**U** **NITED** **S** **TATES**
 **S** **ECURITIES
AND** **E** **XCHANGE** **C** **OMMISSION**
 **WASHINGTON,
D.C. 20549**
 
 **FORM
20-F**
 (Mark
One)
 [
      ]
    REGISTRATION
      STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
      OF 1934
 
 OR
 
 [X
      ]
    ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For
the fiscal year ended December 31, 2004
 
 OR
 
 [
      ]
    TRANSITIONAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 Commission
file number
_________________________________________________________
 
 
 **DRC** **** **R** **ESOURCES** **C** **ORPORATION**
 (Exact
name of registrant as specified in its charter)
 
 **British
Columbia, Canada**
 (Jurisdiction
of incorporation or organization)
 
 **#601
- 595 Howe Street**
 **Vancouver,
BC V6C 2T5**
 (Address
of principal executive offices)
 
 Securities
registered or to be registered pursuant to Section 12(b) of the
Act.
 
 Title
      of each class
    
    Name
      of each exchange on which registeredNone
    
    None
 1
  Securities
registered or to be registered pursuant to Section 12(g) of the
Act.
 
 Title
of class
 ____________________________
 Common
Shares without par value
 
 Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act.
 
 Title
of class
 _____________________________
 None
 
 Indicate
the number of outstanding shares of each of the issuer’s classes of capital or
common stock as of the close of the period covered by the annual
report.
 
 13,941,766
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
 þ  Yes  No
 Indicate
by a check mark which financial statement item the registrant has elected to
follow.
 þ  Item
17 o  Item
18
 
 
  2
  **Table
      of Contents**PageFORWARD
      LOOKING STATEMENTS
    5GLOSSARY
      OF TERMS AND DEFINITIONS
    5**PART
      I**Item
      1.
    Identity
      of Directors, Senior Management and AdvisersA.
    Directors
      and senior management
    9B.
    Advisers
    10C.
    Auditors
    10Item
      2.
    Offer
      Statistics and Expected Timetable (Not applicable)Item
      3.
    Key
      InformationA.
    Selected
      financial data
    10B.
    Capitalization
      and indebtedness
    12C.
    Reasons
      for the offer and use of proceeds (Not applicable)D.
    Risk
      factors
    13Item
      4.
    Information
      on the CompanyA.
    History
      and Development of DRC Resources
    17B.
    Business
      Overview
    19C.
    Organizational
      Structure
    20D.
    Property,
      Plant and Equipment
    20Afton
      Property
    20Ajax-Python
      Property
    31Lipsett
      Lake Property
    33Item
      5.
    Operating
      and Financial Review and ProspectsA.
    Operating
      results
    35B.
    Liquidity
      and capital resources
    38C.
    Research
      and development, patents and licenses, etc. (Not
    applicable)D.
    Trend
      information (Not applicable)Item
      6.
    Directors,
      Senior Management and EmployeesA.
    Directors
      and senior management
    39B.
    Compensation
    41C.
    Board
      practices
    42D.
    Employees
    46E.
    Share
      ownership
    46Item
      7.
    Major
      Shareholders and Related Party TransactionsA.
    Major
      shareholders
    49B.
    Related
      party transactions
    49C.
    Interests
      of experts and counsel
    50Item
      8.
    Financial
      InformationA.
    Consolidated
      Statements and Other Financial Information
    50B.
    Significant
      Changes
    50Item
      9.
    The
      Offer and ListingA.
    Offer
      and listing details
    50B.
    Plan
      of distribution (Not applicable)C.
    Markets
    51D.
    Selling
      shareholders (Not applicable)E.
    Dilution
      (Not applicable)F.
    Expenses
      of the issue (Not applicable)
  3
 Item
      10.
    Additional
      InformationA.
    Share
      capital
    51B.
    Memorandum
      and articles of association
    54C.
    Material
      contracts
    55D.
    Exchange
      controls
    56E.
    Taxation
    56F.
    Dividends
      and paying agents
    57G.
    Statement
      by experts
    57H.
    Documents
      on display
    58Item
      11.
    Quantitative
      and Qualitative Disclosures about the Market (Not
    applicable)Item
      12.
    Description
      of Securities other than Equity SecuritiesA.
    Debt
      securities (Not applicable)B.
    Warrants
      and rights
    58C.
    Other
      securities (Not applicable)D.
    American
      Depositary Shares (Not applicable)**PART
      II**Item
      13.
    Defaults,
      Dividend Arrearages and Delinquencies (Not applicable)Item
      14.
    Material
      Modifications to the Rights of Security Holders and Use of Proceeds (Not
      applicable)Item
      15.
    Controls
      and Procedures (Not applicable)Item
      16.
    (Not
      applicable)**PART
      III**Item
      17.
    Financial
      Statements
    58Item
      18.
    Financial
      Statements
    59Item
      19.
    Exhibits
    59Exhibit
      1: Financial statements and consent of AuditorExhibit
      2: Certificate of IncorporationExhibit
      3: Memorandum and ArticlesExhibit
      4: Opinion of counselExhibit
      5: Services agreement with President & CEOExhibit
      6: Services agreement with Corporate SecretaryExhibit
      7: Stock Option PlanExhibit
      8: Option to purchase Afton Property


4


**FORWARD-LOOKING
STATEMENTS**





This
registration statement of DRC Resources Corporation (herein referred to as “DRC
Resources” or “the Company”) contains forward-looking statements with reference
to: (i) Mineral Resources, (ii) certain plans, strategies and objectives of DRC
Resources’ management, and (iii) expected costs of exploration and development
programs. Such forward-looking statements are not guarantees of future
performance, which may be affected by risk factors and other uncertainties, many
of which are beyond the control of DRC Resources, which may cause actual results
to differ materially from those expressed in the statements contained in this
registration statement.





Historical
financial information as to costs of exploration and administration may not be
indicative of DRC Resources’ future cost performance. All statements which are
not statements of historical fact may be deemed to be forward-looking
statements. The use of words such as “potential”, “possible”, “indicated”,
“inferred”, “estimated” or statements such as “may’, “expect”, “believe”,
“anticipate” and “intend” (and the negative or variations of, or comparable
terminology) are intended to identify forward-looking statements.








**GLOSSARY
OF TERMS AND DEFINITIONS**





The
following is a glossary of technical terms which are used in this registration
statement to describe the DRC Resources’ business.





“ Ag ”
means silver





“ anomaly ”
and “a nomalous ”
mean a value higher or lower than the expected; outlining a zone of potential
exploration interest but not necessarily of commercial significance





“ argillite ”
is a sedimentary rock composed of compacted mud and clay particles





“ Au ”
means gold





“ batholith ”
is a large body of igneous rock formed by intrusion and solidification of
magma





“ blebs ”
are small **** rounded
to elongate inclusions





“ bornite ”
is an important copper sulphide mineral(Cu 5 FeS 4)





“ chalcocite ”
is a copper sulphide mineral (Cu 2 S)





“ chalcopyrite ”
is a copper sulphide mineral (Cu 5 FeS 4 )





“ copper
equivalent ”
means the percentage of marketable metals or minerals contained in mineralized
material, determined by converting all other metals other than copper to
equivalent copper on the basis of a market price for such metals at a given time





“ Cu ”
means copper





5


“ cuprite ”
is a copper oxide (Cu 2 0)





“ diamond
drill ”
means a type of rotary drill, the bit of which is set with diamonds that cut by
abrasion rather than percussion. The hollow-centred cutting bit is attached to
the end of long hollow drill rods that are rotated and through which water is
pumped to the cutting face of the bit. The drill cuts a circle, the rock core of
which is recovered in long cylindrical sections, an inch or more in
diameter.





“ dilution ”
means the incorporation of waste or low grade rock with ore during the mining
process resulting in lower grade





“ disseminated
ore ”
means a scattered distribution of generally fine-grained metal bearing minerals
throughout a rock body, in sufficient quantity to make the deposit an
ore





“ dollars ”
or “ $ ”
means Canadian currency unless otherwise indicated





“ exploration ”
means prospecting, diamond drilling and other work involved in searching for ore
bodies





“ fault ”
means a fracture or fracture zone along which there has been displacement of the
sides





“ feeder
zone ”
means conduits facilitating the movement of magma or mineral bearing
fluids





“ grade ”
the weight of valuable minerals in each tonne of ore





“ g/t ”
means grams per tonne





“ hypogene ”
means primary mineral deposits formed by generally ascending solutions in or
from below the earth’s crust


“ hydrothermal ” means
any process associated with igneous activity involving the action of very hot
aqueous solutions


“ Indicated
Mineral Resource ”
is a term defined by the Canadian Institute of Mining, Metallurgy and Petroleum
(“CIM”) and adopted in Canadian National Instrument NI 43-101 *Standards
for Disclosure of Mineral Projects* as meaning that part of a mineral resource for which quantity, grade or quality,
densities, shape and physical
characteristics, can be estimated with a level of confidence sufficient to allow
the appropriate application of technical and economic parameters, to support
mine planning and evaluation of the economic viability of the deposit. The
estimate is based on detailed and reliable exploration and testing information
gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes that are spaced closely enough for
geological and grade continuity to be reasonably assumed.


“ Inferred
Mineral Resource ”
is a term defined by the CIM and adopted in NI 43-101 as meaning that part of a
mineral resource for which quantity and grade or quality can be estimated on the
basis of geological evidence and limited sampling and reasonably assumed, but
not verified, geological and grade continuity. The estimate is based on limited
information and sampling gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes.


“ intrusive ”
a rock formed by the process of emplacement of magma in pre-existing
rock


“ magmatic ”
means rock derived from cooling magma emplaced in the earth's crust


6


“ Measured
Mineral Resource ”
is a term defined by the CIM and adopted in NI 43-101 as meaning that part of a
mineral resource for which quantity, grade or quality, densities, shape and
physical characteristics, are so well established that they can be estimated
with sufficient confidence to allow the appropriate application of technical and
economic parameters, to support production planning and evaluation of economic
viability of the deposit. The estimate is based on detailed and reliable
exploration sampling and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits, workings and drill
holes that spaced closely enough for geological and grade
continuity.


“ mineralization ”
means rock containing an undetermined amount of minerals or metals


“ Mineral
Reserve ”
is a term defined by the CIM and adopted in NI 43-101 as meaning the
economically mineable part of a Measured or Indicated Mineral Resource
demonstrated by at least a Preliminary Feasibility Study. This Study must
include adequate information on mining, processing, metallurgical, economic and
relevant factors that demonstrate, at the time of reporting, that economic
extraction can be justified. A Mineral Reserve includes diluting materials and
allowances for losses that may occur when the material is mined. (Note below the
definition of “Reserve” found in the U.S. Securities and Exchange Commission
Industry Guide 7)


“ Mineral
Resource ”
is a term defined by the CIM and adopted in NI 43-101 as meaning a concentration
or occurrence of natural, solid, inorganic or fossilized organic material in or
on the earth’s crust in such form and quantity and of such a grade or quality
that it has reasonable prospects for economic extraction. The location,
quantity, grade, geological characteristics and continuity of a Mineral Resource
are known, estimated or interpreted from specific geological evidence and
knowledge.


“ mineral
zone ”
means a mineral-bearing belt or area


“ Mo ”
means molybdenum


“ Ore ”
is a natural aggregate of one or more minerals which, at a specified time and
place, may be mined, processed and sold at a profit, or from which some part may
profitably be separated


“ oz/t ”
means Troy ounces per short ton


“ Pd ”
means palladium


“ percussion
drill ”
means a drill that operates by having the drill bit fall with force onto the
rock


“ petrographic
study ”
is the identification of minerals with the aid of a microscope


“ plutonic ”
means a phaneritic igneous rock that has crystallized at depth within earth’s
crust


“ porphyry ”
means an igneous rock containing conspicuous crystals or phenocrysts in a
fine-grained groundmass; it refers to a type of mineral deposit in which ore
minerals are widely disseminated, generally of low grade but large
tonnage


“ porphyry
copper ”
is a type of deposit in which the copper mineralization occurs as discrete
grains and veins throughout a large volume of rock


“preliminary
assessment” means an assessment that may be disclosed under NI 43-101 if made by
a qualified person, notwithstanding that it includes an economic evaluation
which uses inferred mineral resources, provided that such disclosure includes a
proximate statement that the assessment is preliminary in nature, that it
includes inferred mineral resources that are too speculative geologically to
have the economic considerations applied to them that would enable them to be
categorized as mineral reserves and there is no certainty that the preliminary
assessment will be realized; a preliminary assessment is sometimes referred to
as a “scoping study”


“Reserve”
is a term defined by Industry Guide 7 of the U.S. Securities and Exchange
Commission (SEC) as meaning that part of a mineral deposit which could be
economically and legally extracted or produced at the time of the reserve
determination. Industry Guide 7 classifies reserves as either “Proven
(Measured)” or “Probable (Indicated)”. Proven (measured) reserves are those for
which (a) quantity is computed from dimensions revealed in outcrops, trenches,
workings or drill holes; grade and/or quality are computed from the results of
detailed sampling and (b) the sites for inspection, sampling and measurement are
spaced so closely and geologic character is so well defined that size, shape,
depth and mineral content of reserves are well-established. Probable (indicated)
reserves are those for which quantity and grade and/or quality are computed from
information similar to that used for proven (measured) reserves, but the sites
for inspection, sampling, and measurement are farther apart or are otherwise
less adequately spaced. The degree of assurance, although lower than that for
proven (measured) reserves, is high enough to assume continuity between points
of observation. *Note:
SEC staff has traditionally required a “bankable” or “final” feasibility study
before reserves may be designed for purposes of meeting the requirements of
Industry Guide 7.*


7


“ resource ”
or “Mineral Resource” is a term defined by the CIM and adopted in NI 43-101 as
meaning a concentration or occurrence of natural, solid, inorganic or fossilized
organic material in or on the Earth’s crust in such form and quantity and of
such a grade or quality that it has reasonable prospects for economic
extraction. The location, quantity, grade, geological characteristics and
continuity of a Mineral Resource are known, estimated or interpreted from
specific geological evidence and knowledge.


“ short
ton ”
a unit of weight which equals 2000 pounds


“ sulphides ”
or “ sulfides ”
are a group of minerals consisting of metals combined with sulphur; common
metallic ores


“ supergene ”
means a secondary enrichment of a rock body by a re-precipitation of oxides and
sulphides from descending ground water


“ tonne ”
means metric tonne (2,204 pounds)





Measurements
stated in metric units covert to **** imperial
equivalents is as follows:





Metric
      Units
    Multiplied
      by
    =Imperial
      Unitshectares
    2.471
    =acresmetres
    3.281
    =feetkilometres
    0.621
    =miles
      (5,280 feet)grams
    0.032
    =ounces
      (troy; 12 troy ozs/lb)tonnes
    1.102
    =tons
      (short or 2,000 lbs)grams/tonne
    0.029
    =ounces
      (troy)/ton


8


**PART
I**





**Item
      1.**
    **Identity
      of Directors, Senior Management and
Advisers**


**A.**
    **Directors
      and senior management**


The
following are the directors and executive officers of DRC
Resources:


**Name
      & business address**
    **Position
      or Function**John
      Harvey Kruzick
      #601
      - 595 Howe Street
      Vancouver,
      BC Canada V6C 2T5
    Director
      Chairman
      of the BoardChristopher
      John . Bradbrook
      Suite
      810, Box 4
      1
      First Canadian Place
      Toronto,
      ON M5X 1A9
    Director
      President
      and Chief Executive OfficerSharon
      Lynne Ross
      #601
      - 595 Howe Street
      Vancouver,
      BC Canada V6C 2T
    Director
      SecretaryCharles
      Robert Edington
      Unit
      1 - 929 Ellery Street
      Victoria,
      BC, Canada V8Z 6M1
    DirectorMike
      Muzylowsi
      Suite
      1160, 1040 West Georgia St.
      Vancouver,
      BC, Canada V6E 4H1
    DirectorThomas
      O’Toole Taylor
      1358
      232ndSteet
      Langley,
      BC, Canada V2Z 2W9
    DirectorCraig
      Dalton Thomas
      Suite
      1525, 625 Howe Street
      West
      Vancouver, BC V6C 2T6
    DirectorClifford
      John Davis
      505541
      Grey Road 1, RR#2
      Kemble,
      Ontario, N0H 1S0
    DirectorRobert
      Gregory Laing
      240
      Dolphin Court
      Oakville,
      Ontario, L6J 5S8
    DirectorIan
      Mackenzie Beardmore
      Suite
      1400, 701 West Georgia Street
      Vancouver,
      BC Canada V7Y 1C6
    Chief
      Financial OfficerMichael
      W. J. Hibbitts
      1518
      Tanglewood Lane
      Coquitlam,
      BC
      V3E
      2V2
    Vice
      President Exploration and Development





9





**B.**
    **Advisers**


The
following are DRC Resources’ principal advisers:


**Name
      & business address**
    **Function**HSBC
      Bank Canada
      885
      West Georgia Street
      Vancouver,
      BC Canada V6C 3E9
    BankerDundee
      Securities Corporation
      320
      Bay Street, Suite 800
      Toronto
      ON Canada M5H 4A6
    Sponsor
      for listing of DRC Resources on the Toronto Stock
  ExchangeDonald
      W.J. Specht
      4130
      Ripple Road, West Vancouver, BC, Canada V7V 3L2
    Legal
      counsel





**C.**
    **Auditors**





De
Visser Gray


Chartered
Accountants


401
- 905 West Pender Street


Vancouver,
British Columbia, Canada, V6C 1L6





Member
of the Institute of Chartered Accountants of British Columbia and a registrant
with the United States Public Company Accounting Oversite Board
(PCAOB).





**Item
      2.**
    **Offer
      Statistics and Expected Timetable - NOT
  APPLICABLE**





**Item
      3.**
    **Key
      Information**





**A.**
    **Selected
      financial data.**





The
selected financial data appearing below for the fiscal years ending December 31,
2004, 2003, 2002, 2001, 2000 and 1999 are set forth in Canadian dollars and
extracted from the audited Consolidated Financial Statements of DRC Resources
that appear elsewhere herein.





DRC
Resources’ financial statements are prepared in accordance with generally
accepted accounting principles (GAAP) that apply in Canada. The selected
financial data appearing in the first table below is presented in accordance
with Canadian GAAP. The second table sets out the selected financial data in
accordance with US GAAP. The principle differences between Canadian GAAP and US
GAAP that affect DRC Resources’ income and shareholders’ equity relate to those
items described in Note 16 of the DRC Resources’ December 31, 2004 financial
statements appearing elsewhere herein.





The
following selected financial data should be read in conjunction with, and is
qualified in its entirety by reference to DRC Resources’ audited Consolidated
Financial Statements appearing elsewhere in this registration
statement.





**SELECTED
FINANCIAL DATA UNDER CANADIAN GAAP**





**Year
      Ended**
      **December**
      **31,
      2004**
    **Year
      Ended**
      **December**
      **31,
      2003**
    **Year
      Ended December 31, 2002**
    **Year
      Ended December 31, 2001**
    **Year
      Ended December 31, 2000**
    **Year
      Ended**
      **December**
      **31,
      1999**Net
      Operating Revenue
    
    565,017
    107,910
    113,823
    255,155
    176,527
    984Net
      Income (Loss)
    
    (1,249,545)
    (1,218,371)
    (185,907)
    (114,809)
    (227,166)
    110,108Income
      (Loss) per Share
    
    (0.09)
    (0.13)
    (0.02)
    (0.02)
    (0.04)
    (0.02)Total
      Assets
    
    31,795,645
    28,470,396
    6,492,825
    5,899,183
    6,380,707
    1,076,948Net
      Assets
    
    29,655,721
    27,427,076
    6,333,889
    5,566,571
    6,075,855
    1,060,157Deferred
      Income Taxes
    
    922,675
    875,935
    113,767
    296,410
    216,985
    0Cash
      Dividends per share
    
    Nil
    Nil
    Nil
    Nil
    Nil
    NilDeficit
    
    (4,220,830)
    (2,971,285)
    (1,752,914)
    (1,567,007)
    (1,452,198)
    (1,225,032)Capital
      Stock
    
    33,008,361
    30,398,361
    8,086,803
    7,133,578
    7,528,053
    2,285,189Weighted
      Average Number of Shares
    
    13,390,604
    9,746,722
    8,704,716
    7,792,620
    5,742,938
    4,456,016














**SELECTED
FINANCIAL DATA UNDER US GAAP**





**Year
      Ended December 31, 2004**
    **Year
      Ended December 31, 2003**
    **Year
      Ended December 31, 2002**
    **Year
      Ended December 31, 2001**Other
      Income and Expenses
    
    565,017
    107,910
    113,823
    255,155Net
      (Loss)
    
    (13,696,181)
    (2,412,340)
    (1,064,130)
    (563,384)Income
      (Loss) per Share
    
    (0.28)
    (0.25)
    (0.12)
    (0.07)Total
      Assets
    
    25,861,713
    24,983,100
    4,199,498
    4,406,179Net
      Assets
    
    23,721,789
    23,939,780
    3,962,662
    4,073,567Deferred
      Income Taxes
    
    922,675
    875,935
    113,767
    296,410Cash
      Dividends per share
    
    Nil
    Nil
    Nil
    NilDeficit
    
    (10,154,762)
    (6,458,581)
    (4,124,141)
    (3,060,011)Capital
      Stock
    
    33,008,361
    30,398,361
    8,086,803
    7,133,578Weighted
      Average Number of Shares
    
    13,390,604
    9,746,722
    8,704,716
    7,792,620





On
December 31, 2004 a Canadian dollar (C$1.00) was exchangeable for US$0.83 on the
basis applied in the following table, which sets forth, for the periods and
dates indicated, information concerning the rates of exchange of one Canadian
dollar (C$1.00) into the US$ 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 (“Noon Buying Rate”).





10




**Period**
    **At
      Period End**
    **Average
      Rate****(1)**
    **High**
    **Low**(all
      figures in US$ per C$)Month
      ended February 28, 2005
    0.8107
    0.8067
    0.8107
    0.7988Month
      ended January 31, 2005
    0.8057
    0.8161
    0.8295
    0.8078Month
      ended December 31, 2004
    0.8319
    0.8203
    0.8390
    0.8122Month
      ended November 30, 2004
    0.8432
    0.8361
    0.8469
    0.8174Month
      ended October 31, 2004
    0.8210
    0.8020
    0.8160
    0.7890Month
      ended September 30, 2004
    0.7926
    0.7765
    0.7865
    0.7660Year
      ended December 31, 2004
    0.8319
    0.7683
    0.8469
    0.7194Year
      ended December 31, 2003
    0.7713
    0.7135
    0.7789
    0.6338Year
      ended December 31, 2002
    0.6329
    0.6368
    0.6546
    0.6237Year
      ended December 31, 2001
    0.6279
    0.6458
    0.6671
    0.6268Year
      ended December 31, 2000
    0.6669
    0.6733
    0.6948
    0.6397Year
      ended December 31, 1999
    0.6925
    0.6730
    0.6859
    0.6563








**B.**
    **Capitalization
      and Indebtedness**





The
following tables set out the capitalization of DRC Resources at December 31,
2004 in accordance with Canadian and US GAAP





**Under
      Canadian GAAP**
    **At
      Dececmber 31, 2004**(all
      figures in C$)Shareholders’
      EquityCommon
      Shares
    33,008,361Retained
      earnings (deficit)
    (4,220,830)Total
      shareholders’ equity
    29,655,721Indebtedness
      (direct, indirect, contingent) Note 1Short
      term debt - unsecured (current accounts payable)
    1,187,021Long
      term debt - capital lease
    30,228Total
      indebtedness
    2,139,924





**Under
      US GAAP**
    **At
      December 31, 2004**(all
      figures in C$)Shareholders’
      EquityCommon
      Shares
    33,008,361Retained
      earnings (deficit)
    (10,154,762)Total
      shareholders’ equity
    23,721,789Indebtedness
      (direct, indirect, contingent) Note 1Short
      term debt - unsecured (current accounts payable)
    1,187,021Long
      term debt - capital lease
    30,228Total
      indebtedness
    2,139,924





Note
1: There has been no other significant change in the Company’s other
indebtedness since December 31, 2003 and significant accounts payable are for
underground tunneling completed in the month of December ,2004 and not invoiced
or paid until January, 2005





11





**C.**
    ***Reasons
      for the offer and use of
proceeds***





Not
applicable





**D.**
    ***Risk
      factors***





This
section describes some of the risks and uncertainties faced by DRC Resources’.
The factors below should be considered in connection with any forward-looking
statements in this registration statement. The risks described below are
considered to be the significant or material ones, but they are not the only
risks faced by DRC Resources. Some risks may not be known to DRC Resources and
others that are not considered significant or material may turn out to be
material. Investment in the common shares of DRC Resources must be considered
speculative and risky, since any one or more of the risks could materially
impact DRC Resources’ business, its revenues, income, ability to raise required
capital and the market price of its common shares.


n
    ***No
      Ongoing Operations and No Production History***DRC Resources has no current ongoing mining operations and no significant
      income. The resources developed by DRC Resources are not reserves and,
      until such time as resources are proven to be reserves, there is a risk
      that the Company may not achieve ongoing operations from which it may
      derive significant income.


**n**
    ***Risks
      Specific to the Afton Copper-Gold
Project***


·
    *Potential
      Increase in Surface Costs of Site*The owner of the surface rights, a previous operator, may deny DRC
      Resources use or purchase at a reasonable rental or price, of an existing
      mill building, assay laboratory, administration building, power line and
      other surface facilities, which would require DRC Resources to build new
      facilities. (see further discussion of this point under Item 4.B on page
      20 of this registration statement) DRC Resources does not own any surface
      rights (fee lands) to the area comprising the Afton Copper-Gold Project.
      To date, access to the Company’s property has been over the previous
      operator’s fee lands. Alternate, though somewhat less convenient, access
      is readily available over government lands. The*Mineral
      Tenure Act*(British Columbia) provides for a free miner or the holder of a mineral
      claim to have a right of way to entry over surface areas for the location,
      exploration and development or production of minerals, by arbitrated
      access order if necessary, subject to compensating a surface owner for
      such disturbances or use of surface area.


·
    *Increased
      Tailing System Costs*Since
      DRC Resources does not have rights to use the existing tailings facility,
      it may be put to the cost of developing a new tailings system or employing
      a dry tailings process, which is slightly more costly than processing
      tailings in the conventional way.


·
    *Limited
      Geotechnical Study*Though
      geotechnical studies by SRK Consulting supports a panel (block) caving
      method of mining, the limited scope of such studies means that there is a
      risk that panel caving will not be feasible and that DRC Resources will
      have to employ another, somewhat more costly, mining method such as
      sublevel mining.


·
    *Potential
      Dilution*DRC
      Resources estimated that it would have to provide at least 10% of the $140
      million required to commence the development stage of the Afton
      Copper-Gold Project. In November 2003 DRC Resources raised $24 million by
      issue of 3.45 million shares, which constituted a 24% dilution of the
      company’s then equity. If DRC Resources is required to raise further
      equity to attract project debt financing, further shareholder dilution may
      be required.




12


·
    *Management
      Inexperience*DRC Resources’ management is experienced in exploring for minerals, but
      lacks technical training and experience with developing and operating a
      mine. With no direct training or experience in these areas, management may
      not be fully aware of many of the specific requirements related to working
      within this area of industry and their decisions and choices may not take
      into account standard engineering or managerial approaches mine operating
      companies commonly use. Consequently, DRC Resources’ operations, earnings
      and ultimate financial success could suffer irreparable harm due to
      management’s lack of operating experience.


·
    *Potential
      Drilling Cost Increase*Key drill sites being used by DRC Resources to conduct its exploration
      program are situate on an existing open pit slope, which may be subject to
      failure. If instability of the pit slope requires DRC Resources to drill
      from alternate locations, the cost of drilling yet to be done could be
      significantly increased.


·
    *Existing
      Site Hazards*The open pit left by the previous mining operation constitutes an inherent
      safety hazard to on-site operations of DRC Resources, in addition to
      which, by assuming control of surface areas used by a previous operator,
      DRC Resources may also become liable for consequent environmental and
      personal safety problems related to such things as slope failure, soils
      contamination, etc.


n
    ***Exploration*********The
      business of the exploration for minerals involves a high degree of risk.
      Few properties that are explored are ultimately developed into producing
      mines. At present, there are no known bodies of commercially mineable ore
      on any of the mineral properties in which DRC Resources has an
      interest.


n
    ***Additional
      Funding Requirements*********Though DRC Resources currently has funds sufficient to meet its
      obligations and to carry out its exploration plans for at least the next
      24 months, there is no assurance that DRC Resources will in the future be
      able to obtain all the financing it requires on acceptable terms and
      conditions, or at all. The only sources of future funds presently
      available to DRC Resources are the sale of equity capital, or the offering
      by DRC Resources of an interest in its properties to be earned by another
      party or parties carrying out further exploration or development of the
      properties.


n
    ***Amount
      of Property Cost is not Evidence of Value***Expenditures
      made by DRC Resources in the exploration or development of its mineral
      properties are included in the balance sheet value of its resource
      properties. The amounts described as “RESOURCE PROPERTIES” in the balance
      sheets of DRC Resources’ financial statements cannot be taken to reflect
      realizable value.


n
    ***Competition***********Competition
      for mineral prospects and financing required for exploration is intense.
      Many of the companies competing with DRC Resources have greater financial
      resources**,
      l**arger
      staff and labour forces, more equipment for exploration and greater
      experience and may therefore be in a better competitive position than DRC
      Resources.


n
    ***Title
      Matters*****While
      DRC Resources has investigated title to its properties and is satisfied
      that, to the best of its knowledge, title to all its properties is in good
      standing, this should not be construed as a guarantee of title, which may
      be affected by undetected defects. DRC Resources’ mineral claims
      comprising its principal property, the Afton Copper-Gold Project, have
      been validly staked in accordance with applicable legislation, the legal
      corner post of four key claims has been located by survey, but DRC
      Resources has not surveyed the boundaries of its mineral claims. Until
      that is done, one cannot be certain of the precise location and whether or
      not there are any internal, unstaked fractions. DRC Resources does not
      hold title insurance.


**n**
    ***Potential
      Conflicts of Interest*****Mike
      Muzylowski and Craig D. Thomas, directors of DRC Resources, are also
      directors and/or officers of other natural resource companies. (See Item
      6.A on pages 35-37 for names of other companies where these directors hold
      positions as directors.) Directors and officers are aware of their
      fiduciary obligations to DRC Resources and its shareholders. However,
      conflicts with respect to corporate opportunities may arise between the
      obligations of these directors and officers of DRC Resources and such
      other natural resource companies. DRC Resources’ incorporating documents
      and applicable legislation require all material transactions between DRC
      Resources and its directors and officers to be approved by a majority of
      DRC Resources’ disinterested directors. Any decision made by any of such
      directors and officers involving DRC Resources is made in accordance with
      their duties and obligations to deal fairly and in good faith with DRC
      Resources. The directors of DRC Resources must disclose, and refrain from
      voting on, any matter in which such directors may have a conflict of
      interest.




13


In
the past, Chairman of the Board, John H. Kruzick and Mike Muzylowski, directors
of DRC Resources, have been involved as independents in the business of
acquiring mineral properties. As directors and/or officers of other companies,
Messrs. Muzylowski and Craig D. Thomas provide management services
(directorship) and consulting (legal services) to other mineral exploration
companies. If those directors or officers learn of mineral exploration
opportunities, they will not necessarily present them to DRC Resources, but may
pursue them through other vehicles or present them to others. Mr. Muzylowski
presently provides management and consulting services only to Callinan Mines
Limited and Mr. Thomas is consulting legal counsel to Intercontinental Mining
Corporation, Golden Raven Resources, Anglo-Andean Exploration Inc., Terramin
Mining Inc., Rystar Communications Ltd. and Cogent Technologies Inc. (see also
Item 6.A. on pages 36-38 of this document). By the terms of their engagement and
their disclosure of all potentially conflicting property interests and
acquisitions, this practice complies with these directors’ duties to the Company
under the *Company
Act* (British Columbia). It is determined on the facts of each case as the same
arises and is disclosed whether or not a conflict exists and, if so, whether the
benefit in the conflict is to be resolved in the Company’s favour. In the past,
no conflict has arisen that has adversely affected the Company’s business
operations.


n
    ***Dependence
      on Key Employees*********DRC
      Resources depends on Chris Bradbrook, John H. Kruzick and Sharon L. Ross
      as key employees, the loss of any one of whom could have an adverse effect
      on DRC Resources’ administrative
operations.


n
    ***Environmental
      Liability***Mineral
      exploration is subject to potential risks and liabilities associated with
      pollution of the environment. Breach of regulations may result in the
      imposition of fines or penalties, or prevent the conduct of exploration
      completely.


n
    *Requirement
      for Permits and Licenses***DRC
      Resources believes that it presently holds or has applied for all
      necessary licenses and permits to carry on the activities in which it is
      currently engaged under applicable laws and regulations in respect of its
      properties, and DRC Resources believes it is presently complying in all
      material respects with the terms of such licenses and permits. However,
      such licenses and permits are subject to changes in regulations and in
      various operational circumstances. A substantial number of additional
      permits and licenses will be required should DRC Resources proceed beyond
      exploration. There can be no guarantee that DRC Resources will be able to
      obtain such licenses and permits.


n
    ***Market
      Risks***If DRC Resources’ stock trades in the OTC Bulletin Board or the Pink
      Sheets, but not on national exchanges, such as the New York Stock Exchange
      or NASDAQ, at a price below US$5.00 per share, it will be subject to the
      “penny stock” rules of the Securities and Exchange Commission. These rules
      require that, before a broker or dealer can sell a penny stock to persons
      other than established customers and accredited investors (generally those
      with assets in excess of $1 million or annual income exceeding $200,000),
      the firm must make a determination as to the suitability of the purchase
      of such securities for the customer and obtain the customer’s written
      consent to the transaction prior to the purchase. Unless a penny stock
      transaction is exempt under the rules, the broker or dealer must furnish
      the customer a document describing the risks of investing in penny stocks.
      The broker or dealer must give the customer the current market quotation,
      if any, for the penny stock and disclose the compensation to the firm and
      registered representative. The firm must send monthly account statements
      showing the recent market price of penny stocks in the account. The penny
      stock rules will tend to restrict the ability of brokers and dealers to
      sell DRC Resources stock, which could have an adverse effect on liquidity
      and market price of DRC Resources’ stock.


14


n
    ***Legal
      Remedies***Because
      DRC Resources is incorporated in British Columbia, Canada and all its
      assets and business operations are located outside the United States, as
      is the residence of all members of its management, the bringing of an
      action, the service of process, proof of a case and the enforcement of
      judgments will be more difficult.


n
    ***Risks
      Associated with Mining Operations***If
      DRC Resources ever commenced actual mining operations, such operations
      would face the risk of changing circumstances, including but not limited
      to:


·
    failure
      of production to achieve metal recovery levels indicated by pre-production
      testing of drill core and bulk samples;


·
    estimates
      of reserves being adversely affected by encountering unexpected or unusual
      geological formations;


·
    production
      costs being adversely affected by unforeseen factors such as substantial
      adverse changes in exchange rates or changes in environmental protection
      requirements, breakdowns and other technical difficulties, slides,
      cave-ins or other natural disasters, work interruptions or labour
      strikes;


·
    the
      grade of ore actually mined being lower than that indicated by drilling
      results;


·
    persistently
      lower market prices of the products mined than those used to determine the
      feasibility of mining a mineral occurrence;


·
    adverse
      changes in interest rates that may apply to project development
      debt.





15


**Item
      4.**
    **Information
      on the Company**





**A.**
    **History
      and Development of DRC Resources**





***1.***
    ***Name
      of the Company***





The
Company’s legal and commercial name is: DRC Resources Corporation





***2.***
    ***Incorporation***


DRC
Resources was incorporated on January 31, 1980





***3.***
    ***Domicile
      and form of Company***


DRC
Resources exists as a limited liability corporation pursuant to Certificate of
Incorporation issued by the Registrar of Companies and registration of its
Memorandum and Articles under the *Company
Act* (British Columbia), Canada.





DRC
Resources’ registered office for service in Canada and its principal place of
business are located at Suite #601 - 595 Howe Street, Vancouver, British
Columbia, V6C 2T5.





DRC
Resources is a reporting issuer in British Columbia, Alberta, Ontario and the
USA, and is a multiple jurisdiction filer with SEDAR and an EDGAR filer. DRC
Resources Corporation Common Shares are listed on the Toronto Stock Exchange
(the TSX) under the symbol “DRC,” and on the American Stock Exchange (the AMEX)
under the symbol “DRJ.”





***4.***
    ***Important
      events in development of Company’s
  Business***


DRC
Resources is in the business of acquiring and exploring natural resource
properties. Exploration work on the properties has been limited to prospecting,
sampling, research and drilling. To date, no property has been the subject of
development work to bring it into production. A mineral property is abandoned if
exploration results do not appear to warrant further expenditure on the
property. Upon abandonment, DRC Resources writes off its investment in the
property. Administrative expenditures are related primarily to maintaining
corporate existence and meeting filing requirements, as there have been no
mining operations. As properties are not acquired on a regular or periodic basis
there can not be said to be observable trends in DRC Resources’ business and
year-to-year comparisons of accounting information may not be meaningful. As an
exploration company, DRC Resources’ success is generally measured by the extent
and quality of mineralization (if any) discovered and this information is not
contained in financial statements.


From
incorporation in 1980 until 1998, DRC Resources was exclusively in the business
of acquiring and exploring mineral resource properties in Canada.


***Diversification
Attempt***


For
a period from June 1998 until September 1999, due to poor economic conditions in
the mining industry, DRC Resources took steps to change the nature of its
business, by diversifying and de-emphasizing mineral exploration. Several
mineral properties were allowed to lapse and a joint venture was concluded to
allow another company to acquire 50% of the Python claim group, DRC Resources’
then major mineral property holding. e-Bid Online Inc. was incorporated under
the *Company
Act* (British Columbia) to reserve the corporate name as reflected in the domain
(internet) address. DRC Resources secured shareholder approval for its plan to
change its name and business to reflect its then e-commerce business direction.
Consultants in that area of activity were engaged to assist in the transition.
An e-commerce website was designed and developed during 1999 but
commercialization was not achieved and the project was
discontinued.


16


DRC
Resources’ President, John H. Kruzick, acted as nominee subscriber, holding in
trust for the Company the one issued share of e-Bid Online Inc., which was
incorporated on August 27, 1999 by registration of its Memorandum and Articles
under the *Company
Act* ,
British Columbia. e-Bid Online Inc. was never recorded in the financial
statements as a subsidiary, but as a project expense subsequently written
off.


***Return
to Mineral Exploration Business***


While
the Company pursued its change of direction to e-commerce, in 1998 and 1999 John
H. Kruzick privately continued his long-time interest in mineral exploration
with a colleague, John C. Ball by, among other activities, staking in June 1999
in their joint names the mineral claims that subsequently came to comprise the
Afton Copper-Gold Project. Messrs. Kruzick and Ball shared the costs of their
staking, which was approximately $10,000. When metal prices showed signs of
recovery in September 1999, Mr. Kruzick persuaded his colleague to offer the
Afton mineral claims to DRC Resources for a price of 2,000,000 million common
shares with payment to be spread over six years and a retained 10% Net Profits
Royalty (see also Item 7.B on page 46 and Item 4.B on pages 22-23 of this
registration statement). The directors decided to acquire the property and
refocus the Company’s activities on mineral property exploration, the current
area of interest. Consistent with that decision, the Python mineral property
option (covering ground in the same general area as the Afton Project) was
terminated when the optionee decided not to proceed with required
expenditures.


***5.***
    ***Principal
      Business and Capital Investment in the Last Three
      Years***


Since
1999 DRC Resources’ principal capital expenditures have been on or in connection
with the Afton Copper-Gold Project, a copper-gold mineral exploration prospect
located near Kamloops, British Columbia, Canada. There have been no significant
divestitures.


From
2000 to present the Company raised over $31 million, of which approximately $9
million has been expended in exploration of the Afton Copper-Gold Project to
date.. As of March 1, 2005 approximately $23.5 million is retained as working
capital.


***6.***
    ***Principal
      Capital Expenditures in
Progress***


The
Afton Copper-Gold Project exploration programs are the only significant
expenditures in progress. All exploration has been funded by external financing
through issue of securities of DRC Resources.


***7.***
    ***Takeover
      Offers***


While
there has been friendly discussion with several majors in the industry, there
has been no indication of public takeover offers in respect of DRC Resources’
shares.


**B.**
    **Business
      Overview**


**l**
    ***General***


The
Company was formed in British Columbia under its present name by registering its
Memorandum and Articles under the British Columbia *Company
Act* on January 31, 1980. The same year the Company filed articles of amendment to
remove the private company restrictions from its articles and made its first
public stock distribution December 12, 1980. By amendment of its Memorandum on
July 10, 1987 the Company’s capital was increased from 5,000,000 common shares
without par value so that it was authorized to issue 20,000,000 common shares
without par value, 10,000,000 Class “A” preferred shares with a par value of
$10.00 each and 10,000,000 Class “B” preferred shares with a par value of $50.00
each. By further amendment of its Memorandum on July 11, 2001 the Company’s
capital was altered by deleting all preferred shares and increasing the number
of common shares without par value to 40,000,000. The Company’s registered
office and principal place of business are located at Suite #601 - 595 Howe
Street, Vancouver, British Columbia, V6C 2T5.


17


**l**
    ***The
      Business of the Company***


Except
for a period from September 1998 until September 1999 when it attempted to
change its business to an e-commerce direction, DRC Resources has been
exclusively in the business of acquiring and exploring resource properties in
Canada and elsewhere. A brief foray into oil and gas exploration in the early
1980s resulted in the Company acquiring a small royalty interest in a Texas gas
play. However, since 1999 the Company has devoted itself exclusively to the
business of acquiring and exploring mineral properties in Canada. The object of
its acquisition and exploration activity was to find, stake or option, advance
through exploration and turn such properties to account by farm-out, joint
venture or sale to a senior mining company.


DRC
Resources is an exploration company, whose work on its properties has been
limited to prospecting, sampling, research and drilling. While it has not yet
determined that any of its properties contain economically recoverable reserves,
the Company received a favourable preliminary assessment that includes an
economic evaluation in respect of its principal mineral prospect, the Afton Copper-Gold Project in October,
2003. The economic evaluation delineated additional exploration work required to
advance the  Afton
Copper-Gold Project from exploration state to feasibility or development
stage.


Mineral
exploration tends to be a seasonal activity, though the location of the Afton Copper-Gold
Project permits the Company to conduct its exploration work year round. Mineral
exploration in British Columbia, Canada, the geographical area in which the
Company’s activities are focused, is relatively free of government regulation,
except in the area of environmental protection. As an experienced exploration
company, DRC Resources has not encountered difficulties in complying with
regulations regarding environmental protection.


l
    ***Effect
      of Government Regulation***


Mineral
exploration in British Columbia, Canada, the geographical area in which the
Company’s activities are focused, is relatively free of government regulation,
except in the area of environmental protection. As an experienced exploration
company, DRC Resources has not encountered difficulties in complying with
regulations regarding environmental protection. The Company’s experience in
exploration has required that it keep abreast of regulatory requirements, that
it engage experienced contractors who are familiar with governmental
requirements and good practices in the area of environmental protection and
compliance and that it take pains to research potential exploration prospects
insofar as their potential for becoming problem areas as acid
producers.


**C.**
    **Organizational
      Structure**


DRC
Resources is an independent resource and mineral exploration company. In 2004 it
had only one subsidiary, Dynamic Resources Corporation Inc., incorporated as
such on December 12, 1980 under the laws of the State of Nevada, United States
of America. (The Company notified the Nevada State registry office that the
Company was being dissolved on December 31, 2004) **.**





**Property,
Plant and Equipment**


**Afton
Copper-Gold Project**


The
Afton Copper-Gold Project is DRC Resources’ principal mineral property. After
acquiring an option of the property in 1999, the Company undertook several
exploration programs, which culminated in the engagement in 2000 of mine
engineering firm, Behre Dolbear and Company Ltd., to review the results of the
Company’s initial $800,000 diamond drilling program with the object of
determining the scope of potential mine development. A February 2001 Behre
Dolbear and Company Ltd. scoping study anticipated potential mine production at
4,500 tons per day, based on the then estimated 25 million ton Indicated Mineral
Resource, which was based on a copper equivalent cut-off grade of 1%. NOTE: A
resource is not a reserve.


18


Following
a further $2,400,000 of diamond drilling in 2001 and 2002, Behre Dolbear was
engaged to update the resource estimate that formed the basis of their 2001
scoping study. On completion of a 2003 infill diamond drilling program, a study
entitled “Mineral Resource Estimate for the Afton Copper-Gold Project, Kamloops,
B.C.” was received from Behre Dolbear in May 2003. The Behre Dolbear study was
authored by independent consulting engineer, James A. Currie, P.Eng., who is a
Qualified Person within the definition set out in NI 43-101 as having at least
five years experience in mineral exploration, mine development or mineral
assessment, as having experience relevant to the subject matter of the mineral
project and as being a member in good standing of a professional
association.


In
June 2003 Behre Dolbear was engaged to prepare and in October, 2003 delivered a
preliminary assessment or advanced scoping study, which after some amendment was
accepted by the British Columbia Securities Commission in November, 2003 as
being within the definition set out in NI 43-101. This advanced scoping study
was updated in February, 2004. The preliminary assessment is based on computer
simulation of a 9,125 tonne per day panel (block) caving mine plan carried out
by Behre Dolbear sub-consultant, Metalica Consultores S.A. of Chile, under
supervision of Behre Dolbear Qualified Person, James A. Currie,
P.Eng.





l  *Location
and Means of Access* The
Afton Copper-Gold Project is located on the south side of the Thompson River
Valley 350 kilometres (220 miles) northeast of Vancouver and 10 kilometres (6
miles) west of the city Kamloops, in the south-central interior of British
Columbia, within NTS Quadrangles 92-I-9W/10E. The Trans-Canada Highway passes
through the middle of the property, just west of its junction with Highway 5
(the Coquihalla Highway). Access is by mine-site roads off the Trans-Canada
Highway. Kamloops has an airport with daily air service from Vancouver and
Calgary. Railroads belonging to both Canadian National and Canadian Pacific
Railways service Kamloops, with a line belonging to Canadian National crossing
the northern portion of the property.





Physical
access to the property off the main highway is by mine-site roads on private and
crown lands. DRC has entered into access agreements with Afton Operating
Corporation, (a subsidiary of Teck Cominco Ltd., who is also the parent of Afton
Mines Ltd.) to cross that portion of private lands that lie within the DRC
Resources claims. By Access Agreement dated May 1, 2004 between the Company and
Afton Mining Corporation, the owner of certain surface rights (“the lands”), the
Company has the right to enter upon the lands of the former operator of the
Afton Mine to conduct exploration until June 30, 2007. The Access Agreement
requires the Company to compensate the owner for disruption or damage to any
surface facilities, to reclaim areas disturbed by the Company’s operations, to
post bond (which was done) against any failure to reclaim, to be responsible for
any hazardous substances introduced to the lands and to insure (which has been
done) and indemnify the owner against liabilities arising from any activities of
the Company in and about the lands. There is no guarantee that the Access
Agreement will be extended. If it is not extended, DRC Resources would have to
apply for an arbitrated access order, which could result in delay and increased
cost to compensate the surface owner for use of the area or DRC Resources could
be forced to use more costly, less convenient access over Crown (government)
lands.




19





*Surface
Title* DRC Resources did not acquire, and does not own, any surface rights to the area
covered by the mineral claims comprising the Afton Copper-Gold Project property.
The surface area overlying DRC Resources’ mineral zones is Crown land (British
Columbia government owned land). O ther
fee interests in the surface overlying and surrounding the claims of DRC
Resources belong to the crown (government) and a number of private owners,
including the former operator of the Afton mine, who also has fee ownership of
some of the surface area on which the tailings pond and dam are located. DRC
Resources does not own the surface of lands that would provide the easiest
access to the resource. However, if the owner of those lands denied DRC
Resources access to explore, develop or commence production from the Afton
Copper-Gold Project, DRC Resources could use a less convenient and somewhat more
costly access over government owned lands. Alternatively, DRC Resources could
make application to the gold commissioner to settle any dispute with the owner
and, if necessary, refer the matter to the Mediation and Arbitration Board as
provided by the *Mineral
Tenure Act* ,
British Columbia for an order as to the terms of entry, taking of right of way,
use or occupation, and the security, rent and compensation to be paid to the
owner thereof.
 
 *Surface
Facilities* Teck Cominco Ltd., the owner of the mill building and most of the fee land
comprising the tailing facility (all of which have been shut down since 1997)
made an offer in 2002 to sell these facilities to DRC Resources. DRC Resources
made a conditional counter proposal in 2003. Negotiations continue, while DRC
Resources considers the several alternatives to purchase of the existing surface
facilities.
 
 20
 l  *Title
to Minerals* The
mineral property consists of eight 4-post mineral claims and twenty-four 2-post
mineral claims comprising 131 units covering 3150 hectares (7783
acres).  There
has been no legal survey of DRC Resources’ mineral claims beyond location of the
legal corner post for the Afton 1, 2, 4 and 5 mineral claims.
 All
of the claims are contiguous and overlie expired mining leases held by the
previous operator and current owner of part of the surface, Afton Operating
Corporation. In February 2001, the claims were grouped as the “Afton Claim
Group” for the purpose of recording exploration work. A “Statement of Work” in
the amount of $207,000 was filed and the claim group now has work recorded to a
common expiry date of March 8, 2011.
 By
Option to Purchase Agreement (“the Option”) dated September 22, 1999 DRC
Resources acquired the exclusive right for 90 days to purchase a 100% undivided
working interest in the Afton 1 - 11, incl. mineral claims, Record Nos. 372023 -
372026 incl. and 372641 - 372647 incl. (the “Original Claims”) as to 50% from
Westridge Enterprises Ltd., a non-reporting British Columbia company wholly
owned by John H. Kruzick, a director, the President and CEO of the Company, and
as to 50% from Indo-Gold Development Ltd., a non-reporting British Columbia
company owned by John Ball, a geologist. The Option provided for consideration
to be a 10% Net Profit Royalty to and a property management agreement with the
optionors, with exercise to be by carrying out exploration work and paying
Common Shares of DRC Resources as follows:
 **Due
      Date****(1)**
    
    **Option
      Payment**
    **Status**
    **Exploration
      ($)**
    **Status**On
      regulatory approval
    
    1,000,000
      Shares
    PaidYear
      1 (2000)
    
    -
    
    400,000
    PerformedYear
      2 (2001)
    
    200,000
      Shares
    Paid
    600,000
    PerformedYear
      3 (2002)
    
    200,000
      Shares
    Paid
    1,000,000
    PerformedYear
      4 (2003)
    
    200,000
      Shares
    Paid
    1,000,000
    PerformedYear
      5 (2004)
    
    200,000
      Shares
    Paid
    1,000,000
    PerformedYear
      6 (2005)
    
    200,000
      Shares
    
    1,000,000
    PerformedYear
      7 (2006)
    
    
    
    500,000
    PerformedYear
      8 (2007)
    
    
    
    500,000
    PerformedYear
      9 (2008)
    
    
    
    500,000
    PerformedTOTALS
    
    2,000,000
      Shares
    
    6,500,000
    Completed
 
 *Note:*(1)  The initial option payment was due and paid following acceptance
of the filing of the Formal Option by the then governing regulatory body, the
Canadian Venture Exchange. Subsequent option payments are due to be paid in full
on or before the anniversary of the Due Date on November 10th in all
future years unless otherwise agreed upon by both parties.
 While
the mineral claims comprising the Afton Copper-Gold Project have been
transferred into the name of DRC Resources, title is subject to reverting to the
optionors if the Option is not exercised according to its terms.
 On
June 27, 2002 DRC Resources acquired an option exercisable on or before December
1, 2010 to purchase the optionors’ 10% Net Profit Royalty for a cash
consideration of $2 million and the Option was amended by removing the exclusive
right of the optionors to act as the operators of the Afton Copper-Gold Project.
(see also Item 7.B on page 46 of this registration statement)
 The
Option requires DRC Resources to maintain the mineral claims in good standing,
which under the *Mineral
Tenure Act* ,
British Columbia requires certain minimum work to be carried out each year. Work
done to date has caused all the mineral claims comprising this property to be in
good standing until at least March 8, 2011. Sufficient work has been completed
by DRC Resources to maintain the Option in good standing until November 10,
2004.
 
   21
     22


l  *History
of the Property* The first documentation of mineralization in the area was in 1898, when an
English company sunk a 300 foot shaft near the current Pothook Pit.


From
1949 to 1960 the property was owned by Axel Bergland who optioned it to Kennco
Explorations, Graham-Bousquet Gold Mines, Noranda and New Jersey Zinc, all of
whom encountered limited exploration success before the title was
dropped.


In
1964 Chester Millar staked the property, optioned it once to Colonial Mines, who
terminated after drilling 11 holes around the Pothook shaft. Millar then formed
Afton Mines Ltd. and. completed a public offering in 1969 to finance drilling
that intersected 170 ft. of 0.4% copper in 1970 in what became the Afton open
pit. Subsequent options to Duvall Corporation and Quintana Minerals were
dropped.


Canex
Placer Ltd. optioned the property in 1972. That year Teck Corporation and
affiliate, Iso Mines Ltd., acquired an equity interest in Afton Mines Ltd.
through the stock market. In 1973 Teck Corporation and Iso Mines Ltd. acquired
Canex Placer’s rights to the property and commenced production from the Afton
open-pit in 1977 on a stated reserve of 34 million tons of 1% copper, 0.016 oz/t
(0.58 g/t) gold, and 0.12 oz/t (4.2 g/t) silver. The Afton open-pit mine closed
in 1987 after mining 24 million tons (21.8 million tonnes) of predominantly
supergene native copper and chalcocite, with minor covellite and chalcopyrite at
an overall grade of about 1% copper. The Afton mill operated until 1997,
processing ores from various deposits in the vicinity including the Ajax and
Pothook.


In
1999 the mining leases at Afton then held by Afton Mines Ltd. (a subsidiary of
Teck Cominco Ltd.) expired and Westridge Enterprises Ltd. and Indo-Gold
Development Ltd. staked the claims covering the area of these mining leases. The
located claims were subsequently optioned to DRC Resources Corporation which
staked additional claims on its own account.


l  *Present
Condition of Property* The Afton site has rolling topography with elevations ranging from 2450 feet
above sea level (ASL) to approximately 1100 feet ASL at the Thompson River, with
the elevation of the old Afton mill being approximately 2170 feet ASL. The
Thompson River (which widens into Kamloops Lake) is located along the northern
periphery of the claim group. The most significant features are the Afton and
Pothook open pits.


Major
utilities and mine infrastructure are accessible and available on site. Electric
power from the main grid feeding Kamloops (pop. 80,000) is linked to the old
mine sub-station, and a pipeline is used to transport water 4 km from Kamloops
Lake at a point adjoining the Canadian Pacific Railway at 343 meters (1100 ft)
elevation. A natural gas pipeline crosses the mine site. The Afton mill
building, workshop, office, assay-lab, and administration buildings, still owned
by Afton Mines Ltd., remain on site. Much of the production equipment has been
removed from the Afton mill building. The nearby Afton Mines tailings pond is
capable of expansion. All sites are encircled by wire-fences and locked gates.
DRC Resources has no interest in the buildings and other installations on the
property.


To
December 31, 2004 the Company has carried out an exploration program, including
174,943 feet of diamond drilling in 109 holes ranging in depth from 87 to 3,260
feet and commenced development of a 1.8 km underground decline of which 146
metres (479 feet) had been completed by December 31, 2004, at an aggregate cost
of $7,404,850. All drill core samples were prepared by DRC Resources’ personnel
under the supervision of a Qualified Person and were shipped for analysis to Eco
Tech Laboratories Ltd., a certified laboratory.


In
June 2003 Behre Dolbear & Company Ltd. was engaged to carry out, and in
November 2003 delivered, an advanced scoping study and in February,2004 updated
the advanced scoping study at a cost of $245,000 . Including the deemed value of
common shares paid on the option to acquire the property, total cost of the
property to DRC Resources to date is in excess of $4.9 million.


23


l  *Rock
Formations and Mineralization* The Afton mineral zones are located at the northern end of the late Triassic to
early Jurassic Iron Mask Batholith in contact with Tertiary volcanic and
sediments to the north along an unconformable and faulted contact. The Iron Mask
Batholith is a northwest-elongated composite sub-alkaline to alkaline pluton
made-up of several different mafic to felsic intrusive phases and is contained
within older Triassic-aged volcanic rocks of the Nicola Group. Copper
mineralization at Afton is contained in the early Jurassic-aged Cherry Creek
Unit, a sub-unit of the Iron Mask Batholith.


The
principal metallic constituents of the occurrence are copper minerals that range
from disseminated chalcopyrite and bornite together with native copper and
chalcocite to disseminated chalcopyrite with only very minor isolated bornite
and no native copper or chalcocite. Precious metals associated with this
mineralization include significant gold, silver and palladium.


The
Afton mineralization is in a low sulphide environment and is hosted by a
carbonate rich rock which makes it non-acid generating due to the neutralizing
effect of the lime.


When
the open pit mine was brought into production in 1978, it was assumed to be a
supergene-enriched porphyry type copper deposit, in which surface water
percolating down through the rock had oxidized and enriched low grade copper
minerals near surface. Open pit mining operations ceased in 1987, when at a
depth of 900 feet, supergene native copper, chalcocite and chalcopyrite ores
could no longer be economically mined by open-pit methods. Subsequent drilling
below the pit bottom indicated higher copper and precious metals grades at
depth, a factor inconsistent with most porphyry copper deposits, which decrease
in grade with depth. Mineralogical and petrographic examination of the deeper
mineralization suggests that the Afton deposit might be analogous to a magmatic
copper-nickel deposit.


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


This
section uses the terms “measured” and “indicated resources.” We advise U.S.
investors that, while those terms are recognized and required by Canadian
regulations, the U.S. Securities and Exchange Commission does not recognize
them. **U.S.
investors are cautioned not to assume that any part or all of mineral deposits
in these categories will ever be converted into reserves.**


The
exploration drilling by DRC Resources disclosed two mineralized zones: the Main
Zone and the Northeast Zone. DRC Resources engaged the independent mine
engineering firm of Behre Dolbear and Company Ltd. to prepare an estimate of
mineral resources of the Afton Copper-Gold Project. The estimate was done under
the direction of Behre Dolbear’s James A. Currie, P. Eng., a Qualified Person.
Copper equivalent grades of the following Measured and Indicated Mineral
Resources of in-place material were estimated for the Main Zone assuming 90%
recovery of copper and gold, 75% recovery of silver and 74% recovery of
palladium and the following metal prices: Copper $US 0.85/lb, Gold $US 375/oz,
Silver $US 5.25/oz and Palladium $US 200/oz. The estimate was done for
underground exploration program planning purposes using a cut off grade of 0.7%
copper equivalent.


The
terms “measured mineral resource” and “indicated mineral resource” as defined by
the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) indicate the
relative quality, reliability and risk associated with each group of estimates.
“Measured” means so well established as to support production planning and
evaluation of the economic viability of the deposit. “Indicated” is less well
established, but at a level of confidence sufficient to support mine planning
and evaluation of the economic viability of the deposit. The reader is referred
to the glossary for the full CIM definitions.


24


The
following estimates were selected on the basis of a copper equivalent cut off
grade expected to apply to the panel (block) cave underground mining method
considered for the project in the Behre Dolbear advanced scoping
study.





Main
      Zone Measured Resource**Cutoff**
      **Cu****Eq**
      **(%)**
    **Tonnes
      > Cutoff**
      **(tonnes)**
    Grade
      > Cutoff(1)**Cu**
      **(%)**
    **Au**
      **(g/t)**
    **Ag**
      **(g/t)**
    **Pd**
      **(g/t)**
    **Cu****Eq**
      **(g/t)**
    **Au****Eq**
      **(g/t)**0.7
    9,540,000
    1.289
    0.945
    3.438
    0.117
    1.956
    3.039Main
      Zone Indicated Resource**Cutoff**
      **Cu****Eq**
      **(%)**
    Tonnes
      > Cutoff
      **(tonnes)**
    Grade
      > Cutoff**Cu**
      **(%)**
    **Au**
      **(g/t)**
    **Ag**
      **(g/t)**
    **Pd**
      **(g/t)**
    **Cu****Eq**
      **(g/t)**
    **Au****Eq**
      **(g/t)**0.7
    59,160,000
    1.049
    0.829
    2.487
    0.119
    1.635
    2.541





(1) The
parameters used for these tabulations are as follows:





Cu
Price = $0.85/lb  Copper
Recovery = 90%


Au
Price = $375 / oz Gold
Recovery = 90%


Ag
Price = $5.25 / oz Silver
Recovery = 75%


Pd
Price = $200 / oz  Palladium Recovery
= 74%





The
method use to determine equivalent grade used for the cutoff in defining the
mineral resources was to calculate the value of a tonne of material grading1.0%
copper at a given recovery and price, i.e.


Cu$
= (Cu% / 100% x 2204.623 lbs) x 0.90 x $0.85/ lb


So
the value at 1% Cu would be (1/100) x 2204.623 x 0.90 x $0.85 = $16.865 (base
value)


Then
to calculate the combined value of gold, silver and palladium in a tonne of
material at the actual grades at given recoveries and prices, i.e.


Au$
= (Au g/t / 31.103 g/oz) x 0.90 x $375 /oz


Ag$
= (Ag g/t / 31.103 g/oz) x 0.75 x $5.25 / oz


Pd$
= (Pd g/t / 31.103 g/oz) x 0.74 x $200 / oz


Then
to divide the combined value by the base value, i.e.


CuEq
(%Cu) = ( +Au$+Ag$ +Pd$) / $16.865





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


This
section uses the term “inferred resources.” We advise U.S. investors that, while
this term is recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize it. “Inferred resources”
have a great amount of uncertainty as to their existence, and great uncertainty
as to their economic and legal feasibility. It cannot be assumed that all or any
part of the Inferred Mineral Resource will ever be upgraded to a higher
category. **U.S.
investors are cautioned not to assume that any part or all of an inferred
resource exists, or is economically or legally mineable.**





The
Behre Dolbear & Company Ltd. Mineral Resource Estimate for the Main Zone of
the Afton Copper-Gold Project also contained estimates of Inferred Resource
in-place material, without dilution, based on 90% recovery of copper and gold,
75% recovery of silver and 74% recovery of palladium and a 0.7% copper
equivalent cut off grade.  This
category of resource is only reasonably assumed on the basis of geological
evidence and limited sampling, but not verified as to geological and grade
continuity.


25





Main
      Zone Inferred Resource**Cutoff**
      **Cu****Eq**
      **(%)**
    **Tonnes
      > Cutoff**
      **(tonnes)**
    Grade
      > Cutoff(1)**Cu**
      **(%)**
    **Au**
      **(g/t)**
    **Ag**
      **(g/t)**
    **Pd**
      **(g/t)**
    **Cu****Eq**
      **(g/t)**
    **Au****Eq**
      **(g/t)**0.7
    7,450,000
    0.924
    0.784
    2.341
    0.120
    1.480
    2.300





(1) The
parameters used for these tabulations are as follows:





Cu
Price = $0.85/lb  Copper
Recovery = 90%


Au
Price = $375 / oz  Gold
Recovery = 90%


Ag
Price = $5.25 / oz  Silver
Recovery = 75%


Pd
Price = $200 / oz  Palladium
Recovery = 74%





The
method use to determine equivalent grade used for the cutoff in defining the
mineral resources was to calculate the value of a tonne of material grading1.0%
copper at a given recovery and price, i.e.


Cu$
= (Cu% / 100% x 2204.623 lbs) x 0.90 x $0.85/ lb


So
the value at 1% Cu would be (1/100) x 2204.623 x 0.90 x $0.85 = $16.865 (base
value)


Then
to calculate the combined value of copper, gold, silver and palladium in a tonne
of material at the actual grades at given recoveries and prices,
i.e.


Au$
= (Au g/t / 31.103 g/oz) x 0.90 x $375 /oz


Ag$
= (Ag g/t / 31.103 g/oz) x 0.75 x $5.25 / oz


Pd$
= (Pd g/t / 31.103 g/oz) x 0.74 x $200 / oz


Then
to divide the combined value by the base value, i.e.


CuEq
(%Cu) = ( +Au$+Ag$ +Pd$) / $16.865








**Cautionary
Note to U.S. Investors concerning resource estimates**


This
section discusses the results of a scoping study, which is a “preliminary
assessment” as defined in the Canadian NI 43-101, under which the use of
inferred mineral resources is permitted under certain circumstances. The U.S.
Securities and Exchange Commission regulations do not recognize any
circumstances in which inferred mineral resources may be so used **U.S.
investors are cautioned not to assume that any part or all of an inferred
resource category described as a ‘resource falling within the mine plan’ will
ever be converted into ‘reserves’ within the definition of that term in SEC
Industry Guide 7.**


Behre
Dolbear prepared an advanced scoping study or preliminary assessment on the
Afton Copper-Gold Project mineral resources based on computer simulation of a
9,125 tonne per day panel (block) cave operation done by Behre Dolbear’s
sub-consultant, Metalica Consultores S.A. of Chile, under the supervision of
Behre Dolbear Qualified Person, James A. Currie, P.Eng., on a mine plan that
included the following mineral resources:





**Category**
    **Tonnes**
    **Grade****Cu**
      **(%)**
    **Au**
      **(g/t)**
    **Ag**
      **(g/t)**
    **Pd**
      **(g/t)**
    **Cu****Eq****(%)**Measured
    7,739,000
    1.236
    0.867
    3.253
    0.106
    1.849Indicated
    39,244,000
    1.110
    0.848
    2.432
    0.111
    1.705Measured
      + Indicated
    46,983,000
    1.131
    0.851
    2.567
    0.110
    1.729Inferred
      Resource
    4,543,000
    1.084
    0.908
    2.393
    0.131
    1.723Life
      of Mine Throughput
    51,526,000
    1.126
    0.848
    2.552
    0.111
    1.722





26


As
required by NI 43-101 DRC Resources points out that the preliminary assessment
(referring to the above-mentioned scoping study) is preliminary in nature, it
includes inferred resources that are considered too speculative geologically to
have the economic considerations applied to them that would enable them to be
categorized as mineral reserves, there is no certainty that the preliminary
assessment may be realized and the Afton Copper-Gold Project has no reserves.


l  ***Environmental
legislation to which the property is subject***  Use
of the surface is governed by the *Waste
Management Act* ,
S.B.C. 1982, c.41 as amended by *Waste
Management Act* ,
1993, S.B.C. 1993, c.25, under which an “owner” includes a person who is in
possession or, has the right of control of, occupies or controls the use of the
property. Liability is absolute, retroactive and joint and several and applies
despite the fact that a contaminating substance was introduced to the
environment in compliance with legislation and permits in effect at the time of
introduction. The effect could be to render DRC Resources  liable
for a waste or contaminant deposited or permitted to escape by a previous owner,
subject to a government appointed ‘manager’ apportioning responsibility. Afton
Mines Ltd. ,
t he
previous operator of the Afton Mine on the property, carried out a successful
reclamation program.


Reclamation
permits issued by the British Columbia Ministry of Energy and Mines are held in
the name of Afton Mines Ltd. All mining and other disturbances caused by Afton
Mines Ltd. remain its liability. Any new disturbance resulting from DRC
Resource’s exploration is the responsibility of DRC Resources.


l  ***Material
Plans for Property Exploration*** DRC Resources’ current exploration program is designed to test several other
areas of the Afton Copper-Gold Project property by geophysical, geochemical and
electro-magnetic surveys, to be followed up with diamond drilling if indicated.
The Behre Dolbear scoping study anticipates an underground exploration program
targeted at improving the confidence level in the Inferred Resources so as to
upgrade it to the Measured or Indicated category. Including accruals for the
cost of an economic evaluation by the Company’s mine engineering consultants,
Behre Dolbear & Company Ltd. and additional metallurgical test work and
geophysical surveys all carried out in the period June to November 2003, to date
approximately $4.5 million has been expended on the Afton Copper-Gold Project
exploration program. The exploration program is being paid for out of working
capital.


In
its October 2003 Advanced Scoping Study, Behre Dolbear estimated the costs to
take the Afton Copper-Gold Project to feasibility study and through permitting
over a period of 18 months from start-up to completion will involve the
following work:


Item
    
    CostUnderground
      Development
    
    $
    13,626,000Definition
      Drilling from Underground
    
    
    1,862,000Metallurgical
      Testing
    
    
    250,000Environmental/Permitting
    
    
    610,000Technical
      Studies
    
    
    250,000Feasibility
      Study
    
    
    750,000DRC Supplied
      Personnel
    
    
    400,000Total
    
    $
    17,748,000


This
program will be funded by a $24 million financing completed in November
2003.


27


Note:
Certain technical reports have been filed on SEDAR. A direct link to SEDAR may
be found on the Company’s website: www.drcresources.com.


**Ajax-Python
Property**


l  ***Geographic
location and access*** This property is situate in the Kamloops Mining Division within NTS map sheet
921-9W/10E of British Columbia, is situate 10 km (6 miles) southeast of the
Afton Copper-Gold Property and 10 km (6 miles) south of Kamloops, British
Columbia. Access is by secondary road from the Trans-Canada Highway.





28





l  *Title* This
4,500 acre property consists of two groups totaling 72 mineral claims located
and recorded under the Mineral Tenure Act of British Columbia and 5 crown
grants, all claims of each group are contiguous, though
the two groups are not contiguous. All
mineral claims are in good standing until at least September 26, 2011. Annual
assessment work in the amount of $200 per claim unit or cash in lieu is required
to be performed or paid to keep mineral claims in good standing. All taxes have
been paid on the crown granted claims.


DRC
Resources owns all (100%) interest in the mineral claims and crown grants
comprising the property, but does not own any surface rights to the area covered
by the mineral claims and crown granted mineral claims comprising the
Ajax-Python Property


Par
Five Equities Ltd., from whom DRC Resources purchased all interest in the Python
claims group (67 mineral claim units and 5 crown granted mineral claims) in
February 22, 1996, retains a 2% net smelter return royalty, which DRC Resources
has the right to purchase at any time for a total purchase price of $100,000
payable in cash and/or shares of DRC Resources. DRC Resources has not exercised
the option to purchase the net smelter royalty.


l  *History* ****** Copper mineralization was discovered on the Python property in 1886 and
underground mining took place from 1899 to 1914. Thereafter, a number of
companies, including Teck Corporation optioned or owned the property and did
surface exploration and limited diamond drilling. In 1996 DRC Resources optioned
the property and did 1000 feet of diamond drilling. From 1928 onward the nearby
Ajax property was held by a number of companies until in 1987 Afton Mines Ltd.
extensively explored and brought the Ajax open pit into production in 1990.
Until shut down in 1997 two Ajax pits produced approximately 19 million tons of
low grade (approx. 0.5% Cu and 0.35 g/t Au) ore which was trucked to the Afton
mill six miles away. DRC Resources acquired the property in 1996 and carried out
surface exploration and approximately 2000 feet of diamond
drilling.


l  *Rock
formations and mineralization* The Ajax-Python claim group is located within the Iron Mask Batholith 10km
Southeast of the Afton Property, Kamloops, British Columbia. These intrusive
rocks have hosted several open-pit porphyry copper-gold mines such as the Afton,
Pothook, Crescent, Ajax and Python. Chalcopyrite is the predominant copper
mineralization, occurring in blebs and disseminations. DRC Resources’
exploration on the Ajax-Python Property indicates anomalous areas between the
two previously mined Ajax open pits.


The
property contains no known deposits or reserves.


l  *Environmental
legislation to which the property is subject*  Use
of the surface is governed by the *Waste
Management Act* ,
S.B.C. 1982, c.41 as amended by *Waste
Management Act* ,
1993, S.B.C. 1993, c.25, under which an “owner” includes a person who is in
possession or, has the right of control of, occupies or controls the use of the
property. Liability is absolute, retroactive and joint and several and applies
despite the fact that a contaminating substance was introduced to the
environment in compliance with legislation and permits in effect at the time of
introduction. The effect could be to render DRC Resources  liable
for a waste or contaminant deposited or permitted to escape by a previous owner,
subject to a government appointed ‘manager’ apportioning responsibility. The
previous operator has carried out a successful reclamation program in respect of
the Ajax property group.





29


l  ***Exploration
Carried out by the Company*** In
the fall of 1996 the Company carried out a 305 meter, $30,000 program of diamond
drilling and geological prospecting on the Python claim group. Although
anomalous peripheral values were present over narrow intervals of the core, no
economic values of copper/gold were intersected.





By
agreement dated April 4, 1999 the Company granted Planet Ventures Inc. an option
to acquire a 50% working interest in the Python mineral claims group by
providing $400,000 in exploration funding. Planet Ventures Inc. funded a 3 hole,
304 meter program of diamond drilling, geological mapping, prospecting and
surveying. Narrow intervals of low grade copper were intersected in one hole
(99-3), but no significant sulphide mineralization was encountered in any of the
three holes. On March 28, 2000 the Planet Ventures Inc. option was
terminated.





The
Ajax mineral claims were grouped with the Python mineral claim group for
purposes of recording work done. Prior to 2004, exploration on the Ajax claims
group has been limited to prospecting, surface reconnaissance and sampling
carried out in 2001 by the Company.





In
2004 the Company completed 6 diamond drill holes on the Ajax Property. The
purpose of the diamond drill program was to test for sulphide mineralization
between the two Ajax open pits and below the previously mined depths. Drilling
successfully indicated a large near surface copper sulphide system with an
associated gold credit between and deeper than the previously mined Ajax East
and Ajax West pits. The Ajax Property is connected by an existing 10 km mine
haulage road to the Afton Copper-Gold Property to the west (for drill holes
location, refer to maps on Company’s website: www.drcresources.com) .





The
2004 exploration program included 6,613 feet of diamond drilling in 6 holes
ranging in depths from 558 to 1538 feet, at an aggregate cost of $200,560
details of which are as follows:





Diamond
      drilling
    
    $
    121,960Assays
    
    
    10,769Engineering
    
    
    19,950Casual
      labour
    
    
    5,981Meals,
      accommodations and travel
    
    
    3,906Project
      expenses and supplies
    
    
    8,048Project
      Manager and consulting expenses
    
    
    25,195Staking
      costs
    
    
    4,781Grant
      Recovery
    
    
    (34,438
    )


The
results of the exploration program represent a significant departure from the
shallow surface pits where the copper-gold ore was mined by the previous
operator in the early nineteen nineties. The exploration drill program has
outlined copper-gold mineralization with an interpreted vertical depth of 300
meters below surface and with an apparent thickness of 400 metres which is
consistent with the zone mined in the two open pits. Three of the five drill
holes were drilled over a strike length of approximately 400 metres. Two drill
holes completed to the northwest of the Ajax East and West pits did not
intersect the mineralized zone as the holes were collared too far in the foot
wall of the zone.





30


The
Ajax East and West pits have been described as porphyry deposits in geological
publications. The Company is encouraged by the size and depth of the system and
intends to continue to explore for a higher grade core.





Significant
assay results for three drill holes intersecting the mineral zone over a length
of 400 metres and to a depth of 300 metres below surface are as
follows:





ASSAY
INTERSECTIONS FOR AX-01 @ -55 ° /121 °


**Core
      Length (m)**
    
    **Depth
      (m)**
    
    **Copper
      (%)**
    
    **Gold
      (g/t)****51**
    
    **75-126**
    
    **0.232**
    
    **0.145****121**
    
    **156-277**
    
    **0.240**
    
    **0.169****63**
    
    **307-370**
    
    **0.362**
    
    **0.165****31.2**
    
    **421-452.2**
    
    **0.249**
    
    **0.126**





**ASSAY
INTERSECTIONS FOR AX-02 @ -52** **°** **/120** **°**


**Core
      Length (m)**
    
    **Depth
      (m)**
    
    **Copper
      (%)**
    
    **Gold
      (g/t)****194**
    
    **26-220**
    
    **0.223**
    
    **0.141****123**
    
    **277-400**
    
    **0.221**
    
    **0.082**





**ASSAY
INTERSECTION FOR AX-04 @ -55** **°** **/120** **°**


**Core
      Length (m)**
    
    **Depth
      (m)**
    
    **Copper
      (%)**
    
    **Gold
      (g/t)****278**
    
    **27-305**
    
    **0.233**
    
    **0.159**








l ** ***Sampling***


The
Company and its exploration personnel implemented a Quality Assurance Program as
part of a formal Exploration Practices Policy under the supervision of the
Company’s Vice President of Exploration and Development, Michael W. Hibbitts, P.
Geo., a Qualified Person as defined by National Instrument 43-101.





Samples
for assay were transported (by Eco-Tech employees) to Eco-Tech Laboratory Ltd.
of Kamloops, B.C. for analysis for copper, gold, silver and palladium. Copper is
analyzed by Aqua Regia digestions and A.A. finish. Gold is analyzed with
conventional fire assay with an A.A. finish.





l ** ***Geology
and Mineralization***


The
Python claims group lies on the Iron Mask pluton, the same geologic structure as
the Afton Copper-Gold Property and within 1 km of the two Ajax open pits from
which Afton Mines Ltd.


mined
20 million tonnes of copper/gold ore. Limited drilling has shown that
sub-economic copper and gold values occur as chalcopyrite, native copper and,
possibly, very fine grained bornite.





31


l ** ***Reserves***


The
property contains no known ore body or mineral reserves.





l ** ***Material
Plans for Proposed Exploration***


The
Company plans to carry out further geological exploration on the property in
2005. The Company has been compiling a data base on the Ajax-Python Property and
from this information will develop a suitable diamond drilling program. At this
time the Company does not intend to allow any key claims to lapse.





l *Material Plans for Property Exploration* ****** **** The
Company does not plan a significant program on this property. Sufficient
exploration work will be done to keep the property in good standing year to
year. The annual cost of maintaining title is approximately $ 10,000
per year in assessment work ,
including statutory work requirements and filing fees.





**Lipsett
Lake Prospect**





**l** ****** *Geographic
location* This
property, consisting of 11 units under single unpatented claim Number P1229896,
is located in Timmins Township on the north shore of Lipsett Lake approximately
48 km southeast of Timmins, Ontario.


**l**  *Acreage*  **** This
property covers 440 acres.


**l** ****** *Percentage
ownership* The Company holds all (100%) direct interest in this claim.


l  *Details
of Acquisition*  This
claim was purchased outright at arm’s length from John Ball for $15,000 on
October 20, 1997, free and clear of any encumbrance or royalty.


l  *Status
of tenure* This claim is
in good standing until October 14, 2006.


**l** ****** *Legal
impediments* DRC Resources is aware of no legal impediments or challenges to its title to
this claim.


l  *Environmental
legislation to which the property is subject* ****** This
property is subject to environmental legislation and regulations governing
exploration and development in the Province of Ontario.


l  *Geological
setting*  The
property is underlain by a sequence of north-south trending meta-volcanic rocks
in contact with the Kasba Lake intrusive body on the east.


l *History of Exploration* ****** The
property has no known history of exploration.


l  *Exploration
Carried out by the Company* ****** In
May 1998 DRC Resources carried out prospecting, a geophysical survey and
mapping, which was followed up by a 291 meter diamond drill program to test the
meta-volcanic sequence for polymetallic massive sulphide mineralization that is
characteristic of a similar geologic setting to the north of the property. No
economic metal values were found in the disseminated sulphide mineralization
intersected in the test holes.


l  *Reserves* ****** The
property contains no known orebody or mineral reserves.


l *Material Plans for Property Explorati* ***on*** DRC
Resources has no immediate plans to carry out exploration of this property,
though it intends holding the property.





32








**Item
      5.**
    **Operating
      and Financial Review and Prospects**
 **A.**
    **Operating
      results.**
 33
 The
following discussion of DRC Resources’ operations and financial condition
describes financial data prepared using Canadian GAAP. The differences between
US GAAP and Canadian GAAP are described in Note 15 to the accompanying audited
financial statements.
 Significant
accounting policies applied in preparing DRC Resources’ financial statements are
set out in Note 2 to the accompanying audited financial statements.
 ***Other
Income and Expenses did not***  ***include
product sales*** Operations consisted wholly of exploration, primarily in the form of mineral
exploration on the Afton Project carried out by DRC Resources since commencement
of the periods reported on in this report. To December 31, 2004 a total of
$7,404,850 has been expended on the project to conduct an exploration program
including 174,943 feet of diamond drilling in 109 holes ranging in depth from 87
to 3,260 feet and start up on a 1.8 km underground decline of which 146 metres
have been completed, at an aggregate cost of $7,404,850. These expenditures
represent over 100% of the costs budgeted for Stage 1 of the Exploration Program
($4.7 million) and included an additional approximately 90,000 feet of diamond
drilling. Also included in the aggregate cost was the start-up and advance of
146 meters on the underground decline. The estimated costs for Stage 2 to take
the Afton Copper-Gold Project to feasibility study and through permitting over a
period of 18 months from start-up to completion as projected by Behre Dolbear in
their October, 2003 report will be approximately $17,748,000 of which
$2,159,224. was expended to December 31, 2004.
 The
work completed in year 2000 established an Indicated Mineral Resource of 25
million tons grading an average 3% copper equivalent. Year 2001 exploration
increased the Indicated Mineral Resource of the Afton Project by more than 50%
to 37.7 million tons grading an average 2.32% copper equivalent. Drilling during
and subsequent to the first quarter of 2002, encountered an intersection west of
the mineral zone envelope boundary used in the 2000-2001 indicated mineral
resource estimate of 37.7 million tons of 2.32% copper equivalent, indicating a
possible widening of the mineralized zone. Year 2003 expenditures for infill
drilling and an advanced scoping study that included an economic evaluation by
Behre Dolbear & Company Ltd. brought total expenditures on the Afton
Copper-Gold Project to an estimated aggregate of $4.7 million that resulted in
establishing the mineral resources described under Item 4.D on pages 26-28 of
this registration statement.
 Some
economies achieved by DRC Resources in the conduct of its exploration program
were in part attributable to a persistent downturn in British Columbia’s mineral
exploration sector that resulted in diamond drilling units and other exploration
facilities being available at favourable rates.
 For
purposes of illustrating management explanation and discussion of the Company’s
financial condition and results of operations, please refer to the following
table of selected financial information that appears in more detail in the
financial statements that accompany this application.
 **Year
      ended December 31**
    
    **2004**
    
    **2003**
    
    **2002**Other
      Income & Expenses
    
    
    565,017
    
    
    107,910
    
    
    113,823General
      and Administrative Expenses
    
    
    1,767,822
    
    
    523,612
    
    
    482,374Write-down
      of mineral property interests
    
    
    -
    
    
    1
    
    
    5,999Net
      Income (Loss)
    
    
    -202,805
    
    
    -415,702
    
    
    -368,551Working
      Capital
    
    
    24,166.55
    
    
    24,675,849
    
    
    4,001,927Properties-
      Acquisition Costs
    
    
    590,467
    
    
    530,467
    
    
    581,335-
      Deferred Exploration Expenses
    
    
    5,343,465
    
    
    2,956,829
    
    
    1,822,859Other
      Assets (automobile and equipment) - net book value
    
    
    508,138
    
    
    28,999
    
    
    41,535Deferred
      Income Taxes
    
    
    922,675
    
    
    875,935
    
    
    113,676Shareholders’
      equity ($)
    
    
    29,655,721
    
    
    27,427,076
    
    
    6,333,889Number
      of Common Shares Outstanding(1)
    
    
    13,941,766
    
    
    12,901,766
    
    
    9,131,766
  34
 
 **Financial
Condition and Changes**
 ***Introduction*** ** In evaluating the Company’s financial condition and performance, management
looks at DRC’s relative position in the context of reporting mineral exploration
companies in Canada. In that context, management sees the Company as emerging
from junior to advanced exploration stage, in which its decision making
capabilities will undergo more rigorous testing as DRC moves toward the
development and production stages on its advanced Afton Copper-Gold Project. How
effectively the Company meets the new issues and challenges will depend upon
some planned staff additions and the management of priorities in conduct of the
Afton Copper-Gold Project. Management perceives the advancement of DRC’s status
as due to selection of highly qualified technical advisors, on-site attention of
management to conduct of exploration work, understanding of what constitutes a
successful exploration attempt and careful cash management. All of those
qualities must continue and be improved to meet the challenges of higher cost
activities (underground vs surface exploration). While a generally improved
economic climate in the mining industry has greatly assisted in the money
raising area, the main risks to achievement of objectives will be increased
competition for both expert personnel and contract labour is expected to result
in a general increase in costs and, possibly, delay in getting jobs done. Hence,
staffing and cost management are expected to be the main challenges to company
stewardship in the near term.
 ***Other
Income and Expenses*** Over
the years 2004, 2003 and 2002 other income consisted primarily of interest on
working capital augmented by a small oil and gas royalty. The increase in year
2004 other income was due to a full year’s interest being earned and reported on
working capital raised by the $24.1 million private placement in year 2003. The
reduction in interest income reported for 2003 & 2002 was due in part to the
application of working capital to expenditures in exploration and partly to
progressively lower interest rates being earned on remaining working capital.
Working capital is maintained in low risk term deposits. Year 2002 foreign
exchange losses of $4,159 and oil and gas revenues of $1,743 added to year 2002 interest earnings of $116,676 resulted in income of $114,260
for the year .
A foreign exchange loss of $74,929 in year 2003 (due to a rise in value of the
Canadian dollar) and oil and gas income of $1,713 and interest earnings of
$181,698 resulted in income of $108,482 in year 2003. Year 2004 income of
$565,017 was the result of foreign exchange losses of $36,689, the sale of and
investment property for $32,801, oil & gas income of $1,211 and interest
earnings of $528,893.
 ***An
increase in loss*** .
A $ 47,151 increase in loss before taxes for the year 2003 over the year 2002
was the primarily due to (1) the payment of $30, 945 in provincial corporate
capital taxes incurred in the past 5 years (this tax was cancelled by the
provincial government in year 2002); (2) an increase of $32,514 in management
and consulting fees due to increased regulatory activities; (3) a $51,363
increase in professional fees due to increased activity on the Afton Project;
(4) a decrease of $52,000 in sponsorship fees; and (5) the $35,203 decrease in
travel and promotion. A $787,103 increase in loss before income taxes for the
year 2004 over the year 2003 was due primarily to four factors: (1) a $868,190
stock based compensation amount included as an expense which is required by new
Canadian accounting standards; (2) a $152,693 increase in consulting and
management fees coupled with a $48,504 increase in office, secretarial, supplies
and support staff due to increased activity on the Afton Project and the
American Stock Exchange Listing; (3) a $17,217 increase in regulatory fees and a
$22,794 increase in insurance costs in connection with the Company’s listing on
the American Stock Exchange; and (4) a $111,753 increase in travel and promotion
costs.
 35
 In
the next 18 months a disproportionately higher cost is expected due to the
increased advancement of the underground exploration program. Senior personnel
costs for the calendar year 2005 are expected to increase $500,000 over year
2004 and further technical staff hiring will be required to complete the
feasibility study on the Afton Project. The Company has engaged exploration
professionals to oversee the underground exploration for the feasibility study
and, assuming that the feasibility proves positive, anticipates adding an
engineering executive to manage mine development as well as a first line mining
superintendent to direct the mining contractors planned to be engaged to carry
out the work.
 The
initial estimate of $17,748,000 for these costs for an 18 month period from
start-up of the underground decline through feasibility was included in the
scoping study by the Company’s principal project consultant, Behre Dolbear &
Company Ltd., to cover all required consulting professionals and the internal
administrative, planning and supervisory group costs. To December 31, 2004
approximately $2.2 million of the estimated $17,748,000 has been expended on the
underground program since start-up.
 ***Administrative
costs increased*** from
an average $38,991 per month in year 2002 to $42,637 per month in 2003 to
$71,633 per month in year 2004 due primarily to increasing demands for
professional services, regulatory and financing costs related to increasing
exploration and analytical activity on DRC Resources’ Afton Project and the
search for financing and development partners for that project as its
development prospect matured.
 ***Property
acquisition costs increased*** by
$60,000 for each of the years 2003 and 2004 by the deemed value of 200,000
Common Shares issued in each of those years at a deemed $0.30 per share in
partial exercise of the option to acquire the Afton Project property.
Ordinarily, the deemed value of shares issued for property would be the market
price on the date of issue; however, because the acquisition agreement in
September 1999 stated that shares would be issued at a deemed value of $0.30 per
share (the actual market price at the time) over a six year period, that value
has been used with respect to each annual payment of shares since that year. The
Alberta Property acquired for $6,000 in 2000 was written down in the year ended
2002.
 ***Deferred
exploration cost*** s
The balance of deferred exploration costs as at December 31st, 2002, 2003 and
2004 was, respectively, $1,822,859, $2,956,829, and $5,343,465. In year 2004
exploration costs were $649,847 higher than in 2003. The Company’s exploration
grant recoveries were only $40,311 in 2004 compared to $412,375 in 2003. In 2003
a retroactive $4,388 deduction was made from the 2002 grant recover of $96,335
to reflect the actual monies received. The indicated $608,692 reduction for year
2003, the $376,207 reduction for year 2002 and the $379,200 reduction for year
2001 in deferred exploration costs due to ‘tax effect of flow through shares’
does not represent a cost recovery, though it reduces cost for DRC Resources’
tax purposes. Those amounts, which were qualifying exploration expenditures
under Canadian income tax law, were renounced in favour of the subscribers to
issues of flow-through shares of the Company.
 ***Exploration
costs*** for 2004 were $2,426,947.compared to $1,742,551 in 2003 and $1,158,752 in 2002.
The work done in the fiscal years 2004, 2003 and 2002 were diamond drilling,
engineering studies and property evaluations for the planning of the respective
diamond drill and underground programs. The work in 2004 included the start-up
of an underground exploration decline, which advanced 146 meters from the face
by year end. The work in 2003 included data preparation, infill and exploration
diamond drilling for the economic evaluation and related studies commissioned in
2003. To December 31, 2004 the Company had carried out an exploration program,
including 174,943 feet of diamond drilling in 109 holes ranging in depth from 87
to 3,260 feet and commenced work on the 1.8 km underground decline of which 146
metres have been completed.
 36
 ***Inflation*** did
not affect DRC Resources’ operating results, which actually benefited from lower
costs due to a sectoral downturn that did not reverse until late 2004, when the
Company contracted for its major project expenditures. Accelerating steel costs
and competition for personnel in the upturned mining economy are expected to
result in considerable inflation in the future. .
 ***Foreign
currency fluctuations*** had a very limited negative effect on DRC Resources other income and expenses.
The impact of a rising Canadian dollar (or devaluing US dollar) could have
significant effect on concentrate product sales in the future, since all such
sales are conducted in US currency, while costs are incurred in Canadian
dollars. Recent increases in the US prime rate have stabilized the trend in
exchange rates.
 **B.**
    **Liquidity
      and capital resources**
 ***Working
Capital***  ***at
Year-end*** DRC Resources had net working capital of $24,166,554, $24,700,000, and
$ 4,000,000
and  substantially no debt at December 31 st in, respectively, the years 2004, 2003, and 2002. Equity financings of
$4,904,120 in 2000, $1,935,515 in 2002 and $24,150,000 in 2003 and the exercise
of stock options in 2004 were the principal sources of working capital. Working
capital at the date of this report is approximately $22 million.
 Except
for a brief period in 1999, the Company has been in the business of acquiring
and exploring mineral properties. As such, it has had no operations revenue and
has depended on sale of shares to provide capital to carry out its
activities.
 During
2004 interest income, a small oil and gas royalty and foreign exchange gains
provided for approximately 65.86% of the Company’s administrative costs. In 2003
and 2002 interest, royalty income and a foreign exchange gains provided for,
respectively, approximately 20.70%,and 23.66% of the Company’s administrative
costs.
 In
2002 a $2.1 million private placement of flow-through shares was added to
general working capital. In November 2003, DRC Resources arranged a private
placement of $24 million to provide its base requirement of equity financing
through issue of 3.45 million shares of the Company at $7.00 per share. In 2004
$2,550,000 was added to working capital by the exercise of options which
assisted with the growing expenses due to the advancement of the Afton Project.
 Interest
income on its working capital combined with a prior favourable exploration cost
experience on the Afton Copper-Gold Project to leave DRC Resources with working
capital adequate to meet its administrative costs and property maintenance
programs through the year 2005. Other than relatively nominal property
maintenance costs on projects other than the Afton Copper-Gold Project, the
Company’s only commitment for material expenditures is to complete the
feasibility study of the Afton Project at an estimated cost of $17,748,000. DRC
Resources’ working capital is sufficient to meet all its present requirements as
an exploration company. In order to be in a position to move to the development
stage of its Afton Copper-Gold Project, DRC Resources realized that it would be
expected to raise as much as 10% of the expected capital requirement of about
$140 million, in order to attract an institutional lender or mine financing
partner, such as a smelter, to the project.
 
 **C.**
    **Research
      and development, patents and licences, etc.**(Not
      applicable)
 **D.**
    **Trend
      information**(Not
      applicable)
 
 **Item
      6.**
    **Directors,
      Senior Management and Employees**
 **A.**
    **Directors
      and senior management**
 37
 **John
Harvey Kruzick** ,
60 , a
director since February 26, 1980, President and CEO of DRC Resources since
incorporation, and Chairman of the Board since October 2004, with the
appointment of Mr. Bradbrook as President and CEO, has been self-employed in
mineral exploration since graduating with a B.Sc. in geology from the University
of British Columbia in 1969. Mr. Kruzick has supervised exploration programs
throughout North America for over 30 years. He was a director and President of
Planet Ventures Inc. (formerly known as Footwall Explorations Inc.) from April
1998 to June 1999, when he resigned as president but remained a director until
his resignation from all positions with that company in March 2000.
 **Christopher
John Bradbrook** ,
46, a director and President and Chief Executive Officer of the Company since
October 12, 2004, has more than 25 years experience in the mining industry, in
which his principal roles have encompassed many aspects of the industry,
including exploration, mine development, corporate development work, financial
analysis, investor relations and marketing. Most recently he was Vice President
of Corporate Development for Goldcorp Inc.
 **Sharon
Lynne Ross** ,
57 , a
director since May 12, 1981, Corporate Secretary and of DRC Resources, is a
self-employed corporate administrator employed by Allshare Holdings Ltd., a
non-reporting (private) British Columbia company in which she holds a 50%
interest that manages the day-to-day administration of DRC
Resources.
 **Charles
Robert Edington** ,
64 , a
director of DRC Resources since July 13, 1992, is an engineer who is currently
the Director of Trades and Production at Deas Pacific Marine Inc., prior to
which he was employed as a ship manager by FENCO MacLaren Inc. (an SNC Lavalin
company) since 1997, and project director of Ship Repair Unit Pacific, a
Canadian federal governmental ship repair unit in Victoria, B.C.
 **Mike
Muzylowski** ,
70 , an
independent director of DRC Resources since September 12, 2000 has since 1995
been the President and Chief Executive Officer of Callinan Mines Limited, a
reporting company listed on the TSXV, which retains an interest in the Callinan
Mine, a poly-metallic underground operation producing 550,000 to 600,000 tons
per year. He holds a B.Sc. in geology from the University of Manitoba. Mr.
Muzylowski was named developer of the year for Canada in 1988 in recognition for
Hycroft and Trout Lake Mines. Mr. Muzylowski’s experience includes 35 years in
managing exploration programs for Hudson Bay Exploration and Development Company
Limited, Granges Exploration Aktiebilog, Granges Exploration Ltd., Granges Inc.
and Hycroft Resources Ltd., where as Chairman and CEO he headed up that
Company’s Winnemucca, Nevada gold mine development project in 1986. During the
preceding 5 years, he has been a director, officer and/or promoter of 14 other
reporting issuers. He presently holds positions in the following publicly listed
companies: director of Napier International Technologies Ltd. (TSE/Frankfurt)
since October 1989; director of Williams Creek Exploration Limited, a natural
resource company (TSXV) since July 1987; director of KRL Resources Corp. , a
natural resource company (TSXV) since May 1990; Chairman and director from
November 1989 to December 1991 and Co-chairman and director from November 1989
to December 1991; director of Diamondex Resources Ltd., a natural resource
company (TSXV) since June 1999; director of VanGold Resources Ltd. (formerly
Paccom Ventures Inc.) , a natural resource company (TSXV) since June 1994;
director since December 1994 and President and CEO since June 1995 of Callinan
Mines Limited, a natural resource company (TSXV); director of Cypress Minerals
Corp. (TSXV) since January 1997; and since February, 2003 a director of Austin
Development Corp., a natural resource company (TSXV). During the past 5 years he
has held positions in the following public companies: director of Winspear
Resources Ltd. (TSXV) from January 1993 to August 2000; director and Chairman of
Tan Range Exploration Corporation (TSXV) from September 1991 to May 1999;
director of United America Enterprises Ltd. (TSXV) from November 1996 to July
17, 2001; director of Westfort Energy Ltd. (TSE) from July 1998 to March 2003;
director of Firestone Venture Inc. (TSV) August, 1990 to Jan, 2001; and director
of Thunderbird Properties Ltd. (TSXV) from February 1998 to February
1999.
 38
 **Thomas
O’Toole Taylor** ,
42 ,  an
independent director since February 1, 2002, is a commercial pilot with Cathay
Pacific Airways and Air China since the summer of 2004, prior to which he was a
pilot for five years with Air Canada. Mr. Taylor has been a director of DRC
Resources since February 1, 2002 and served on the board of directors of Winzen
International Inc. (TSXV) from November, 1992 to July, 2000.
 **Craig
D. Thomas** ,
52 , an independent director of DRC Resources since November 19, 2002, who obtained
his undergraduate degree in 1975 from Harvard College and a law degree in 1978
from the University of Alberta, has practiced law in British Columbia since
1979. He is now a principal of the law firm of Thomas Rondeau specializing the
practice of corporate and securities law matters, including structuring and
implementation of corporate financing transactions, public and private
securities offerings, mergers and acquisitions, registration, reporting and
compliance matters. He has served as an officer and/or director of the following
reporting corporations: director of Phoenix Leisure Corporation (TSXV) from July
2, 1996 to February 12, 2003; director of Golden Raven Resources Ltd., a natural
resource company (TSXV) since January 24, 2002; director from September 12, 1996
to the present of Intercontinental Mining Corporation, a natural resource
company (TSXV), which he served as president from December 28, 1996 to July 29,
1998; secretary from December 20, 1996 to December 5, 2000 of Rystar
Communications Ltd. (TSXV) on which he served as a director from March 17, 1997
to December 5, 2000 and from November 5, 2002 to the present; director of
Anglo-Andean Explorations Inc., a natural resource company (TSXV) from February
26, 1993 to the present; secretary of Terramin Mining Inc., a natural resource
company, from July 16, 1993 and director from October 11, 1998 to the present;
director from March 6, 2000 to October 13, 2001 of AimGlobal Technologies
Company Inc. (TSX, AMEX), which he also served as secretary from August 10, 2001
to October 3, 2001; director of Leitak Enterprises Ltd. (TSXV) from April 9,
1998 to October 15, 1999; director of First Smart Sensor Corp. (COATS) from
February 26, 1998 to November 9, 1999; director of CSCC Casino Software
Corporation (OTC) form April 10, 1997 to August 27, 1998; director of Greenwood
Environmental Ltd. (TSXV) from October 25, 1993 to June 24, 1999; director from
November 24, 1993 to May 15, 1998 of RW Packaging Ltd. (TSXV), which he also
served as secretary from March 30, 1988 to October 9, 1991; director of L.E.H.
Ventures Ltd., (VSE) from January 16, 1997 to March 11, 1998; director of Blue
Ribbon Resources Ltd. (VSE) from June 4, 1991 to January 6, 1997; director of
Crown Butte Resources Ltd. (VSE, TSE) from February 27, 1987 to August 9, 1996;
director and secretary of Darius Technology Ltd. (VSE) from December 8, 1992 to
December 22, 1995; director of Plexus Resources Corporation (TSE, NASDAQ) from
November 23, 1981 to January 27, 1990.
 **Clifford
J. Davis,** 61,
an independent director of DRC Resources since March 10, 2005. Mr.
Davis has more than 40 years of international experience in the operation and
development of both underground and open pit gold and base metal mines. His
career has given him extremely valuable exposure to bulk mining operations in
locations throughout North America, Europe and Africa. Mr. Davis is a graduate
in mining engineering from the Royal School of Mines in London, England. Mr.
Davis has held numerous senior executive positions at levels up to and including
President, Chief Executive Officer, and Chief Operations Officer with a variety
of large multinational mining companies and smaller development companies. He
presently holds directorships with Rio Narcea Gold Mines and Tiberon Mineral and
formerly held positions with RTZ & Kennecott from 1979 to 1993 as Mine
Superintendent to General Manager, Echo Bay Mines Ltd., from 1993-1996 as Vice
President of Alaskan Projects, TVX Gold Inc. from 1996-2001as Senior VP of
Operations to President and COO, and Gabriel Resources from 2001-2003 as CEO.
 39
 **R.**  **Gregory
Laing,** 46,
an independent director of DRC Resources since March 18 th ,
2005. Mr Laing is currently Vice President , Legal of Goldcorp Inc. Prior to
joining Goldcorp in 2003, he served as General Counsel of TVX Gold Inc from 1995
before which he worked as corporate securities lawyer for two Toronto law
firms.
 **Ian
M. Beardmore** , 65,  Chief
Financial Officer of DRC Resources since October 28, 2002 is a chartered
accountant who began studies in 1967 with the firm of Young, Peers, Milner (now
Deloitte, Haskins & Sells), in 1973 began working in industry for a number
of firms including Fallis Turf & Co. (assistant to the president 1974 to
1975), Western Panelex, Inc. (president 1974 to 1976), consultant to Laventhol
& Horvath, chartered accountants (managed International Plaza Hotel during
1977), owner of Canvas Company restaurant and art gallery (1977 to 1978),
controller of Plantation Indoor Plants Ltd. (1978 to 1983) and, from 1985 to the
present, associated with the firm of Moen and Company (and its predecessors,
Moen and Jorgensen and Jorgensen Beauchamp), chartered accountants, where he
handled personal and corporate taxation and audits of reporting companies
accounts in the securities area.
 **Michael
W.P. Hibbitts** ,
52, Vice President Exploration and Development since March 22, 2004 is a
Professional Geologist who obtained his geology degree from Dalhousie
University. Mr. Hibbitts has worked continuously in the field of exploration and
development since 1976, his experience including six years with Northgate
Exploration Ltd. from 1997 -2003 where he acted as chief geologist instrumental
in the development of British Columbia's Kemess Mine from the initial stages to
production at 53,000 tonnes per day. He also worked for Royal Oak Mines Inc. for
9 years as Chief Geologist for the Newfoundland division, from April 1992-
August 1997, where he was responsible for the geological function of the Hope
Brook Mine and as Senior Geologist at the Giant Yellowknife Mines in Timmins,
Ontario, between December 1988 to April 1992 He gained extensive surface and
underground mining experience through other key positions with major mining
companies, including Noranda Mines from 1981-1987, and Sherritt Gordon Mines
from 1979 to 1981 where he supervised feasibility studies and developed mines
for production. He is the co-recipient of the 2002 E.A. Scholz Award for
Excellence in Mine Development, presented by BC and Yukon Chamber of Mines, for
his work on the Kemess Mine Project.
 There
are no arrangements or understandings with any major shareholders, customers,
suppliers or others, pursuant to which any person referred to above was selected
as a director or member of DRC Resources’ board of directors or senior
management.
 **B.**
    **Compensation**
 The
following is a description of all compensation and benefits paid or granted in
kind to DRC Resources’ directors and members of its administrative, supervisory
and management bodies during the fiscal year ended December 31, 2004 for
services in all capacities to the Company.
 For
purposes of reporting compensation and benefits under governing Canadian
securities legislation and policy and stock exchange rules, the following terms
are used:
 40
 “ **SAR”** is
an acronym for “Stock Appreciation Right”, which means a right, granted by an
issuer or any of its subsidiaries as compensation for services rendered or
otherwise in connection with office or employment, to receive a payment of cash
or an issue or transfer of securities based wholly or in part on changes in the
trading price of publicly traded securities;
 “ **LTIP** ”
is an acronym for “Long-term Incentive Plan”, which means any plan providing
compensation intended to serve as incentive for performance to occur over a
period longer than one financial year, whether the performance is measured by
reference to financial performance of the issuer or an affiliate of the issuer,
the price for the issuer’s securities, of any other measure, but does not
include option or SAR plans or plans for compensation through restricted shares
or restricted share units.
 The
amount of compensation paid to DRC Resources’ directors and members of its
administrative, supervisory or management bodies for the last full financial
year 2004 is set out below:
  
 **Name
      and**
      **Principal
      Position**
    **Fiscal**
      **Year**
    **Annual
      Compensation**
    **Long
      Term Compensation**
    **All
      other**
      **Compen-**
      **sation****Awards**
    **Payouts****Salary**
      **$**
    **Bonu****s**
      **$**
    **Other**
      **$**
    **Securities
      Under Options or**
      **SARs**
      **Granted**
    **Restricted
      Shares or Restricted**
      **Units
      ($)**
    **LTIP**
      **Payouts
      ($)**John
      H. Kruzick, Chairman
    2004
    -
    -
    153,0001
    -
    -
    -
    1,0003Sharon
      L. Ross, Corporate Secretary
    2004
    -
    -
    64,4461
    -
    -
    -
    1,0003Chris
      J. Bradbrook,
      President
      &
      CEO
    2004
    
    
    46,4602
    600,000
    
    
    1,0003
 Note
      1:
    Paid
      during the fiscal year for business management and administrative services
      billed by private consulting companies controlled by John H. Kruzick and
      Sharon L. Ross.
 Note
      2:
    Paid
      during the fiscal year (Oct 12-Dec 31, 2004) for contract services related
      to the position of President and CEO.
 Note
      3:
    Director’s
      fees
 The
Company does not have an **LTIP** for its executive officers.
 No **SAR** s
were granted to ending December 31, 2004:
 A
total of 750,000 options were granted during the last completed financial year.
At the date of this statement there were outstanding options in respect of a
total of 800,000 unissued Common Shares, of which 750,000 were held by directors
and members of the Company’s administrative, supervisory or management
bodies.
 The
Company does not have any amount set aside or accrued to provide pension,
retirement or similar benefits.
 41
 **C.**
    **Board
      practices**
 ***1.***
    ***Term
      of Office***
 Under
DRC Resources’ Articles the office of director expires at each annual meeting of
shareholders. A director holds office as such until the next annual meeting of
shareholders when he/she may stand for re-election. The Board of Directors as a
group determines in advance of each annual meeting of shareholders who will be
put forward for re-election. See item 6.A for the period during which each
director has served in that capacity.
 Under
the *Company
Act* (British Columbia) annual meetings of shareholders are required to be held in
every calendar year and not longer than 15 months after the last annual meeting
of shareholders.
 ***2.***
    ***Service
      Contracts***
 The
Company has concluded service contracts with four persons who are directors
and/or members of administrative, supervisory or management bodies.
 The
Service Agreements approved by the Board of Directors on April 23, 2003 were
amended on January 1, 2005 to provide for the employment of John H. Kruzick as
Chairman (former President) and Sharon L. Ross as Corporate Secretary. To ensure
the continued good management of the Company, it was deemed fair and necessary
to extend to them as essential employees service agreements that provide for the
following:
 §  An
annual review of compensation
 §  Entitlement
to receive directors’ fees
 §  Eligibility
to receive Extended Benefits Package
 §  Continuation
of salary and benefits during illness for up to 6 months
 §  Eligibility
for grant of stock options
 §  Annual
vacation entitlement of 20 working days
 §  Re-imbursement
for out-of-pocket expenses; and
 §  in
the event of termination by the Company:
 (i)
    without
      cause prior to the expiration of this Agreement, Kruzick and/or Ross shall
      be paid a lump sum severance payment in lieu of any other compensation or
      benefits otherwise payable thereafter under this Agreement; such payment
      to include any accrued but unpaid service fees and a lump sum payment
      equal to one month of base retainer fees for each year those persons held
      their respective position (based on the average monthly fee paid for the
      previous year);
 (ii)
    by
      DRC Resources with cause, other than moral turpitude or dishonesty on
      Kruzick’s and/or Ross’ part, prior to the expiration of this Agreement,
      Kruzick and/or Ross shall be paid a lump sum severance payment equal to
      one month of base retainer fees for each year such person held their
      respective position (based on the average monthly fees paid for the
      previous year), together with any accrued but unpaid expenses;
 (iv)
upon Kruzick and/or Ross retiring from all positions with the Company prior to
the
 expiration
of this Agreement, Kruzick and/or Ross shall be paid a lump sum severance
payment equal to one month’s base salary for each year such person has held
their respective position (based on the average monthly salary during the
previous year), paid as to 50% at time of retirement and 50% on the first
(1 st )
day of January in the year following retirement.
 
 In
March, 2004 the Company engaged the services of Mr. Michael W. Hibbitts as Vice
President of Exploration and Development. Mr. Hibbitts’ contract dated March 22,
2004 and approved by the board of directors was amended on January 1, 2005 to
reflect the following compensation arrangement:
 42
 §  Compensation
for services reviewed annually
 §  Eligibility
to be granted stock options
 §  Re-imbursement
for out-of-pocket expenses
 §  Eligibility
to receive Extended Benefits Package
 
 In
October, 2004 the Company engaged the services of Mr. Christopher J. Bradbrook
to fill the position of President and CEO, replacing Mr. Kruzick who moved to
the position of Chairman. Mr. Bradbrook’s agreement for services contains the
following provisions:
 §  Compensation
for services to be reviewed June, 2005 and thereafter annually
 §  Eligibility
to be granted stock options
 §  Re-imbursement
for out-of-pocket expenses
 §  Eligibility
to receive Extended Benefits Package
 §  Eligibility
to receive an annual performance bonus
 § Annual Vacation entitlement of 20 working days
 §  In
the event Mr. Bradbrook’s position is terminated without cause by DRC Resources
or in the event of a change in control by merger or purchase of the Company, Mr.
Bradbrook will be entitled to receive a severance payment equal to three times
his annual compensation.
 
 The
Board deemed the additional incentive benefits fair and reasonable, since the
Company is moving toward determining the mining potential of its main mineral
project and is at a critical stage in its financing and development
arrangements, which will demand considerably more effort on the basis of full
time attendance to the Company’s affairs. The Board made a competitive rates
study, but noted that, in recent years despite a poor equities market, under the
Chairman’s management the Company was able to advance its mineral exploration
project and to raise significant financing required to stabilize and maintain
market price. The Board determined the appropriateness of the benefit package
added to the Chairman, President/CEO, Vice President of Exploration &
Development and Corporate Secretary’s cash compensation on the basis of their
experience in and contribution to the advancement of the business of the
Company.
 
 
 ***2.***
    ***Audit
      Committee and Remuneration
Committee***
 The
Company does not have a remuneration committee.
 The
Audit Committee consists of three independent directors: Mike Muzylowski, Craig
Thomas and Thomas Taylor. The terms of reference of the audit committee include
the following:
 **Primary
Function:** to
assist the Board in fulfilling its oversight responsibilities by reviewing the
financial information to be provided to the shareholders and others, the systems
of internal controls that management and the Board have established, and the
Company’s audit process.
 **Powers:** to conduct or authorize investigations into any financial or other matter of the
Company; to request any officer or employee of the Company, its counsel and its
outside auditor to attend a meeting of the committee or any member(s) of the
committee; to select, evaluate, and when required or appropriate, replace the
outside auditor or nominate the outside auditor to be proposed, subject to
shareholder approval.
 **Accountable:** to the Board.
 43
 **Responsibilities:** to
determine whether the Company’s financial statements are complete, accurate, are
in accordance with generally accepted accounting principles and fairly present
the financial position and risks of the organization by querying management and
the outside auditor; to resolve disagreements between management and the outside
auditor; to assure compliance with laws and regulations and the Company’s own
policies; and to provide the Board with such reports and recommendations with
respect to the financial statements of the Company as it deems
advisable.
 **Duties:** meet
at least four times per year or more frequently as circumstances require;
annually review and reassess the adequacy of this policy; perform such functions
as may be assigned by law and the Company’s constating documents, or by the
Board; recommend to the Board of Directors the outside auditor to be nominated
and review the performance of the auditor; confer with the outside auditor and
receive written confirmation at least once per year as to the outside auditor’s
view of the Company’s internal processes and quality control and disclosure of
any investigations or government inquiries, reviews or investigations of the
outside auditor; take reasonable steps to confirm the independence of the
outside auditor; in consultation with the outside auditor consider the audit
scope and plan of the outside auditor; review with the outside auditor the
matters required to be discussed by generally accepted auditing practices; at
the completion of the annual examination review and discuss same with
management; consider and discuss with the outside auditor any significant
changes required in the outside auditor’s audit plan; review any problems the
outside auditor has in obtaining required information; review and discuss with
management and the outside auditor at the completion of any review engagement or
other examination, the Company’s quarterly financial statements as well as the
annual reports, the quarterly reports, the management discussion and analysis,
Annual Information Form, prospectus and other disclosures and, if thought
advisable, recommend the acceptance of such documents to the Board for approval;
review and discuss with management any guidance being provided to shareholders
on the expected future results and financial performance of the company and
provide their recommendations on such documents to the Board; inquire of
management and the outside auditor about the systems of internal controls that
management and the Board of Directors have established and the effectiveness of
those systems. In addition inquire of management and the outside auditor about
significant financial risks or exposures and the steps management has taken to
minimize such risks to the Company; inquire of the auditors the quality and
acceptability of the Company’s accounting principles, including the clarity of
financial disclosure and the degree of conservatism or aggressiveness of the
accounting policies and estimates; and meet with the outside auditor and
management in separate executive sessions, as necessary or appropriate, to
discuss any matters that the Committee or any of these groups believe should be
discussed privately with the Audit Committee.
 **D.**
    **Employees**
 At
fiscal year end 2004 the Company had 8 contract employees working in a
full-time, part-time capacity to attend to the administrative, managerial and
technical work (all of which worked 7-9 hour per day on a 4 or 5 day work week
as required). The Company engages consultants or service firms to attend to
requirements on a fee-for-services basis.
 The
Company anticipates that will change if and when mine development program or
mining operations begins.
 No
labour union is certified to represent workers at any site of the Company, nor
to bargain with the Company for any employee(s).
 **E.**
    **Share
      Ownership**
 44
 The
following sets forth the share ownership and options held by DRC Resources’
directors and members of its administrative, supervisory and management bodies
as at the date of this report. Percentages are based on there being 13,941,766
Common Shares outstanding at the date of this report. All shares are of the same
class with the same voting rights.
 
 **Name
      and**
      **Position
      with the Company**
    **Common
      Share Holdings**
    **Options
      to Purchase Common Shares****Number
      of Shares Held**
    **Percentage
      of all Issued Shares**
    **Number
      of Shares Under Options Held**
    **Exercise
      Price Per Share**
    **Expiry
      Date of Options**Christopher
      J. Bradbrook,
      Director,
      President and CEO
    23,800
    0.17%
    600.000
    $4.60
    12-Oct,-09John
      Harvey Kruzick,
      Chairman
      of the Board
    2,740,057
    19.65%
    Nil
    N/A
    N/ASharon
      Lynne Ross, Director, Corporate Secretary
    50,100
    0.36%
    50,000
    $7.00
    22-Mar-10Charles
      Robert Edington, Director
    115,000
    0.82%
    25,000
    $7.00
    22-Mar-10Mike
      Muzylowski, Director
    88,000
    0.63%
    50,000
    $7.00
    22-Mar-10Thomas
      O’Toole Taylor, Director
    31,500
    0.23%
    Nil
    N/A
    N/ACraig
      Dalton Thomas, Director
    12,300
    0.09%
    Nil
    N/A
    N/AClifford
      J. Davis
    Nil
    0.00%
    50,000
    $6.81
    10-Mar-10R.
      Gregory Laing
    Nil
    0.00%
    50,000
    $7.00
    22-Mar-10Julia
      Young, Corporate Financial Strategist
    25,000
    0.18%
    Nil
    N/A
    N/AMichael
      Hibbitts
      VP
      Exploration & Development
    NIl
    0.00%
    100,000
    $6.50
    13-Apr.-09Ian
      Mackenzie Beardmore, Chief Financial Officer
    25,000
    0.18%
    Nil
    N/A
    N/AMichael
      W.J. Hibbitts,
      Vice
      President Exploration and Development
    Nil
    Nil
    100,000
    $6.50
    13-Apr.-06
 
 **Stock
Option Plan**
 In
accordance with Toronto Stock Exchange (TSX) (“Exchange”) policies, the Company
has adopted by resolution of the shareholders at the 2003 annual shareholders’
meeting, the DRC Resources Corporation Stock Option Plan (the “Plan”). The Plan
complies with the requirements of Exchange Policy set out prior to January 1,
2005 in Sections 627 - 637.3 of the TSX Company Manual. Under the Plan,
1,000,000 common shares of the Company are reserved for issuance on the exercise
of stock options. The number of common shares of the Company reserved for
issuance under the Plan and under previously issued and unexercised options
total 750,000 common shares, equal to 5.38% of the Company’s issued and
outstanding common shares as at December 31, 2004.
 **Principal
Terms of Stock Option Plan**
 The
Plan provides that stock options may be granted to directors, senior officers,
employees, consultants and service providers of the Company (and any subsidiary
of the Company) and management company employees. For the purpose of the Plan,
“service provider” means an employee or insider of a listed company and any
other person or company engaged to provide ongoing management or consulting
services for the listed company and “insider” means a person so defined in the
Ontario *Securities
Act* and associate of any person who is an insider, both as provided in TSX Company
Policy Manual, Section 627. Under the Ontario *Securities
Act* “insider” means (a) every director or senior officer of a reporting issuer, (b)
every director or senior officer of a company that is itself an insider or
subsidiary of a reporting issuer, (c) any person or company who beneficially
owns, directly or indirectly, voting securities of a reporting issuer or who
exercises control or direction over voting securities of a reporting issuer or a
combination of both carrying more than 10 per cent of the voting rights attached
to all voting securities of the reporting issuer for the time being outstanding
other than voting securities held by the person or company as underwriter in the
course of a distribution, and (d) a reporting issuer where it has purchased,
redeemed or otherwise acquired any of its securities, for so long as it holds
any of its securities.
 45
 Under
the Plan, the Company’s board of directors may, from time to time, designate a
director or other senior officer or employee of the Company as administrator of
the Plan.
 The
Plan provides for the issuance of stock options to acquire up to a total of
1,000,000 common shares of the company (subject to standard anti-dilution
adjustments). The Plan will terminate when all of the stock options have been
granted or when the Plan is otherwise terminated by the Company. If a stock
options expires or otherwise terminated for any reason without being exercised
in full, the number of common shares in respect of which that stock option
expired or terminated shall again be available for the purposes of the Plan. Any
stock option outstanding when the Plan is terminated will remain in effect until
it is exercised or it expires.
 It
is in the sole discretion of the Board to determine who should receive stock
options and in what amounts, subject to the following conditions:
 (a)
    options
      are non-assignable and non-transferable, but may be exercised by the
      personal representative of the option holder in the event of the option
      holder’s death;
 (b)
    options
      may be exercisable for a maximum of five years from the date of
      grant;
 (c)
    options
      to acquire no more than 5% of the issued shares of the Company may be
      granted to any one individual in any 12 month
period;
 (d)
    options
      held by an option holder who is a director, employee, consultant or
      management company employee must expire on the expiry day or within 365
      days after the option holder ceases to be a director, employee, consultant
      or management company employee for reason of death or
      disability;
 (e)
    options
      held by option holders who are terminated for cause will expire on date of
      termination; and
 (f)
    options
      held by an option holder who ceases to be a director, employee, consultant
      or management company employee must expire on the expiry day or within 30
      days after the option holder ceases to be a director, employee, consultant
      or management company employee for reason of early retirement, voluntary
      resignation or termination other than for
cause.
 The
Plan provides that other terms and conditions may be attached to a particular
stock option, such terms and conditions to be referred to in a schedule attached
to the option agreement. The vesting schedule for each stock option will also be
set out in the schedule attached to the option agreement.
 In
addition, a stock option will expire immediately in the event a director or
senior officer ceases to be a director or senior officer of the company as a
result of (1) ceasing to meet the qualification under the *Company
Act* (British Columbia), (ii) the passing of a special resolution by the
shareholders, or (iii) an order made by a regulatory authority.
 46
 The
price at which an option holder may purchase a common share upon exercise of a
stock option will be as set forth in the option agreement issued in respect of
such option and in any event will not be less that the discounted market price
of the Company’s common shares as of the date of the grant of the stock option.
The market price of the Company’s common shares for a particular date will be
the closing trading price of the Company’s common shares on the day immediately
preceding the date of grant of the option. Discount market price means the
market price less a discount of up to 25% if the market price is $0.50 or less;
up to 20% if the market price is between $2.00 and $0.51; and up to 15% if the
market price is greater than $2.00.
 The
Company will not offer financial assistance to facilitate the purchase of shares
under the Plan.
 No
stock option will be exercisable at a price less than the minimum price
prescribed by each of the organized trading facilities or the applicable
regulatory authorities that would apply to the award of the stock option in
question.
 Disinterested
shareholder approval will be obtained for any reduction in the exercise price of
an option held by an insider of the Company. Options may not be granted to other
than bona fide employees, consultants or management company employees.
 No
certificate for shares may be issued until fully paid for on due exercise of any
stock option granted under the Plan. The Company will not provide financial
assistance to option holders to assist them in exercising their stock
options.
 
 **Item
      7.**
    **Major
      Shareholders and Related Party
Transactions**
 **A.**
    **Major
      shareholders**
 The
Company is authorized to issue 40,000,000 common shares without par value. At
December 31, 2004 the Company had outstanding 13,941,766 There are no
disproportionate or weighted voting privileges attaching to any shares of the
Company.
 1. To
the knowledge of the directors and senior officers of the Company, the only
persons who beneficially own, directly or indirectly, or exercise control or
direction over voting securities carrying more than 5% of the voting rights
attached to any class of voting securities of the Company are the
following.
 
 **Name**
    **Number
      of Common Shares**
    **Percentage**John
      H. Kruzick1
    2,740,051
    19.65%
 Note
1: 800,000 owned through Westridge Enterprises Ltd., a non-reporting company
controlled by Mr. Kruzick.
 
 2. At
March 22, 2005 there were a total of 75 registered shareholders and 431
non-registered shareholders of DRC Resources. Of a total 75 shareholders of
record, 47 were Canadian holders of an aggregate 13,045,580 common
shares.
 3. To
the knowledge of DRC Resources it is not controlled directly or indirectly by
another corporation, any foreign government or by any other natural or legal
person(s) severally or jointly.
 4. DRC
Resources is not aware of any arrangements, the operation of which may at a
later date result in a change in control of the Company.
 **B.**
    **Related
      Party Transactions**
 1. There
have been no transactions or loans since the beginning of the last three
financial years between the Company and any enterprise that is under common
control with the Company, any associate, individual having significant influence
over the Company, key management personnel of the Company, directors of the
Company or any enterprise controlled by, or in which an individual having
significant influence over the Company or any key management person of the
Company has a substantial interest and over which such person can exercise
significant influence, except five payments of common shares as purchase
installments on the agreement to acquire the Afton Project Property. Westridge
Enterprises Ltd., a non-reporting company controlled by the President and CEO of
the Company, Mr. John H. Kruzick, has been paid a total of 900,000 common shares
of the Company, as to 500,000 in year 2000 and 100,000 in each of the years
2001, 2002, 2003 and 2004 as part payment of an annual option payment of 200,000
common shares due under that property option agreement described in Item 4.D
above.
 47
 2. There
have not been, nor are there any transactions proposed which are material to the
Company or any related party, except a further annual option payment of 200,000
common shares on the Afton Copper-Gold Project property option, one-half of
which (100,000 common shares) was paid to Westridge Enterprises Ltd. on November
7, 2004.
 **C.**
    **Interests
      of experts and counsel**
 To
the knowledge of the Company, no expert or counsel engaged by the Company has
any shares or other material, direct or indirect, economic interest in the
Company.
 
 **Item
      8.**
    **Financial
      Information**
 **A.**
    **Consolidated
      Statements and Other Financial
Information**
 Forming
a part of this report are audited comparative financial statements that cover
the years 2001, 2002, 2003 and 2004 prepared in accordance with Canadian
GAAP.
 There
are no legal or arbitration proceedings in process, pending or threatened
against the Company.
 **B.**
    **Significant
      Changes**
 Apart
from the issue of 865,000 common shares pursuant to the exercise of stock
options described below, there have been no significant changes since the date
of the December 31, 2003 audited financial statements.
 
 **Item
      9.**
    **The
      Offer and Listing**
 **A.**
    **Offer
      and listing details**
 The
Company is a reporting issuer in British Columbia, Alberta, Ontario and the USA,
and is a multiple jurisdiction filer with SEDAR and an EDGAR filer. DRC
Resources Corporation Common Shares are listed on the Toronto Stock Exchange
(the TSX) under the symbol “DRC,” and on the American Stock Exchange (the AMEX)
under the symbol “DRJ.”
 The
following is the price history of the Company’s stock on the Toronto Stock
Exchange:
 
 4.
(a)  for
the five most recent full financial years
 **Last
      Five Full Fiscal Years**
    
    **High
      ($)**
    
    **Low
      ($)**January
      1 to December 31, 2000
    
    
    14.40
    
    
    2.70January
      1 to December 31, 2001
    
    
    5.00
    
    
    2.95January
      1 to December 31, 2002
    
    
    4.80
    
    
    2.30January
      1 to December 31, 2003
    
    
    9.50
    
    
    3.65January
      1 to December 31, 2004
    
    
    9.25
    
    
    4.30
 4.
(b)  for
each financial quarter of the two most recent full financial years
 **Year
      2004 Fiscal Quarters**
    **High
      ($)**
    **Low
      ($)**
    
    **Year
      2003 Fiscal Quarters**
    **High
      ($)**
    **Low
      ($)**January
      1 to March 31
    9.25
    5.95
    
    January
      1 to March 31
    5.78
    3.65April
      1 to June 30
    6.90
    5.00
    
    April
      1 to June 30
    6.50
    4.70July
      1 to September 30
    5,72
    4.30
    
    July
      1 to September 30
    7.80
    5.50October
      1 to December 31
    8.00
    4.45
    
    October
      1 to December 31
    9.50
    6.65
 
 48
 4.
(c)  for
each month for the most recent six months
 **Most
      Recent Six Months**
    
    **High
      ($)**
    
    **Low
      ($)**September
      2004
    
    
    8.10
    
    
    6.65October
      2004
    
    
    9.50
    
    
    7.65November
      2004
    
    
    8.75
    
    
    7.20December
      2004
    
    
    9.25
    
    
    7.90January
      2005
    
    
    8.30
    
    
    7.10February
      2005
    
    
    6.30
    
    
    5.20
 
 The
following is the price history of the Company’s stock on the American Stock
Exchange, since its listing on November 10, 2004:
 **Most
      Recent Three Months**
    
    **High
      (US$)**
    
    **Low
      (US$)**November
      2004
    
    
    6.06
    
    
    4.38December
      2004
    
    
    6.55
    
    
    4.90January
      2005
    
    
    5.35
    
    
    4.41February
      2005
    
    
    5.03
    
    
    4.16
 
 **B.**
    **Plan
      of distribution**(Not applicable)
 **C.**
    **Markets**(see
      Item 9. A above)
 **D.**
    **Selling
      shareholders**(Not
      applicable)
 **E.**
    **Dilution**(Not
      applicable)
 **F.**
    **Expenses
      of the issue (Not applicable)**
 
 **Item
10.**  **Additional
Information**
 **A.**
    **Share
      capital**
 1. DRC
Resources is authorized to issue 40,000,000 Common Shares without par value. A
total of 13,941,766 Common Shares are issued and outstanding at the date of this
report. The following share transactions took place in year 2004:
 Transaction
    
    Number
      of SharesIssued
      at December 31, 2003
    
    
    12,876,766Afton
      Project property payment
    
    
    200,000Exercise
      of options
    
    
    865,000Issued
      at date of this registration statement
    
    
    13,941,766
 
 3.
    On
      July 11, 2001 the authorized capital of the Company was changed from
      40,000,000 shares divided into 20,000,000 common shares without par value
      and 10,000,000 Class A preferred shares with a par value of $50.00 each
      and 10,000,000 Class B preferred shares with a par value of $10.00 each to
      a single class of 40,000,000 common shares without par value. No preferred
      shares were ever issued.
 
 49
  The
following table sets forth the events history of share capital since January 1,
2000.
 **Date**
    **Event**
    **Price
      per Security**
    **Number
      of Shares Issued (Cancelled)**
    **Consideration
      received by the Company**
    **Discounts,**
      **Special
      Terms, Installment Payments, etc.****Cash**
    **Other**8-Feb-00
    Options
      exercised
    0.20
    30,000
    6,000
    
    N/A2000
    Property
      Option Payment
    0.301
    1,000,000
    -
    Property
    N/A13-Apr-00
    Options
      exercised
    0.20
    33,000
    6,600
    
    N/A13-Apr-00
    Warrants
      exercised
    0.25
    1,000,000
    250,000
    
    N/A10-Jul-00
    Options
      exercised
    0.20
    50,000
    10,000
    
    N/A10-Jul-00
    Options
      exercised
    0.30
    74,000
    22,200
    
    N/A13-Aug-00
    Private
      Placement
    4.00
    1,350,000
    4,904,12012-Sep-00
    Options
      exercised
    0.20
    25,000
    5,000
    
    N/A2001
    Property
      Option Payment
    0.301
    200,000
    -
    Property
    N/A19-Apr-01
    Options
      exercised
    0.20
    160,000
    32,000
    
    N/A4-Sep-01
    Options
      exercised
    0.30
    51,000
    15,300
    
    N/A2002
    Property
      Option Payment
    0.301
    200,000
    -
    Property
    N/A24-Jul-02
    Private
      Placement
    3.00
    700,000
    1,932,000
    
    N/A31-Dec-02
    Cancellation
      of Shares repurchased by the Company
    2.882
    (252,000)17-Mar-02
    Broker
      Warrants exercised
    3.00
    5,000
    15,000
    
    N/A9-May-03
    Options
      exercised
    3.00
    25,000
    75,000
    
    N/A21-May-03
    Broker
      Warrants exercised
    3.00
    65,000
    195,000
    
    N/A8-Aug-03
    Options
      exercised
    3.00
    2,000
    6,000
    
    N/A13-Aug-03
    Options
      exercised
    3.00
    6,000
    18,000
    
    N/A8-Sept-03
    Options
      exercised
    3.00
    10,000
    30,000
    
    N/A6-Nov-03
    Private
      Placement
    7.00
    3,450,000
    22,500,241
    
    N/A7-Nov-03
    Property
      Option Payment
    0.301
    200,000
    -
    Property
    N/A27-Nov-03
    Options
      exercised
    3.00
    7,000
    21,000
    
    N/A16-Jan-04
    Option
      exercised
    3.00
    150,000
    450,000
    
    N/A29-Jan-04
    Option
      exercised
    3.00
    145,000
    435,000
    
    N/A19-Feb-04
    Option
      exercised
    3.05
    10,000
    30,500
    
    N/A7-Apr-04
    Option
      exercised
    3.05
    30,.000
    91,500
    
    N/A26-July-04
    Option
      exercised
    3.05
    60,000
    183,000
    
    N/A13-Sept-04
    Option
      exercised
    3.00
    395,000
    1,185,000
    
    N/A18-Oct-04
    Option
      exercised
    3.50
    25,000
    87,500
    
    N/A10-Nov-04
    Property
      Option Payment
    0.301
    200,000
    -
    Property
    N/A2-Dec-04
    Option
      exercised
    3.50
    25,000
    87,500
    
    N/A
 Note
1: Deemed price of shares issued as part exercise of Afton Project property
option
 Note
2: Average market price paid per share on common shares repurchased by the
Company pursuant to an ordinary course purchase approved by the Toronto Stock
Exchange.
 
 3. All
share issues must be authorized by an ordinary resolution approved by a majority
of the Board of Directors and the acceptance of a filing by the Toronto Stock
Exchange in respect of any proposed plan, rights or brokered offering, private
placement or underwriting pursuant to which shares are to be
issued.
 
 50
 
 **B.**
    **Memorandum
      and articles of association**
 1. DRC
Resources was incorporated under Certificate of Incorporation No. 203816 issued
by the Registrar of Companies on registration of its Memorandum and Articles
under the *Company
Act* (British Columbia), Canada. Under the *Company
Act* (British Columbia) DRC Resources is permitted to conduct any lawful business
that it is not restricted from conducting by its memorandum and articles,
neither of which contain any restriction on the business the Company may
conduct.
 2. A
director who, in any way, directly or indirectly, is interested in a proposed
contract or transaction with the Company must disclose in writing the nature and
extent of the director’s interest at a meeting of directors and abstain from
voting on approval of the matter. The Articles of the Company permit an
interested director to be counted in the quorum and the *Company
Act* (British
Columbia) provides that a director of a company is not deemed to be interested
in a proposed contract or transaction merely because the proposed contract or
transaction relates, among other things, to an indemnity, liability insurance or
the remuneration of a director in that capacity. Hence, directors can vote
compensation to themselves or any of their members. The board of directors has
an unlimited power to borrow, issue debt obligations and to charge the assets of
the Company, provided only that such power is exercised bona fide and in the
best interests of the Company. There is no mandatory retirement age for
directors. A director is not required to have any share
qualification.
 3. The
Company has only one class of common shares, without any special rights or
restrictions. The dividend entitlement of a shareholder of record is fixed at
the time of declaration by the board of directors. A vested dividend entitlement
does not lapse, but unclaimed dividends are subject to a statutory six year
contract debts limitation. Each common share is entitled to one vote on the
election of each director. There are no cumulative voting rights, in consequence
of which a simple majority of votes at the annual meeting can elect all the
directors of the Company. Each common share carries with it the right to share
equally with every other common share in dividends declared and in any
distribution of surplus assets of the Company after payment to creditors on any
winding up, liquidation or dissolution. There are no sinking fund provisions.
All common shares must be fully paid prior to issue and are thereafter subject
to no further capital calls by the Company. There exists no discriminatory
provision affecting any existing or prospective holder of common shares as a
result of such shareholder owning a substantial number of shares.
 4. Under
the *Company
Act* (British Columbia), the rights of shareholders may be changed only by the
shareholders passing a special resolution approved by 75% of the votes cast at a
general meeting of the Company, the notice of which is accompanied by a circular
describing the proposed action and its effect on the shareholders. Shareholders
representing 10% of the Company who vote against such a resolution may apply to
the Court to set aside the resolution and the Court may set aside, affirm or
affirm and order the Company to purchase the shares of any member at a price
determined by the Court.
 5. The
Board of Directors must call an annual general meeting once in each calendar
year and not later than 15 months after the last such meeting. The Board may
call an extraordinary general meeting at any time. Notice of such meetings must
be accompanied by an information circular describing the proposed business to be
dealt with and making disclosures as prescribed by statute. A shareholder or
shareholders having in the aggregate 5% of the issued shares of the Company may
requisition a meeting and the Board is required to hold such meeting within four
months of such requisition. Admission to such meetings is open to registered
shareholders and their duly appointed proxies. Others may be admitted subject to
the pleasure of the meeting.
 51
 6. The
memorandum and articles of the Company contain no limitations on the rights of
non-resident or foreign shareholders to hold or exercise rights on the shares of
the Company.
 There
is no limitation at law upon the right of a non-resident to hold shares in a
Canadian company. However, the *Investment
Canada Act* (Canada)
requires certain non-Canadian individuals, governments, corporations, agencies
or entities who wish to acquire ‘a Canadian business’ or to establish ‘a new
Canadian business’ as those terms are defined in that Act, to file a
notification or an application for review with Investment Canada, a Canadian
federal governmental agency.  The *Investment
Canada Act* requires
that certain acquisitions of control of a Canadian business by a non-Canadian
must be reviewed by the Minister responsible for the Act and approved on the
basis that the Minister is satisfied that the acquisition is likely to be of net
benefit to Canada, having regard to the criteria set forth in the Act. The Act
makes the acquisition of control a reviewable event. The Act sets out detailed
rules for determining whether control has been acquired. The acquisition of
one-third or more of the voting shares of a corporation may, in some
circumstances, be deemed to constitute acquisition of control. A reviewable
acquisition of control may not be implemented before being approved by the
Minister. If not ultimately approved, a reviewable acquisition that has been
completed may be subject to an order to divest, enforceable by injunction or a
court order directing disposition of assets or shares.
 7. There
are no provisions in DRC Resources’ memorandum and articles that would have an
effect of delaying, deferring or preventing a change in control of the Company
and that would operate only with respect to a merger, acquisition or corporate
restructuring involving the Company or any of its subsidiaries.
 8. There
is no provision in the Company’s articles setting a threshold or requiring or
governing disclosure of shareholder ownership above any level. Securities Acts,
regulations and the policies and rules thereunder in the Provinces of Ontario,
Alberta and British Columbia, where the Company is a reporting company, require
any person holding or having control of more than 10% of the issued shares of
the Company to file insider returns disclosing such share holdings.
 **C.**
    **Material
      Contracts**
 (1)
    Underground
      diamond drilling contract with F. Boisvenu Drilling Ltd., dated November
      30, 2004 under which the Contractor will provide the expertise and the
      manpower to drill up to 20,000 metres of core sample holes, commencing in
      January 2005.
 (2)
    Excavation
      and development contract with Procon Mining & Tunnelling Ltd. of an
      exploration access decline at the Afton Pit Minesite in Kamloops, BC,
      dated October 23, 2004 for the contract price of $10,811,066.00,
      commencing October 23, 2004 and to be completed November 15,
      2005.
 (3)
    Services
      agreement with Chris J. Bradbrook to engage him as President and Chief
      Executive Officer of the Company as of October 12, 2004 for an annual
      salary of $250,000 with a benefits package covering medical and dental
      expenses and provisions for, among other things, compensation in the event
      of termination by the Company. On October 12, 2004 Chris Bradbrook was
      granted the option to purchase 600,000 Common Shares of the Company for
      the price of $4.60****per
      share, exercisable on or before October 12,
2009.
 (4)
    Compensation
      Stock Option Agreement granted to Orion Securities Inc. for the purchase
      of 50,000 common shares at an exercise price of $4.60 expiring October 13,
      2006, in consideration for services render with respect to recruiting,
      identifying and hiring of a President and Chief Executive Officer for the
      Company.*(see
      section 2 “Service contracts” under item 6. C. “Compensation” above for
      details)*
 52
 (5)
    Services
      agreement and addendum thereto with Michael W. Hibbitts to engage him as
      Vice President, Exploration and Development of the Company as of March 24,
      2004 for an annual salary of $150,000 with a benefits package covering
      medical and dental expenses. On April 13, 2004 Michael Hibbitts was
      granted the option to purchase 100,000 Common Shares of the Company for
      the price of $6.50****per
      share, exercisable on or before April 13, 2006.*(see
      section 2 “Service contracts” under item 6. C. “Compensation” above for
      details)*
 (6)
    Agency
      agreement by letter dated November 6, 2003 between DRC Resources and Orion
      Securities Inc., Dundee Securities Corporation and Salman Partners Inc.
      (the “Syndicate”) relating to a bought deal agency offering of up to
      3,450,000 Common Shares at $7.00 per Common Share. The Company paid the
      agent a total of $1,649,758.50 in cash commission and as reimbursement of
      legal fees and disbursements incurred by the agent. In addition to cash
      commission, the underwriters received 345,000 compensation options
      exercisable to purchase that number of Common Shares at $7.50 per share on
      or before November 6, 2005.
 (7)
    Services
      agreement and addendums thereto with John H. Kruzick, formalizing his
      engagement as Chairman of the Board for a term of five years from April
      23, 2003 at an annual salary of $200,000 with provisions for, among other
      things, compensation in the event of sickness and special compensation in
      the event of termination by the Company.*(see
      section 2 “Service contracts” under item 6. C. “Compensation” above for
      details)*
 (8)
    Services
      agreement and addendum thereto with Sharon L. Ross, formalizing her
      engagement as Corporate Secretary for a term of five years from April 23,
      2003 at a salary equal to $44.00 per hour with provisions for, among other
      things, compensation in the event of sickness and special compensation in
      the event termination by the Company.*(see
      section 2 “Service contracts” under item 6. C. “Compensation” above for
      details)*
 
 **D.**
    **Exchange
      controls**
 There
are no governmental laws, decrees, regulations or other legislation in Canada
that affect the export or import of capital, including the availability of cash
or cash equivalents for use by the Company, or the remittance of dividends,
interest or other payments to nonresident holders of the Company’s
shares.
 **E.**
    **Taxation**
 The
following information concerning the Canadian taxes to which a non-resident of
Canada may be subject is of a general nature only. A shareholder or a person
considering an investment in the Company’s shares should consult their tax
advisers and accountants or tax counsel as to how and to what extent the tax
laws and rules of both Canada and of the shareholder’s or potential investor’s
own country will or may affect such holdings or investment
decision.
 Canadian
federal tax legislation generally requires a 25% withholding from dividends paid
or deemed to be paid to the Company’s non-resident shareholders. Under the tax
treaty with the United States, this withholding rate is reduced to 15%. Stock
dividends paid to non-residents of Canada are subject to withholding tax at the
same rate. For tax purposes, the amount of a stock dividend would generally be
equal to the amount by which stated capital is increased by the payment of such
dividend. In either event, the Company will provide further information at the
time, if such dividend is paid. Interest paid or deemed to be paid on any debt
security of the Company held by a non-resident of Canada may also be subject to
withholding, depending upon the terms and conditions of the security and the
applicable tax treaty.
 Unless
a US shareholder owned more than 25% of the Company’s issued shares or was not
dealing at arm’s length with the Company, capital gains derived from disposition
of shares of the Company would likely be exempt from tax in Canada by virtue of
the Canada-US tax Treaty.
 53
 Tax
consequences depend upon each investor’s individual circumstances and should be
determined in consultation with the investor’s own tax counsel.
 **F.**
    **Dividends
      and paying agents**
 The
Company has to date not paid dividends and does not anticipate being in a
position to pay dividends in the foreseeable future. Accordingly, the Company
has appointed no paying agents.
 **G.**
    **Statement
      by experts**
 Reference
is made in this report to experts’ (i.e. ‘qualified persons’ as defined in NI
43-101) statements by the firms of J.J. McDougall & Associates and Behre
Dolbear & Company Ltd., whose principal and authorized representatives are,
respectively, the following individuals:
 James
J. McDougall, P.Eng.
 7720
Sunnydene Road, Richmond, BC Canada V6Y 1H1
 Mr.
McDougall holds a Master of Science (1954) from the University of British
Columbia and is a B.C. Professional Engineer (Geological) (1964). He is a
registered member of the Association of Professional Engineers and Geoscientists
of the Province of British Columbia and a Fellow of the Society of Economic
Geologists. He is a member of the Geological Association of Canada, the Canadian
Institute of Mining and Metallurgy, the B.C.-Yukon Chamber of Mines, Northwest
Mining Association and the Prospectors and Developers Association of
Canada.
 Mr.
McDougall is responsible for the preparation of the technical edited report
titled “2000 and 2001 Diamond Drill Exploration Report and Mineral Resources
Study” dated April 17, 2002, which is included with this report. Mr. McDougall’s
consent to the use of his report is included in this report with the technical
report.
 James
A. Currie, P.Eng.
 600-890
West Pender Street, Vancouver, British Columbia, Canada V6C 1J9
 Mr.
Currie is a Vice President of Behre Dolbear & Company Ltd. He holds a B.Sc.
(Hons 1979) from Queens University, Kingston, Ontario and is a B.C. Professional
Engineer (Mining) (1982). He is a registered member of the Association of
Professional Engineers and Geoscientists of the Province of British Columbia.
Mr. Currie acted as Project Manager of the Afton Project assignment. He has 24
years experience in the mining industry including exploration, construction and
operations management.
 Mr.
Currie is responsible for the preparation of the technical report titled
“Scoping Study on the Afton Mines Project, Kamloops, B.C.” dated February 2001,
which is included with this report. Mr. Currie’s consent to the use of the
“Scoping Study on the Afton Mines Project, Kamloops, B.C.” in connection the
filing of this report is included with the technical report.
 **H.**
    **Documents
      on display**
 Investors
and other interested persons may review the filings and documents of and
concerning the Company together with all exhibits and related materials referred
to in this report, with the Securities and Exchange Commission (“SEC”) at the
SEC’s public reference facilities in Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. One may call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms facility. The SEC maintains a
website ( HTTP://WWW.SEC.GOV) that contains information filed electronically.
 **Item
      11.**
    **Quantitative
      and Qualitative Disclosures About Market
Risk.**
 Not
applicable
 **Item
      12.**
    **Description
      of Securities Other than Equity
Securities**
 **A.**
    **Debt
      Securities**(Not applicable)
 **B.**
    **Warrants
      and Rights**
 54
 In
connection with a private placement of common shares in November, 2003, as part
of the compensation payable under the bought deal agency agreement, the Company
issued 345,000 compensation options to the syndicate of underwriters, Orion
Securities Inc. as to 80%, Dundee Securities Corporation as to 10% and Salman
Partners Inc as to 10%, who have the right thereunder exercisable until close of
business on November 6, 2005 to purchase their respective proportionate number
of common shares at a price of $7.50 per share **.**
 **C.**
    **Other
      Securities**(Not
      applicable)
 **D.**
    **American
      Depositary Shares**(Not applicable)
 **Item
      13.**
    **Defaults,
      Dividend Arrearages and Delinquencies**(Not applicable)
 **Item
      14.**
    **Material
      Modifications to the Rights of Security Holders and Use of
      Proceeds**
 (Not
applicable)
 **Item
      15.**
    **Controls
      and Procedures**(Not applicable)
 **Item
      16.**
    (Not
      applicable)
 **Item
      17.**
    **Financial
      Statements**
 DRC
Resources has furnished with this report audited comparative financial
statements for the years ended December 31, 2002, 2003 and 2004 which
include:
 ·
    Consolidated
      Balance Sheets
 ·
    Consolidated
      Statements of Operations and Deficit
 ·
    Consolidated
      Statements of Cash Flows
 ·
    Statements
      of Changes in Shareholders’ Equity
 The
financial statements were prepared in accordance with generally accepted
accounting principles in Canada and are reconciled to United States generally
accepted accounting principles as described in the auditor’s report and in Note
16 to the financial statements. All figures are expressed in Canadian
dollars.
 **Item
      18.**
    **Financial
      Statements**
 See
“Item 17 Financial Statements”
 **Item
      19**
    **Exhibits**
 Exhibit
      1:
    Financial Statements and consent of auditor, De Visser
      Gray
 Exhibit
      2:
    Diamond Drilling Contract between the Company and
      Boisvenu Drilling Ltd., dated November 30,
2004
 Exhibit
      3:
    Contract between the Company and Procon Mining and
      Tunnelling Ltd. dated October 23, 2004
 Exhibit
      4:
    Letter Agreement between the Company and Christopher J.
      Bradbrook, President and CEO, dated October 12,
2004
 Exhibit
      5:
    Service Agreement between the Company and Michael
      Hibbitts, Vice President of Exploration and Development, dated March 24,
      2004
  55
  
 
 **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 registration statement on its behalf.
 
 DRC
RESOURCES CORPORATION
 
 
 *“Chris
J. Bradbrook”*
 
 _______________________________
 Chris
J. Bradbrook, President & CEO
 
 Date:
March 30, 2005
 
 56