, 2002, were $0.25 million
as compared to $0.20 million for 2001. The Company conducted a five-hole
1,000-metre drilling program to test new targets at its Mara Rosa gold project
in Brazil in 2002 versus no drilling activities in 2001. The 2002 drilling
program did not encounter any economic mineralization. The cost of the drilling
program was approximately $0.07 million and is the primary reason for the $0.05
million increase in exploration expenses in 2002. Exploration expenses of $0.20
million for the year ended December 31, 2001 were consistent with 2000
expenditures of $0.21 million. The Company has budgeted $0.31 million for
grass-roots exploration activities in 2003.

The Company incurred reclamation and property closure costs relating to its
Mara Rosa project in Brazil of $0.20 million for the year ended December 31,
2002, as compared to $0.05 million for 2001. The increase of $0.15 million is
primarily attributable to cost overruns and delays in the Companys closure
activities in Brazil to allow for completion of a 2002 drilling program at the
Mara Rosa Project. The Company increased its estimated liability for
reclamation and property closure costs on the Mara Rosa project at December 31,
2001, by $0.05 million. This resulted in a charge to operations of $0.05
million for the year ended December 31, 2001. The Company did not incur any
reclamation or property closure costs in 2000.

The Company abandoned three of the six MIMK exploration properties in 2003
resulting in a write-down of mineral properties and deferred exploration
expenditures totaling $0.02 million in 2002. At December 31, 2001, the Company
elected to write-off the $2.89 million carrying value of its Mara Rosa project.
The Company will continue its efforts to joint venture or sell the Mara Rosa
project in 2003. At December 31, 2000, due to low precious metal prices, the
Company wrote-down the carrying value of its Cerro San Pedro project by $6.67
million to the then estimated value of the projects undiscounted future net
cash flows of $10.86 million.

The Company sold its investment in Cambior Inc. common shares in 2000, which
resulted in a loss on sale of marketable securities of $0.14 million for the
year ended December 31, 2000. There were no sales of marketable securities in
2002 or 2001.

B) Liquidity and Capital
Resources

The Company relies primarily on the sale of common shares, the exercise of
share options and common share purchase warrants, the sale of royalty interests
and joint venture arrangements to fund its exploration and project development
activities. The extent to which such financing options are pursued in the
future will depend upon various factors, including the successful acquisition
of new properties or projects, commodity prices, results of exploration and
development activities and managements assessment of the capital markets. Any
cessation of joint venture funding or significant increase in exploration or
project development activities may require the Company to seek additional
funding. There is no assurance that such financing will be available when
needed or that it can be secured on favourable terms. Furthermore, there is no
assurance that the Company will be able to obtain new properties or projects,
or that they can be secured on favourable terms. For the years ended December
31, 2002, 2001 and 2000, the Company received net proceeds of $4.08 million,
$1.20 million, $0.10 million, respectively, from the sale of equity securities.

At December 31, 2002, the Company had working capital of $4.40 million as
compared to $2.32 million at December 31, 2001. The increase of $2.08 million
is primarily attributable to a private placement financing of $4.05 million in
April 2002 less expenditures on mineral properties and deferred exploration
totaling $0.89 million and cash flows used in operating activities totaling
$1.23 million.

On February 12, 2003, the Company purchased its joint venture partners 50%
interest in Minera San Xavier, S.A. de C.V. (MSX), the owner of the Cerro San
Pedro project for $18 million, adjusted for 50% of MSXs working capital as
described in Note 14 to the Consolidated Financial Statements. With this
purchase, the Company now has a 100% interest in MSX. I added this in because
this point was only clear to me after putting several isolated comments
together.The Company paid $2 million at closing and is required to make a $5
million payment on or before August 12, 2003, and another $6 million payment in

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cash or shares on February 12, 2004. In addition, the Company is required to
make a $2.5 million payment upon commencement of commercial production and a
final payment of $2.5 million one year after commencement of commercial
production.

On March 11, 2003, the Company closed a private placement for 10.1 million
shares at a price of Cdn$1.50 per share for gross proceeds of Cdn$15.1 million
(US$9.59 million). Each share includes a one-half common share purchase
warrant. Each whole common share purchase warrant is exercisable at a price of
Cdn$2.00 per share for a period of two years to March 11, 2005. Proceeds from
the private placement will be used to make the $5 million Cerro San Pedro
acquisition payment due on August 12, 2003 and to fund initial development
activities at the project.

As of December 31, 2002, the Company had capitalized mineral property and
deferred exploration expenditures totaling $12.59 million. This amount includes
$10.98 million relating to Cerro San Pedro, of which $0.38 million and $0.79
million were capitalized in 2002 and 2001, respectively, for project
development activities. These amounts were reduced by the Companys 50% share
of Glamis equity contributions to MSX of $0.06 million and $0.98 million for
2002 and 2001, respectively. The Company was not required to match Glamis
equity contributions; therefore, the Companys 50% share of Glamis equity
contributions has been allocated as a reduction to mineral property and
deferred exploration expenditures. Capitalized expenditures relating to the El
Morro project totaled $1.04 million at December 31, 2002, and included $0.08
and $0.02 million for costs that were capitalized during the years ended
December 31, 2002 and 2001, respectively. The majority of exploration
expenditures relating to the El Morro project are being incurred by Noranda
Inc., pursuant to its earn-in requirement as described below. The MIMK project
reflected capitalized costs totaling $0.57 million at December 31, 2002, and
included $0.42 and $0.07 million for costs that were capitalized during the
years ended December 31, 2002 and 2001, respectively. The Mara Rosa project was
written off at December 31, 2001; therefore, there were no costs capitalized on
the project in 2002. In 2001, $0.28 million was capitalized on the Mara Rosa
project.

Additional expenditures were made on the Companys Cerro San Pedro and El Morro
projects by its joint venture partners pursuant to earn-in requirements.
Expenditures by the Companys joint venture partners totaled approximately $4.5
million, $5.5 million and $2.7 million for the years ended December 31, 2002,
2001 and 2000, respectively. The Companys partner on the El Morro project,
Noranda Inc., is required to fund all project exploration activities until such
time as it completes the requirements necessary for it to earn a 70% interest
in the project. One earn-in requirement is that the joint venture partner must
make a $10 million payment to the Company by September 2005. If, and when, the
$10 million payment is made, the Company will be required to fund its 30% share
of future exploration expenditures at the El Morro project. See Note 3(b) to
the Consolidated Financial Statements for details relating to the terms of the
El Morro agreement. The Company purchased its joint venture partners 50%
interest in Cerro San Pedro on February 12, 2003. Effective this date, the
Company is required to fund all exploration and development costs associated
with the Cerro San Pedro project.

The Company is subject to a multitude of risks that may affect future
operations which include, among others, metal prices, currency fluctuations,
laws governing the repatriation of profits, foreign exchange controls, mineral
property exploration and development, environmental contingencies and political
and economic stability. The Company manages its foreign currency risk by
maintaining maximum cash balances in the currency in which most of the
Companys expenditures are made, the U.S. dollar.

Outlook

The Companys primary focus for 2003 will be the development of its 100% owned
Cerro San Pedro project. Approximately $2.3 million has been budgeted for 2003
for initial development of the project. It is estimated that an additional $24
million will be required to complete construction of the mine, which is
anticipated to begin during the fourth quarter of 2003. The Companys goal is
to raise an estimated $40 million through a combination of equity and debt
financing in order to fulfill the payment terms of the

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purchase agreement, construct the mine and provide the Company with a
sufficient level of working capital. There is no assurance that the Company
will be successful in its efforts to raise these funds. In the event that the
Company is unsuccessful in its financing efforts, it will defer development of
the Cerro San Pedro project. This will allow the Company to meet its ongoing
general and administrative, and property related expenditures for at least the
next eighteen months with its present level of working capital.

Noranda Inc. is required to fund all exploration costs at the El Morro project
until such time as it makes a $10 million earn-in payment to the Company, which
is due no later than September 2005. Once this payment is made, the Company
will be required to fund its 30% share of ongoing exploration costs, if any,
associated with the project. The Company was informed by Noranda that it
intends to spend approximately $1.0 million on the El Morro project in 2003.
The Company estimates that it will incur exploration costs up to $0.1 million
on the El Morro project in 2003.

The Company has budgeted exploration expenditures totaling $0.7 million on the
MIMK and other identified exploration projects for 2003. In addition, $0.8
million has been budgeted for general and administrative expenses for 2003.
These expenditure levels could materially change depending on market conditions
or results achieved from the Companys current exploration programs.

C) Research and Development,
Patents and Licenses, etc.

As the Company is a mineral exploration company that has not yet commenced
production on any of its properties, the information required by this section
is inapplicable.

D) Trend Information

The Company has incurred losses in each of the last five fiscal periods due to
the lack of an operating property or other revenue generating activity.
Management anticipates that net losses of the Company will continue for at
least the next two years as a result of ongoing corporate general and
administrative, exploration and project development costs. Management
anticipates that the trend of losses may reverse if and when gold and silver is
produced from the Cerro San Pedro project. However, a number of significant
events must occur before commercial production at the Cerro San Pedro project
can begin, including completion of certain requirements identified in the
regulatory permits and financing of the anticipated development costs. There
can be no assurance that commercial production from the Cerro San Pedro project
will be achieved or that mining activities will be profitable.




ITEM 6 Directors, Senior Management
and Employees

A) Directors and Senior
Management

The following table sets forth the name and municipality of residence, and the
office (if any) held with the Company of each of the officers and directors of
the Company:

|                                           |  |     |    |             |  |                                                 |  |  |      | 
|------------------------------------------ |  | --- | -- | ----------- |  | ----------------------------------------------- |  |  | ---- | 
|Name and Municipality
of                   |  |     |    |             |  |                                                 |  |  |      | 
|Residence                                  |  | Age |    | Office Held |  | Director Since                                 
|                                           |  |     |    |             |  |                                                
|Craig J. Nelsen (2)(4)
Littleton, Colorado |  |     | 51 |             |  | Chairman, Director                              |  |  | 1994 | 
|Richard J. Hall (6)
Spokane, Washington    |  |     | 53 |             |  | President, Chief Executive Officer
and Director |  |  | 1999 | 
|Denis M. Marsh(1)(2)
Toronto, Ontario      |  |     | 61 |             |  | Director                                        |  |  | 1994 | 
|J. Alan Spence(1)(2)                       |  |     | 65 |             |  | Director                                        |  |  | 1994 | 

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|                                         |  |     |    |             |  |                                                           |  |  |      | 
|---------------------------------------- |  | --- | -- | ----------- |  | --------------------------------------------------------- |  |  | ---- | 
|Name and Municipality
of                 |  |     |    |             |  |                                                           |  |  |      | 
|Residence                                |  | Age |    | Office Held |  | Director Since                                           
|                                         |  |     |    |             |  |                                                          
|Toronto, Ontario                         |  |     |    |             |  |                                                           |  |  |      | 
|Ian A. Shaw (1)(3)
Toronto, Ontario      |  |     | 62 |             |  | Director                                                  |  |  | 1994 | 
|Oliver Lennox-King (3)
Toronto, Ontario  |  |     | 53 |             |  | Director                                                  |  |  | 1998 | 
|Fred H. Lightner (5)
Littleton, Colorado |  |     | 56 |             |  | Senior Vice President, Chief
Operating Officer & Director |  |  | 1999 | 
|Brad Blacketor
Lone Tree, Colorado       |  |     | 44 |             |  | Chief Financial Officer & Secretary                       |  |  | -    | 



|(1) |  | Member of the audit committee.                                                                                                                                                                                                                                                                     
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Member of the compensation committee.                                                                                                                                                                                                                                                              
|   
|(3) |  | Member of the nominating committee.                                                                                                                                                                                                                                                                
|   
|(4) |  | Mr. Nelsen resigned as Chief Executive Officer on April 9, 1999.                                                                                                                                                                                                                                   
|   
|(5) |  | Mr. Lightner was appointed Chief Executive Officer and Director of the
Company on March 26, 1999. Mr. Lightner resigned as Chief Executive
Officer and was appointed Senior Vice-President and Chief Operating
Officer on November 8, 1999. Mr. Lightner continues to be a Director of
the Company.
|   
|(6) |  | Mr. Hall was appointed President, Chief Executive Officer and Director on
November 8, 1999.                                                                                                                                                                                                        

The following is a brief biographical description, including principal
occupations of each of the officers and directors of the Company.

Craig J. Nelsen holds a Master of Science degree in Geology from the University
of New Mexico and a Bachelor of Arts degree in Geology and has been involved in
exploration and mining for over 28 years. From January, 1991 to January, 1994,
Mr. Nelsen was Senior Vice-President of Exploration with Lac Minerals Ltd. Mr.
Nelsen was the Chairman, Chief Executive Officer and a director of the Company
from January, 1994 through March, 1999. In April 1999, Mr. Nelsen resigned as
Chief Executive Officer of the Company but continues to serve as Chairman and a
director of the Company. Mr. Nelsen is currently the Executive Vice-President
of Exploration of Gold Fields Ltd., an international gold mining company.

Richard J. Hall holds Bachelors and Masters Degrees in Geology, and a Masters
Degree in Business Administration, all from Eastern Washington University. Mr.
Hall has over 30 years of experience in the mining industry and has previously
held senior management positions with Dayton Mining Corporation and Pegasus
Gold Corporation. Mr. Hall was appointed President and Chief Executive Officer
and director of the Company on November 8, 1999.

Ian A. Shaw holds a Bachelor of Commerce degree from the University of Toronto
and is a Chartered Accountant. He has over 30 years of experience in the
mining industry. Mr. Shaw worked with Sherritt Inc. (1975-1986), Curragh Inc.
(1986-1993, most recently as Vice-President and Treasurer), and from October
1993 to present has provided financial management services as a consultant to a
number of mineral resource exploration companies. Executive positions he holds
or has held since October 1993 include Secretary and Treasurer of CaribGold
Resources Inc. (October 1993 to present), Treasurer of Pelangio-Larder Mines,
Limited and Vice-President, Finance of Pangea Goldfields Inc. and Tiomin
Resources Inc. (January 1994 to December 1994) and Vice-President, Finance of
Black Hawk Mining Inc. from 1997 to 1998. Mr. Shaw was formerly the Secretary
and Treasurer of the Company, and is currently a director of the Company, which
position he has held since January 1994.

Denis M. Marsh is a Chartered Financial Analyst and has worked in the Canadian
investment industry over the past 32 years. Most of his experience has been as
an investment analyst for both investment dealers and investment counselors.
His analytical experience encompasses a wide range of disciplines, including
the mining industry. Mr. Marsh has been a Senior Vice-President and Director
of Beutel,

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Goodman & Company Ltd., a Canadian investment dealer, since 1983 and a director
of the Company since January 1994.

J. Alan Spence holds a Master of Science degree in Geology from McGill
University and an Executive Master of Business Administration from Columbia
University. He has been involved in mineral exploration and development for
over 34 years, including positions as Director of Exploration with Inco Ltd.,
Vice-President of North American Partners Ltd., a venture capital fund, and
President of South American Goldfields Inc. which pioneered gold and diamond
exploration in the Guiana Shield from 1988 to 1992. Mr. Spence was Chairman of
Bactech Metallurgical Solutions Inc., a refractory minerals process technology
company from 1999 to 2001. Mr. Spence has been a director of Canuc Resources
from 1987 to 1997; a director of Consolidated Nevada Goldfield Company from
1989 to 1993, and has been President of I.M.I. Minerals Development since 1993.
Mr. Spence is currently the President of Spence Resource Management Inc. Mr.
Spence has been a director of the Company since January 1994.

Oliver Lennox-King was previously a director of the Company from January 1994
until February 1997. In May 1998, Mr. Lennox-King was reappointed as a
director of the Company. Mr. Lennox-King holds a Bachelor of Commerce degree
and has over 26 years experience in the mineral resource industry in positions
ranging from administration to metal marketing to financial analysis. Since
February 1997, Mr. Lennox-King has been the Chairman of Southern Cross
Resources Inc., a uranium mining company listed on The Toronto Stock Exchange.
Prior to February 1997, Mr. Lennox-King was the President of Tiomin Resources
Inc. (July 1992 to January 1997), and the Chairman of Pangea Goldfields Inc.
(January 1994 to January 1997). From 1988 to 1992, Mr. Lennox-King was a
Vice-President of Midland Walwyn Inc., a Canadian investment dealer. Mr.
Lennox-King is also a director of Newstar Resources Inc. (since June, 1996),
Dumont Nickel Company (since 1991) and Tiomin Resources Inc. (since July 1992).

Fred H. Lightner holds a Metallurgical Engineering degree from the Colorado
School of Mines. He has over 33 years of experience in mine development and
project management, including senior management positions with Wharf Resources
Ltd., Pegasus Gold Company, Tenneco Minerals Co. and Asarco Inc. He was
appointed Vice President of Operations for the Company in September 1996 and
was appointed Chief Executive Officer and director of the Company in March
1999. Mr. Lightner resigned as Chief Executive Officer of the Company in
November 1999 and was re-appointed Senior Vice President and Chief Operating
Officer. Mr. Lightner has been a director of the Company since March 1999.

Bradley J. Blacketor holds a Bachelor of Science degree in Business
Administration from Indiana University and an MBA from Colorado State
University. He is also a Certified Public Accountant. He has over 20 years of
experience in domestic and foreign accounting, taxation and finance. He was
Chief Financial Officer and Secretary for Mincorp Ltd. of Denver, Colorado
(July 1991 to April 1997), Vice President and Controller of Pincock, Allen &
Holt, Inc. of Lakewood, Colorado (July 1988 to July 1991) and an Audit Manager
at Touche Ross & Co. in Denver, Colorado (November 1983 to July 1988). He was
appointed Chief Financial Officer and Secretary for the Company in April 1997.

B) Compensation

Summary Compensation Table

|                                    |  |      |      |       |  |                     |         |             |  |               |       |                |  |              |        |  |  |   |        | 
|----------------------------------- |  | ---- | ---- | ----- |  | ------------------- | ------- | ----------- |  | ------------- | ----- | -------------- |  | ------------ | ------ |  |  | - | ------ | 
|                                    |  |      |      |       |  |                     |         |             |  |               |       |                |  | Long-Term    |        |  |  |  
|                                    |  |      |      |       |  |                     |         |             |  |               |       |                |  | Compensation |        |  |  |  
|                                    |  |      |      |       |  | Annual Compensation |         | Awards      |  |               |       |               
|                                    |  |      |      |       |  |                     |         |             |  | Retirement    |       | Securities     |  | Other       
|Name and Principal                  |  |      |      |       |  | Salary              |         | Plan        |  | Under Options |       | Compensation -
|Position                            |  | Year |      | (US$) |  | (US$)               |         | Granted (#) |  | Bonus (US$)  
|                                    |  |      |      |       |  |                     |         |             |  |              
|Richard
J. HallPresident and CEO    |  |      | 2002 |       |  | $                   | 116,533 |             |  | $             | 5,808 |                |  |              |       |  |  | $ | 55,000 | 
|Fred
H. LightnerSenior VP and COO   |  |      | 2002 |       |  | $                   | 110,950 |             |  | $             | 5,548 |                |  |              |       |  |  | $ | 52,500 | 
|Bradley
J. BlacketorCFO & Secretary |  |      | 2002 |       |  | $                   | 100,384 |             |  | $             | 5,019 |                |  |              | 87,500 |  |  | $ | 47,500 | 

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Options Granted During the Year
Ended December 31, 2002

|                     |  |            |        |                 |  |                 |      |                 |  |                 |      |  |  |                  |  | 
|-------------------- |  | ---------- | ------ | --------------- |  | --------------- | ---- | --------------- |  | --------------- | ---- |  |  | ---------------- |  | 
|                     |  |            |        |                 |  |                 |      |                 |  | Market Value of |      |  |  |                 
|                     |  | Securities |        |                 |  |                 |      | Securities      |  |                 |      | 
|                     |  | Under      |        |                 |  |                 |      | Underlying      |  |                 |      | 
|                     |  | Options    |        | Exercise or     |  | Options on the  |      |                 |  |                
|                     |  | Granted    |        | Base Price      |  | Date of Grant   |      |                 |  |                
|Name                 |  | (#)        |        | (Cdn$/Security) |  | (Cdn$/Security) |      | Expiration Date
|                     |  |            |        |                 |  |                 |      |                
|Bradley J. Blacketor |  |            | 87,500 |                 |  | $               | 1.39 |                 |  | $               | 1.39 |  |  | January 10, 2007
|CFO & Secretary      |  |            |        |                 |  |                 |      |                 |  |                 |      |  |  |                  |  | 

The options vest 1/3 on the date of grant, January 10, 2002, an additional 1/3
on the first anniversary of the date of grant and the remaining 1/3 on the
second anniversary of the date of grant.

Director Compensation

Directors are entitled to remuneration as determined by the Board of Directors.
The Company has no specific provision for compensation of Directors in their
capacities as such, and did not pay any such compensation to Directors during
2002 or 2001. Directors are entitled to reimbursement from the Company of
out-of-pocket costs incurred in connection with acting in their capacities as
directors.

Retirement Plan

Since 1997, the Company has sponsored a defined contribution tax-deferred
retirement plan in accordance with the provisions of section 401(k) of the U.S.
Internal Revenue Service Code (the Retirement Plan). The Retirement Plan is
available to all permanent U.S. based employees. The purpose of the Retirement
Plan is to enable the Companys employees to make tax deferred contributions to
a trust established under the Retirement Plan. Upon termination of an
employees employment with the Company, all amounts contributed by the employee
to the Retirement Plan, as well as amounts contributed by the Company on behalf
of the employee in respect of which the employee has vested, may be paid out to
the employee, rolled into another retirement plan maintained by another
employer or rolled into an eligible rollover account under the U.S. Employee
Retirement Income Security Act.

Under the Retirement Plan, U.S. based employees of the Company and its
affiliates may elect to defer up to 15% of their compensation, subject to
statutory dollar limits, by way of payroll deductions (employee
contributions). The Company also contributes an amount of common shares of
the Company, equal to one-half of the particular employees contribution, to a
maximum of 5% of the employees compensation. By way of example, if an
employee elects to contribute 8% of his or her compensation to the Retirement
Plan, the Company contributes 4% of the employees compensation, in the form of
common shares of the Company, to the plan. If an employee elects to contribute
15% of his or her compensation (being the maximum allowable contribution), the
Company contributes 5% of that employees compensation, in the form of common
shares of the Company, to the plan. The employee vests in respect of the
Companys contributions upon completion of three years employment with the
Company or its affiliates. At the Companys Annual General Meeting of
shareholders on June 7, 2001, the shareholders approved the

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issuance of up to 300,000 shares of Metallica common stock to satisfy the
Companys obligations as to employer matching contributions under the
Retirement Plan.

The Company has not set aside or accrued any funds for pension, retirement, or
similar benefits.

Employment Contracts

The Company has entered into employment contracts with each of its three
executive officers: Richard J. Hall, President and Chief Executive Officer,
Fred H. Lightner, Senior Vice President and Chief Operating Officer, and
Bradley J. Blacketor, Chief Financial Officer and Secretary. The respective
current salaries under these contracts, are $121,000, $115,500 and $104,500.
The contracts are for two or three-year terms with various expiration dates,
but will remain in effect subsequent to the initial term unless a minimum of
six-months notice is provided by either party. The contracts provide that in
the event that following a change of control, as defined, the Company
terminates the employment of the Named Executive Officer other than for
Manifest Cause, as defined, or the executive officer resigns from his
employment for Good Reason, as defined, within six months following a Change of
Control, then the Company shall pay to the executive officer a lump sum amount
equal three times the executive officers annual salary currently in effect.

C) Board Practices

Directors are elected at each Annual General Meeting of Shareholders, each to
hold office until the next Annual Meeting or until his successor is duly
elected or appointed, unless his office is earlier vacated by death, removal or
other cause in accordance with the Articles of the Company.

The non-executive directors of the Company are not entitled to any benefits
following termination of their service with the Company.

The board or directors has assigned specific governance responsibilities to
three committees of the board, as follows:

Audit Committee

The Corporation has an Audit Committee which has the functions defined in
applicable legislation. The Audit Committee is comprised of three
non-management directors who are appointed by the Board. The committee reviews
the Corporations annual financial statements prior to their acceptance by the
Board of Directors. The Committee is also responsible for reviewing the
Corporations financial reporting procedures and the adequacy of its internal
controls. It considers the report of the external auditors and examines the
fees and expenses for audit services and it recommends to the Board the
independent auditors for appointment by the shareholders. It may undertake
additional tasks at the request of the Board. The audit committee is composed
of Ian A. Shaw, Denis M. Marsh and J. Alan Spence.

Compensation Committee

The Compensation Committee consists of three non-management directors. The
Committee reviews and recommends to the Board the remuneration of senior
officers. It is also charged with reviewing senior officer hiring, management
development and management succession. The Compensation Committee is composed
of Craig J. Nelsen, Denis M. Marsh and J. Alan Spence.

Nominating Committee

The Nominating Committee consists of two non-management directors. The
Committee is responsible for proposing new nominees to the board and for
assessing directors on an ongoing basis. The Committee is also responsible for
assessing the effectiveness of the board as a whole, the committees of the
board and

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the contribution of individual directors. The Nominating Committee is composed
of Oliver Lennox-King and Ian A. Shaw.

D) Employees

Number of Employees at the End of
Each of the Past Three Years

|               |                        |  |      |   |      |  |      |   |  |  |  |   | 
|-------------- | ---------------------- |  | ---- | - | ---- |  | ---- | - |  |  |  | - | 
|               |                        |  | 2002 |   | 2001 |  | 2000
|               |                        |  |      |   |      |  |     
|United States: |                        |  |      |   |      |  |      |   |  |  |  |  
|               | Management             |  |      | 3 |      |  |      | 3 |  |  |  | 3 | 
|               | Professional           |  |      | 0 |      |  |      | 0 |  |  |  | 0 | 
|               | Administrative/support |  |      | 1 |      |  |      | 1 |  |  |  | 1 | 
|Chile:         |                        |  |      |   |      |  |      |   |  |  |  |  
|               | Management             |  |      | 0 |      |  |      | 0 |  |  |  | 0 | 
|               | Professional           |  |      | 0 |      |  |      | 0 |  |  |  | 0 | 
|               | Administrative/support |  |      | 0 |      |  |      | 0 |  |  |  | 0 | 
|Brazil:        |                        |  |      |   |      |  |      |   |  |  |  |  
|               | Management             |  |      | 0 |      |  |      | 0 |  |  |  | 0 | 
|               | Professional           |  |      | 0 |      |  |      | 0 |  |  |  | 0 | 
|               | Administrative/support |  |      | 0 |      |  |      | 0 |  |  |  | 0 | 
|Mexico:        |                        |  |      |   |      |  |      |   |  |  |  |  
|               | Management             |  |      | 0 |      |  |      | 0 |  |  |  | 0 | 
|               | Professional           |  |      | 0 |      |  |      | 0 |  |  |  | 0 | 
|               | Administrative/support |  |      | 0 |      |  |      | 0 |  |  |  | 0 | 

The Companys Brazil office was closed in 2000. Glamis Gold Ltd. was the
operator of the Cerro San Pedro project in Mexico at December 31, 2002, 2001
and 2000 and employed all personnel for the Cerro San Pedro project through a
wholly-owned subsidiary. The Company utilizes independent contractors in Chile
and Brazil to carry out its exploration activities.

E) Share Ownership

The following table sets forth certain information as of May 5, 2003 regarding
share ownership and all outstanding options to purchase the Companys common
shares.

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|                   |  |            |         |           |  |            |         |              |  |             |     |          |  |  |      |  |  |  |          | 
|------------------ |  | ---------- | ------- | --------- |  | ---------- | ------- | ------------ |  | ----------- | --- | -------- |  |  | ---- |  |  |  | -------- | 
|                   |  |            |         |           |  |            |         |              |  | Beneficial  |     | Exercise |  |  |      | 
|                   |  | Beneficial |         | Number of |  | Ownership  |         | Price of the |  | Expiration 
|Identity of Person |  | Share      |         | Options   |  | Percentage |         | Options      |  | Date of    
|or Group           |  | Ownership  |         | (1)       |  | (2)        |         | (Cdn$)       |  | the Options
|                   |  |            |         |           |  |            |         |              |  |            
|Craig J. Nelsen    |  |            | 450,000 |           |  |            | 100,000 |              |  |             | 1.9 | %        |  |  | 0.85 |  |  |  | 04/20/05 | 
|                   |  |            |         |           |  |            | 207,500 |              |  |             |     |          |  |  | 0.83 |  |  |  | 06/07/06 | 
|                   |  |            |         |           |  |            | 25,000  |              |  |             |     |          |  |  | 1.11 |  |  |  | 03/16/04 | 
|                   |  |            |         |           |  |            | 21,000  |              |  |             |     |          |  |  | 0.45 |  |  |  | 05/18/05 | 
|                   |  |            |         |           |  |            | 25,000  |              |  |             |     |          |  |  | 1.32 |  |  |  | 03/12/03 | 
|Dennis A. Marsh    |  |            | 50,000  |           |  |            | 30,000  |              |  |             | *   |          |  |  | 0.50 |  |  |  | 01/14/04 | 
|                   |  |            |         |           |  |            | 28,750  |              |  |             |     |          |  |  | 0.83 |  |  |  | 06/07/06 | 
|                   |  |            |         |           |  |            | 25,000  |              |  |             |     |          |  |  | 1.11 |  |  |  | 03/16/04 | 
|                   |  |            |         |           |  |            | 21,000  |              |  |             |     |          |  |  | 0.45 |  |  |  | 05/18/05 | 
|                   |  |            |         |           |  |            | 25,000  |              |  |             |     |          |  |  | 1.32 |  |  |  | 03/12/03 | 
|J. Alan Spence     |  |            | 20,000  |           |  |            | 30,000  |              |  |             | *   |          |  |  | 0.50 |  |  |  | 01/14/04 | 
|                   |  |            |         |           |  |            | 28,750  |              |  |             |     |          |  |  | 0.83 |  |  |  | 06/07/06 | 
|                   |  |            |         |           |  |            | 25,000  |              |  |             |     |          |  |  | 1.11 |  |  |  | 03/16/04 | 
|                   |  |            |         |           |  |            | 21,000  |              |  |             |     |          |  |  | 0.45 |  |  |  | 05/18/05 | 
|                   |  |            |         |           |  |            | 25,000  |              |  |             |     |          |  |  | 1.32 |  |  |  | 03/12/03 | 
|Ian A. Shaw        |  |            | 20,000  |           |  |            | 20,000  |              |  |             | *   |          |  |  | 0.50 |  |  |  | 01/14/04 | 
|                   |  |            |         |           |  |            | 28,750  |              |  |             |     |          |  |  | 0.83 |  |  |  | 06/07/06 | 
|                   |  |            |         |           |  |            | 25,000  |              |  |             |     |          |  |  | 1.11 |  |  |  | 03/16/04 | 
|                   |  |            |         |           |  |            | 21,000  |              |  |             |     |          |  |  | 0.45 |  |  |  | 05/18/05 | 
|                   |  |            |         |           |  |            | 25,000  |              |  |             |     |          |  |  | 1.32 |  |  |  | 03/12/03 | 
|Oliver Lennox-King |  |            | 50,000  |           |  |            | 25,000  |              |  |             | *   |          |  |  | 1.11 |  |  |  | 03/16/04 | 
|                   |  |            |         |           |  |            | 21,000  |              |  |             |     |          |  |  | 0.45 |  |  |  | 05/18/05 | 
|                   |  |            |         |           |  |            | 20,000  |              |  |             |     |          |  |  | 0.83 |  |  |  | 06/07/06 | 
|                   |  |            |         |           |  |            | 25,000  |              |  |             |     |          |  |  | 1.32 |  |  |  | 03/12/03 | 
|Brad Blacketor     |  |            | 26,152  |           |  |            | 125,000 |              |  |             | *   |          |  |  | 0.83 |  |  |  | 06/07/06 | 
|                   |  |            |         |           |  |            | 25,000  |              |  |             |     |          |  |  | 1.11 |  |  |  | 03/16/04 | 
|                   |  |            |         |           |  |            | 30,000  |              |  |             |     |          |  |  | 0.45 |  |  |  | 05/18/05 | 
|                   |  |            |         |           |  |            | 87,500  |              |  |             |     |          |  |  | 1.39 |  |  |  | 01/10/07 | 
|                   |  |            |         |           |  |            | 125,000 |              |  |             |     |          |  |  | 1.32 |  |  |  | 03/12/03 | 
|Fred H. Lightner   |  |            | 165,941 |           |  |            | 297,500 |              |  |             | 1.7 | %        |  |  | 0.83 |  |  |  | 06/07/06 | 
|                   |  |            |         |           |  |            | 200,000 |              |  |             |     |          |  |  | 1.11 |  |  |  | 03/16/04 | 
|                   |  |            |         |           |  |            | 150,000 |              |  |             |     |          |  |  | 1.32 |  |  |  | 03/12/03 | 
|Richard J. Hall    |  |            | 440,336 |           |  |            | 300,000 |              |  |             | 2.1 | %        |  |  | 0.70 |  |  |  | 11/08/04 | 
|                   |  |            |         |           |  |            | 75,000  |              |  |             |     |          |  |  | 0.83 |  |  |  | 06/07/06 | 
|                   |  |            |         |           |  |            | 200,000 |              |  |             |     |          |  |  | 1.32 |  |  |  | 03/12/03 | 

(1) Includes vested and non-vested options.

(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares owned by
a person and the percentage ownership of that person, Common Shares subject to
options and warrants held by that person that are currently exercisable or
exercisable within 60 days of May 5, 2003, are deemed outstanding. Such
shares, however, are not deemed outstanding for the purposes of computing the
percentage ownership of any other person. This table has been prepared based
on 42,555,010 Common Shares outstanding as of May 5, 2003.

*   Less than 1%.

The Company has two stock option plans that are designed to give each option
holder an interest in preserving and maximizing shareholder value in the longer
term and to reward employees and service providers for both past and future
performance Individual grants are determined by an assessment of an

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individuals current and expected future performance, level of responsibilities
and the importance of his/her position with, and contribution to, the Company.
The stock option plans allow for the issuance of up to 4,500,000 million common
shares in the Company. Options issued and outstanding as of May 5, 2003 total
2,977,083. Options exercised pursuant to the stock option plans total
1,073,999 leaving 448,918 options available for issuance.




ITEM 7 Major Shareholders and Related Party Transactions

A) Major Shareholders

Metallicas securities are recorded on the books of its transfer agent in
registered form. The majority of such shares are, however, registered in the
name of intermediaries such as brokerage houses and clearing houses on behalf
of their respective clients. Metallica does not have any knowledge of the
beneficial owners thereof. To the best of the Companys knowledge, the
following is a summary of shareholders who own 5% or more of the Companys
shares. The Company is not aware of any other shareholders with a 5% or
greater share position in the Company.

|                                                                                                                                                                     |  |                |           |                |  |                |      |   |  |  |           |  |  |  |      |   |  |  |           |  |  |  |     |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | --------- | -------------- |  | -------------- | ---- | - |  |  | --------- |  |  |  | ---- | - |  |  | --------- |  |  |  | --- | -
|Beneficial Shareholders (5% or                                                                                                                                       |  |                |           |                |  |                |      |   |  |  |           |  |  |  |      |   |  |  |           |  |  |  |     |  
|greater)                                                                                                                                                             |  | As of 12/31/02 |           | As of 12/31/01 |  | As of 12/31/00
|                                                                                                                                                                     |  |                |           |                |  |               
|Franco Nevada Mining Corporation
Limited
20 Eglinton Avenue West, Suite 1900
Toronto, Ontario M4R 1K8                                                                |  |                |          |                |  |                |     |   |  |  | 3,455,852 |  |  |  | 12.8 | % |  |  | 2,179,852 |  |  |  | 8.1 | %
|Canada                                                                                                                                                               |  |                |           |                |  |                |      |   |  |  |           |  |  |  |      |   |  |  |           |  |  |  |     |  
|Newmont Mining Corporation
1700 Lincoln Street
Denver, Colorado 80203                                                                                                |  |                | 3,749,932 |                |  |                | 11.6 | % |  |  |          |  |  |  |     |   |  |  |          |  |  |  |    |  
|Cambior Inc.
800 Rene-Levesque Blvd. W., Suite 850
Montreal, Quebec H3B 1X9
Canada                                                                                   |  |                |          |                |  |                |     |   |  |  |          |  |  |  |     |   |  |  | 2,000,000 |  |  |  | 7.4 | %
|Fidelity Investments
Fidelity Select Gold Portfolio
82 Devonshire Street
Boston, MA 02109-3614                                                                       |  |                |          |                |  |                |     |   |  |  | 1,490,800 |  |  |  | 5.2  | % |  |  | 1,690,800 |  |  |  | 6.2 | %
|Royal Precious Metals Fund
c/o The Royal Trust Company
The Royal Trust Tower
P.O. Box 7500, Station A
77 King Street West, 6th Floor
Toronto, Ontario M5W 1P9
Canada |  |                | 3,150,000 |                |  |                | 9.7  | % |  |  | 2,500,000 |  |  |  | 8.8  | % |  |  | 2,000,000 |  |  |  | 7.4 | %

Each share held by the major shareholders named above is entitled to equal
voting rights.

In October 1997 Franco Nevada Mining Corporation Limited issued a $1.1 million
letter of credit on behalf of the Company to Western Mining Corporation in
connection with the purchase of the Mara Rosa Project in Brazil. The letter of
credit was drawn in October 1999 and Franco Nevada elected to receive 2,179,852
shares in the Company valued at $1.1 million.

In May 2001 Cambior sold its 2,000,000 common shares in the Company on the
Toronto Stock Exchange. Also in May 2001, Franco Nevada Mining Corporation
Limited increased the number of

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shares it owns in the Company by 1,276,000 to hold a total of 3,455,852 shares
representing 12.8% of the issued and outstanding shares in the Company. In
early 2002, Franco Nevada Mining Corporation Limited was acquired by Newmont
Mining Corporation.

To the best of the Companys knowledge, at December 31, 2002, 10,825,384 common
shares were held by 578 registered record holders in the U.S. The number of
outstanding shares of the Companys Common Stock at May 5, 2003 was 42,555,010.
To the best of the Companys knowledge, the Company is not directly or
indirectly owned or controlled by another corporation, by any foreign
government, or by any other natural or legal persons severally or jointly.

B) Related Party Transactions

In June 2000 the Company granted a $100,000 interest-free loan to Richard J.
Hall that is collateralised by real property and due in June 2003. In the
event that the underlying collateral is sold prior to June 2003, the loan is
due and payable within 30 days of the date of sale unless additional collateral
is provided that is acceptable by the Company. As of May 5, 2003 the
outstanding balance on the loan was $100,000.

C) Interests of Experts and Counsel

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this Item.




ITEM 8 Financial Information

A) Consolidated Statements and Other Financial Information

This Annual Report contains the audited consolidated financial statements of
the Company for the years ended December 31, 2002, 2001, and 2000, including an
Audit Report dated February 21, 2003, except as to Note 14(b), which is as of
March 11, 2003. The following financial statements are included: Consolidated
Balance Sheets as at December 31, 2002 and 2001; Consolidated Statements of
Operations and Deficit for the Years Ended December 31, 2002, 2001 and 2000;
and Consolidated Statements of Cash Flows for the Years Ended December 31,
2002, 2001 and 2000. Also included are Notes to the Consolidated Financial
Statements for the Years Ended December 31, 2002, 2001 and 2000. The Companys
consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles. Except as described in Note
13 to the consolidated financial statements, there are no material measurement
differences, for the purposes of these financial statements, between accounting
principles generally accepted in Canada and the United States.

Legal Proceedings

No material legal proceedings are pending to which the Company is a party or of
which any of its properties is the subject.

Dividend Policy

The Company has not paid any dividends on its Common Shares and has no dividend
policy with respect to the payment of dividends.

B) Significant Changes

There have been no significant changes since the date of the audited financial
statements, February 21, 2003, except as to Note 14(b), which is as of March
11, 2003.

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ITEM 9 The Offer and Listing

A) Offer and Listing Details

The Common Shares of the Company are listed and posted for trading on The
Toronto Stock Exchange (the TSX), under the symbol MR. The Common Shares
also trade from time to time on the NASD Over-the-Counter Bulletin Board under
the symbol METLF.

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The following table sets out the annual high and low closing market prices of
the Common Shares on the TSX during the last five fiscal years:

|     |  |               |      |              |  |  |      | 
|---- |  | ------------- | ---- | ------------ |  |  | ---- | 
|     |  | HIGH (Cdn. $) |      | LOW (Cdn. $)
|     |  |               |      |             
|1998 |  |               | 3.10 |              |  |  | 1.15 | 
|1999 |  |               | 1.50 |              |  |  | 0.38 | 
|2000 |  |               | 0.60 |              |  |  | 0.20 | 
|2001 |  |               | 1.45 |              |  |  | 0.19 | 
|2002 |  |               | 2.02 |              |  |  | 1.00 | 

The following table sets out the closing market price range of the Common
Shares for the last two years by fiscal quarter.

|               |  |          |      |          |  |  |      | 
|-------------- |  | -------- | ---- | -------- |  |  | ---- | 
|               |  | HIGH     |      | LOW     
|               |  |          |      |         
|               |  | (Cdn. $) |      | (Cdn. $)
|Fiscal 2001    |  |          |      |          |  |  |      | 
|First Quarter  |  |          | 0.75 |          |  |  | 0.19 | 
|Second Quarter |  |          | 1.25 |          |  |  | 0.48 | 
|Third Quarter  |  |          | 1.45 |          |  |  | 0.94 | 
|Fourth Quarter |  |          | 1.41 |          |  |  | 1.00 | 
|Fiscal 2002    |  |          |      |          |  |  |      | 
|First Quarter  |  |          | 1.95 |          |  |  | 1.17 | 
|Second Quarter |  |          | 2.02 |          |  |  | 1.25 | 
|Third Quarter  |  |          | 1.60 |          |  |  | 1.02 | 
|Fourth Quarter |  |          | 1.54 |          |  |  | 1.00 | 
|Fiscal 2003    |  |          |      |          |  |  |      | 
|First Quarter  |  |          | 1.70 |          |  |  | 1.12 | 

The following table sets out the high and low closing market prices of the
Common Shares on the TSX for the last six months:

|              |  |         |      |         |  |  |      | 
|------------- |  | ------- | ---- | ------- |  |  | ---- | 
|              |  | HIGH    |      | LOW    
|              |  |         |      |        
|              |  | (Cdn.$) |      | (Cdn.$)
|              |  |         |      |        
|November 2002 |  |         | 1.24 |         |  |  | 1.05 | 
|December 2002 |  |         | 1.25 |         |  |  | 1.00 | 
|January 2003  |  |         | 1.50 |         |  |  | 1.12 | 
|February 2003 |  |         | 1.65 |         |  |  | 1.37 | 
|March 2003    |  |         | 1.45 |         |  |  | 1.26 | 
|April 2003    |  |         | 1.50 |         |  |  | 1.24 | 

On May 5, 2003, the closing price of the Common Shares on the TSX was Cdn
$1.40.

B) Plan of Distribution

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this section.

C) Markets

The Companys Common Shares are listed for trading on The Toronto Stock
Exchange.

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D) Selling Shareholders

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this section.

E) Dilution

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this section.

F) Expenses of the Issue

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this section.




ITEM 10 Additional Information

A) Share Capital

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this Item.

B) Articles of Incorporation and By-laws

On July 16, 2002 the Company was continued from the Business Corporations Act
(Ontario) to the Canada Business Corporations Act (the CBCA). The effect of
the continuance is that the Company is a corporation to which the CBCA applies
as if it had been incorporated under the CBCA. The Companys corporation
number under the CBCA is 600473-3.

A corporation subsisting under the CBCA has the capacity and, subject to the
CBCA, the rights, powers and privileges of a natural person. The Companys
Articles and by-laws do not contain any restrictions on the business which the
Company may carry on or the powers which the Company may exercise.

The CBCA and the Companys by-laws provide that a director who is a party to,
or related to a person who is a party to, a material transaction or contract or
a proposed material transaction or contract with the Company shall disclose the
nature and extent of his interest at that time to the Company in writing or
request that it be entered into the minutes of a meeting of directors. A
director who has an interest in a material transaction or contract shall not
vote on any resolution to approve that material transaction or contact except
as permitted by the CBCA.

Directors are entitled to remuneration as determined by the board of directors.
The directors may also award special remuneration to any director undertaking
special services on behalf of the Company. There was no compensation paid or
accrued to any director during the year 2002 and through May 5, 2003.
Directors are also entitled to reimbursement of out-of-pocket costs incurred in
connection with their capacity as a director of the Company. The directors
cannot conduct any business without a quorum of directors.

The board of directors has unlimited authority to borrow, issue, reissue,
pledge, guarantee or otherwise, funds on behalf of the Company without the
approval of the shareholders.

The Companys bylaws do not provide for any age limit restrictions regarding
its directors and there is no requirement that directors hold a specified
number of shares in the Company.

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Each share of the common stock is entitled to share equally with each other
share of common stock in dividends from sources legally available therefore,
when, as, and if declared by the board of directors and, upon liquidation or
dissolution of the Company, whether voluntary or involuntary, to share equally
in the assets of the Company that are available for distribution to the holders
of the common stock. Each holder of common stock of the Company is entitled to
one vote per share. Cumulative voting shall not be allowed in the election of
directors or for any other purpose, and the holders of common stock have no
preemptive rights, redemption rights or rights of conversion with respect to
the common stock. All outstanding shares of common stock and all shares
underlying any warrants when issued will be fully paid and nonassessable by the
Company. The board of directors is authorized to issue an unlimited number of
common stock within the limits of the Canada Business Corporations Act and
without stockholder action.

All shares of common stock have equal voting rights and voting rights are not
cumulative. The holders of more than 50 percent of the shares of common stock
of the Company could, therefore, if they chose to do so and unless subject to a
voting agreement to the contrary, elect all the directors of the Company.

The Companys bylaws are incorporated by reference to the Companys Form 20-F
Registration Statement filed on September 22, 1995. The Articles of
Continuance are listed as an Exhibit 1.2. The only changes to the
bylaws/articles of incorporation since September 22, 1995 are presented below:

New Class of Preferred Shares

On June 18, 1998 the shareholders approved an amendment to the Companys
articles of incorporation to creation of a new class of preference shares
issuable in series (Preference Shares). Such amendment was subsequently
incorporated in the Companys Articles of Continuance. The rights, privileges,
restrictions and conditions attaching to the Preference Shares as a class are
as follows:



| | 1. |  | Preference Shares may at any time or from time to time be issued in
one or more series. Prior to the issue of the shares of any such
series, the directors shall, subject to the limitations set out below,
fix the number of shares in, and determine the designation, rights,
privileges, restrictions and conditions attaching to the shares of such
series including, without limitation:
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The rate, amount or method of calculation of dividends,
if any, and whether the same are subject to adjustments;                                                               
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Whether such dividends are cumulative, partly
cumulative or non-cumulative;                                                                                                    
|
| |  |  | The dates, manner and currency of payments of dividends
and the dates from which dividends accrue or become payable;                                                           
|
| |  |  | If redeemable or purchasable, the redemption or
purchase prices and the terms and conditions of redemption or
purchase, with or without provision for sinking or similar funds;
|
| |  |  | Any conversion, exchange or reclassification rights;
and                                                                                                                       
|
| |  |  | Any other rights, privileges, restrictions and
conditions not inconsistent with these provisions;                                                                              



| |  |  | The whole subject to the receipt by the Director under the CBCA of
articles of amendment designating and fixing the number of Preference
Shares in such series and setting forth the rights, privileges,
restrictions and conditions attaching thereto and the issue by such
Director of a certificate of amendment with respect thereto.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. |  | The Preference Shares of each series shall, with respect to the
payment of dividends and the distribution of assets in the event of the
liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, or any other distribution of the assets of
the Corporation among its shareholders of the purpose of winding-up its
affairs, rank on a parity with the Preference Shares of every other
series and be entitled to a preference over the Common Shares and the
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |    |  | shares of any other class ranking junior to the Preference Shares. The
Preference Shares of any series shall also be entitled to such other
preferences, not inconsistent with these provisions, over the Common
Shares and the shares of any other class ranking junior to the Preference
Shares, as may be fixed in accordance with Section 1 above.                                                                                                                                    
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 3. |  | Except as otherwise provided in the CBCA or these provisions, the
holders of Preference Shares shall not be entitled as such to receive
notice of, or to attend or vote at, any meeting of the shareholders of
the Corporation. Provided, however, that the holders of Preference
Shares shall be entitled to notice of meetings called for the purpose
of authorizing the dissolution of the Corporation or the sale, lease or
exchange of its undertaking or a substantial part thereof.

Adoption of Rights Plan

A shareholder rights plan (Rights Plan) was unanimously adopted at a meeting
of the Board of Directors held on March 19, 1999 and subsequently approved by
the shareholders on June 23, 1999. The provisions of the Rights Plan are set
out in an agreement dated as of March 19, 1999 (the Rights Plan Agreement)
between the Corporation and Equity Transfer Services Inc., as Rights Agent, as
previously filed by the Company. Under the Rights Plan, shareholders of the
Corporation have received, for each Common Share issued and outstanding at 5:00
p.m. (Toronto Time) on March 23, 1999 (the Effective Date), one right to
purchase one additional Common Share (a Right), under the circumstances and
on the terms described in the Rights Plan Agreement. A discussion of the
background and objectives of the Rights Plan, and the general impact of the
Rights Plan are discussed below:

Background and Objectives of the Rights Plan

The Board of Directors has considered various strategies, including
implementation of a shareholder rights plan, to ensure that, in the context of
a bid for control of the Corporation through an acquisition of the
Corporations Common Shares, shareholders will be positioned to receive full
and fair value for their shares. Of particular concern to the Board of
Directors is the widely held view that existing Canadian securities legislation
provides too short a response time to a company that is the subject of an
unsolicited bid for control. An inadequate response time has been identified
as an impediment to ensuring that shareholders are offered full and fair value
for their shares. Also of concern to the Board of Directors is the possibility
that, under existing securities laws, the Corporations shareholders could be
treated unequally in the context of a bid for control. These concerns are
described in more detail below.

The Rights Plan was not adopted in response to, or in anticipation of, any
pending or threatened take-over bid, nor to deter take-over bids generally.
Rather, the objectives of the Rights Plan are to give adequate time for
shareholders to properly assess a bid without undue pressure, for the Board of
Directors to consider value-enhancing alternatives and to allow competing bids
to emerge. In addition, the Rights Plan has been designed to provide
shareholders of the Corporation with equal treatment in a bid for control of
the Corporation.

In adopting the Rights Plan, the Board of Directors considered the following
concerns inherent in the existing legislative framework governing take-over
bids in Canada:

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| |  |  | (a)     Time.Current Canadian legislation permits a take-over
bid to expire in 21 days. The Board of Directors is of the view
that this is not sufficient time to permit shareholders to
consider a take-over bid and to make a reasoned and unhurried
decision. The Rights Plan provides a mechanism whereby the
minimum expiry period for a Take-over Bid must be 45 days after
the date of the bid and the bid must remain open for a further
period of 10 Business Days after the Offerer publicly announces
that the shares deposited or tendered and not withdrawn constitute
more than 50% of the Voting Shares outstanding held by
Independent Shareholders (generally, shareholders other than the
Offerer or Acquiring Person, their Associates and Affiliates, and
Persons acting jointly or in concert with the Offerer or Acquiring
Person). The Rights Plan is intended to provide shareholders with
adequate time to properly evaluate the offer and to provide the
Board of Directors with sufficient time to explore and develop
alternatives for maximizing shareholder value. Those alternatives
could include, if deemed appropriate by the Board of Directors,
the identification of other potential bidders, the conducting of
an orderly auction or the development of a corporate restructuring
alternative which could enhance shareholder value.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | (b)     Pressure to Tender.A shareholder may feel compelled to
tender to a bid which the shareholder considers to be inadequate
out of a concern that failing to tender may result in the
shareholder being left with illiquid or minority discounted shares
in the Corporation. This is particularly so in the case of a
partial bid for less than all shares of a class where the bidder
wishes to obtain a control position but does not wish to acquire
all of the Voting Shares. The Rights Plan provides a shareholder
approval mechanism in the Permitted Bid provision which is
intended to ensure that a shareholder can separate the tender
decision from the approval or disapproval of a particular
take-over bid. By requiring that a bid remain open for acceptance
for a further 10 Business Days following public announcement that
more than 50% of the Voting Shares held by Independent
Shareholders have been deposited, a shareholders decision to
accept a bid is separated from the decision to tender, lessening
the undue pressure to tender typically encountered by a
shareholder of a company that is the subject of a take-over bid.                                                                                                                                                                                                           
|
| |  |  | (c)     Unequal Treatment.While existing securities legislation
has substantially addressed many concerns of unequal treatment,
there remains the possibility that control of a company may be
acquired pursuant to a private agreement in which a small group of
shareholders disposes of shares at a premium to market price which
premium is not shared with the other shareholders. In addition, a
person may slowly accumulate shares through stock exchange
acquisitions which may result, over time, in an acquisition of
control without payment of fair value for control or a fair
sharing of a control premium among all shareholders. The Rights
Plan addresses these concerns by applying to all acquisitions of
greater than 20% of the Voting Shares, to better ensure that
shareholders receive equal treatment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

General Impact of the Rights Plan

In the past, shareholder rights plans have been criticized by some commentators
on the basis that they may serve to deter take-over bids, to entrench
management, and to place in the hands of boards of directors, rather than
shareholders, the decision as to whether a particular bid for acquisition of
control is acceptable. Critics of some shareholder rights plans have also
alleged that they cast a needlessly wide net, thereby increasing the likelihood
of an inadvertent triggering of the plan, while at the same time deterring
shareholders from participating in legitimate corporate governance activities.

The Board of Directors has considered these concerns, and believes that they
have been largely addressed in the Rights Plan.

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It is not the intention of the Board of Directors in adopting the Rights Plan
to secure the continuance of existing directors or management in office, nor to
avoid a bid for control of the Corporation. For example, through the Permitted
Bid mechanism, described in more detail below, shareholders may tender to a bid
which meets the Permitted Bid criteria without triggering the Rights Plan,
regardless of the acceptability of the bid to the Board of Directors.
Furthermore, even in the context of a bid that does not meet the Permitted Bid
criteria, the Board of Directors will continue to be bound to consider fully
and fairly any bid for the Corporations Common Shares in any exercise of its
discretion to waive application of the Rights Plan or redeem the Rights. In
discharging that responsibility, the Board of Directors must act honestly and
in good faith with a view to the best interests of the Corporation and its
shareholders.

The Rights Plan does not preclude any shareholder from utilizing the proxy
mechanism of the Canada Business Corporations Act to promote a change in the
management or direction of the Corporation, and has no effect on the rights of
holders of outstanding voting shares of the Corporation to requisition a
meeting of shareholders, in accordance with the provisions of applicable
corporate and securities legislation, or to enter into agreements with respect
to voting their Common Shares. The definitions of Acquiring Person and
Beneficial Ownership have been developed to minimize concerns that the Rights
Plan may be inadvertently triggered or triggered as a result of an overly-broad
aggregating of holdings of institutional shareholders and their clients.

The Board of Directors believes that the dominant effect of the Rights Plan
will be to enhance shareholder value, and ensure equal treatment of all
shareholders in the context of an acquisition of control.

The Rights Plan will not interfere with the day-to-day operations of the
Corporation. The initial issuance of the Rights does not in any way alter the
financial condition of the Corporation, impede its business plans or alter its
financial statements. In addition, the Rights Plan is initially not dilutive
and is not expected to have any effect on the trading of Common Shares.
However, if a Flip-in Event occurs and the Rights separate from the Common
Shares, as described in the summary below, reported earnings per share and
reported cash flow per share on a fully-diluted or non-diluted basis may be
affected. In addition, holders of Rights not exercising their Rights after a
Flip-in Event may suffer substantial dilution.

At or prior to the first annual meeting of shareholders of the Corporation
following the third anniversary of the date of the Rights Plan Agreement, the
Board of Directors must submit to the shareholders a resolution ratifying the
continued existence of the Rights Plan. If holders of a majority of Common
Shares held by Independent Shareholders who vote in respect of such resolution
are voted against the continued existence of the Rights Plan, the Board of
Directors shall, without further formality, be deemed to have elected to redeem
the Rights at the then current Redemption Price. Otherwise, the Rights Plan, if
ratified after its third anniversary, will remain in force for a period of six
years. On June 6, 2002, the shareholders of the Company ratified the continued
existence of the Rights Plan through March 19, 2005.

Action Necessary to Change the Rights of Holders of the Stock

The rights, privileges, restrictions and conditions attaching to the common
stock of the Company may only be changed by Articles of Amendment, which must
be authorized by a special resolution of shareholders (being a resolution
passed by more than two-thirds of the votes cast on the matter at a meeting of
shareholders). In certain circumstances specified in the CBCA, including an
amendment to the Articles of the Company to create a class of shares have
rights superior to those of the common shares, holders of common shares would
have a right to dissent in respect of the proposed amendment. Dissenting
shareholders who follow the procedure set out in the CBCA are entitled to
require the Company to pay them the fair value of their shares.

Conditions Governing Manner in Which Shareholder Meetings are Convoked

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The CBCA provides that the directors of the Company may at any time call a
special meeting of shareholders, and shall call an annual meeting of
shareholders not later than fifteen months after holding the last preceding
annual meeting (but no later than six months after the end of the Companys
preceding financial year). Meetings of shareholders may be held at any place
within Canada that the directors determine. The holders of not less than 5% of
the issued shares of the Company that carry the right to vote at a meeting
sought to be held may requisition the directors to call a meeting of
shareholders for the purposes stated in the requisition.

Notice of each shareholders meeting must be sent to each of the shareholder,
directors and auditor of the Company not less than 21 days and not more than 60
days before the meeting. The Company is required to prepare an alphabetical
list of shareholders entitled to receive notice of a meeting, showing the
number of shares held by each shareholder, not less than ten days after the
record date for determining shareholders entitled to receive such notice (or,
if no such record date is fixed, as of the close of business on the day
immediately preceding the day on which the notice is given). A shareholder
whose name appears on the list is entitled to vote the shares shown opposite
their name at the meeting to which the list relates. Each shareholder whose
name appears on such list may attend the meeting in person, or may by a written
proxy appoint a proxyholder, who need not be a shareholder, to attend and act
at the meeting in the manner and to the extent authorized by the proxy.

Limitations on Rights to Own Securities of the Company

Except as provided in the Investment Canada Act (the Act), there are not any
limitations under the laws of Canada, the Province of Ontario or in the charter
or any other constituent documents of the Company on the right of foreigners to
hold and/or vote the Common Shares of the Company.

The Act requires a non-Canadian making an investment to acquire control of a
Canadian business, the gross assets of which exceed certain defined threshold
levels, to file an application for review with Investment Canada, the federal
agency created by the Act.

As a result of the Canada-U.S. Free Trade Agreement, the Act was amended in
January 1989 to provide distinct threshold levels for Americans who acquire
control of a Canadian business.

A Canadian business is defined in the Act as a business carried on in Canada
that has a place of business in Canada, an individual or individuals in Canada
who are employed or self-employed in connection with the business, and assets
in Canada used in carrying on the business.

An American, as defined in the Act, includes: an individual who is an American
national or a lawful permanent resident of the United States; a government or
government agency of the United States; an American-controlled entity, Company
or limited partnership; and a Company, limited partnership or trust which is
not controlled in fact through ownership of its voting interests of which
two-thirds of its board of directors, general partners or trustees, as the case
may be, are any combination of Canadians and Americans.

The following investments by a non-Canadian are subject to review by Investment
Canada:

(a)     all direct acquisitions of control of Canadian businesses with assets
of $5 million or more;

(b)     all indirect acquisitions of control of Canadian businesses with
assets of $50 million or more if such assets represent less than 50% of the
value of the assets of the entities, the control of which is being acquired;
and

(c)       all indirect acquisitions of control of Canadian businesses with
assets of $5 million or more if such assets represent more than 50% of the
value of the assets of the entities, the control of which is being acquired.

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Review by Investment Canada is required when investments by Americans exceed
$150 million for direct acquisitions of control. For purposes of the Act,
direct acquisition of control means a purchase of the voting interest in a
Company, partnership, joint venture or trust carrying on a Canadian business,
or any purchase of all or substantially all of the assets used in carrying on a
Canadian business. Also for purposes of the Act, indirect acquisition of
control means a purchase of the voting interest of a Company, partnership,
joint review or trust, whether a Canadian or foreign entity, which controls a
Company, partnership, joint venture or trust company carrying on a Canadian
business in Canada.

The acquisition of certain Canadian businesses is excluded from the higher
thresholds set out for Americans. These excluded businesses include oil, gas,
uranium, financial services (except insurance); transportation services and
cultural services (i.e., the publication, distribution or sale of books,
magazines, periodicals (other than printing or typesetting businesses), music
in print or machine readable form, radio, television, cable and satellite
services; the publication, distribution, sale or exhibitions of film or video
recordings or audio or video music recordings).

Direct or indirect acquisitions of control of these excluded business are
reviewable at the $5 and $50 million thresholds.

A non-Canadian shall not implement an investment reviewable under the Act
unless the investment has been reviewed and the Minister responsible for
Investment Canada is satisfied or is deemed to be satisfied that the investment
is likely to be of net benefit to Canada. If the Minister is not satisfied
that the investment is likely to be a net benefit to Canada, the non-Canadian
shall not implement the investment or, if the investment has been implemented,
shall divest himself of control of the business that is the subject of the
investment.

A non-Canadian or American making the following investments must notify
Investment Canada, within prescribed time limits, of such investments:

(i)    nan investment to establish a new Canadian business; and

(ii)     an investment to acquire control of a Canadian business which
investment is not subject to review under the Act.

Provisions governing the ownership threshold above which shareholder ownership
must be disclosed

The Ontario Securities Actprovides that a person that has direct or indirect
beneficial ownership of, control or direction over, or a combination of direct
or indirect beneficial ownership of, and of control or direction over,
securities of the issuer carrying more than 10% of the voting rights attached
to all the issuers outstanding voting securities must, within 10 days of
becoming an insider, file an insider report in the required form effective
the date on which the person became an insider, disclosing any direct or
indirect beneficial ownership of, or control or direction over, securities of
the reporting issuer. The Ontario Securities Actalso provides for the filing
of a report by an insider of a reporting issuer who acquires or transfers
securities of the issuer. This insider report must be filed within 10 days
after the end of the month in which the change takes place.

The U.S. rules governing the ownership threshold above which shareholder
ownership must be disclosed are more stringent than those under the Ontario
Securities Act. Section 13 of the Exchange Act imposes reporting requirements
on persons who acquire beneficial ownership (as such term is defined in the
Rule 13d-3 under the Exchange Act) of more than 5 per cent of a class of an
equity security registered under Section 12 of the Exchange Act. In general,
such persons must file, within 10 days after such acquisition, a report of
beneficial ownership with the Securities and Exchange Commission containing the
information prescribed by the regulations under Section 13 of the Exchange Act.
This information is also required to be sent to the issuer of the securities
and to each exchange where the securities are traded.

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Significant differences between law applicable to the Company and law of the
United States

See preceding two paragraphs.

C) Material Contracts

The Company has entered into the following material contract for the two years
preceding the date of publication of this document:



| |  |  | Purchase of Glamis Gold Ltd.s 50% interest in Minera San Xavier,
S.A. de C.V., the owner of the Cerro San Pedro gold and silver project
in Mexico. for $18 million plus a sliding scale royalty when average
monthly gold prices exceed $325 per ounce. Please refer to Item 4 
Information on the Company  D. Property, Plant and Equipment  The
Cerro San Pedro Project, Mexico for information about the Companys
purchase of Glamis 50% interest in Minera San Xavier, S.A. de C.V.
Please see Exhibit 4.11.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Please refer to Item 6. Directors, Senior Management and Employees -- B.
Compensation -- Employment Contracts for information about the Companys
employment contracts with each of its three executive officers.

D) Exchange Controls

There are not any governmental laws, decrees or regulations in Canada relating
to restrictions on the import/export of capital affecting the remittance of
interest, dividends or other payments to non-residential holders of the
Companys Common Shares. Any such remittances to United States residents,
however, are subject to a 15% withholding tax pursuant to Article X of the
reciprocal tax treaty between Canada and the United States. See  -- E.
Taxation, below.

E) Taxation

The following paragraphs summarize certain Canadian and United States federal
income tax considerations in connection with the receipt of dividends paid on
Common Shares of the Company and certain Canadian federal income tax
considerations in connection with a disposition of Common Shares by
non-residents of Canada. These tax considerations are stated in brief and
general terms and are based on Canadian and United States law currently in
effect. There are other potentially significant Canadian and United States
federal income tax considerations, including proposals to amend some of the
rules summarized herein, and provincial, state or local income tax
considerations with respect to ownership and disposition of the Common Shares
which are not discussed herein.

The discussion below is of a general nature only and is not intended to be,
nor should it be construed to be, legal, business or tax advice to any
particular holder or prospective holder of Common Shares. The tax
considerations relative to ownership and disposition of the Common Shares may
vary from taxpayer to taxpayer depending on the taxpayers particular status.
Accordingly,holders and prospective holders of Common Shares should consult
their own tax advisors regarding any and all tax consequences of purchasing,
owning and disposing of Common Shares.

Certain Canadian Federal Income Tax Consequences

The Company believes that the following is a summary of the principal Canadian
federal income tax considerations generally applicable to holders of Common
Shares who, for purposes of the Income Tax Act (Canada) (the Canadian Tax
Act): (i) will hold Common Shares as capital property; (ii) deal at arms
length with the Company; (iii) do not and will not have a fixed base or
permanent establishment in Canada; (iv) are not and will not be resident or
deemed to be resident in Canada at any time while they

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hold Common Shares; (v) do not use or hold, and are not deemed to use or hold
Common Shares in connection with carrying on a business in Canada; and (vi) in
the case of a nonresident of Canada who carries on an insurance business in
Canada and elsewhere, the Common Shares are not designated insurance
property pursuant to the amendments to the Canadian Tax Act and Regulations
publicly announced by the Minister of Finance prior to the date hereof (the
Proposed Amendments) and are not effectively connected with an insurance
business carried on in Canada at any time a (non-resident holder). This
summary does not apply to a non-resident holder with respect to whom the
Company is a foreign affiliate within the meaning of the Canadian Tax Act.

This summary is based on the current provisions of the Canadian Tax Act, the
Regulations thereunder, the current provisions of the Canada-United States
Income Tax Convention of 1980 (the Tax Treaty), and the current published
administrative practices of Canada Customs and Revenue Agency (CCRA). This
summary takes into account the Proposed Amendments and assumes that all the
Proposed Amendments will be enacted in their present form. However, no
assurance can be given that the Proposed Amendments will be enacted in the
form proposed, or at all.

Except for the foregoing, this summary does not take into account or
anticipate any changes in law, whether by legislative, administrative or
judicial decision or action, nor does it take into account provincial,
territorial or foreign income tax legislation or considerations, which may
differ from the Canadian federal income tax considerations described herein.

Dividends

Dividends paid or credited to a non-resident holder on the Common Shares will
be subject to a non-resident withholding tax under the Canadian Tax Act at the
rate of 25% although such rate may be reduced under the provisions of an
applicable income tax treaty.

Disposition of Company Common Shares

A non-resident holder will not be subject to tax under the Canadian Tax Act on
any capital gain realized on a disposition or deemed disposition of Common
Shares provided such shares are not taxable Canadian property to such holder
at the time of disposition. Generally, the Common Shares will not be taxable
Canadian property to a non-resident holder described above, provided that such
shares are listed on a prescribed stock exchange (which currently includes the
TSX and the NYSE), and the holder, persons with whom such holder does not deal
at arms length, or the holder and such persons, has not owned (or had under
option) 25% or more of the issued shares of any class or series of the capital
stock of the Company at any time within five years preceding the date in
question.

Even if the Common Shares are taxable Canadian property to a non-resident
holder, the Tax Treaty may generally exempt such a holder who is resident in
the United States for purposes of the Tax Treaty from tax in respect of the
disposition provided the value of the Common Shares is not derived principally
from real property situated in Canada. The Company is of the view that the
value of the Common Shares is not currently derived principally from real
property situated in Canada.

Certain United States Federal Income Tax Consequences

The Company believes that the following is a summary of the principal United
States Federal income tax consequences under current law which are generally
applicable to a U.S. Holder (as defined below) of Common Shares. This
discussion does not address all potentially relevant United States Federal
income tax matters and it does not address consequences peculiar to persons
subject to special provisions of United States Federal income tax law, such as
those described below as excluded from the definition of a U.S. Holder. In
addition, this discussion does not cover any state, local or foreign tax
consequences.

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The following discussion is based upon the sections of the Internal Revenue
Code of 1986, as amended (the Code), Treasury Regulations, published
Internal Revenue Service (IRS) rulings, published administrative positions
of the IRS and court decisions that are currently applicable, any or all of
which could be materially and adversely changed possibly on a retroactive
basis, at any time. The following discussion is for general information only
and it is not intended to be, nor should it be construed to be, legal or tax
advice to any holder or prospective holder of Common Shares and no opinion or
representation with respect to the United States Federal income tax
consequences to any such holder or prospective holders is made.

U.S. Holders

As used herein, a U.S. Holder includes a holder of Common Shares who is a
citizen or resident of the United States, a corporation created or organized
in or under the laws of the United States or of any political subdivision
thereof, any entity which is taxable as a corporation for U.S. tax purposes
and which is organized under the laws of the United States or any political
subdivision thereof, and any other person or entity whose ownership of Common
Shares is effectively connected with the conduct of a trade or business in the
United States. A U.S. Holder does not include persons subject to special
provisions of United States Federal income tax law.

Distributions on Common Shares

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

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income
tax with respect to the ownership of Common Shares may be entitled, at the
option of the U.S. Holder, to either a deduction or a tax credit for such
foreign tax paid or withheld. This election is made on a year-by-year basis
and applies to all foreign taxes paid by (or withheld from amounts paid to)
the U.S. Holder during that year. There are significant and complex
limitations which apply to the credit, among which is the general limitation
that the credit cannot exceed the proportionate share of the U.S. Holders
United States income tax liability that the U.S. Holders foreign source
income bears to his or her worldwide taxable income.

Disposition of Common Shares

A U.S. Holder will recognize a gain or loss upon the sale of Common Shares
equal to the difference, if any, between (i) the amount of cash plus the fair
market value of any property received, and (ii) and shareholders tax basis in
the Common Shares. This gain or loss will be a capital gain or loss if the
Common Shares are a capital asset in the hands of the U.S. Holder, and will be
either a short-term or long-term capital gain or loss depending upon the
holding period of the U.S. Holder. Gains and losses

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are netted and combined according to special rules in arriving at the overall
capital gain or loss for a particular tax year. Deductions for net capital
losses are subject to significant limitations.

Other Considerations

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

Passive Foreign Investment Company

The Company may potentially be treated as a passive foreign investment company
(PFIC), as defined in Section 1297 of the Internal Revenue Code of 1986, as
amended, depending upon whether (i) 75% or more of its gross income is passive
income; or (ii) 50% or more of the average amount of its assets produce (or
are held for the production of) passive income.

For the years ended December 31, 2002, 2001 and 2000, the Company does believe
that it is a PFIC as defined in Section 1297 of the Internal Revenue Code of
1986. The Companys determination in this respect has been made after
reviewing the PFIC provisions and applying such provisions to its past and
present situations. Although it is considered unlikely, there can be no
assurance that the Companys determination concerning its PFIC status may not
be challenged by the IRS, or that the Company will be able to satisfy record
keeping requirements which are imposed on certain PFICs. The Company intends
to make annual information available to each U.S. Holder as to its potential
PFIC status and income to be reported.

If a U.S. Holder does not make an election with respect to a PFIC, such U.S.
Holder may be subject to additional tax and to an interest charge upon
receiving certain dividends from a PFIC, or upon the disposition of shares of
a PFIC. The tax and interest charge are determined by allocating the
distribution or gain over the U.S. Holders holding period of the stock,
imposing tax at the highest rate in effect for each tax year to which the
excess distribution is allocated, and calculating interest on that unpaid tax.

If the U.S. Holder makes a timely election either to treat a PFIC as a
qualified electing fund (QEF) or to mark-to-market any publicly traded PFIC
stock, the above-described rules generally will not apply. If a QEF election
is made, a U.S. Holder would include annually in gross income his or her pro
rata share of the PFICs ordinary earnings and net capital gain, regardless of
whether such income or gain was actually distributed.

The mark-to-market election would cause a PFIC shareholder to include in
income each year an amount equal to the excess, if any, of the fair value of
the PFIC stock as of the close of the taxable year over the shareholders
adjusted basis in such stock; or allow the shareholder a deduction for the
excess, if any, of the adjusted basis of the PFIC stock over its fair market
value as of the close of the taxable year. The shareholders adjusted basis
in the PFIC stock is increased by the amount included in income and decreased
by any deductions allowed.

The PFIC rules are exceedingly complex and, therefore, each U.S. Holder is
encouraged and expected to consult his or her own tax advisor regarding the
effect of the Companys potential PFIC status on such U.S. Holder.

The foregoing summary is a general discussion of the United States Federal
income tax considerations to U.S. Holders of Common Shares under current law.
It does not discuss all the tax consequences that may be relevant to
particular holders in light of their circumstances or to holders subject to
special rules, such as tax-exempt organizations, qualified retirement plans,
financial institutions, insurance companies, real estate investment trusts,
regulated investment companies, broker-dealers, nonresident alien individuals
or foreign corporations whose ownership of Common Shares is not effectively
connected with the conduct of a trade or business in the United States,
shareholders who acquired their stock through

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the exercise of employee stock options or otherwise as compensation, and any
other non U.S. Holders. In addition, U.S. Holders may be subject to state,
local or foreign tax consequences. This discussion is not intended to be, nor
should it be construed to be, legal or tax advice to any holder or prospective
holder of Common Shares and no opinion or representation with respect to the
United States Federal income tax consequences to any such holder or
prospective holder is made. Holders and prospective holders should therefore
consult their own tax advisors with respect to their particular circumstances.
This discussion is limited to U.S. Holders who hold their Common Shares as
capital assets.

F) Dividends and Paying Agents

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this Item.

G) Statement by Experts

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this Item.

H) Documents on Display

The documents and exhibits referred to in this document are available for
inspection at the offices of Metallica Management Inc., 12200 East Briarwood
Avenue, Suite 165, Centennial, Colorado USA 80112.

I) Subsidiary Information

The information referred to in this section is not required for reports filed
in the United States.




ITEM 11 Quantitative and Qualitative Disclosures About Market Risk

The Company is a Small Business Issuer as such term is defined in Rule 12b-2
under the Exchange Act and, as such, there is no requirement to provide any
information under this Item.




ITEM 12 Description of Securities Other than Equity Securities

This Form 20-F is being filed as an Annual Report under the Exchange Act and,
as such, there is no requirement to provide any information under this Item.




PART II




ITEM 13 Defaults, Dividend Arrearages and Delinquencies

There has not been a material default in the payment of principal, interest, a
sinking or purchase fund installment, or any other material default not cured
within thirty days, relating to indebtedness of the Company or any of its
subsidiaries. There are no payments of dividends by the Company in arrears,
nor has there been any other material delinquency relating to any class of
preference shares of the Company.




ITEM 14 Material Modifications to the Rights of Security Holders and Use of Proceeds

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Neither the Company nor any other person has (i) modified materially any
instrument defining the rights of holders of any class of registered
securities, (ii) modified materially or qualified the rights evidenced by any
class of registered securities by issuing or modifying any other class of
securities, or (iii) withdrawn or substituted a material amount of the assets
securing any class of registered securities. There has been no change in the
trustees or paying agents for any of the Companys securities during the
previous fiscal year.




ITEM 15 Controls and Procedures

(a)  Evaluation of disclosure controls and procedures. Based on their
evaluation as of a date within 90 days of the filing date of this Annual Report
on Form 20-F, the Companys principal executive officer and principal financial
officer have concluded that the Companys disclosure controls and procedures
(as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act
of 1934 (the Exchange Act)) are effective to ensure that information required
to be disclosed by the Company in reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.

(b)  Changes in internal controls. There were no significant changes in
the Companys internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.




ITEM 16 [Reserved]

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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PART III




ITEM 17 Financial Statements

The following financial statements are attached and incorporated herein:

|                                                                                                              |  |      |     | 
|------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|Description of Document                                                                                       |  | Page
|                                                                                                              |  |     
|Independent Auditors Report dated February 21, 2003 (except as to
Note 14(b), which is as of March 11, 2003) |  |      | F-2 | 
|Consolidated Balance Sheets as at December 31, 2002 and 2001                                                  |  |      | F-3 | 
|Consolidated Statements of Operations and Deficit for the Years Ended
December 31, 2002, 2001 and 2000        |  |      | F-4 | 
|Consolidated Statements of Cash Flows for the Years Ended December
31, 2002, 2001 and 2000                    |  |      | F-5 | 
|Notes to Consolidated Financial Statements for the Years Ended
December 31, 2002, 2001 and 2000               |  |      | F-6 | 




ITEM 18 Financial Statements

See Item 17.




ITEM 19 Exhibits

The following exhibits are attached and incorporated herein:

|    |  |                                                                                                                       |  |  
|--- |  | --------------------------------------------------------------------------------------------------------------------- |  | -
|    |  | Description of Document                                                                                               |  |  
|    |  |                                                                                                                       |  |  
|1.1 |  | Certificate of Incorporation                                                                                          |  | *
|    |  |                                                                                                                       |  |  
|1.2 |  | Certificate of Continuance dated July 16, 2002                                                                        |  |  
|    |  |                                                                                                                       |  |  
|1.3 |  | Articles of Continuance dated July 16, 2002                                                                           |  |  
|    |  |                                                                                                                       |  |  
|1.4 |  | By-Laws dated July 16, 2002                                                                                           |  |  
|    |  |                                                                                                                       |  |  
|4.1 |  | Employment Agreement between the Company and Richard J. Hall
dated June 5, 2001                                       |  | *
|    |  |                                                                                                                       |  |  
|4.2 |  | Employment Agreements between the Company and Fred H.
Lightner dated May 16, 1997, April 1, 1999 and November 8,
1999 |  | *
|    |  |                                                                                                                       |  |  
|4.3 |  | Employment Agreement between the Company and Bradley J.
Blacketor dated May 16, 1997                                  |  | *
|    |  |                                                                                                                       |  |  
|4.4 |  | Shareholder Rights Plan Agreement dated March 19, 1999                                                                |  | *
|    |  |                                                                                                                       |  |  
|4.5 |  | Loan Agreement between Metallica Barbados Inc. and Richard
J. Hall dated June 26, 2000                                |  | *

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|     |  |                                                                                                                                                                                             |  |  
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -
|     |  | Description of Document                                                                                                                                                                     |  |  
|     |  |                                                                                                                                                                                             |  |  
|4.6  |  | Richard J. Hall Subscription Agreement dated November 8, 1999                                                                                                                               |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.7  |  | Richard J. Hall Warrant Agreement dated November 8, 1999                                                                                                                                    |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.8  |  | Noranda Exploration Agreement dated September 14, 1999                                                                                                                                      |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.9  |  | Noranda Exploration Agreement dated February 10, 2000                                                                                                                                       |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.10 |  | Stock Acquisition and Shareholders Agreement between
Raleigh Mining International Limited and Cambior de Mexico
S.A. de C.V. and Minera San Xavier S.A. de C.V. dated
January 21, 1998     |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.11 |  | Share Purchase Agreement between Glamis de Mexico, S.A. de
C.V., Raleigh Mining International Limited, Metallica
Resources Inc. and Minera San Xavier, S.A. de C.V. dated
February 12, 2003 |  |  
|     |  |                                                                                                                                                                                             |  |  
|8    |  | Subsidiaries of the Company                                                                                                                                                                 |  |  
|     |  |                                                                                                                                                                                             |  |  
|99.1 |  | Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002                                           |  |  
|     |  |                                                                                                                                                                                             |  |  
|99.2 |  | Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002                                           |  |  

* Previously filed.

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SIGNATURES

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

|                  |  |                          |                                      
|----------------- |  | ------------------------ | -------------------------------------
|                  |  | METALLICA RESOURCES INC.
|                  |  | (Registrant)            
|                  |  |                          |                                      
|Date: May 5, 2003 |  | By:                      | /s/ Bradley J. Blacketor             
|                  |  | Name:                    | Bradley J. Blacketor                 
|                  |  | Title:                   | Chief Financial Officer and Secretary

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CERTIFICATIONS

I, Richard J. Hall, certify that:

1.     I have reviewed this annual report on Form 20-F of Metallica Resources
Inc.;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and

c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (and persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 5, 2003

/s/ Richard J. Hall
Richard J. Hall
President and Chief Executive Officer

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CERTIFICATIONS

I, Bradley J. Blacketor, certify that:

1.     I have reviewed this annual report on Form 20-F of Metallica Resources
Inc.;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and

c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (and persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 5, 2003

/s/ Bradley J. Blacketor
Bradley J. Blacketor
Chief Financial Officer and Secretary

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Metallica Resources Inc.
(An Exploration Stage Company)

Consolidated Financial Statements
as at December 31, 2002 and 2001 and for the
years ended December 31, 2002, 2001 and 2000

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Independent Auditors Report

To the Shareholders of Metallica Resources Inc.

We have audited the consolidated balance sheets of Metallica Resources Inc. as
at December 31, 2002 and 2001, and the consolidated statements of operations
and deficit and cash flows for the years ended December 31, 2002, 2001 and
2000. These consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company as at
December 31, 2002 and 2001, and the consolidated results of its operations and
its cash flows for the years ended December 31, 2002, 2001 and 2000 in
accordance with accounting principles generally accepted in Canada.

/s/ PricewaterhouseCoopers LLP

Chartered Accountants
Vancouver, Canada
February 21, 2003, except as to note 14(b), which is as of March 11, 2003

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Metallica Resources Inc.
(An Exploration Stage Company)
Consolidated Balance Sheets
December 31, 2002 and 2001U.S. dollars

|                                                                  |                                                                    |                                            |            |             |            |      |            |             |            | 
|----------------------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------ | ---------- | ----------- | ---------- | ---- | ---------- | ----------- | ---------- | 
|                                                                  |                                                                    |                                            |            | 2002        |            | 2001
|                                                                  |                                                                    |                                            |            |             |            |     
|Assets                                                            |                                                                    |                                            |            |             |            |      |            |            
|Current assets:                                                   |                                                                    |                                            |            |             |            |      |            |            
|                                                                  | Cash and cash equivalents (Note 11)                                |                                            | $          | 4,520,886   |            |      | $          | 2,562,101   |           
|                                                                  | Value-added tax and other current assets (Note 5)                  |                                            |            | 285,480     |            |      |            | 220,064     |           
|                                                                  |                                                                    |                                            |            |             |            |      |            |             |           
|                                                                  |                                                                    |                                            | 4,806,366  |             |            |      | 2,782,165  |            
|Mineral properties and deferred exploration expenditures (Note 3) |                                                                    |                                            | 12,587,193 |             |            |      | 11,786,622 |            
|Fixed assets (Note 4)                                             |                                                                    |                                            | 92,283     |             |            |      | 93,436     |            
|Other assets (Note 5)                                             |                                                                    |                                            | 5,196      |             |            |      | 106,633    |            
|                                                                  |                                                                    |                                            |            |             |            |      |            |             |           
|                                                                  |                                                                    | Total assets                               |            | $           | 17,491,038 |      |            | $           | 14,768,856 | 
|                                                                  |                                                                    |                                            |            |             |            |      |            |            
|Liabilities and Shareholders Equity                              |                                                                    |                                            |            |             |            |      |            |            
|Current liabilities:                                              |                                                                    |                                            |            |             |            |      |            |            
|                                                                  | Accounts payable and accrued liabilities                           |                                            | $          | 153,017     |            |      | $          | 188,577     |           
|                                                                  | Provision for reclamation and property closure costs (Note 3(d))   |                                            |            | 150,000     |            |      |            | 126,000     |           
|                                                                  | Note payable (Note 6)                                              |                                            |            | 100,050     |            |      |            | 150,050     |           
|                                                                  |                                                                    |                                            |            |             |            |      |            |             |           
|                                                                  |                                                                    |                                            | 403,067    |             |            |      | 464,627    |            
|Shareholders equity:                                             |                                                                    |                                            |            |             |            |      |            |            
|                                                                  | Share capital (Note 7) 32,449,167 common shares (2001: 28,472,978) |                                            |            | 43,068,285  |            |      |            | 38,964,222  |           
|                                                                  | Deficit                                                            |                                            |            | (25,980,314 | )          |      |            | (24,659,993 | )         
|                                                                  |                                                                    |                                            |            |             |            |      |            |             |           
|                                                                  |                                                                    |                                            | 17,087,971 |             |            |      | 14,304,229 |            
|                                                                  |                                                                    |                                            |            |             |            |      |            |             |           
|                                                                  |                                                                    | Total liabilities and shareholders equity |            | $           | 17,491,038 |      |            | $           | 14,768,856 | 
|                                                                  |                                                                    |                                            |            |             |            |      |            |            
|Contingencies and commitments (Note 10)                           |                                                                    |                                            |            |             |            |      |            |            
|Subsequent events (Note 14)                                       |                                                                    |                                            |            |             |            |      |            |            

|                                     | 
|------------------------------------ | 
|Approved by the Board:               | 
|                                     | 
|/s/ Craig J. Nelsen

Craig J. Nelsen | 
|                                     | 
|/s/ Denis M. Marsh

Denis M. Marsh   | 

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

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Metallica Resources Inc.
(An Exploration Stage Company)
Consolidated Statements of Operations and Deficit
for the years ended December 31, 2002, 2001 and 2000U.S. dollars, except share data

|                                                                                |                          |   |             |            |      |   |             |            |   |   |             |            |  
|------------------------------------------------------------------------------- | ------------------------ | - | ----------- | ---------- | ---- | - | ----------- | ---------- | - | - | ----------- | ---------- | -
|                                                                                |                          |   | 2002        |            | 2001 |   | 2000       
|                                                                                |                          |   |             |            |      |   |            
|Interest income                                                                 |                          | $ | 64,918      |            |      | $ | 69,900      |            |   | $ | 152,829     |           
|                                                                                |                          |   |             |            |      |   |             |            |   |   |             |           
|General and administrative expense                                              |                          |   | 923,885     |            |      |   | 743,074     |            |   |   | 722,147     |           
|Exploration expense                                                             |                          |   | 246,828     |            |      |   | 198,971     |            |   |   | 214,000     |           
|Reclamation and property closure costs                                          |                          |   | 198,749     |            |      |   | 51,000      |            |   |   |            |           
|Write-down of mineral properties and deferred exploration
expenditures (Note 3) |                          |   | 21,000      |            |      |   | 2,892,086   |            |   |   | 6,670,194   |           
|Loss on sale of marketable securities (Note 3(a))                               |                          |   |            |            |      |   |            |            |   |   | 142,709     |           
|                                                                                |                          |   |             |            |      |   |             |            |   |   |             |           
|                                                                                | Loss before income taxes |   |             | (1,325,544 | )    |   |             | (3,815,231 | ) |   |             | (7,596,221 | )
|Income tax (recovery) provision (Note 8)                                        |                          |   | (5,223      | )          |      |   | 10,795      |            |   |   | 3,243       |           
|                                                                                |                          |   |             |            |      |   |             |            |   |   |             |           
|                                                                                | Loss for the year        |   |             | (1,320,321 | )    |   |             | (3,826,026 | ) |   |             | (7,599,464 | )
|Deficit, beginning of year                                                      |                          |   | (24,659,993 | )          |      |   | (20,833,967 | )          |   |   | (13,234,503 | )         
|                                                                                |                          |   |             |            |      |   |             |            |   |   |             |           
|Deficit, end of year                                                            |                          | $ | (25,980,314 | )          |      | $ | (24,659,993 | )          |   | $ | (20,833,967 | )         
|                                                                                |                          |   |             |            |      |   |             |            |   |   |             |           
|Basic and diluted loss per share                                                |                          | $ | (0.04       | )          |      | $ | (0.14       | )          |   | $ | (0.28       | )         
|                                                                                |                          |   |             |            |      |   |             |            |   |   |             |           
|Weighted average number of common shares outstanding                            |                          |   | 31,295,063  |            |      |   | 27,290,979  |            |   |   | 27,016,825  |           
|                                                                                |                          |   |             |            |      |   |             |            |   |   |             |           

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

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Metallica Resources Inc.
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
for the years ended December 31, 2002, 2001 and 2000U.S. dollars

|                                                         |                                                                        |   |            |         |      |   |            |           |   |   |            |           |  
|-------------------------------------------------------- | ---------------------------------------------------------------------- | - | ---------- | ------- | ---- | - | ---------- | --------- | - | - | ---------- | --------- | -
|                                                         |                                                                        |   | 2002       |         | 2001 |   | 2000      
|                                                         |                                                                        |   |            |         |      |   |           
|Cash Flows Provided From (Used in) Operating Activities  |                                                                        |   |            |         |      |   |            |           |   |   |            |          
|Loss for the year                                        |                                                                        | $ | (1,320,321 | )       |      | $ | (3,826,026 | )         |   | $ | (7,599,464 | )        
|Non-cash items:                                          |                                                                        |   |            |         |      |   |            |           |   |   |            |          
|                                                         | Depreciation and amortization                                          |   |            | 8,638   |      |   |            | 5,852     |   |   |            | 7,557     |  
|                                                         | Common share contribution to retirement plan                           |   |            | 17,163  |      |   |            | 15,572    |   |   |            | 5,167     |  
|                                                         | Reclamation and property closure costs                                 |   |            | 24,000  |      |   |            | 51,000    |   |   |            |          |  
|                                                         | Write-down of mineral properties and deferred exploration
expenditures |   |            | 21,000  |      |   |            | 2,892,086 |   |   |            | 6,670,194 |  
|                                                         | Loss on sale of marketable securities                                  |   |            |        |      |   |            |          |   |   |            | 142,709   |  
|Changes in non-cash working capital:                     |                                                                        |   |            |         |      |   |            |           |   |   |            |          
|                                                         | Value-added tax and other current assets                               |   |            | 34,584  |      |   |            | 3,598     |   |   |            | (76,941   | )
|                                                         | Accounts payable and accrued expenses                                  |   |            | (16,159 | )    |   |            | (24,837   | ) |   |            | (74,569   | )
|                                                         | Other assets                                                           |   |            | 1,238   |      |   |            | 29,097    |   |   |            | (12,286   | )
|                                                         |                                                                        |   |            |         |      |   |            |           |   |   |            |          
|                                                         |                                                                        |   | (1,229,857 | )       |      |   | (853,658   | )         |   |   | (937,633   | )        
|Cash Flows Provided From (Used in) Investing Activities  |                                                                        |   |            |         |      |   |            |           |   |   |            |          
|Mineral properties and deferred exploration expenditures |                                                                        |   | (886,771   | )       |      |   | (1,049,811 | )         |   |   | (1,529,783 | )        
|Reimbursement of joint venture costs                     |                                                                        |   |           |         |      |   |           |           |   |   | 150,000    |          
|Proceeds from sale of marketable securities              |                                                                        |   |           |         |      |   |           |           |   |   | 108,920    |          
|Fixed assets disposals (acquisitions)                    |                                                                        |   | (18,348    | )       |      |   | (5,554     | )         |   |   | 27,212     |          
|                                                         |                                                                        |   |            |         |      |   |            |           |   |   |            |          
|                                                         |                                                                        |   | (905,119   | )       |      |   | (1,055,365 | )         |   |   | (1,243,651 | )        
|Cash Flows Provided From (Used in) Financing Activities  |                                                                        |   |            |         |      |   |            |           |   |   |            |          
|Contributions to joint venture by joint venture partner  |                                                                        |   | 61,968     |         |      |   | 977,788    |           |   |   | 1,380,000  |          
|Repayment of note payable                                |                                                                        |   | (50,000    | )       |      |   | (50,000    | )         |   |   | (175,000   | )        
|Common shares issued for cash, net of issue costs        |                                                                        |   | 4,054,994  |         |      |   | 998,313    |           |   |   | 98,731     |          
|Proceeds from exercise of warrants                       |                                                                        |   |           |         |      |   | 123,088    |           |   |   |           |          
|Proceeds from exercise of options                        |                                                                        |   | 26,799     |         |      |   | 82,227     |           |   |   |           |          
|Loan to director                                         |                                                                        |   |           |         |      |   |           |           |   |   | (100,000   | )        
|                                                         |                                                                        |   |            |         |      |   |            |           |   |   |            |          
|                                                         |                                                                        |   | 4,093,761  |         |      |   | 2,131,416  |           |   |   | 1,203,731  |          
|                                                         |                                                                        |   |            |         |      |   |            |           |   |   |            |          
|Increase (decrease) in cash and cash equivalents         |                                                                        |   | 1,958,785  |         |      |   | 222,393    |           |   |   | (977,553   | )        
|Cash and cash equivalents, beginning of year             |                                                                        |   | 2,562,101  |         |      |   | 2,339,708  |           |   |   | 3,317,261  |          
|                                                         |                                                                        |   |            |         |      |   |            |           |   |   |            |          
|Cash and cash equivalents, end of year                   |                                                                        | $ | 4,520,886  |         |      | $ | 2,562,101  |           |   | $ | 2,339,708  |          
|                                                         |                                                                        |   |            |         |      |   |            |           |   |   |            |          
|Supplementary Cash Flow Information (Note 11)            |                                                                        |   |            |         |      |   |            |           |   |   |            |          

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

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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



|1. |  | Nature of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Metallica Resources Inc. (the Company) is engaged in the exploration and
acquisition of mineral deposits principally in Mexico and South America. At
December 31, 2002, the Company is advancing a gold and silver development
project in Mexico with Glamis Gold Ltd. (Notes 3(a) and 14). Construction
of the mine is on hold pending the availability of financing. The Company
is also advancing a copper and gold porphyry exploration project in Chile
with Noranda Inc. (Note 3(b)) and is pursuing various other exploration
projects in North and South America.
|  
|2. |  | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | These consolidated financial statements are prepared in accordance with
generally accepted accounting principles (GAAP) in Canada. The
significant measurement differences between these principles and those that
would be applied to the Company under United States GAAP are described in
Note 13.                                                                                                                                                                                                                                                                    
|  
|   |  | Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | These consolidated financial statements include the financial statements of
the Company and its wholly owned subsidiaries, after elimination of
intercompany balances and transactions.                                                                                                                                                                                                                                                                                                                                                                                    

|                            |  |                                       
|--------------------------- |  | --------------------------------------
|· Datawave Sciences Inc.    |  | · Metallica Management Inc.           
|· De Re Holdings Inc.       |  | · Minera Metallica Limitada           
|· Desarrollos Metallica C.A |  | · MMM Exploraciones S.A. de C.V.      
|· Metallica (Barbados) Inc. |  | · Raleigh Mining International Limited
|· Metallica Brazil Ltda     |  |                                       



| |  | The Companys 50% joint venture investment in Minera San Xavier, S.A. de
C.V. (MSX) is included in these consolidated financial statements using
the proportionate consolidation method.                                                                                                                                                                                                                                                                                 
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | The preparation of consolidated financial statements in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
consolidated financial statements and the reported amount of expenses during
the reporting period. Actual results could differ from those reported.                          
|
| |  | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | The Company considers the U.S. dollar to be the functional currency of all
of its operations and, accordingly, foreign currency amounts are translated
into U.S. dollars using the temporal method. Monetary balances are
translated at the rate of exchange at the balance sheet date, nonmonetary
balances at historic exchange rates and revenue and expense items at average
exchange rates. Foreign currency gains and losses are included in earnings
for the period.
|
| |  | Commitments and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | The Companys activities are subject to various governmental laws and
regulations relating to the protection of the environment. These
environmental regulations are continually changing and generally becoming
more restrictive. The Company believes its operations comply in all
material respects with all applicable laws and regulations.                                                                                                                           

F-6



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



| |  | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Cash and cash equivalents include cash in demand deposits and short-term
money market investments that, on acquisition, have a term to maturity of
three months or less.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Mineral Properties and Deferred Exploration Expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | The cost of mineral property interests and related exploration costs are
capitalized until commercial production is established, the property is
disposed of through sale or otherwise, or management believes that the
recoverable value has declined. Reclamation costs are accrued and
capitalized when management determines that an obligation exists and that
the amount can be reasonably estimated. Expenditures related to grass roots
exploration are expensed as incurred.                                                                                                                                                                                                           
|
| |  | If a project is put into commercial production, capitalized costs would be
depleted on the unit of production basis. Proceeds received from the
partial sale or sale of any interest in a property are credited against the
carrying cost of such property. If management determines that a project is
not economically viable, the property and the related deferred expenditures
are written off.                                                                                                                                                                                                                                                                                             
|
| |  | The costs deferred at any time do not necessarily reflect present or future
values. The ultimate recovery of such amounts depends on the discovery of
economically recoverable reserves, successful commercial development of the
related properties, availability of financing and future profitable
production or proceeds from the disposition of the properties.                                                                                                                                                                                                                                                                                                                            
|
| |  | Management of the Company regularly reviews the carrying value of each
mineral property. Where information is available and conditions suggest
impairment, estimated future net cash flows from each property are
calculated using estimated future prices, proven and probable reserves, and
operating, capital and reclamation costs on an undiscounted basis.
Reductions in the carrying value of each property would be recorded to the
extent the net book value of the property exceeds the estimated future cash
flows. Where estimates of future net cash flows are not available and where
other conditions suggest impairment, management assesses if carrying value
can be recovered.
|
| |  | Although the Company has taken steps to verify title to mineral properties
in which it has an interest, according to the industry standards for the
current stage of exploration of such properties, these procedures do not
guarantee the Companys title. Such properties may be subject to prior
undetected agreements or transfers and title may be affected by such
defects.                                                                                                                                                                                                                                                                                                               
|
| |  | Fixed Assets, Depreciation and Amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Fixed assets are recorded at cost. Depreciation and amortization are
provided on a straight-line basis over the estimated useful lives of the
related assets. The following rates are being used:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

|                                     |  |               |  | 
|------------------------------------ |  | ------------- |  | 
|Equipment                            |  | 3 to 10 years
|Vehicles                             |  | 4 years      
|Buildings and leasehold improvements |  | 3 to 17 years
|Furniture                            |  | 3 to 10 years



| |  | Provision for Reclamation Costs                                                                                                                                                                                                                                           
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Site restoration costs for exploration and development projects are
estimated and charged to earnings when reasonably determinable.                                                                                                                                       
|
| |  | Financial Instruments                                                                                                                                                                                                                                                     
|
| |  | At December 31, 2002 the carrying value of cash and cash equivalents,
value-added tax and other current assets, accounts payable and accrued
liabilities, and note payable approximate their fair value due to the
relatively short period to maturity of the instruments.
|
| |  | Income Taxes                                                                                                                                                                                                                                                              
|
| |  | The Company uses the liability method of accounting for income taxes. Under
this method future tax assets                                                                                                                                                                 

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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



|   |  | and liabilities are recognized for future tax consequences attributable to
differences between the financial statement carrying value and tax basis of
assets and liabilities. Future tax assets and liabilities are measured
using substantively enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered
or settled. The effect on future tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the date of
substantive enactment.                                                                                                                                                    
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Stock-based Compensation Plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | The Company has two stock-based compensation plans, which are described in
Note 7. Effective January 1, 2002 the Company adopted the new
recommendations of the Canadian Institute of Chartered Accountants for
stock-based compensation. As allowed by the recommendation, the Company has
elected not to follow the fair value method of accounting for share options
granted to employees and directors. Under the intrinsic value method
adopted by the Company, no compensation expense is recorded if the exercise
price of the share options is not less than the market price on the date of
the grant. Any consideration paid on exercise of stock options or purchase
of stock is credited to share capital.
|  
|   |  | Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | Loss per share is determined using the weighted average number of shares
outstanding during the year. All outstanding options and warrants are
anti-dilutive; therefore, basic and diluted losses per share are the same.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|3. |  | Mineral Properties and Deferred Exploration Expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | Mineral property costs and deferred exploration expenditures are summarized
as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

|                             |                                                         |   |                   |           |              |   |           |           |   |   |            |            |  
|---------------------------- | ------------------------------------------------------- | - | ----------------- | --------- | ------------ | - | --------- | --------- | - | - | ---------- | ---------- | -
|                             |                                                         |   | December 31, 2002
|                             |                                                         |   |                  
|                             |                                                         |   | Mineral           |           | Deferred     |   |           |           |  
|                             |                                                         |   | Property          |           | Exploration  |   |           |           |  
|                             |                                                         |   | Cost              |           | Expenditures |   | Total    
|                             |                                                         |   |                   |           |              |   |          
|Cerro San Pedro, Mexico (a): |                                                         |   |                   |           |              |   |           |           |   |   |            |           
|                             | Balance at January 1, 2002                              |   | $                 | 3,601,493 |              |   | $         | 7,062,647 |   |   | $          | 10,664,140 |  
|                             | Additions                                               |   |                   | 8,193     |              |   |           | 374,277   |   |   |            | 382,470    |  
|                             | Contributions to joint venture by joint venture
partner |   |                   |          |              |   |           | (61,968   | ) |   |            | (61,968    | )
|                             |                                                         |   |                   |           |              |   |           |           |   |   |            |            |  
|                             | Balance at December 31, 2002                            |   |                   | 3,609,686 |              |   |           | 7,374,956 |   |   |            | 10,984,642 |  
|El Morro, Chile (b):         |                                                         |   |                   |           |              |   |           |           |   |   |            |           
|                             | Balance at January 1, 2002                              |   |                   | 90,000    |              |   |           | 867,452   |   |   |            | 957,452    |  
|                             | Additions                                               |   |                   |          |              |   |           | 78,552    |   |   |            | 78,552     |  
|                             |                                                         |   |                   |           |              |   |           |           |   |   |            |            |  
|                             | Balance at December 31, 2002                            |   |                   | 90,000    |              |   |           | 946,004   |   |   |            | 1,036,004  |  
|MIMK, Chile (c):             |                                                         |   |                   |           |              |   |           |           |   |   |            |           
|                             | Balance at January 1, 2002                              |   |                   | 17,462    |              |   |           | 147,568   |   |   |            | 165,030    |  
|                             | Additions                                               |   |                   |          |              |   |           | 422,517   |   |   |            | 422,517    |  
|                             | Write-offs                                              |   |                   | (7,700    | )            |   |           | (13,300   | ) |   |            | (21,000    | )
|                             |                                                         |   |                   |           |              |   |           |           |   |   |            |            |  
|                             | Balance at December 31, 2002                            |   |                   | 9,762     |              |   |           | 556,785   |   |   |            | 566,547    |  
|                             |                                                         |   |                   |           |              |   |           |           |   |   |            |            |  
|                             |                                                         | $ | 3,709,448         |           |              | $ | 8,877,745 |           |   | $ | 12,587,193 |           
|                             |                                                         |   |                   |           |              |   |           |           |   |   |            |            |  

F-8



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars

|                             |                                                         |   |                   |           |              |   |           |            |   |   |            |            |  
|---------------------------- | ------------------------------------------------------- | - | ----------------- | --------- | ------------ | - | --------- | ---------- | - | - | ---------- | ---------- | -
|                             |                                                         |   | December 31, 2001
|                             |                                                         |   |                  
|                             |                                                         |   | Mineral           |           | Deferred     |   |           |            |  
|                             |                                                         |   | Property          |           | Exploration  |   |           |            |  
|                             |                                                         |   | Cost              |           | Expenditures |   | Total    
|                             |                                                         |   |                   |           |              |   |          
|Cerro San Pedro, Mexico (a): |                                                         |   |                   |           |              |   |           |            |   |   |            |           
|                             | Balance at January 1, 2001                              |   | $                 | 3,559,787 |              |   | $         | 7,295,301  |   |   | $          | 10,855,088 |  
|                             | Additions                                               |   |                   | 41,706    |              |   |           | 639,537    |   |   |            | 681,243    |  
|                             | Contributions to joint venture by joint venture
partner |   |                   |          |              |   |           | (977,788   | ) |   |            | (977,788   | )
|                             | Reclassification from fixed assets                      |   |                   |          |              |   |           | 105,597    |   |   |            | 105,597    |  
|                             |                                                         |   |                   |           |              |   |           |            |   |   |            |            |  
|                             | Balance at December 31, 2001                            |   |                   | 3,601,493 |              |   |           | 7,062,647  |   |   |            | 10,664,140 |  
|El Morro, Chile (b):         |                                                         |   |                   |           |              |   |           |            |   |   |            |           
|                             | Balance at January 1, 2001                              |   |                   | 90,000    |              |   |           | 851,039    |   |   |            | 941,039    |  
|                             | Additions                                               |   |                   |          |              |   |           | 16,413     |   |   |            | 16,413     |  
|                             |                                                         |   |                   |           |              |   |           |            |   |   |            |            |  
|                             | Balance at December 31, 2001                            |   |                   | 90,000    |              |   |           | 867,452    |   |   |            | 957,452    |  
|MIMK, Chile (c):             |                                                         |   |                   |           |              |   |           |            |   |   |            |           
|                             | Balance at January 1, 2001                              |   |                   | 12,488    |              |   |           | 82,510     |   |   |            | 94,998     |  
|                             | Additions                                               |   |                   | 4,974     |              |   |           | 65,058     |   |   |            | 70,032     |  
|                             |                                                         |   |                   |           |              |   |           |            |   |   |            |            |  
|                             | Balance at December 31, 2001                            |   |                   | 17,462    |              |   |           | 147,568    |   |   |            | 165,030    |  
|Mara Rosa, Brazil (d):       |                                                         |   |                   |           |              |   |           |            |   |   |            |           
|                             | Balance at January 1, 2001                              |   |                   | 927,146   |              |   |           | 1,732,817  |   |   |            | 2,659,963  |  
|                             | Additions                                               |   |                   |          |              |   |           | 282,123    |   |   |            | 282,123    |  
|                             | Reduction to provision for reclamation costs            |   |                   |          |              |   |           | (50,000    | ) |   |            | (50,000    | )
|                             | Write-offs                                              |   |                   | (927,146  | )            |   |           | (1,964,940 | ) |   |            | (2,892,086 | )
|                             |                                                         |   |                   |           |              |   |           |            |   |   |            |            |  
|                             | Balance at December 31, 2001                            |   |                   |          |              |   |           |           |   |   |            |           |  
|                             |                                                         |   |                   |           |              |   |           |            |   |   |            |            |  
|                             |                                                         | $ | 3,708,955         |           |              | $ | 8,077,667 |            |   | $ | 11,786,622 |           
|                             |                                                         |   |                   |           |              |   |           |            |   |   |            |            |  



|a) |  | Mexico Cerro San Pedro Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Cerro San Pedro gold and silver project (the Project) is located in
the State of San Luis Potosi, Mexico. The Project is owned by Minera San
Xavier, S.A. de C.V. (MSX), which is owned 50% by Glamis de Mexico,
S.A. de C.V. and 50% by the Companys wholly owned subsidiary, Raleigh
Mining International Limited. On February 12, 2003 the Company purchased
Glamis de Mexico, S.A. de C.V.s 50% interest in MSX for $18 million
(Note 14 (a)).                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | The feasibility study for the Project is based on an open pit gold and
silver mining operation with heap leach processing of ores. The federal,
state and local mining permits necessary to commence construction of the
Project have been received. MSX intends to proceed with construction of
the Project subject to completion of certain requirements identified in
the permits, market conditions and the availability of financing.
Several governmental agencies periodically supervise compliance with the
conditions identified in the permits. Although MSX is currently in
compliance with the permit conditions, future non-compliance could result
in the permits being revoked. In addition, various complaints have been
filed against the government alleging that the permits should not have
been granted. In the event that the government were to lose these
lawsuits, the permits could be revoked.
|  
|   |  | The Project is subject to a 2% net smelter return (NSR) royalty
interest in all mineral concessions presently owned or optioned by MSX.
In addition, MSX has entered into an agreement with a former owner of
certain mining concessions that provides for a 2.5% NSR royalty on any
mining that occurs on the properties, subject to a maximum of $1.0
million. Although none of the former owners mining concessions are in
the approved mine plan, the agreement provides for MSX to pay minimum
annual royalties of $50,000 beginning in April 2003.                                                                                                                                                                                                                                                                                                                                                              

F-9



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



| |  | In January 1998, the Company entered into a joint venture agreement (the
Agreement) whereby Cambior de Mexico S.A. de C.V., a wholly owned
subsidiary of Cambior Inc. (collectively, Cambior), acquired 50% of the
outstanding common shares of MSX. Under the terms of the Agreement,
Cambior was required to provide $20 million in funding to the joint
venture in the form of direct payment of the capital requirements of the
Project or an equity contribution into the joint venture. In May 2000,
Cambior sold its 50% interest to Glamis de Mexico S.A. de C.V., a wholly
owned subsidiary of Glamis Gold Ltd. (collectively Glamis). Glamis
assumed the remaining obligation on the $20 million funding commitment to
MSX. Glamis attained the $20 million funding commitment by making the
final $2 million cash contribution to MSX in January 2001.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Agreement required that Cambior exchange 199,644 Cambior common
shares, which were valued at approximately $1.5 million on January 21,
1998, for one million of the Companys common shares. The Companys
investment in Cambior was sold in 2000 resulting in a loss on sale of
$142,709.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | At December 31, 2000 the Company wrote down its investment in MSX by
$6,670,194 due to low precious metal prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | The Company accounts for its investment in MSX using the proportionate
consolidation method, whereby the Companys 50% interest is combined with
the financial results of the Company and its subsidiaries. The Companys
share of the assets and liabilities of MSX at December 31, 2002 and 2001,
and cash flows of MSX for the three years ended December 31, 2002 are as
follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|                                  |                           |   |              |            |      |   |           |            | 
|--------------------------------- | ------------------------- | - | ------------ | ---------- | ---- | - | --------- | ---------- | 
|                                  |                           |   | December 31,
|                                  |                           |   | 2002         |            | 2001
|                                  |                           |   |              |            |     
|Current assets                    |                           | $ | 129,657      |            |      | $ | 442,552   |           
|Current liabilities               |                           |   | 131,566      |            |      |   | 192,001   |           
|                                  |                           |   |              |            |      |   |           |           
|                                  | Working capital (deficit) |   |              | (1,909     | )    |   |           | 250,551    | 
|Fixed assets, net                 |                           |   | 75,299       |            |      |   | 85,309    |           
|Mineral properties                |                           |   | 3,609,686    |            |      |   | 3,601,493 |           
|Deferred exploration expenditures |                           |   | 7,374,956    |            |      |   | 7,062,647 |           
|                                  |                           |   |              |            |      |   |           |           
|                                  | Net assets                |   | $            | 11,058,032 |      |   | $         | 11,000,000 | 
|                                  |                           |   |              |            |      |   |           |           

|                            |                             |  |                         |          |      |  |      |          |   |  |   |            |  
|--------------------------- | --------------------------- |  | ----------------------- | -------- | ---- |  | ---- | -------- | - |  | - | ---------- | -
|                            |                             |  | Year Ended December 31,
|                            |                             |  | 2002                    |          | 2001 |  | 2000
|                            |                             |  |                         |          |      |  |     
|Cash inflow (outflow) from: |                             |  |                         |          |      |  |      |          |   |  |   |           
|                            | Operating activities        |  | $                       | 131,546  |      |  | $    | (34,402  | ) |  | $ | (89,410    | )
|                            | Investing activities        |  |                         | (382,896 | )    |  |      | (681,243 | ) |  |   | (1,215,816 | )
|                            | Financing activities        |  |                         | 11,968   |      |  |      | 902,738  |   |  |   | 1,205,000  |  
|                            |                             |  |                         |          |      |  |      |          |   |  |   |            |  
|                            | Increase (decrease) in cash |  | $                       | (239,382 | )    |  | $    | 187,093  |   |  | $ | (100,226   | )
|                            |                             |  |                         |          |      |  |      |          |   |  |   |            |  



|b) |  | Chile El Morro Project                                                                                                                                                                                                                                                                                                                                                                                   
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Companys activities in Chile are concentrated on gold and copper
exploration targets. The El Morro project consists of the La Fortuna and
El Morro properties. In September 1999 the Company entered into a
revised option agreement to acquire a 100% interest in the La Fortuna
mining concessions owned by BHP Minerals (BHP) by making aggregate
payments to BHP of $1,690,000 over a four-year

F-10



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



|   |  | period beginning July 1999. The option agreement also provides for BHP to retain
a 2% NSR on the mining concessions. All payments owed pursuant to this
agreement since September 1999 have been made by Noranda Inc. (Noranda)
pursuant to the exploration agreement described below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company also entered into an option agreement to acquire a 100%
interest in the La Fortuna mining concessions owned by S.L.M. Cantarito
and S.L.M. Tronquito (collectively, Martin) by making aggregate
payments to Martin of $1.5 million, which was completed in December 2001.
These properties are also subject to a 2% NSR royalty of which a 1% NSR
can be repurchased by the Company for $500,000 at any time up to June 4,
2003. All payments owed pursuant to this agreement since September 1999
have been made by Noranda pursuant to the exploration agreement described
below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | The Company acquired a 100% interest in the El Morro copper-gold
property, which is adjacent to the La Fortuna property, by staking in
1998. As of December 31, 2002 the Company had incurred net deferred
costs totaling $1,036,004 on the El Morro project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | The Company entered into an exploration agreement with Noranda to conduct
an exploration program on the El Morro project in September 1999. In
February 2000 the agreement was amended and provides for Noranda to earn
up to a 70% interest in the project by making aggregate exploration and
development expenditures of $10 million, including the BHP and Martin
option payments, over a five-year period beginning September 1999 and a
payment to the Company by September 14, 2005 of $10 million. The
agreement also provided for Noranda to subscribe for a private placement
in the Company for $1 million, which was completed in October 2001 by
paying the Company $1 million in exchange for 918,563 Metallica common
shares (Note 7). Noranda also made payments to the Company of $150,000
in each of 1999 and 2000 that have been recorded as a reduction to
deferred exploration expenditures As of December 31, 2002 the Company
has been advised that Noranda had incurred approximately $10 million of
exploration and development expenditures on the El Morro project.
|  
|c) |  | Chile MIMK Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | The MIMK project consisted of six copper-gold exploration properties that
were acquired in 2000 by staking. At December 31, 2002 three of the MIMK
properties with a carrying value of $21,000 were abandoned and written
off. The three remaining MIMK properties have a carrying value of
$566,547 as of December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|d) |  | Brazil Mara Rosa Project                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | At December 31, 2001 the Company elected not to proceed with further
exploration on the Mara Rosa project and wrote-off its $2,892,086
investment in the project. At December 31, 2002 and 2001 the Company had
accrued estimated reclamation and property closure costs relating to the
Mara Rosa project of $150,000 and $126,000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-11



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



|4. |  | Fixed Assets                                                        
|-- |  | --------------------------------------------------------------------
|  
|   |  | Fixed assets consist of the following at December 31, 2002 and 2001:

|                                    |       |   |         |         |              |   |              |         |          |   |        |        | 
|----------------------------------- | ----- | - | ------- | ------- | ------------ | - | ------------ | ------- | -------- | - | ------ | ------ | 
|                                    |       |   |         |         |              |   | Accumulated  |         |          |   |       
|                                    |       |   |         |         |              |   | Depreciation |         |          |   |       
|                                    |       |   |         |         |              |   | and          |         | Net Book
|                                    |       |   | Cost    |         | Amortization |   | Value       
|                                    |       |   | 2002    |         | 2002         |   | 2002        
|                                    |       |   |         |         |              |   |             
|Equipment                           |       | $ | 100,183 |         |              | $ | 64,409       |         |          | $ | 35,774 |       
|Vehicles                            |       |   | 60,517  |         |              |   | 58,205       |         |          |   | 2,312  |       
|Building and leasehold improvements |       |   | 66,546  |         |              |   | 13,105       |         |          |   | 53,441 |       
|Furniture                           |       |   | 23,220  |         |              |   | 22,464       |         |          |   | 756    |       
|                                    |       |   |         |         |              |   |              |         |          |   |        |       
|                                    | Total |   | $       | 250,466 |              |   | $            | 158,183 |          |   | $      | 92,283 | 
|                                    |       |   |         |         |              |   |              |         |          |   |        |       

|                                    |       |   |         |         |              |   |              |         |          |   |        |        | 
|----------------------------------- | ----- | - | ------- | ------- | ------------ | - | ------------ | ------- | -------- | - | ------ | ------ | 
|                                    |       |   |         |         |              |   | Accumulated  |         |          |   |       
|                                    |       |   |         |         |              |   | Depreciation |         |          |   |       
|                                    |       |   |         |         |              |   | and          |         | Net Book
|                                    |       |   | Cost    |         | Amortization |   | Value       
|                                    |       |   | 2001    |         | 2001         |   | 2001        
|                                    |       |   |         |         |              |   |             
|Equipment                           |       | $ | 100,412 |         |              | $ | 70,995       |         |          | $ | 29,417 |       
|Vehicles                            |       |   | 60,517  |         |              |   | 54,103       |         |          |   | 6,414  |       
|Building and leasehold improvements |       |   | 66,546  |         |              |   | 9,815        |         |          |   | 56,731 |       
|Furniture                           |       |   | 23,220  |         |              |   | 22,346       |         |          |   | 874    |       
|                                    |       |   |         |         |              |   |              |         |          |   |        |       
|                                    | Total |   | $       | 250,695 |              |   | $            | 157,259 |          |   | $      | 93,436 | 
|                                    |       |   |         |         |              |   |              |         |          |   |        |       



|5. |  | Other Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company granted a $100,000 interest free loan to a director and officer
in June 2000. The loan is collateralized by real property and is due in
June 2003. At December 31, 2002, the loan is included in value-added tax
and other current assets; at December 31, 2001, the loan is included in
other assets. In the event that the underlying collateral is sold prior to
June 2003, the loan is due and payable within 30 days of the date of sale
unless additional collateral is provided that is acceptable to the Company.
|  
|6. |  | Note Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | The note payable at December 31, 2002 and 2001 is collateralized by mineral
properties held by MSX (Note 3(a)) and consists of the following:                                                                                                                                                                                                                                                                                                                                                                                        

|                                                                            |                |   |         |   |      |   |         |   | 
|--------------------------------------------------------------------------- | -------------- | - | ------- | - | ---- | - | ------- | - | 
|                                                                            |                |   | 2002    |   | 2001
|                                                                            |                |   |         |   |     
|MSX debt, interest at 1% per month effective
March 1, 2002, payable monthly |                | $ | 100,050 |   |      | $ | 150,050 |  
|Less current portion                                                        |                |   | 100,050 |   |      |   | 150,050 |  
|                                                                            |                |   |         |   |      |   |         |  
|                                                                            | Long-term debt |   | $       |  |      |   | $       |  | 
|                                                                            |                |   |         |   |      |   |         |  

F-12



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



|7. |  | Share Capital
|-- |  | -------------



| | a) |  | Authorized
Unlimited number of common and preferred shares without par value.
| | -- |  | -----------------------------------------------------------------------------
|
| | b) |  | Issued and Outstanding                                                       

|                               |                                                        |  |                         |           |        |   |            |           |        |  |            |         |        |   |            |         |  |  |            |         |  |   |            |        | 
|------------------------------ | ------------------------------------------------------ |  | ----------------------- | --------- | ------ | - | ---------- | --------- | ------ |  | ---------- | ------- | ------ | - | ---------- | ------- |  |  | ---------- | ------- |  | - | ---------- | ------ | 
|                               |                                                        |  | Year Ended December 31,
|                               |                                                        |  |                        
|                               |                                                        |  | 2002                    |           | 2001   |   | 2000      
|                               |                                                        |  |                         |           |        |   |           
|                               |                                                        |  | Shares                  |           | Amount |   | Shares     |           | Amount |  | Shares     |         | Amount
|                               |                                                        |  |                         |           |        |   |            |           |        |  |            |         |       
|Outstanding, beginning of year |                                                        |  | 28,472,978              |           |        | $ | 38,964,222 |           |        |  | 27,077,735 |         |        | $ | 37,744,962 |         |  |  | 26,809,877 |         |  | $ | 37,646,231 |       
|                               | Shares issued in private
placements (Notes 3 and
7(d)) |  |                         | 3,900,000 |        |   |            | 4,054,994 |        |  |            | 918,563 |        |   |            | 998,313 |  |  |            | 267,858 |  |   |            | 98,731 | 
|                               | Exercise of warrants
(Note 7(d))                       |  |                         |          |        |   |            |          |        |  |            | 267,858 |        |   |            | 123,088 |  |  |            |        |  |   |            |       | 
|                               | Exercise of stock options
(Note 7 (c))                 |  |                         | 50,000    |        |   |            | 26,799    |        |  |            | 154,000 |        |   |            | 82,227  |  |  |            |        |  |   |            |       | 
|                               | Shares issued for retirement
Plan (Note 9)             |  |                         | 26,189    |        |   |            | 22,270    |        |  |            | 55,551  |        |   |            | 15,632  |  |  |            |        |  |   |            |       | 
|                               | Transfer agent share
consolidation                     |  |                         |          |        |   |            |          |        |  |            | (729    | )      |   |            |        |  |  |            |        |  |   |            |       | 
|                               |                                                        |  |                         |           |        |   |            |           |        |  |            |         |        |   |            |         |  |  |            |         |  |   |            |       
|Outstanding, end of year       |                                                        |  | 32,449,167              |           |        | $ | 43,068,285 |           |        |  | 28,472,978 |         |        | $ | 38,964,222 |         |  |  | 27,077,735 |         |  | $ | 37,744,962 |       
|                               |                                                        |  |                         |           |        |   |            |           |        |  |            |         |        |   |            |         |  |  |            |         |  |   |            |       



| |    |  | On March 19, 1999, the Company adopted a Shareholder Rights Plan whereby
each shareholder of record was effectively issued one right for each
common share held. In the event that a bidder acquires 20% or more of
the outstanding voting shares of the Company, other than by a permitted
bid or with the approval of the Board of Directors of the Company, the
rights would become exercisable to purchase common shares of the Company
at a 50% discount to the then current market price. In June 2002 the
shareholders ratified the continued existence of the Shareholder Rights
Plan to March 19, 2005.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | c) |  | Options
The Company has two stock-based compensation plans. Under these plans
the exercise price per share is equal to the closing market price the day
prior to granting as quoted on the Toronto Stock Exchange. Each option
allows for the purchase of one share and expires not later than ten years
from the date it was granted. Options vest over a period up to three
years depending on the date of grant.                                                                                                                                                                                             
|
| |    |  | If the Company had followed the fair value method of accounting, the
Company would have recorded additional compensation expense totaling
$24,770 for the year ended December 31, 2002. The pro forma effect on
loss for the period, and basic and diluted loss per share, for the year
ended December 31, 2002 had the Company followed the fair value method of
accounting for stock-based compensation for options granted from January
1, 2002 is as follows:                                                                                                                                               

|                                  |             |   |              |      | 
|--------------------------------- | ----------- | - | ------------ | ---- | 
|                                  |             |   | Year Ended  
|                                  |             |   | December 31,
|                                  |             |   | 2002        
|                                  |             |   |             
|Loss for the year                 |             | $ | 1,320,321    |     
|Compensation expense              |             |   | 24,770       |     
|                                  |             |   |              |     
|Pro forma loss for the year       |             | $ | 1,345,091    |     
|                                  |             |   |              |     
|Basic and diluted loss per share: |             |   |              |     
|                                  | As reported |   | $            | 0.04 | 
|                                  | Pro forma   |   | $            | 0.04 | 



| |  |  | The fair value of share options used to calculate compensation expense
has been estimated using the Black-Scholes Option Pricing Model with the following assumptions: risk
free rate of 4.5%; dividend
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-13



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



| |  |  | yield of 0%; volatility factor of the
expected market price of the Companys common stock of 50% and a weighted
average expected life of the options of five years.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The following is a summary of options granted under these plans:                                                                                                   

|                               |           |  |                         |          |                         |  |           |            |      |  |           |          |      |   |                                 |      |  |   |      |      |  |   |      |      | 
|------------------------------ | --------- |  | ----------------------- | -------- | ----------------------- |  | --------- | ---------- | ---- |  | --------- | -------- | ---- | - | ------------------------------- | ---- |  | - | ---- | ---- |  | - | ---- | ---- | 
|                               |           |  |                         |          |                         |  |           |            |      |  |           |          |      |   | Weighted Average Exercise Price
|                               |           |  |                         |          |                         |  |           |            |      |  |           |          |      |   | (Canadian Dollars)             
|                               |           |  | Year Ended December 31, |          | Year Ended December 31,
|                               |           |  |                         |          |                        
|                               |           |  | 2002                    |          | 2001                    |  | 2000      |            | 2002 |  | 2001      |          | 2000
|                               |           |  |                         |          |                         |  |           |            |      |  |           |          |     
|Outstanding, beginning of year |           |  | 2,144,583               |          |                         |  | 2,555,500 |            |      |  | 2,569,500 |          |      | $ | 1.01                            |      |  | $ | 1.69 |      |  | $ | 1.82 |     
|                               | Granted   |  |                         | 87,500   |                         |  |           | 811,250    |      |  |           | 141,000  |      |   |                                 | 1.39 |  |   |      | 0.83 |  |   |      | 0.45 | 
|                               | Exercised |  |                         | (50,000  | )                       |  |           | (154,000   | )    |  |           |         |      |   |                                 | 0.85 |  |   |      | 0.84 |  |   |      |     | 
|                               | Forfeited |  |                         |         |                         |  |           | (18,667    | )    |  |           |         |      |   |                                 |     |  |   |      | 1.04 |  |   |      |     | 
|                               | Expired   |  |                         | (175,000 | )                       |  |           | (1,049,500 | )    |  |           | (155,000 | )    |   |                                 | 2.55 |  |   |      | 2.55 |  |   |      | 2.73 | 
|                               |           |  |                         |          |                         |  |           |            |      |  |           |          |      |   |                                 |      |  |   |      |      |  |   |      |     
|Outstanding, end of year       |           |  | 2,007,083               |          |                         |  | 2,144,583 |            |      |  | 2,555,500 |          |      | $ | 0.90                            |      |  | $ | 1.01 |      |  | $ | 1.69 |     
|                               |           |  |                         |          |                         |  |           |            |      |  |           |          |      |   |                                 |      |  |   |      |      |  |   |      |     
|Exercisable, end of year       |           |  | 1,678,333               |          |                         |  | 1,558,750 |            |      |  | 2,236,500 |          |      | $ | 0.89                            |      |  | $ | 1.09 |      |  | $ | 1.82 |     
|                               |           |  |                         |          |                         |  |           |            |      |  |           |          |      |   |                                 |      |  |   |      |      |  |   |      |     



| |  |  | The following table summarizes information about stock options outstanding
at December 31, 2002:
| |  |  | ------------------------------------------------------------------------------------------------

|                   |                |                    |  |                  |        |                    |           |                  |   |      |      |  |  | 
|------------------ | -------------- | ------------------ |  | ---------------- | ------ | ------------------ | --------- | ---------------- | - | ---- | ---- |  |  | 
|Range of           |                |                    |  |                  |        | Weighted Average   |           | Weighted Average
|Exercise Prices    |                |                    |  |                  |        | Remaining          |           | Exercise Price  
|(Canadian Dollars) |                | Number Outstanding |  | Contractual Life |        | (Canadian Dollars)
|                   |                |                    |  |                  |        |                   
|                   | $0.45 to $0.50 |                    |  | 215,000          |        |                    | 1.9 years |                  | $ | 0.47 |     
|                   | $0.70 to $0.85 |                    |  | 1,271,250        |        |                    | 2.9 years |                  |   | 0.80 |     
|                   | $1.11 to $1.39 |                    |  | 445,833          |        |                    | 1.8 years |                  |   | 1.16 |     
|                   |                | $2.24              |  |                  | 75,000 |                    |           | 0.3 years        |   |      | 2.24 | 
|                   |                |                    |  |                  |        |                    |           |                  |   |     
|                   | $0.45 to $2.24 |                    |  | 2,007,083        |        |                    | 2.5 years |                  | $ | 0.90 |     
|                   |                |                    |  |                  |        |                    |           |                  |   |     



| |    |  | All outstanding options expire on or before June 2006.                                                                                                                                                                                                                                                                                                                                                       
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | d) |  | Warrants
On April 16, 2002, the Company sold 3.9 million shares pursuant to a
private placement at a price of Cdn$1.80 per share for gross proceeds of
Cdn$7.0 million (US$4,054,994 net of share issuance costs). Each common
share includes one-half of a common share purchase warrant. Each whole
common share purchase warrant is exercisable at a price of Cdn$2.00 per
share for a period of one year.
|
| |    |  | The 267,858 common shares issued pursuant to a private placement in 2000
for net proceeds of $98,731 each had one common share purchase warrant
attached. Each warrant allowed the holder to purchase one common share
in the Company at a price of Cdn$0.70 per share. The warrants were
exercised in June 2001.                                                                                            

F-14



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



|8. |  | Income Taxes                                                                                                                                                                                                                                                                                             
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The difference between the amount of reported consolidated income tax
provision and the amount computed by multiplying the loss before income
taxes by the Companys combined effective Canadian federal and
provincial tax rates of 38.62% (42.12% in 2001 and 45.62% in 2000) is
reconciled as follows:

|                                                                                      |                                |   |          |        |      |   |            |        |  |   |            |       | 
|------------------------------------------------------------------------------------- | ------------------------------ | - | -------- | ------ | ---- | - | ---------- | ------ |  | - | ---------- | ----- | 
|                                                                                      |                                |   | 2002     |        | 2001 |   | 2000      
|                                                                                      |                                |   |          |        |      |   |           
|Income taxes computed using the effective tax rate                                    |                                | $ | (489,912 | )      |      | $ | (1,606,975 | )      |  | $ | (3,465,396 | )    
|Non-deductible write-down of mineral properties
and deferred exploration expenditures |                                |   | 8,110    |        |      |   | 1,218,147  |        |  |   | 3,042,943  |      
|Net foreign losses subject to different tax rates                                     |                                |   | 91,852   |        |      |   | 53,147     |        |  |   | 21,140     |      
|Earnings taxed at less than effective rate                                            |                                |   | (5,262   | )      |      |   | (7,766     | )      |  |   | (40,438    | )    
|Benefit of tax losses not recognized                                                  |                                |   | 389,989  |        |      |   | 354,242    |        |  |   | 444,994    |      
|                                                                                      |                                |   |          |        |      |   |            |        |  |   |            |      
|                                                                                      | Income tax (benefit) provision |   | $        | (5,223 | )    |   | $          | 10,795 |  |   | $          | 3,243 | 
|                                                                                      |                                |   |          |        |      |   |            |        |  |   |            |      



| |  | The tax effects of temporary differences that give rise to significant
portions of the future income tax assets and liabilities at December 31,
2002 and 2001 are as follows:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             |                                                      |                                                          |   |            |           |      |   |            |           | 
|---------------------------- | ---------------------------------------------------- | -------------------------------------------------------- | - | ---------- | --------- | ---- | - | ---------- | --------- | 
|                             |                                                      |                                                          |   | 2002       |           | 2001
|                             |                                                      |                                                          |   |            |           |     
|Future income tax assets:    |                                                      |                                                          |   |            |           |      |   |           
|                             | Canada:                                              |                                                          |   |            |           |      |   |            |          
|                             |                                                      | Net operating loss carryforwards                         |   | $          | 2,326,000 |      |   | $          | 2,227,000 | 
|                             |                                                      | Mineral properties and deferred exploration
expenditures |   |            | 1,989,000 |      |   |            | 2,169,000 | 
|                             |                                                      | Deferred financing costs                                 |   |            | 125,000   |      |   |            | 4,000     | 
|                             | Mexico:                                              |                                                          |   |            |           |      |   |            |          
|                             |                                                      | Net operating loss carryforwards                         |   |            | 3,517,000 |      |   |            | 4,630,000 | 
|                             | Chile:                                               |                                                          |   |            |           |      |   |            |          
|                             |                                                      | Net operating loss carryforwards                         |   |            | 179,000   |      |   |            | 181,000   | 
|                             | Barbados:                                            |                                                          |   |            |           |      |   |            |          
|                             |                                                      | Net operating loss carryforwards                         |   |            | 53,000    |      |   |            | 43,000    | 
|                             |                                                      | Mineral properties and deferred exploration
expenditures |   |            | 31,000    |      |   |            | 94,000    | 
|                             |                                                      | Other, net                                               |   |            | 6,000     |      |   |            | 7,000     | 
|                             |                                                      |                                                          |   |            |           |      |   |            |           | 
|                             | Total future income tax assets                       |                                                          |   | 8,226,000  |           |      |   | 9,355,000  |          
|                             | Less valuation allowance                             |                                                          |   | (5,771,000 | )         |      |   | (5,376,000 | )        
|                             |                                                      |                                                          |   |            |           |      |   |            |           | 
|                             | Future income tax assets, net of valuation allowance |                                                          |   | 2,455,000  |           |      |   | 3,979,000  |          
|Future income tax liability: |                                                      |                                                          |   |            |           |      |   |           
|                             | Mexico:                                              |                                                          |   |            |           |      |   |            |          
|                             |                                                      | Mineral properties and deferred exploration
expenditures |   |            | 2,455,000 |      |   |            | 3,979,000 | 
|                             |                                                      |                                                          |   |            |           |      |   |            |           | 
|                             | Net future income tax assets                         |                                                          | $ |           |           |      | $ |           |          
|                             |                                                      |                                                          |   |            |           |      |   |            |           | 



| |  | At December 31, 2002 the Company and its subsidiaries have available
Canadian tax loss carryforwards of approximately $6 million that expire
between the years 2003 and 2009, Mexican tax loss carryforwards of
approximately $10 million that expire between the years 2005 and 2012,
Chilean tax loss carryforwards of
approximately $1 million that can be carried forward indefinitely and
Barbados tax loss carryforwards of approximately $2 million that expire
between the years 2006 and 2011.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-15



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars

9.     Pension Plan

The Company has a qualified defined contribution savings plan that covers
all U.S. based salaried and hourly employees. When an employee meets
certain eligibility requirements, the Company matches 50% of employee
contributions up to 10% of base salary. Employees vest 100% in the employer
matching contribution after three years of service. The Companys matching
contributions were $18,038, $15,572 and $18,963 for the years ended December
31, 2002, 2001 and 2000, respectively.

10.     Contingencies and Commitments



| | a) |  | MSX entered into a lease agreement with a group of individuals
representing Ejido Cerro San Pedro for a 15-year period beginning
February 1997. The lease provides for annual lease payments of $30,861
and grants MSX surface rights to Ejido Cerro San Pedros communal farm
land at the proposed mine site. Another group of individuals has filed
a lawsuit requesting nullification of the existing lease agreement with
MSX alleging that they are the lawful representatives of Ejido Cerro
San Pedro. In December 2002 a judgment was rendered in favor of the
group of individuals who signed the lease agreement with MSX, which
allows them to prove that they are the lawful representatives of Ejido
Cerro San Pedro. Management anticipates that this matter will be
resolved in favor of MSX.
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | The Company leases certain facilities and equipment under long-term
operating lease agreements. As of December 31, 2002, lease commitments
for the next five years and thereafter, including the Companys 50%
share of MSX leases, are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|           |  |   |         | 
|---------- |  | - | ------- | 
|2003       |  | $ | 55,700  | 
|2004       |  |   | 51,900  | 
|2005       |  |   | 49,300  | 
|2006       |  |   | 26,600  | 
|2007       |  |   | 22,400  | 
|Thereafter |  |   | 112,000 | 



|11. |  | Supplementary cash flow information                            
|--- |  | ---------------------------------------------------------------
|   
|    |  | Cash and cash equivalents include the following at December 31:

|                                    |  |      |           |      |  |      |           |  |  |   |           | 
|----------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                    |  | 2002 |           | 2001 |  | 2000
|                                    |  |      |           |      |  |     
|Cash on hand and balances with bank |  | $    | 120,886   |      |  | $    | 459,288   |  |  | $ | 304,129   | 
|Short-term investments              |  |      | 4,400,000 |      |  |      | 2,102,813 |  |  |   | 2,035,579 | 
|                                    |  |      |           |      |  |      |           |  |  |   |           | 
|                                    |  | $    | 4,520,886 |      |  | $    | 2,562,101 |  |  | $ | 2,339,708 | 
|                                    |  |      |           |      |  |      |           |  |  |   |           | 



| |  |  | The Company paid interest and income taxes as follows:
| |  |  | ------------------------------------------------------

|             |  |      |        |      |  |      |   |  |  |   |   | 
|------------ |  | ---- | ------ | ---- |  | ---- | - |  |  | - | - | 
|             |  | 2002 |        | 2001 |  | 2000
|             |  |      |        |      |  |     
|Income taxes |  | $    | 13,000 |      |  | $    |  |  |  | $ |  | 
|Interest     |  | $    | 10,005 |      |  | $    |  |  |  | $ |  | 

F-16



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



| |  |  | The Company incurred non-cash operating and financing activities as
follows:
| |  |  | ----------------------------------------------------------------------------

|                               |                                                             |  |      |         |      |  |      |         |   |  |   |   | 
|------------------------------ | ----------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | - | 
|                               |                                                             |  | 2002 |         | 2001 |  | 2000
|                               |                                                             |  |      |         |      |  |     
|Non-cash operating activities: |                                                             |  |      |         |      |  |      |         |   |  |   |  
|                               | Settlement of retirement plan obligation with common
shares |  | $    | (22,270 | )    |  | $    | (15,632 | ) |  | $ |  | 
|Non-cash financing activities: |                                                             |  |      |         |      |  |      |         |   |  |   |  
|                               | Common shares issued for retirement plan
contributions      |  | $    | 22,270  |      |  | $    | 15,632  |   |  | $ |  | 



| | 12. |  | Segment Information                                                                                                                                                                                       
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Companys operations are limited to a single industry segment being the
exploration of mineral properties for economically recoverable reserves.
Segment assets by geographic location are as follows:

|                                                         |  |                   |            |       |  |               |           |       |  |   |        |  |  |   |            | 
|-------------------------------------------------------- |  | ----------------- | ---------- | ----- |  | ------------- | --------- | ----- |  | - | ------ |  |  | - | ---------- | 
|                                                         |  | December 31, 2002
|                                                         |  |                  
|                                                         |  | Mexico            |            | Chile |  | United States |           | Total
|                                                         |  |                   |            |       |  |               |           |      
|Mineral properties and deferred
exploration expenditures |  | $                 | 10,984,642 |       |  | $             | 1,602,551 |       |  | $ |       |  |  | $ | 12,587,193 | 
|Fixed assets, net                                        |  |                   | 75,299     |       |  |               |          |       |  |   | 16,984 |  |  |   | 92,283     | 
|                                                         |  |                   |            |       |  |               |           |       |  |   |        |  |  |   |            | 
|                                                         |  | $                 | 11,059,941 |       |  | $             | 1,602,551 |       |  | $ | 16,984 |  |  | $ | 12,679,476 | 
|                                                         |  |                   |            |       |  |               |           |       |  |   |        |  |  |   |            | 

|                                                         |  |                   |             |       |  |               |           |       |  |   |       |  |  |   |            | 
|-------------------------------------------------------- |  | ----------------- | ----------- | ----- |  | ------------- | --------- | ----- |  | - | ----- |  |  | - | ---------- | 
|                                                         |  | December 31, 2001
|                                                         |  |                  
|                                                         |  | Mexico            |             | Chile |  | United States |           | Total
|                                                         |  |                   |             |       |  |               |           |      
|Mineral properties and deferred
exploration expenditures |  | $                 | 10,664,1400 |       |  | $             | 1,122,482 |       |  | $ |      |  |  | $ | 11,786,622 | 
|Fixed assets, net                                        |  |                   | 85,309      |       |  |               |          |       |  |   | 8,127 |  |  |   | 93,436     | 
|                                                         |  |                   |             |       |  |               |           |       |  |   |       |  |  |   |            | 
|                                                         |  | $                 | 10,749,449  |       |  | $             | 1,122,482 |       |  | $ | 8,127 |  |  | $ | 11,880,058 | 
|                                                         |  |                   |             |       |  |               |           |       |  |   |       |  |  |   |            | 



|13. |  | Reconciliation to United States GAAP                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The consolidated financial statements have been prepared in accordance with
Canadian GAAP which differ in certain respects from those principles that
the Company would have followed had its consolidated financial statements
been prepared in accordance with United States GAAP. Significant
measurement differences that materially affect these consolidated financial
statements are as follows:



| |  |  | For United States GAAP, the Company has elected to continue to
account for stock options using the intrinsic value method allowed by
existing accounting pronouncements effective both in Canada and in the
United States. As such, there are no differences in accounting for
stock options.                                                                                                                                
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | As described in note 2, Canadian GAAP allows for the deferral of
exploration expenditures. For United States GAAP, the Company
expenses, as incurred, costs relating to unproven mineral properties.
When proven and probable reserves are determined for a property and a
feasibility study has been prepared, then subsequent exploration and
development costs of the property would be capitalized. The
capitalized costs

F-17



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



| |   |  | of such properties would then be measured periodically for recoverability
of carrying values under Statement of Financial Accounting Standard (SFAS)
144.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Canadian GAAP provides for write-downs on the carrying value of the
Companys mineral properties and deferred exploration expenditures on a
non-discounted cash flow basis when these assets have become impaired.
At December 31, 2000, due to depressed gold and silver prices the
Company determined that a $6,670,194 write-down to the carrying value
of the Cerro San Pedro project was required. Under United States GAAP,
which requires write-downs for impairment to be on a discounted cash
flow basis, the carrying value of the Cerro San Pedro project was
written down to the estimated present value of the projects future
cash flows of $3,559,787, resulting in a United States GAAP write-down
of $14,110,407. During the year ended December 31, 2002, the Company
wrote-off $99,762 of mineral property acquisition costs on unproven
mineral properties.
|
| |  |  | Canadian GAAP provides for investments in jointly controlled
entities to be accounted for using proportionate consolidation. Under
United States GAAP, investments in incorporated joint ventures are to
be accounted for using the equity method. Under an accommodation of
the United States Securities and Exchange Commission, the accounting
for joint ventures need not be reconciled from Canadian to United
States GAAP. The different accounting treatment affects only the
display and classification of financial statement items and not net
income or shareholders equity. Details of the Companys share of the
assets, liabilities and cash flows of the MSX joint venture are set out
in Note 3(a).                                                                                                                                                            



| |  | Had the Company followed United States GAAP, certain items in the statements
of operations and deficit and balance sheets would have been reported as
follows:
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

Statement of Operations and Deficit

|                                                                                     |  |                                 |            |      |  |      |            |   |  |   |             |  
|------------------------------------------------------------------------------------ |  | ------------------------------- | ---------- | ---- |  | ---- | ---------- | - |  | - | ----------- | -
|                                                                                     |  | For the Year Ended December 31,
|                                                                                     |  |                                
|                                                                                     |  | 2002                            |            | 2001 |  | 2000
|Net loss:                                                                            |  |                                 |            |      |  |      |            |   |  |   |             |  
|Net loss, Canadian GAAP                                                              |  | $                               | (1,320,321 | )    |  | $    | (3,826,026 | ) |  | $ | (7,599,464  | )
|Net effect of write-down of mineral properties and
deferred exploration expenditures |  |                                 | 13,300     |      |  |      | 1,964,940  |   |  |   | (5,400,546  | )
|Net effect of deferred exploration expenditures                                      |  |                                 | (600,831   | )    |  |      | (313,594   | ) |  |   | (121,273    | )
|                                                                                     |  |                                 |            |      |  |      |            |   |  |   |             |  
|Net loss, U.S. GAAP                                                                  |  | $                               | (1,907,852 | )    |  | $    | (2,174,680 | ) |  | $ | (13,121,283 | )
|                                                                                     |  |                                 |            |      |  |      |            |   |  |   |             |  
|Loss per share, U.S. GAAP                                                            |  | $                               | (0.06      | )    |  | $    | (0.08      | ) |  | $ | (0.49       | )
|                                                                                     |  |                                 |            |      |  |      |            |   |  |   |             |  

Balance Sheet

|                                                         |  |                 |            |      |  |          |           |      |  |   |            |  |  |   |           | 
|-------------------------------------------------------- |  | --------------- | ---------- | ---- |  | -------- | --------- | ---- |  | - | ---------- |  |  | - | --------- | 
|                                                         |  | At December 31,
|                                                         |  |                
|                                                         |  | 2002            |            | 2001
|                                                         |  |                 |            |     
|                                                         |  | Canadian        |            | U.S. |  | Canadian |           | U.S.
|                                                         |  | GAAP            |            | GAAP |  | GAAP     |           | GAAP
|Mineral properties and deferred
exploration expenditures |  | $               | 12,587,193 |      |  | $        | 3,689,341 |      |  | $ | 11,786,622 |  |  | $ | 3,476,301 | 
|                                                         |  |                 |            |      |  |          |           |      |  |   |            |  |  |   |           | 
|Shareholders equity                                     |  | $               | 17,087,971 |      |  | $        | 8,045,207 |      |  | $ | 14,304,229 |  |  | $ | 5,848,996 | 
|                                                         |  |                 |            |      |  |          |           |      |  |   |            |  |  |   |           | 

F-18



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars

Statement of Cash Flows

|                                                         |  |                                 |            |      |  |      |            |   |  |   |            |  
|-------------------------------------------------------- |  | ------------------------------- | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | -
|                                                         |  | For the Year Ended December 31,
|                                                         |  |                                
|                                                         |  | 2002                            |            | 2001 |  | 2000
|Cash flows from operating activities, Canadian
GAAP      |  | $                               | (1,229,857 | )    |  | $    | (853,658   | ) |  | $ | (937,633   | )
|Mineral properties and deferred exploration
expenditures |  |                                 | (499,153   | )    |  |      | (313,594   | ) |  |   | (121,273   | )
|                                                         |  |                                 |            |      |  |      |            |   |  |   |            |  
|Cash flows from operating activities, U.S. GAAP          |  | $                               | (1,729,010 | )    |  | $    | (1,167,252 | ) |  | $ | (1,058,906 | )
|                                                         |  |                                 |            |      |  |      |            |   |  |   |            |  
|Cash flows from investing activities, Canadian
GAAP      |  | $                               | (905,119   | )    |  | $    | (1,055,365 | ) |  | $ | (1,243,651 | )
|Mineral properties and deferred exploration
expenditures |  |                                 | 499,153    |      |  |      | 313,594    |   |  |   | 121,273    |  
|                                                         |  |                                 |            |      |  |      |            |   |  |   |            |  
|Cash flows from investing activities, U.S. GAAP          |  | $                               | (405,966   | )    |  | $    | (741,771   | ) |  | $ | (1,122,378 | )
|                                                         |  |                                 |            |      |  |      |            |   |  |   |            |  



| |  | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Financial Accounting Standards Board (FASB) has issued SFAS No. 143,
Accounting for Asset Retirement Obligations. This statement addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. It requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if
a reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the
long-lived asset. The Company is analyzing the impact of SFAS No. 143 and
does not expect that the implementation of this new standard will have a
material impact on its consolidated financial position or results of
operations when the company adopts the standard on January 1, 2003.
|
| |  | The FASB has issued SFAS No. 146, Accounting for Costs Associated with Exit
or Disposal Activities. Under this standard, exit costs and restructuring
liabilities generally will be recognized only when incurred. SFAS No. 146 is
effective for exit or disposal activities that are initiated after December
31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | The Accounting Standards Board of the Canadian Institute of Chartered
Accountants (CICA) has issued CICA 3063 Impairment of Long-lived Assets.
This standard is effective for years beginning on or after April 1, 2003 and
establishes standards for the recognition, measurement and disclosure of the
impairment of non-monetary long-lived assets, including property, plant and
equipment, intangible assets with finite useful lives, deferred
pre-operating costs and long-term prepaid assets. The Company does not
expect that the implementation of this new standard will have a material
impact on its consolidated financial position or results of operations                                                                                                                                                                                                                
|
| |  | The CICA has approved, subject to written ballot, a new Handbook section,
Asset Retirement Obligations, to replace the current guidance on future
removal and site restoration costs included in the CICA accounting standard
3061, Property, Plant and Equipment. The standard is effective for years
beginning on or after January 1, 2004. The standard requires recognition of
a liability at its fair value for the obligation associated with the
retirement of a tangible long-lived asset. A corresponding asset retirement
cost would be added to the carrying amount of the related asset and
amortized to expense over the useful life of the asset. The Company does
not expect that the implementation of this new standard will have a material
impact on its consolidated financial position or results of operations.                                                    
|
| |  | The FASB has issued Financial Interpretation No. 46, Consolidation of
Variable Interest Entities  an Interpretation of ARB No. 51, (FIN 46).
FIN 46 requires that when the majority equity owner of a variable interest
entity holds an equity ownership representing less than 10% of the total
assets of the variable interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

F-19



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##### Table of Contents



Metallica Resources Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial StatementsU.S. dollars



|    |  | entity, the primary beneficiary of the variable interest entity be required
to consolidate the variable interest entity. FIN 46 is effective for fiscal
periods beginning after June 15, 2003, for variable interests acquired
before February 1, 2003, and for variable interests created after January
31, 2003. The Company expects to adopt FIN 46 on January 1, 2003 and has
not yet determined the effect of adopting this interpretation.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|14. |  | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                               



| | a) |  | On February 12, 2003 the Company acquired Glamis 50% interest in
MSX, owner of the Cerro San Pedro gold and silver project in Mexico,
for $18 million adjusted for 50% of MSXs working capital. The
purchase terms are as follows:
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (i)                                                                                                      |  | $2 million paid at closing.                                                                                                    
| | -------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)                                                                                                     |  | 50% of MSXs working capital due to Glamis, or 50% of MSXs working
capital deficit due to the Company, within 30 days closing.
|
| | (iii)                                                                                                    |  | $5 million due on or before August 12, 2003.                                                                                   
|
| | (iv)                                                                                                     |  | $6 million in cash or the Companys common shares due on February 12, 2004.                                                    
|
| | (v)                                                                                                      |  | $2.5 million due at commencement of commercial production.                                                                     
|
| | (vi)                                                                                                     |  | $2.5 million due one year from commencement of commercial production.                                                          
|
| | Glamis will also receive a sliding scale royalty when monthly average
gold prices exceed $325 per ounce.



| | b) |  | On March 11, 2003 the Company closed a private placement of 10.1
million shares at a price of $1.50 per share for gross proceeds of
Cdn$15.1 million. Each common share includes one-half of a common
share purchase warrant. Each whole common share purchase warrant is
exercisable at a price of Cdn$2.00 per share for a period of two years
to March 11, 2005.
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-20



---



##### Table of Contents



Table of Exhibits

|     |  |                                                                                                                                                                                             |  |  
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -
|     |  | Description of Document                                                                                                                                                                     |  |  
|     |  |                                                                                                                                                                                             |  |  
|1.1  |  | Certificate of Incorporation                                                                                                                                                                |  | *
|     |  |                                                                                                                                                                                             |  |  
|1.2  |  | Certificate of Continuance dated July 16, 2002                                                                                                                                              |  |  
|     |  |                                                                                                                                                                                             |  |  
|1.3  |  | Articles of Continuance dated July 16, 2002                                                                                                                                                 |  |  
|     |  |                                                                                                                                                                                             |  |  
|1.4  |  | By-Laws dated July 16, 2002                                                                                                                                                                 |  |  
|     |  |                                                                                                                                                                                             |  |  
|4.1  |  | Employment Agreement between the Company and Richard J. Hall
dated June 5, 2001                                                                                                             |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.2  |  | Employment Agreements between the Company and Fred H.
Lightner dated May 16, 1997, April 1, 1999 and November 8,
1999                                                                       |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.3  |  | Employment Agreement between the Company and Bradley J.
Blacketor dated May 16, 1997                                                                                                        |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.4  |  | Shareholder Rights Plan Agreement dated March 19, 1999                                                                                                                                      |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.5  |  | Loan Agreement between Metallica Barbados Inc. and Richard
J. Hall dated June 26, 2000                                                                                                      |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.6  |  | Richard J. Hall Subscription Agreement dated November 8, 1999                                                                                                                               |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.7  |  | Richard J. Hall Warrant Agreement dated November 8, 1999                                                                                                                                    |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.8  |  | Noranda Exploration Agreement dated September 14, 1999                                                                                                                                      |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.9  |  | Noranda Exploration Agreement dated February 10, 2000                                                                                                                                       |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.10 |  | Stock Acquisition and Shareholders Agreement between
Raleigh Mining International Limited and Cambior de Mexico
S.A. de C.V. and Minera San Xavier S.A. de C.V. dated
January 21, 1998     |  | *
|     |  |                                                                                                                                                                                             |  |  
|4.11 |  | Share Purchase Agreement between Glamis de Mexico, S.A. de
C.V., Raleigh Mining International Limited, Metallica
Resources Inc. and Minera San Xavier, S.A. de C.V. dated
February 12, 2003 |  |  
|     |  |                                                                                                                                                                                             |  |  
|8    |  | Subsidiaries of the Company                                                                                                                                                                 |  |  
|     |  |                                                                                                                                                                                             |  |  
|99.1 |  | Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002                                           |  |  
|     |  |                                                                                                                                                                                             |  |  
|99.2 |  | Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002                                           |  |  

* Previously filed.

71