U

S

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

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

OR

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

For the fiscal year ended December 31, 200______________

OR

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

Commission file number _________________________________________________________

DRC RESOURCES CORPORATION

(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
    registered
| | ------------------- | ---------------------------------------------
| | None                | None                                         



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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.



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.



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



(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
YEARS)

Indicate by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.





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|TABLE OF CONTENTS                
|---------------------------------
|                                 
|FORWARD LOOKING STATEMENTS       
|GLOSSARY OF TERMS AND DEFINITIONS
|PART I                           
|Item 1.                          
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|Item 2.                          
|Item 3.                          
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|Item 4.                          
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|Item 5.                          
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|Item 6.                          
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|Item 7.                          
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|Item 8.                          
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|Item 9.                          
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|Item 10                          
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|Item 11                          
|Item 12                          
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|PART II                          
|Item 13                          
|Item 14                          
|Item 15                          
|Item 16                          
|PART III                         
|Item 17                          
|Item 18                          
|Item 19                          
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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 "anomalous" 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(Cu5FeS4)

"chalcocite" is a copper sulphide mineral (Cu2S)

"chalcopyrite" is a copper sulphide mineral (Cu5FeS4)

"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

"cuprite" is a copper oxide (Cu20)

"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

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"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

"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.

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"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.

"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"

"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.

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"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 toimperial
equivalents is as follows:

Metric Units Multiplied by =Imperial Units

hectares 2.471 =acres

metres 3.281 =feet

kilometres 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

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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                     | DirectorPresident &
    Chief Executive Officer    
|Sharon Lynne Ross#601 - 595 Howe Street
    Vancouver, BC Canada V6C 2T                         | DirectorSecretary                                  
|Charles Robert EdingtonUnit 1 - 929 Ellery
    Street
    Victoria, BC, Canada V8Z 6M1          | Director                                           
|Mike MuzylowsiSuite 1160, 1040 West Georgia
    St.
    Vancouver, BC, Canada V6E 4H1           | Director                                           
|Thomas O'Toole Taylor1358 232nd
    Steet
    Langley, BC, Canada V2Z 2W9                       | Director                                           
|Craig Dalton ThomasSuite 1525, 625 Howe
    Street
    West Vancouver, BC V6C 2T6               | Director                                           
|Bruno Johann MosimannHerbstacerstr 27
    CH-8472
    Seauzach, Switzerland                     | Vice-President, Corporate Development &
    Finance
|Maurice Delamore Lee789 West 66th
    Avenue
    Vancouver, BC, Canada V6P 2R4                  | Vice-President, Business Development               
|Ian Mackenzie BeardmoreSuite 1400, 701 West
    Georgia Street
    Vancouver, BC Canada V7Y 1C6 | Chief Financial Officer                            

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B. Advisers

The following are DRC Resources' principal advisers:

|Name & business address                                                                  | Function                                                              
|---------------------------------------------------------------------------------------- | ----------------------------------------------------------------------
|HSBC Bank Canada885 West Georgia Street
    Vancouver, BC Canada V6C 3E9                 | Banker                                                                
|Dundee Securities Corporation320
    Bay Street, Suite 800
    Toronto ON Canada M5H 4A6 | Sponsor for listing of DRC
    Resources on the Toronto Stock Exchange
|Donald W.J. Specht4130 Ripple Road, West
    Vancouver, BC, Canada V7V 3L2               | Legal counsel                                                         

C. Auditors

Beauchamp & Company

Chartered Accountants

#205 - 788 Beatty Street, Vancouver, BC Canada V6B 2M1

email: lbeauchamp@intouch.bc.ca

Members of the Chartered Accountants of British Columbia

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, 2002, 2001, 2000, 1999 and 1998 are set forth in Canadian dollars and
extracted from the audited Consolidated Financial Statements of DRC Resources that appear
elsewhere herein. The selected financial data for the nine month periods ended September
30, 2003 and 2002 are extracted from unaudited Interim 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 15 of the DRC
Resources' December 31, 2002 financial statements appearing elsewhere herein.

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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 and from unaudited Interim Consolidated Financial Statements
appearing elsewhere in this registration statement.

SELECTED FINANCIAL DATA UNDER CANADIAN GAAP

|                                  | Nine Months EndedSeptember
    30, 2003 | Nine Months EndedSeptember
    30, 2002 | Year Ended December 31, 2002 | Year Ended December 31, 2001 | ear Ended December 31, 2000 | Year EndedDecember
    31, 1999 | Year EndedDecember
    31, 1998
|--------------------------------- | --------------------------------------- | --------------------------------------- | ---------------------------- | ---------------------------- | --------------------------- | ------------------------------- | -------------------------------
|Net Operating Revenue             | 69,589                                  | 87,954                                  | 114,260                      | 255,155                      | 176,527                     | 984                             | 53,586                         
|Income (Loss) from Operations     | (408,674)                               | (85,291)                                | (185,907)                    | (114,809)                    | (227,166)                   | 110,108                         | 60,905                         
|Income (Loss) per Share           | (0.04)                                  | (0.01)                                  | (0.02)                       | (0.02)                       | (0.04)                      | (0.02)                          | (0.02)                         
|Total Assets                      | 6,098,807                               | 6,773,988                               | 6,492,825                    | 5,899,183                    | 6,380,707                   | 1,076,948                       | 859,265                        
|Net Assets                        | 5,876,397                               | 6,506,589                               | 6,333,889                    | 5,566,571                    | 6,075,855                   | 1,060,157                       | 835,264                        
|Deferred Income Taxes             | 206,266                                 | 183,537                                 | 113,767                      | 296,410                      | 216,985                     | 0                               | 0                              
|Cash Dividends per share          | Nil                                     | Nil                                     | Nil                          | Nil                          | Nil                         | Nil                             | Nil                            
|Deficit                           | (2,161,588)                             | (1,652.298)                             | (1,752,914)                  | (1,567,007)                  | (1,452,198)                 | (1,225,032)                     | (1,114,924)                    
|Capital Stock                     | 8,037,985                               | 8,159,887                               | 8,086,803                    | 7,133,578                    | 7,528,053                   | 2,285,189                       | 1,950,189                      
|Weighted Average Number of Shares |                                         |                                         | 8,704,716                    | 7,792,620                    | 5,742,938                   | 4,456,016                       | 3,231,016                      



SELECTED FINANCIAL DATA UNDER US GAAP

|                                  | Nine Months EndedSeptember
    30, 2003 | Nine Months EndedSeptember
    30, 2002 | Year Ended December 31, 2002 | Year Ended December 31, 2001 | Year Ended December 31, 2000
|--------------------------------- | --------------------------------------- | --------------------------------------- | ---------------------------- | ---------------------------- | ----------------------------
|Other Income and Expenses         | 69,589                                  | 87,954                                  | 114,260                      | 255,155                      | 176,527                     
|Income (Loss) from Operations     | (595,961)                               | (310,422)                               | (806,322)                    | (544,935)                    | (816,364)                   
|Income (Loss) per Share           | (0.11)                                  | (0.05)                                  | (0.11)                       | (0.07)                       | (0.17)                      
|Total Assets                      | 3,098,541                               | 4,719,971                               | 4,088,631                    | 4,295,312                    | 5,225,411                   
|Net Assets                        | 2,876,131                               | 4,533,184                               | 3,929,695                    | 3,962,700                    | 4,920,559                   
|Deferred Income Taxes             | 206,266                                 | 183,537                                 | 113,767                      | 296,410                      | 216,985                     
|Cash Dividends per share          | Nil                                     | Nil                                     | Nil                          | Nil                          | Nil                         
|Deficit                           | 5,161,854                               | 3,626,703                               | (3,977,200)                  | (3,152,429)                  | (2,422,046)                 
|Capital Stock                     | 8,037,985                               | 8,159,887                               | 8,086,803                    | 7,133,578                    | 7,528,053                   
|Weighted Average Number of Shares |                                         |                                         | 8,704,716                    | 7,792,620                    | 5,742,938                   

On December 1 2003 a Canadian dollar (C$1.00) was exchangeable for
US$0.7679 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").

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|Period                         | At Period End                   | Average Rate(1) | High    | Low   
|------------------------------ | ------------------------------- | --------------- | ------- | ------
|                               | (all figures in
    US$ per C$)
|Month ended November 30, 2003  | 0.7698                          | 0.7619          | 0.7723  | 0.7457
|Month ended October 31, 2003   | 0.7579                          | 0.7564          | 0.7667  | 0.7418
|Month ended September 30, 2003 | 0.7404                          | 0.7335          | 0.7424  | 0.7207
|Month ended August 31, 2003    | 0.7220                          | 0.7162          | 0.7227  | 0.7092
|Month ended July 31, 2003      | 0.7105                          | 0.7235          | 0.7481  | 0.7085
|Month ended June 30, 2003      | 0.7376                          | 0.7394          | 0.7492  | 0.7263
|Month ended May 31, 2003       | 0.7293                          | 0.7225          | 0.7437  | 0.7032
|Month ended April 30, 2003     | 0.6975                          | 0.6858          | 0.6975  | 0.6737
|Year ended December 31, 2002   | 0.6329                          | 0.6368          | 0.6546  | 0.6237
|Year ended December 31, 2001   | 0.6279                          | 0.6458          | 0.6671  | 0.6268
|Year ended December 31, 2000   | 0.6669                          | 0.6733          | 0.6948  | 0.6397
|Year ended December 31, 1999   | 0.6925                          | 0.6730          | 0.6859  | 0.6563
|Year ended December 31, 1998   | 0.6504                          | 0.6743          | 0.7075  | 0.6452
|Six Months ended June 30, 2003 | 0.7421                          | 0.6871          | 0.63339 | 0.7499
|                               |                                 |                 |         |       



B. Capitalization and Indebtedness

The following tables set out the capitalization of DRC Resources at September 30, 2003
in accordance with Canadian and US GAAP

|Under Canadian GAAP                                        | At September
    30, 2003
|---------------------------------------------------------- | -------------------------
|                                                           | (all figures in C$)      
|Shareholders' Equity                                       |                          
|Common Shares                                              | 8,037,985                
|Retained earnings (deficit)                                | 2,161,588                
|Total shareholders' equity                                 | 5,876,398                
|Indebtedness (direct, indirect, contingent)
    Note 1     |                          
|Short term debt - unsecured (current accounts
    payable) | 16,144                   
|Long term debt - unsecured (deferred income
    taxes)     | 206,266                  
|Total indebtedness                                         | 222,410                  
|                                                           |                          

|Under US GAAP                                              | At September
    30, 2003
|---------------------------------------------------------- | -------------------------
|                                                           | (all figures in C$)      
|Shareholders' Equity                                       |                          
|Common Shares                                              | 8,037,985                
|Retained earnings (deficit)                                | 5,161,854                
|Total shareholders' equity                                 | 2,876,131                
|Indebtedness (direct, indirect, contingent)
    Note 1     |                          
|Short term debt - unsecured (current accounts
    payable) | 16,144                   
|Long term debt - unsecured (deferred income
    taxes)     | 206,266                  
|Total indebtedness                                         | 222,410                  
|                                                           |                          

Note 1: There has been no other significant change in
    the Company's other indebtedness since September 30, 2003 and there were no accounts
    payable as at December 10, 2003.

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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.

- No
    Ongoing Operations and No Production History DRC Resources has no current mining
    operations and no revenue from 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.
- ExplorationThe 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.
- Additional Funding Requirements

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- 14 -

- Amount of Property Cost is not Evidence of Value
- Competition
- Title
    MattersWhile 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.
- Potential Conflicts of Interest

In the past, President of the Company, 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. In the
    past, no conflict has arisen that has adversely affected the Company's business
    operations.

- Dependence on Key Emplo

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- 15 -

- Environmental Liability
- Requirement for Permits and Licenses

n

- 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.
- 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.
- 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.D 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.
- Management Inexperience

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- 16 -

- Market Risks
- Legal Remedies

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 under the Securities Acts of the
Provinces of British Columbia, Alberta and Ontario. Its Common Shares are listed under
the symbol "DRC" on the Toronto Stock Exchange.

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.

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- 17 -

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.

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 20-21
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.

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- 18 -

In the three years ended December 31, 2002 the Company raised over $7.1
million, of which $4.1 million has been expended in exploration of the Afton Copper-Gold
Project. On November 6, 2003 the Company raised a further $24.15 million. As of November
30, 2003, $25.0 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 have been friendly discussion with several majors in the
industry, there have been no indication of public takeover offers in respect of DRC
Resources' shares.

B. Business Overview

l

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.

l

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
theAfton Copper-Gold Project from exploration state to feasibility
or development stage.

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- 19 -

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

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.

C. Organizational Structure

DRC Resources is an independent resource and mineral exploration
company. It has 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.

D. 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 calculated 25 million
ton Indicated Mineral Resource.

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 containing an economic
evaluation prepared within the definition set out in NI 43-101. The economic evaluation is
based on computer simulation of a 9,125 tonne per day panel (block) caving operation
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.

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- 20 -

l

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 April 7, 2000, subsequently extended from time to time,
between DRC Resources and Afton Operating Corporation, the owner of the surface rights
("the lands"), DRC Resources was given the right to enter upon the lands of the
former operator of the Afton Mine to conduct exploration. The Access Agreement requires
DRC Resources to compensate the owner for damage to disruption or damage to any surface
facilities, to reclaim areas disturbed by DRC Resources' 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 DRC Resources in and about the lands.
Less convenient access is available to DRC Resources over crown owned (government) land.

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). 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 therefor.

l

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.

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- 21 -

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
    ($)
    StatusOn 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
    
    1,000,000Year 6 (2005)
    200,000 Shares
    
    1,000,000Year 7 (2006)
    
    
    500,000Year 8 (2007)
    
    
    500,000Year 9 (2008)
    
    
    500,000TOTALS
    2,000,000 Shares
    
    6,500,000


Note:

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.

l

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.

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- 22 -

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

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.

Since optioning the property in 1999, DRC Resources has drilled 105
diamond core holes comprising a total of 160,000 feet (48,780 m). All except four of these
holes were NQ (5 cm drill core) holes with the remainder being BQ (4 cm drill core). 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. This exploration work was done at an overall cost of $4.4 million.

In June 2003 Behre Dolbear & Company Ltd. was engaged to carry out,
and in November 2003 delivered, an advanced scoping study at a cost of $241,000. 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 $4.7 million.

l

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- 23 -

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 calculations were 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
calculated 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. These calculations were done
for underground exploration program planning purposes using a cut off grade of 0.7% copper
equivalent. The mineral resource calculations take no account of dilution, which for the
selected block cave mining method being considered is expected to be in the range of 10%.

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.

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.

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- 24 -

|Main Zone Measured Resource 
|----------------------------
|Cutoff
    CuEq(%)          
|Cu
    (%)                  
|0.7                         
|Main Zone Indicated Resource
|Cutoff
    CuEq(%)          
|Cu
    (%)                  
|0.7                         



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.

|Main Zone Inferred Resource
|---------------------------
|Cutoff
    CuEq(%)         
|Cu
    (%)                 
|0.7                        

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- 25 -

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
    disclosure of an "economic evaluation" that uses 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
    included in an economic evaluation. The scoping study contains an economic evaluation of a
    mine plan that includes inferred resources. 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 that contained an
economic evaluation 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)
|                        |              |             
|Measured                | 7,494,000    | 1.258       
|                        |              |             
|Indicated               | 29,356,000   | 1.120       
|                        |              |             
|Measured + Indicated    | 36,850,000   | 1.149       
|                        |              |             
|Inferred Resource       | 13,130,000   | 1.134       
|                        |              |             
|Life of Mine Throughput | 49,980,000   | 1.145       

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 and there is no certainty that the preliminary assessment may be
realized.

l

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.

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- 26 -

l





- Technical Reports

Mineral Resource Estimate for the Afton Copper/Gold Project Kamloops, B.C. Behre
    Dolbear & Company Ltd., May, 2003

Petrographic Examination of Rock Samples from the Afton Mine Area,
    B.C.

Harris Exploration Services, December 8, 2000

Flotation Studies, Afton Deposit. Process Research Associates Ltd., February 23,
    2001.

Petrographic Studies of Core Samples from the Southwest Zone, Afton Deposit, Harris
    Exploration Services, December 30, 2001.

Diamond Drill Progress Report on the Afton Mine Property. J.J.
    McDougall, P.Eng., January 24, 2001

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- 28 -

Scoping Study on the Afton Mines Project. Behre Dolbear &
    Company, Ltd. February, 2001

2000 and 2001 Diamond Drill Exploration Report and Mineral Resource Study Afton
    Copper-Gold Project. J.J. McDougall, P.Eng., April 17, 2002

2000, 2001, 2002 Diamond Drill Exploration Report and Mineral Resource Study Afton
    Copper-Gold Project, J.J. McDougall, P. Eng., March 10, 2003

Note 1: The full text of the Behre Dolbear & Company Ltd. Technical
Report and scoping study from which the above data is taken is available for viewing on
SEDAR. In addition, a summary extract may be viewed on the Company's website:
www.drcresources.com, from which there is a direct link to SEDAR.

Ajax-Python Property

l



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

- 29 -

l

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

l

The property contains no known deposits or reserves.

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- 30 -

l

l

Lipsett Lake Prospect

l

l

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l

l

l

l

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- 31 -

l



Item 5 Operating and Financial Review and Prospects

A. Operating results.

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 diamond drilling
totaling 47,721 metres (156,525 feet) on the Afton Project carried out by DRC Resources
since commencement of the periods reported on in this application. This drilling
represents over 100% of the planned

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

- 32 -

diamond drill program. To December 31, 2002 a total of $3,263,974 has
been expended representing 69.45% of the costs budgeted for the total exploration program.
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 to September 30, 2003 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 $4.5 million
that resulted in establishing the mineral resources described under Item 4.D on pages
24-25 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                                      | 2002      | 2001      | 2000     
|----------------------------------------------------------- | --------- | --------- | ---------
|Other Income & Expenses                                     | 114,260   | 255,155   | 176,527  
|General and Administrative Expenses                         | 476,812   | 194,179   | 144,990  
|Write-down of mineral property interests                    | 5,999     | 96,360    | 41,718   
|Net Income (Loss)                                           | 368,551   | (35.385)  | (10,181) 
|Working Capital                                             | 4,001,927 | 4,244,743 | 5,120,622
|Properties                                                  |           |           |          
|- Acquisition Costs                                         | 581,335   | 467,222   | 497,655  
|-Deferred Exploration Expenses                              | 1,377,329 | 1,473,664 | 868,697  
|Other Assets (automobile and equipment)-
    net book value | 41,535    | 14,367    | 15,921   
|Deferred Income Taxes                                       | 113,676   | 296,410   | 216,985  
|Shareholders' equity ($)                                    | 6,333,889 | 5,566,571 | 6,075,855
|Number of Common Shares Outstanding (1)                     | 9,131,766 | 8,283,766 | 6,680,516

|Nine Months ended September 30                                    | 2003                  | 2002                 
|----------------------------------------------------------------- | --------------------- | ---------------------
|Other Income & Expenses                                           | 69,589                | 87,954               
|General and Administrative Expenses                               | 385,763               | 286,118              
|Write-down of mineral property interests                          | -                     | 1,250                
|Net Income (Loss)                                                 | (408,674)             | *85,291)             
|Working Capital                                                   | 3,049,913             | 4.676.915            
|Properties - Acquisition Costs- Deferred
    Exploration Expenses | 470,468
    2,418,931 | 527.334
    1,447,071
|Other Assets (automobile and equipment)-
    net book value       | 32,484                | 39,806               
|Deferred Income Taxes                                             | 206,266               | 183,537              
|Shareholders' equity ($)                                          | 5,876,397             | 6,507,589            
|Number of Common Shares Outstanding1                              | 9,244,766             | 8,399,766            

Note 1: By a private placement November 6, 2003 an
    additional 3,450,000 common shares were issued and 200,000 common shares were issued
    November 10, 2003 as part exercise of the option to purchase the Afton Project property.

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- 33 -

Financial Condition and Changes

Other Income and Expenses over the years 2000, 2001 and 2002
consisted primarily of interest on working capital augmented by a small oil and gas
royalty. The increase in year 2001 other income and expenses was due to a full year's
interest being earned and reported on working capital raised by the $5 million private
placement in year 2000. The decrease in other income and expenses for 2002 over 2001 is
due in part to a reduction of working capital equal 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. Foreign exchange gains of $20,133
and oil and gas royalties of $4,357 added to year 2000 interest earnings of $152,057
resulted in income of $176,527 for the year. Year 2001 foreign exchange gains of $20,231
and oil and gas revenues of $2,123 added to year 2001 interest earnings of $232,801
resulted in income of $290,539 for the year. A foreign exchange loss of $4,159 in year
2002 (due to a rise in value of the Canadian dollar) and oil and gas income of $1,743
resulted in income of $114,260 in year 2002.

An increase in loss (up $25,203) before income taxes for the
year 2001 over the year 2000 was due primarily to increases in the write-off of mineral
claim interests and a $39,405 increase in consulting and management fees. A $333,167
increase in loss before income taxes for the year 2002 over the year 2001 was due
primarily to five factors: (1) a $116,125 drop in interest income due primarily to lower
interest rates earned on working capital; (2) a $35,736 increase in consulting and
management fees coupled with a $42,643 increase in professional fees due to increased
activity on the Afton Project; (3) a $52,000 increase in financing and sponsorship costs
related to a fund raising; (4) a $44,422 increase in regulatory fees in connection with
the Company's listing on the Toronto Stock Exchange; and (5) a $66,621 increase in travel
and promotion costs.

Administrative costs increased from an average $11,150 per
month in year 2000 to $15,262 per month in year 2001 to $39,547 per month in 2002 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 $120,000 for the year
2002 over 2001 by the deemed value of 400,000 Common Shares issued at a deemed $0.30 per
share in partial exercise of the option to acquire the Afton Project property. The Timmins
Ontario Mineral Claims acquired for $31,500 in 1997 and on which $64,860 was expended on
exploration, were written down in the year ended December 31, 2001.

Deferred exploration costs in 2000 and 2001 were, respectively,
$868,687 and $1,473,664. In year 2002 exploration costs were actually $193,692 lower than
in 2001, but the Company's exploration grant recoveries were only $96,335 in 2002 compared
to $412,375 in 2001. The indicated $211,056 reduction for year 2000 and the $376,207
reduction for each of the years 2001 and 2002 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.

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- 34 -

Quarterly Information - Other Income and Expenses for the nine
months ended September 30, 2003 was $69,589 compared to $87,954 for the corresponding
period in 2002. The decrease is due primarily to a decrease in the value US dollar
denominated term deposits as a result of the weakening of the US dollar and to lower rates
of interest income on, and, due to the program work, a reduction in, working capital.
General and administrative expenses were $385,763 for the nine months ended September 30,
2003 compared to $286,118 for the corresponding period in 2002 due to increased activity
on the Afton Project and administrative expenses related to TSX listing and US Form 20F
application. The result was a loss after taxes of $408,674 ($0.04 per share) for the nine
months ended September 30, 2003 compared to a net loss after taxes of $85,291 ($0.01 per
share) for the corresponding period in 2002. Because the president spent much of his time
on the Afton Copper-Gold Project, his charges were apportioned between general and
administrative and deferred exploration costs.

Exploration costs for the first nine months of 2003 were
$983,781 compared to $583,241 in first nine months of 2002. The work done in the first
nine months of the fiscal years of 2003 and 2002 were diamond drilling, engineering
studies and property evaluations for the planning of the respective diamond drill
programs. The work in first nine months of 2003 included data preparation, infill and
exploration diamond drilling for the economic evaluation and related studies commissioned
in February, 2003 .

Inflation did not affect DRC Resources' operating results,
which actually benefited from lower costs due to a sectoral downturn.

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.

B. Liquidity and capital resources

Working Capital at Year-end DRC Resources had
working capital of $4,000,000, $5,800,000 and $5,100,000 and no debt at December 31st
in, respectively, the years 2002, 2001 and 2000. Equity financings of $4,904,120 in 2000
and $1,935,515 in 2002 were the principal sources of working capital.

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 2002 interest income, a small oil and gas royalty and foreign
exchange gains provided for approximately 23.57% of the Company's administrative costs. In
2001 and 2000 interest, royalty income and a foreign exchange gains provided for,
respectively, approximately 87.82% and 94.55% of the Company's administrative costs.

In 2000 DRC Resources' working capital increased significantly due to
funding provided by a $5 million Special Warrants Private Placement Offering, which put
the Company in a position to make a commitment to a large exploration program on its Afton
Copper-Gold Project. In 2002 a $2.1 million private placement of flow-through shares was
added to general working capital.

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- 35 -

Interest income on its working capital combined with a 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 2003. Other than relatively nominal property maintenance costs
on projects other than the Afton Copper-Gold Project, the Company does not have any
commitments for material expenditures in either the near or long term. DRC Resources'
working capital is sufficient to meet all its present requirements as an exploration
company. However, to move to the development stage of its Afton Copper-Gold Project, it
may be necessary for DRC Resources 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. DRC Resources expects that such
capital requirement would have to be met by equity financing through issue of securities
of the Company.

Working Capital at Quarter-end At September 30,
2003 working capital was $3,049,913 compared to $4,676,915 at the end of the corresponding
quarter in 2002. By a November 6, 2003 private placement financing that netted $22.5
million, working capital increased to approximately $25 million at the date of this
registration statement.

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

John Harvey Kruzick, 58, a director since February 26, 1980,
    President and CEO of DRC Resources since incorporation, 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.

Sharon Lynne Ross, 55, 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, 63,a director of DRC Resources since
    July 13, 1992, has been employed as a ship manager by FENCO MacLaren Inc. (an SNC Lavalin
    company) since 1997, prior to which he was project director of Ship Repair Unit Pacific, a
    Canadian federal governmental ship repair unit in Victoria, B.C.

Mike Muzylowski, 68, 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

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- 36 -

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 (TSXV) since July 1987; director of KRL Resources Corp. (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.
    (TSXV) since June 1999; director of Paccom Ventures Inc. (TSXV) since June 1994; director
    since December 1994 and President and CEO since June 1995 of Callinan Mines Limited
    (TSXV); director of Cypress Minerals Corp. (TSXV) since January 1997;. 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.

Thomas O'Toole Taylor, 41,an
    independent director since February 1, 2002, has been employed as a pilot during the past
    five years by 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.

Bruno Johann Mosimann, 59,Vice-President,
    Corporate Development and Finance of DRC Resources since September 2000, has been a
    self-employed investment counselor and portfolio manager, operating since 1985 as Romofin
    AG of Zurich, Switzerland, a private company of which he is the President, majority
    shareholder and general manager. His experience includes 9 years with Dow Banking
    Corporation in various international locations in the areas of business development,
    lending, investment counseling and portfolio management between 1976 and 1985. Mr.
    Mosimann was Vice President of Finance with Westfort Energy Ltd. (TSXV) from September
    2000 to September 2002. He also held a position as Vice President of Finance with Curion
    Ventures Corporation (TSXV) from July 1999 to July 2000.

Maurice Delamore Lee, 70,Vice
    President, Business Development of DRC Resources since February 1, 2002 has been involved
    in corporate finance and business development for 30 years. During his career he has been
    an securities salesman with First Canada Securities (October 1988 to February 1995), a
    securities salesman with CT Securities (March 1995 to March 1997), a salesman with
    Dominick & Dominick Securities Ltd. (April 1997 to April 1999) and a salesman and
    minority shareholder with Thomson Kernaghan & Co. Ltd. (May 1999 to May 2001) until
    retirement.

Craig D. Thomas, 51, 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

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- 37 -

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. (TSXV) since January 24, 2002; director from September 12,
    1996 to the present of Intercontinental Mining Corporation (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. (TSXV) from February 26, 1993 to the present; secretary
    of Terramin Mining Inc. 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.

Ian M. Beardmore, 64,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.

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, 2002 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:

"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;

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

- 38 -

"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 2002 is
set out below:

|Name and
    Principal Position         | Fiscal
    Year | Annual Compensation | Long Term Compensation                      | All otherCompen-
    sation             
|--------------------------------------- | --------------- | ------------------- | ------------------------------------------- | ----------------------------------------
|Awards                                  | Payouts        
|Salary$                                 | Bonus
    $     | Other1$             | Securities Under Options orSARs
    Granted | Restricted Shares or RestrictedUnits ($)
|John H. Kruzick, President &
    CEO    | 2002            | -                   | -                                           | 112,845                                 
|Sharon L. Ross, Corporate
    Secretary | 2002            | -                   | -                                           | 41,405                                  
|                                        |                 |                     |                                             |                                         

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: Director's fees

The Company does not have an LTIP for its executive officers.

No SARs were granted to ending December 31, 2002:

No options were granted during the last completed financial year.
However, at the date of this statement there were outstanding previously granted options
in respect of a total of 847,000 unissued Common Shares, of which 745,000 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.

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.

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- 39 -

2. Service Contracts

The Company has concluded service contracts with two persons who are
directors and/or members of administrative, supervisory or management bodies.

Since founding DRC Resources, John H. Kruzick has provided the
Company's direction and management as a consultant through a private company, Westridge
Enterprises Ltd., controlled by him and paid on a per diem services basis with reimbursed
for out-of-pocket expenses. By Services Agreement made and approved April 23, 2003 by the
Board of Directors, John H. Kruzick's engagement as President and Chief Executive Officer
was formalized on a retainer basis on the following terms and conditions:

- Term: five years commencing April 2003 through March 2007.
- Cash compensation: a base retainer fee $500 per day served during year 2003 (beginning
    in April, 2003) with the base retainer fee to be increased annually as deemed appropriate
    for services performed subject to approval by a majority of the board of directors.
- Director's Fees: as member of the Board of Directors he is to be entitled to any
    approved directors' fees.
- Retainer during Illness: he will be paid the per diem fee on the basis of 20 days per
    month for up to six months from the date when any illness renders him unable to fulfill
    his duties.
- Benefits During Illness: he will receive benefits other than contract fees for up to 2
    years after any illness renders him unable to fulfill his duties.
- Stock Options: he may be granted options to purchase its stock in accordance with DRC
    Resources' Stock Option Plan.
- Expenses: he will be reimbursed all reasonable out-of-pocket expenses incurred by him in
    carrying out his duties.
- Termination: the Board of Directors may terminate Kruzick's employment at any time, with
    or without cause.
- Termination by Company Without Cause: If his services are terminated without cause,
    Kruzick will receive accrued service fees and a lump sum payment equal to the average
    monthly fee paid for the previous year times the number years he has been with the
    Company.
- Termination Without Cause by Kruzick: If Kruzick terminates his employment without cause
    prior to the expiration of the Agreement, he will be paid all accrued, but unpaid fees and
    expenses.
- Termination With Cause by DRC Resources: If Kruzick's employment is terminated by DRC
    Resources for cause, other than moral turpitude or dishonesty on Kruzick's part, prior to
    the expiration of this Agreement, Kruzick shall be paid a lump sum severance payment equal
    to the compensation of one month of service fees for each year of past contract services
    rendered (based on the average monthly fee paid for the previous year), together with any
    accrued, but unpaid expenses
- Reporting: Kruzick is to be a permanent member and chairman of the Executive Committee,
    report to the Board of Directors at regular quarterly Board meetings and at the annual
    general meeting of DRC Resources and otherwise be accountable to the Board of Directors.

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- 40 -

Since May 12, 1981, Sharon L. Ross has provided the Company with
secretarial and office administrative services as a consultant through a private company,
Allshare Holdings Ltd., controlled by her and paid on a per diem services basis with
reimbursed for out-of-pocket expenses. By Services Agreement made and approved April 23,
2003 by the Board of Directors, Sharon L. Ross' engagement as Corporate Secretary to
perform the duties customary to that position was formalized on the following terms and
conditions:

- Term: five years commencing April 2003 through March 2007.
- Cash compensation: a base fee of $35 per hour served during year 2003 (beginning in
    April, 2003) with the base fee to be increased annually as deemed appropriate for services
    performed subject to approval by a majority of the board of directors.
- Director's Fees: as member of the Board of Directors she is to be entitled to any
    approved directors' fees.
- Retainer during Illness: Ross will be paid the per diem fee on the basis of 128 hours
    per month for up to six months from the date when any illness renders her unable to
    fulfill her duties.
- Benefits During Illness: he will receive benefits other than contract fees for up to 2
    years after any illness renders her unable to fulfill her duties.
- Stock Options: he may be granted options to purchase its stock in accordance with DRC
    Resources' Stock Option Plan.
- Expenses: she will be reimbursed all reasonable out-of-pocket expenses incurred by her
    in carrying out her duties.
- Termination: the Board of Directors may terminate Ross' engagement at any time, with or
    without cause.
- Termination by Company Without Cause: If her services are terminated without cause, Ross
    will receive accrued service fees and a lump sum payment equal to the average monthly fee
    paid for the previous year times the number years she has been with the Company.
- Termination Without Cause by Ross: If Ross terminates her engagement without cause prior
    to the expiration of the Agreement, she will be paid all accrued, but unpaid fees and
    expenses.
- Termination With Cause by DRC Resources: If Ross' engagement is terminated by DRC
    Resources for cause, other than moral turpitude or dishonesty on Ross' part, prior to the
    expiration of the Agreement, Ross will be paid a lump sum severance payment equal to the
    compensation of one month of service fees for each year of past contract services rendered
    (based on the average monthly fee paid for the previous year), together with any accrued,
    but unpaid expenses
- Function and Reporting: Ross reports to the President, is to be a member and act as
    secretary of the Executive Committee of the Board of Directors, is to consult with the
    Executive Committee, as required, in respect of extraordinary matters arising in the
    course of day-to-day business and be accountable to the Board of Directors.

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- 41 -

3. 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.

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.

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D. Employees

The Company has no full time employees other than the President and the
Corporate Secretary, both of whom are full-time, part-time (in the case of John Kruzick, 5
days per week, 7 to 9 hours per normal workday and, in the case of Sharon L. Ross 4 days
per week, 7 to 9 hours per normal workday, both as required) under contracts for services.
As required to attend to administrative chores or to perform technical work, 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

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 application. Percentages are based on there being 12,901,766 Common
Shares outstanding at the date of this application. 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
|John Harvey Kruzick, Director,
    President & CEO                           | 2,656,051                           | 20.59%                                 
|Sharon Lynne Ross, Director,
    Corporate Secretary                         | 19,000                              | 0.14%                                  
|Charles Robert Edington, Director                                            | 90,000                              | 0.69%                                  
|Mike Muzylowski, Director                                                    | 35,000                              | 0.27%                                  
|Thomas O'Toole Taylor, Director                                              | 35,000                              | 0.27%                                  
|Craig Dalton Thomas, Director                                                | Nil                                 | Nil                                    
|Bruno Johann Mosimann, Vice
    President, Corporate Development and Finance | Nil                                 | Nil                                    
|Maurice Lee, Vice President
    Business Development                         | 81,969                              | 0.64%                                  
|Julia Young, Corporate Financial
    Strategist                              | Nil                                 | Nil                                    
|Ian Mackenzie Beardmore, Chief
    Financial Officer                         | Nil                                 | Nil                                    

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- 43 -

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 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 1,847,000 common shares, equal to 14.54% of the
Company's issued and outstanding common shares as at November 30, 2003.

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 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:

1. 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;
2. options may be exercisable for a maximum of five years from the date of grant;
3. 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;
4. 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;
5. options held by option holders who are terminated for cause will expire on date of
    termination; and
6. 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.

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- 44 -

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.

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 share without
    par value. At September 30, 2003 the Company had outstanding 9,244,766 common shares
    without par value, each share carrying the right to one vote. A further 3,450,000 common
    shares were issued pursuant to a private placement on November 6, 2003, 7,000 common
    shares were issued on exercise of employee options and 200,000 common shares were issued
    as part exercise of the option to purchase the Afton Project mineral claims, bringing the
    total issued and outstanding capital to 12,901,766. There are no disproportionate or
    weighted voting privileges attaching to any shares of the Company.

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- 45 -

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            | 2,656,051                   | 20.59%    
|Indo-Gold Development Ltd.2 | 766,300                     | 5.94%     
|                            |                             |           

Note 1: Owned through Westridge Enterprises Ltd., a
    non-reporting company controlled by Mr. Kruzick. Mr. Kruzick's holdings have increased by
    536,400 shares over his holdings in 2000, when they represented 31.64% of the issued
    shares of the Company

Note 2: A non-reporting company controlled by John Ball, one of the
    optionors of the Afton Copper-Gold Project property.

Note 3: Individuals owning or have significant influence in this
    corporation are not known to the Company.

2. At September 23, 2003 there were a total of 109 registered
    shareholders and 431 non-registered shareholders of DRC Resources. Of a total 109
    shareholders of record, 51 were Canadian holders of an aggregate 8,437,108 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 three 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 800,000 common shares of the
Company, as to 500,000 in year 2000 and 100,000 in each of the years 2001, 2002 and 2003
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.

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, 2003.

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

- 46 -

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

1. Consolidated Statements and Other Financial Information
2. Significant Changes

Apart from the above-described issue of 200,000 common shares on
November 7, 2003 as an installment payment on acquisition of the Afton Copper-Gold Project
property and the issue on November 6, 2003 of 3,450,000 common shares for $7.00 per share
described above, there have been no significant changes since the date of the 2002 audited
financial statements, nor since the unaudited statements as at September 30, 2003.

Item 9. The Offer and Listing

1. Offer and listing details

The Company's common shares are traded under the symbol "DRC"
on the Toronto Stock Exchange, where DRC Resources has been listed since December 31,
2002. The Company was originally listed on the Vancouver Stock Exchange in 1980 and on its
successors, the Canadian Venture Exchange and TSX Venture Exchange until listed on the
Toronto Stock Exchange.

The following is the price history of the Company's stock on the above
exchanges:

4. (a) for the five most recent full financial years

|Last
    Five Full Fiscal Years    | High
    ($) | Low
    ($)
|---------------------------------- | ------------ | -----------
|January 1 to
    December 31, 1998 | 0.80         | 0.19       
|January 1 to
    December 31, 1999 | 1.75         | 0.17       
|January 1 to
    December 31, 2000 | 14.40        | 2.70       
|January 1 to
    December 31, 2001 | 5.00         | 2.95       
|January 1 to December 31,
    2002 | 4.80         | 2.30       

4. (b) for each financial quarter of the two most recent full financial
years

|Year
    2001 Fiscal Quarters | High
    ($) | Low ($) |  | Year
    2002 Fiscal Quarters | High
    ($) | Low ($)
|----------------------------- | ------------ | ------- |  | ----------------------------- | ------------ | -------
|January 1 to March 31         | 5.00         | 4.00    |  | January 1 to March 31         | 4.80         | 2.90   
|April 1 to June 30            | 4.30         | 2.95    |  | April 1 to June 30            | 4.29         | 2.60   
|July 1 to September 30        | 4.58         | 3.00    |  | July 1 to September 30        | 4.15         | 2.30   
|October 1 to December 31      | 4.00         | 2.90    |  | October 1 to December 31      | 4.40         | 2.94   

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- 47 -

4. (c) for each month for the most recent six months

|Most
    Recent Six Months                  | High
    ($) | Low
    ($)
|------------------------------------------- | ------------ | -----------
|June, 2003                                  | 6.50         | 5.15       
|July, 2003                                  | 6.10         | 5.85       
|August, 2003                                | 7.10         | 5.70       
|September, 2003                             | 7.80         | 6.70       
|October, 2003                               | 8.10         | 6.65       
|November, 2003                              | 9.50         | 7.65       
|to date of application in
    December 2003 | 8.75         | 7.75       

1. The Company's common shares are not listed on any United States stock exchange. However,
    DRC Resources plans to make application for such listing on such United States exchange or
    other public stock quotational facility as the Company's financial counsel may advise.

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 of12,901,766 Common Shares are issued and outstanding at the
    date of this application. The following share transactions took place in year 2002:

Transaction Number of Shares

Issued at beginning of year 8,283,766

Private placement of flow-through 700,000

Repurchase for cancellation 252,000

Issued for Afton Project property 400,000

Issued at December 31, 2002 9,131,766

2. Since 1999 the Company has issued a total of 1,600,000 common
    shares (representing 12.41% of all issued shares) as partial exercise of its option to
    purchase the Afton Project property. In addition to a work commitment, a further 400,000
    common shares are issuable to complete exercise of that option.

3. A total of $726,083 was expended by the Company in repurchasing
    252,000 common shares, all of which have been cancelled and returned to treasury.

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- 48 -

During the first, second, third and fourth (to date of this
    registrations) quarters of 2003, the following share transactions took place:

Transaction Number of Shares

Issued at beginning of 2003 9,131,766

Exercise of broker warrants 5,000

Issued at March 31, 2003 9,136,766

Exercise of broker warrants 65,000

Exercise of options 25,000

Issued at June 30, 2003 9,226,766

Exercise of options 18,000

Issued at September 30, 2003 9,244,766

Private Placement 3,450,000

Afton Project property payment 200,000

Exercise of options 7,000

Issued at date of this registration statement 12,901,766

4. On November 6, 2003 the Company issued to a syndicate of
    underwriters 345,000 compensation options in connection with the private placement of
    3,450,000 common shares. All compensation options are exercisable at a price of $7.50 per
    common shares on or before November 6, 2005.

5. On July 24, 2002 the Company issued 70,000 broker warrants in
    connection with the private placement of 700,000 flow-through shares. All such broker
    warrants were exercised during the first and second quarters of the current fiscal year to
    purchase that number of common shares at a price of $3.00 per share.

6. In addition to the 770,000 share purchase options granted to the
    named directors and members of DRC Resources' administrative, supervisory and management
    bodies as described in Item 6.E. above, options to purchase 120,000 common shares at $3.00
    per share have been granted employees and consultants of DRC Resources under the Company's
    informal practice of granting employees incentive options. That practice has now been
    replaced by the formal stock option plan described in Item 6.E. above.

7. 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. The following table sets
    forth the events history of share capital since January 1, 2000.

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- 49 -

|Date      | Event                                                 | Price per Security | Number
    of Shares Issued (Cancelled) | Consideration
    received by the Company | Discounts,
    Special Terms, Installments Payments, Etc.
|--------- | ----------------------------------------------------- | ------------------ | --------------------------------------- | ----------------------------------------- | ---------------------------------------------------------
|Cash      | Other                                                
|8-Feb-00  | Options exercised                                     | 0.20               | 30,000                                  | 6,000                                     |                                                          
|2000      | Property Option Payment                               | 0.301              | 1,000,000                               | -                                         | Property                                                 
|13-Apr-00 | Options exercised                                     | 0.20               | 33,000                                  | 6,600                                     |                                                          
|13-Apr-00 | Warrants exercised                                    | 0.25               | 1,000,000                               | 250,000                                   |                                                          
|10-Jul-00 | Options exercised                                     | 0.20               | 50,000                                  | 10,000                                    |                                                          
|10-Jul-00 | Options exercised                                     | 0.30               | 74,000                                  | 22,200                                    |                                                          
|13-Aug-00 | Private Placement                                     | 4.00               | 1,350,000                               | 4,904,120                                 |                                                          
|12-Sep-00 | Options exercised                                     | 0.20               | 25,000                                  | 5,000                                     |                                                          
|2001      | Property Option Payment                               | 0.30               | 200,000                                 | -                                         | Property                                                 
|19-Apr-01 | Options exercised                                     | 0.20               | 160,000                                 | 32,000                                    |                                                          
|4-Sep-01  | Options exercised                                     | 0.30               | 51,000                                  | 15,300                                    |                                                          
|2002      | Property Option Payment                               | 0.301              | 200,000                                 | -                                         | Property                                                 
|24-Jul-02 | Private Placement                                     | 3.00               | 700,000                                 | 1,932,000                                 |                                                          
|31-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                                    |                                                          
|9-May-03  | Options exercised                                     | 3.00               | 25,000                                  | 75,000                                    |                                                          
|21-May-03 | Broker Warrants exercised                             | 3.00               | 65,000                                  | 195,000                                   |                                                          
|8-Aug-03  | Options exercised                                     | 3.00               | 2,000                                   | 6,000                                     |                                                          
|13-Aug-03 | Options exercised                                     | 3.00               | 6,000                                   | 18,000                                    |                                                          
|8-Sept-03 | Options exercised                                     | 3.00               | 10,000                                  | 30,000                                    |                                                          
|6-Nov-03  | Private Placement                                     | 7.00               | 3,450,000                               | 22,500,241                                |                                                          
|7-Nov-03  | Property Option Payment                               | 0.30               | 200,000                                 | -                                         | Property                                                 
|27-Nov-03 | Options exercised                                     | 3.00               | 7,000                                   | 21,000                                    |                                                          

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.



7. 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.

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.

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- 50 -

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.

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- 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 Actrequires
    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. Agency agreement by letter dated November 6, 2003 between DRC Resources and Orion
    Securites 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.
2. Services agreement with John H. Kruzick, formalizing his engagement as President &
    Chief Executive Officer for a term of five years from April 23, 2003 at a base retainer
    fee of $500 per day 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)
3. Services agreement with Sharon L. Ross, formalizing her engagement as Corporate
    Secretary for a term of five years from April 23, 2003 at a base fee equal to $35.00 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)
4. Mine engineering services contract with Behre Dolbear & Company Ltd. dated February
    18, 2003 under which that consulting firm provides independent engineering advice,
    currently with respect to the pre-feasibility study (economic evaluation) of the Afton
    Copper-Gold Project.
5. Agency agreement by letter dated June 12, 2002 between DRC Resources and Dundee
    Securities Corporation relating to a best efforts agency offering of up to 1,500,000 units
    or Flow-Through Common Shares (to a maximum of 700,000) at $3.00 per unit or Flow-Through
    Common Share. Each unit consisted of 1 Common Share and 1/2 Warrant, a whole Warrant being
    exercisable at $3.75 per Common Share. The agent placed 700,000 flow-through shares at
    $3.00 per share. The Company paid the agent a total of $168,000 in cash commission and as
    reimbursement of legal fees and disbursements incurred by the agent. In addition to cash
    commission, the agent received 70,000 broker warrants exercisable to purchase that number
    of Common Shares at $3.00 per share, all of which have been exercised. The agent has the
    right until July 24, 2004 to lead any public or private offering of securities of the
    Company.

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.

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.

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

- 53 -

G. Statement by experts

Reference is made in this application 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 application. Mr.
    McDougall's consent to the use of his report is included in this application 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 application. 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 application 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 application, 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

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

- 54 -

Item 12. Description of Securities Other than Equity Securities

A. Debt Securities (Not applicable)

B. Warrants and Rights

In connection with a private placement of flow-through shares in 2002,
as part of the compensation payable under a best efforts agency agreement, the Company
issued 70,000 brokers warrants to its agent, Dundee Securities Corporation, who has the
right thereunder exercisable until close of business on July 24, 2003 to purchase that
number of common shares at a price of $3.00 per share. 5,000 of the said brokers warrants
were exercised on March 17, 2003 and the remaining 65,000 were exercised on May 21, 2003.

C. Other Securities

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.

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 application audited comparative
financial statements for the years ended December 31, 2000, 2001 and 2002, and unaudited
interim financial statements for the quarters ended March 31, 2003 and 2002,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 15 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, Beauchamp &
Company

Exhibit 2: Certificate of Incorporation

Exhibit 3: Memorandum and Articles

Exhibit 4: Opinion of Donald W.J. Specht, counsel, as to existence of
the Company and validity of shares authorized and issued

Exhibit 5: Services agreement dated April 23, 2003 between the Company
and John H. Kruzick, President & Chief Executive Officer

Exhibit 6: Services agreement dated April 23, 2003 between the Company
and Sharon L. Ross, Corporate Secretary

Exhibit 7: Stock Option Plan

Exhibit 8: Option to Purchase Agreement dated November 10, 1999
acquisition among the Company, as optionee, and Westridge Enterprises Ltd. and Indo-Gold
Developments Ltd., as optionors, with respect to the Afton Copper-Gold Project property





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

/s/ John H.
        Kruzick

John H. Kruzick, President & CEO

Date: December 11, 2003































DRC RESOURCES CORPORATION

(An Exploration Stage Company)

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2002, 2001 AND 2000

AND

INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2003 AND 2002



























AUDITORS' REPORT



To the Shareholders of 
DRC Resources Corporation

We have audited the consolidated balance sheets of DRC Resources
Corporation as at December 31, 2002 and 2001 and the consolidated statements of operations
and deficit and cash flows for each of the years in the three-year period ended December
31, 2002. These consolidated financial statements are the responsibility of the Company= s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly,
in all material respects, the financial position of the Company as at December 31, 2002
and 2001 and the result of its operations and its cash flows for each of the years in the
three-year period ended December 31, 2002 in accordance with Canadian generally accepted
accounting principles. As required by the Company Act (British Columbia), we report that,
in our opinion, these principles have been applied on a consistent basis.

Canadian generally accepted accounting principles vary in certain
significant respects from United States generally accepted accounting principles and
practices. Application of United States generally accepted accounting principles and
practices would have affected the results of operations for the year ended December 31,
2002 and the assets and shareholders=
equity as at December 31, 2002 to the extent summarized in note 17 to the financial
statements.





|Vancouver, B.C.   | *"Beauchamp &
    Company"*
|----------------- | ---------------------------
|February 17, 2003 | Chartered Accountants      



COMMENTS BY AUDITORS FOR U.S. READERS
ON CANADA-U.S. REPORTING CONFLICT



In the United States, reporting standards for auditors requires the
addition of an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by significant uncertainties and contingencies such as those
referred to in note 1 to these financial statements. Our report to the shareholders dated
February 17, 2003 is expressed in accordance with Canadian reporting standards which do
not permit a reference to such matters in the auditors= report when the uncertainties are
adequately disclosed in the financial statements.





|Vancouver, B.C.   | *"Beauchamp & Company"*
|----------------- | -----------------------
|February 17, 2003 | Chartered Accountants  











To the Directors of
DRC Resources Corporation

We have reviewed the interim consolidated balance sheet of DRC
Resources Corporation as at September 30, 2003 and the interim consolidated statements of
operations and deficit and cash flows for the nine months ended September 30, 2003 and
2002, and schedule of mineral claim interests for the nine months ended September 30,
2003. Our review was made in accordance with Canadian generally accepted standards for
review engagements and accordingly consisted primarily of enquiry, analytical procedures
and discussion related to information supplied to us by the Company.

A review does not constitute an audit and consequently we do not
express an audit opinion on these financial statements.

Based on our review, nothing has come to our attention that causes us
to believe that these financial statements are not, in all material respects, in
accordance with Canadian generally accepted accounting principles.





|Vancouver, B.C.   | *"Beauchamp & Company"*
|----------------- | -----------------------
|February 17, 2003 | Chartered Accountants  









DRC RESOURCES CORPORATION
(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2003, DECEMBER 31, 2002 AND 2001





|                                                  |   | Sept. 30,2003(Unaudited) |   | Dec. 31,2002(Audited) |   | Dec. 31,2001(Audited)
|------------------------------------------------- | - | ------------------------ | - | --------------------- | - | ---------------------
|ASSETS                                           
|                                                  |   |                          |   |                       |   |                      
|CURRENT
    ASSETS                                |   |                          |   |                       |   |                      
|Cash
    and cash equivalents                     | $ | 2,245,716                | $ | 2,254,144             | $ | 2,756,078            
|Restricted
    cash (Note 3)                      |   | 639,146                  |   | 1,618,000             |   | 1,060,042            
|Marketable
    security                           |   | 1,500                    |   | 1,500                 |   | 3,750                
|Amounts
    receivable - government               |   | 154,903                  |   | 173,452               |   | 447,799              
|Prepaid expenses                                  |   | 4,792                    |   | -                     |   | 13,276               
|                                                  |   | 3,066,057                |   | 4,047,096             |   | 4,280,945            
|                                                  |   |                          |   |                       |   |                      
|MINERAL CLAIM INTERESTS - SCHEDULE(Notes 2 and 4) |   | 2,889,399                |   | 2,293,327             |   | 1,493,004            
|INVESTMENT PROPERTY(Note
    5)                   |   | 110,867                  |   | 110,867               |   | 110,867              
|CAPITAL
    ASSETS(Notes 2 and 6)                 |   | 32,484                   |   | 41,535                |   | 14,367               
|                                                  | $ | 6,098,807                | $ | 6,492,825             | $ | 5,899,183            
|LIABILITIES                                      
|                                                  |   |                          |   |                       |   |                      
|CURRENT LIABILITIES                               |   |                          |   |                       |   |                      
|Account payable and accruals                      | $ | 16,144                   | $ | 45,169                | $ | 36,202               
|                                                  |   |                          |   |                       |   |                      
|FUTURE
    INCOME TAXES(Note 7(c))                |   | 206,266                  |   | 113,767               |   | 296,410              
|SHAREHOLDERS' EQUITY                             
|                                                  |   |                          |   |                       |   |                      
|SHARE CAPITAL(Note 8)                             |   | 8,037,985                |   | 8,086,803             |   | 7,133,578            
|                                                  |   |                          |   |                       |   |                      
|DEFICIT                                           |   | (2,161,588)              |   | (1,752,914)           |   | (1,567,007)          
|                                                  |   | 5,876,397                |   | 6,333,889             |   | 5,566,571            
|                                                  | $ | 6,098,807                | $ | 6,492,825             | $ | 5,899,183            

COMMITMENTS (Note 13)

|APPROVED BY THE BOARD: |  |         
|---------------------- |  | --------
|/s/ John H. Kruzick    |  | Director
|                       |  |         
|/s/ Sharon L. Ross     |  | Director





DRC RESOURCES CORPORATION
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

|                                                |   | Nine
    Months Ended Sept. 30, 2003 |   | Nine
    Months EndedSept. 30, 2002 |   | Year EndedDec. 31, 2002 |   | Year EndedDec. 31, 2001 |   | Year EndedDec. 31, 2000
|----------------------------------------------- | - | ------------------------------------ | - | ----------------------------------- | - | ----------------------- | - | ----------------------- | - | -----------------------
|                                                |   | (Unaudited)                          |   | (Unaudited)                         |   | (Audited)               |   | (Audited)               |   | (Audited)              
|INCOME                                          |   |                                      |   |                                     |   |                         |   |                         |   |                        
|Interest and
    other income                   | $ | 68,413                               | $ | 86,747                              | $ | $116,676                | $ | 232,801                 | $ | 152,057                
|Oil and gas
    royalties                       |   | 1,176                                |   | 1,207                               |   | 1,743                   |   | 2,123                   |   | 4,357                  
|Foreign
    exchange gain (loss)                |   | (61,455)                             |   | (3,899)                             |   | (4,159)                 |   | 20,231                  |   | 20,113                 
|                                                |   | 8,134                                |   | 84,055                              |   | 114,260                 |   | 255,155                 |   | 176,527                
|                                                |   |                                      |   |                                     |   |                         |   |                         |   |                        
|EXPENSES                                        |   |                                      |   |                                     |   |                         |   |                         |   |                        
|Bank charges                                    |   | 553                                  |   | 293                                 |   | 437                     |   | 306                     |   | 349                    
|Consulting and management                       |   | 83,100                               |   | 63,356                              |   | 85,641                  |   | 49,905                  |   | 10,500                 
|Amortization                                    |   | 9,051                                |   | 8,213                               |   | 12,068                  |   | 11,032                  |   | 11,200                 
|Dues and subscriptions                          |   | 936                                  |   | 11,773                              |   | 11,920                  |   | 3,584                   |   | 3,991                  
|Financing and sponsorship                       |   | -                                    |   | 12,000                              |   | 52,000                  |   | -                       |   | -                      
|Mortgage interest                               |   | -                                    |   | -                                   |   | -                       |   | -                       |   | (967)                  
|Office, secretarial services
    and stationary |   | 80,648                               |   | 67,382                              |   | 81,469                  |   | 54,828                  |   | 46,830                 
|Professional fees                               |   | 44,634                               |   | 30,485                              |   | 57,644                  |   | 15,001                  |   | 14,852                 
|Regulatory and filing fees                      |   | 36,260                               |   | 14,645                              |   | 52,855                  |   | 8,433                   |   | 17,545                 
|Rent                                            |   | 16,965                               |   | 14,702                              |   | 19,861                  |   | 18,119                  |   | 17,043                 
|Telephone                                       |   | 2,977                                |   | 3,193                               |   | 4,826                   |   | 4,038                   |   | 4,757                  
|Transfer agent                                  |   | 6,731                                |   | 6,291                               |   | 7,379                   |   | 5,092                   |   | 5,095                  
|Travel and promotion                            |   | 42,452                               |   | 47,636                              |   | 88,462                  |   | 21,841                  |   | 13,795                 
|Write-off of mineral claim
    interests        |   | 1                                    |   | -                                   |   | 5,999                   |   | 96,360                  |   | 41,718                 
|Write-down of marketable
    security           |   | -                                    |   | 2,250                               |   | 2,250                   |   | 2,000                   |   | -                      
|                                                |   | 324,308                              |   | 282,219                             |   | 482,811                 |   | 290,539                 |   | 186,708                
|                                                |   |                                      |   |                                     |   |                         |   |                         |   |                        
|LOSS FOR THE PERIOD BEFORE INCOME TAXES         |   | (316,174)                            |   | (198,164)                           |   | (368,551)               |   | (35,384)                |   | (10,181)               
|                                                |   |                                      |   |                                     |   |                         |   |                         |   |                        
|FUTURE
    INCOME TAXES(Note 7)                 |   | (92,500)                             |   | 112,873                             |   | 182,644                 |   | (79,425)                |   | (216,985)              
|LOSS FOR THE PERIOD                             |   | (408,674)                            |   | (85,291)                            |   | (185,907)               |   | (114,809)               |   | (227,166)              
|                                                |   |                                      |   |                                     |   |                         |   |                         |   |                        
|DEFICIT, BEGINNING OF PERIOD                    |   | (1,752,914)                          |   | (1,567,007)                         |   | (1,567,007)             |   | (1,452,198)             |   | (1,225,032)            
|DEFICIT, END OF PERIOD                          |   | (2,161,588)                          |   | (1,652,298)                         |   | (1,7542,914)            |   | (1,567,007)             |   | (1,452,198)            
|                                                |   |                                      |   |                                     |   |                         |   |                         |   |                        
|LOSS
    PER SHARE                              | $ | (0.04)                               | $ | (0.01)                              | $ | (0.02)                  | $ | (0.02)                  | $ | (0.04)                 
|                                                |   |                                      |   |                                     |   |                         |   |                         |   |                        

See accompanying Notes





DRC RESOURCES CORPORATION
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002

|                                                   |   | Nine
    Months EndedSept. 30, 2003 |   | Nine
    Months EndedSept. 30, 2002 |   | Year EndedDec. 31, 2002 |   | Year EndedDec. 31, 2001 |   | Year EndedDec. 31, 2000
|-------------------------------------------------- | - | ----------------------------------- | - | ----------------------------------- | - | ----------------------- | - | ----------------------- | - | -----------------------
|                                                   |   | (Unaudited)                         |   | (Unaudited)                         |   | (Audited)               |   | (Audited)               |   | (Audited)              
|CASH PROVIDED BY (USED FOR):                       |   |                                     |   |                                     |   |                         |   |                         |   |                        
|                                                   |   |                                     |   |                                     |   |                         |   |                         |   |                        
|OPERATING ACTIVITIES                               |   |                                     |   |                                     |   |                         |   |                         |   |                        
|Loss for the period                                | $ | (408,674)                           | $ | (85,291)                            | $ | (185,907)               | $ | (114,809)               | $ | (227,166)              
|Items not requiring cash:                          |   |                                     |   |                                     |   |                         |   |                         |   |                        
|Amortization                                       |   | 9,050                               |   | 8,213                               |   | 12,068                  |   | 11,032                  |   | 11,200                 
|Write-off
    of mineral claim interests           |   | 1                                   |   | -                                   |   | 5,999                   |   | 96,360                  |   | 41,718                 
|Write-down
    of marketable security              |   | -                                   |   | 2,250                               |   | 2,250                   |   | 2,000                   |   | -                      
|Future
    income taxes                            |   | 92,500                              |   | (112,873)                           |   | (182,644)               |   | 79,425                  |   | 216,985                
|                                                   |   | (307,123)                           |   | (187,701)                           |   | (348,234)               |   | 74,008                  |   | 42,737                 
|Net change in non-cash
    working capital items   |   | (39,201)                            |   | 405,957                             |   | 407,102                 |   | (121,647)               |   | (41,212)               
|Cash (Used For) Provided By Operating Activities   |   | (346,324)                           |   | 218,256                             |   | 58,868                  |   | (47,639)                |   | 1,525                  
|                                                   |   |                                     |   |                                     |   |                         |   |                         |   |                        
|INVESTING ACTIVITIES                               |   |                                     |   |                                     |   |                         |   |                         |   |                        
|Payments for mineral claim
    interests           |   | (979,958)                           |   | (576,962)                           |   | (1,173,040)             |   | (1,209,278)             |   | (727,420)              
|Acquisition of capital
    assets                  |   | -                                   |   | (33,652)                            |   | (39,236)                |   | (8,477)                 |   | (12,630)               
|Cash
    Used For Investing Activities             |   | (979,958)                           |   | (610,614)                           |   | (1,212,276)             |   | (1,217,755)             |   | (740,050)              
|                                                   |   |                                     |   |                                     |   |                         |   |                         |   |                        
|FINANCING ACTIVITIES                               |   |                                     |   |                                     |   |                         |   |                         |   |                        
|Special warrants issued for
    cash, net of costs |   | -                                   |   | -                                   |   | -                       |   | (45,575)                |   | 4,904,120              
|Share capital issued for
    cash                  |   | 339,000                             |   | 1,917,558                           |   | 1,209,432               |   | 47,300                  |   | 249,800                
|Share capital repurchased
    for cash             |   | -                                   |   | (720,168)                           |   | -                       |   | -                       |   | -                      
|Repayment of mortgage                              |   | -                                   |   | -                                   |   | -                       |   | -                       |   | (8,596)                
|Cash Provided By (Used For) Financing Activities   |   | 339,000                             |   | 1,197,390                           |   | 1,209,432               |   | 1,725                   |   | 5,145,324              
|                                                   |   |                                     |   |                                     |   |                         |   |                         |   |                        
|INCREASE (DECREASE) IN CASH                        |   | (987,282)                           |   | 805,032                             |   | 56,024                  |   | (1,263,669)             |   | 4,406,799              
|                                                   |   |                                     |   |                                     |   |                         |   |                         |   |                        
|CASH, BEGINNING OF PERIOD                          |   | 3,872,144                           |   | 3,816,120                           |   | 3,816,120               |   | 5,079,789               |   | 672,990                
|CASH, END OF PERIOD                                | $ | 2,884,862                           | $ | 4,621,152                           | $ | 3,872,144               | $ | 3,816,120               | $ | 5,079,789              
|                                                   |   |                                     |   |                                     |   |                         |   |                         |   |                        
|CASH COMPRISES:                                    |   |                                     |   |                                     |   |                         |   |                         |   |                        
|Cash                                               |   | 16,152                              |   | 68,828                              |   | 65,781                  |   | 4,375                   |   | (30,956)               
|Short
    term investments                         |   | 2,868,710                           |   | 4,552,324                           |   | 3,806,363               |   | 3,811,745               |   | 5,110,745              
|                                                   |   | 2,884,862                           |   | 4,621,152                           |   | 3,872,144               |   | 3,816,120               |   | 5,079,789              

See accompanying Notes





DRC RESOURCES CORPORATION
(An Exploration Stage Company)

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

AND THE NINE MONTHS ENDED SEPTEMBER 30, 2003

Common StockShares
    
    Amount
    
    Special
    Warrants
    
    Deficit
    
    Total
    Shareholders EquityBalance as at December 31, 1999 (Audited)
    4,456,016
    $
    2,285,189
    $
    -
    $
    (1,225,032)
    $
    1,060,157Issued by
    private placementSpecial
    warrants
    -
    
    -
    
    5,400,000
    
    -
    
    5,400,000Issued for cashExercise
    of stock options
    212,000
    
    49,800
    
    -
    
    -
    
    49,800Exercise
    of warrants
    1,000,000
    
    200,000
    
    -
    
    -
    
    200,000Conversion
    of special warrants
    12,500
    
    45,408
    
    (45,408)
    
    -
    
    -Share issue
    costs
    -
    
    -
    
    (495,880)
    
    -
    
    (495,880)Tax effect on
    flow-through special warrants
    -
    
    (211,056)
    
    -
    
    -
    
    (211,056)For mineral
    claim interests
    1,000,000
    
    300,000
    
    -
    
    -
    
    300,000Loss for the year
    -
    
    -
    
    -
    
    (227,166)
    
    (227,166)Balance as at December 31, 2000 (Audited)
    6,680,516
    
    2,669,341
    
    4,858,712
    
    (1,452,198)
    
    6,075,855Issued for cashExercise
    of options
    211,000
    
    47,300
    
    -
    
    -
    
    47,300Conversion
    of special warrants
    1,392,250
    
    4,813,137
    
    (4,813,137)
    
    -
    
    -Share issue
    costs
    -
    
    -
    
    (45,575)
    
    -
    
    (45,575)Tax effect on
    flow-through special warrants
    -
    
    (396,200)
    
    -
    
    -
    
    (396,200)Loss for the year
    -
    
    -
    
    -
    
    (114,809)
    
    (114,809)Balance as at December 31, 2001 (Audited)
    8,283,766
    
    7,133,578
    
    -
    
    (1,567,007)
    
    5,566,571Issued by
    private placement for cash
    700,000
    
    2,100,000
    
    -
    
    -
    
    2,100,000Repurchase for
    cancellation
    (252,000)
    
    (726,083)
    
    -
    
    -
    
    (726,083)Share issue
    costs
    -
    
    (164,485)
    
    -
    
    -
    
    (164,485)Tax effect on
    flow-through special warrants
    -
    
    (376,207)
    
    -
    
    -
    
    (376,207)For mineral
    claim interests
    400,000
    
    120,000
    
    -
    
    -
    
    120,000Loss for the year
    -
    
    -
    
    -
    
    (185,907)
    
    (185,907)Balance as at December 31, 2002 (Audited)
    9,131,766
    
    8,086,803
    
    -
    
    (1,752,914)
    
    6,333,889Issued for cashExercise of
    stock options
    43,000
    
    129,000
    
    -
    
    -
    
    129,000Broker warrants
    70,000
    
    210,000
    
    -
    
    -
    
    210,000Tax effect on
    flow-through special warrants
    -
    
    (387,818)
    
    -
    
    -
    
    (387,818)Loss for the period
    -
    
    -
    
    -
    
    (408,674)
    
    (408,674)Balance as at September 30, 2003 (Unaudited)$
    9,244,766
    $
    8,037,985
    $
    (2,161,588)
    $
    5,876,397


See accompanying Notes





DRC RESOURCES CORPORATION
(An Exploration Stage Company)

SCHEDULE OF MINERAL CLAIM INTERESTS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

AND THE NINE MONTHS ENDED SEPTEMBER 30, 2003



|                                  |   |                       |   |                         |   | Nine
    Months EndedSept. 30, 2003 |   | Year Ended Dec. 31, 2002 |   | Year Ended Dec. 31, 2001
|--------------------------------- | - | --------------------- | - | ----------------------- | - | ----------------------------------- | - | ------------------------ | - | ------------------------
|                                  |   |                       |   |                         |   | (Unaudited)                         |   | (Unaudited)              |   | (Unaudited)             
|Acquisition
    Costs             |   |                       |   |                         |   |                                     |   |                          |   |                         
|Kamloops "Afton" Claims           |   |                       |   |                         | $ | 421,734                             | $ | 421,734                  | $ | 301,733                 
|Kamloops Ajax -Python Claims      |   |                       |   |                         |   | 48,732                              |   | 48,732                   |   | 48,621                  
|Alberta Mineral Permits           |   |                       |   |                         |   | -                                   |   | 1                        |   | 6,000                   
|Timmins, Ontario Claims           |   |                       |   |                         |   | 1                                   |   | 1                        |   | 1                       
|**Balance, End of Period**        |   |                       |   |                         |   | 470,467                             |   | 470,468                  |   | 356,355                 
|                                  |   |                       |   |                         |   |                                     |   |                          |   |                         
|                                  |   | Afton
    
    Claims |   | Ajax-
    Python Claims |   | Nine
    Months EndedSept. 30, 2003 |   | Year Ended Dec. 31, 2002 |   | Year Ended Dec. 31, 2001
|                                  |   |                       |   |                         |   | (Unaudited)                         |   | (Unaudited)              |   | (Unaudited)             
|                                  |   |                       |   |                         |   |                                     |   |                          |   |                         
|Balance, Beginning Of Period      | $ | 1,763,674             | $ | 59,185                  | $ | 1,822,859                           | $ | 1,136,649                | $ | 657,641                 
|                                  |   |                       |   |                         |   |                                     |   |                          |   |                         
|Assays and testing                |   | 31,607                |   | -                       |   | 31,607                              |   | 46,256                   |   | 44,905                  
|Drilling                          |   | 532,555               |   | -                       |   | 532,555                             |   | 738,557                  |   | 809,873                 
|Engineering                       |   | 251,702               |   | -                       |   | 251,702                             |   | 98,170                   |   | 116,996                 
|Geological consulting             |   | 111,575               |   | -                       |   | 111,575                             |   | 163,705                  |   | 268,462                 
|Labour                            |   | 19,472                |   | -                       |   | 19,472                              |   | 39,512                   |   | 36,918                  
|Supplies and equipment            |   | 3,063                 |   | -                       |   | 3,063                               |   | 26,869                   |   | 7,818                   
|Travel and accommodation          |   | 23,555                |   | -                       |   | 23,555                              |   | 38,477                   |   | 52,157                  
|Staking and filing fees           |   | 500                   |   | 111                     |   | 611                                 |   | -                        |   | 11,617                  
|Miscellaneous                     |   | 5,365                 |   | -                       |   | 5,365                               |   | 7,206                    |   | 3,698                   
|Grant recoveries (Note 2(f))      |   | 4,388                 |   | -                       |   | 4,388                               |   |                          |   |                         
|Tax effect of flow through shares |   | (387,820)             |   | -                       |   | (387,820)                           |   | (376,207)                |   | (396,200)               
|                                  |   | 595,962               |   | 111                     |   | 596,073                             |   | 686,210                  |   | 543,869                 
|                                  |   |                       |   |                         |   |                                     |   |                          |   |                         
|Costs
    written-off             |   | -                     |   | -                       |   | (64,861)                            |   | -                        |   | (64,861)                
|                                  |   | 595,962               |   | 111                     |   | 479,008                             |   | 686,210                  |   | 479,008                 
|Balance, End Of Period            | $ | 2,359,636             | $ | 59,296                  | $ | 2,418,932                           | $ | 1,822,859                | $ | 1,136,649               
|                                  |   |                       |   |                         |   |                                     |   |                          |   |                         
|Mineral Claim Interests           |   |                       |   |                         |   | 2,889,399                           |   | 2,293,327                |   | 1,493,004               

See accompanying Notes





DRC RESOURCES CORPORATION
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

1. NATURE OF BUSINESS

The Company is in the process of exploring its mineral claim interests
  to determine whether the properties contain ore reserves that are economically
  recoverable.

The continued operations of the Company and the recoverability of the
  amounts shown as mineral claim interests are dependent upon the existence of recoverable
  reserves, the ability of the Company to obtain financing to complete the developments, and
  upon future profitable production or proceeds from disposition of its mineral claim
  interests.

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

a)       Principals of Consolidation

> These consolidated financial statements include the accounts of the
>       Company and its wholly-owned subsidiary, Dynamic Resources Corporation, Inc. All
>       significant inter-company transactions and balances have been eliminated on consolidation.

b)       Use of Estimates

> The preparation of consolidated financial statements in conformity with
>       Canadian generally accepted accounting principles requires the Company= s management to
>       make estimatesand assumptions that affect the amounts reported in these
>       consolidated financial statements and accompanying notes. Significant areas of estimate
>       relate to mineral claim interests and related deferred exploration costs, future site
>       restoration costs, and future income tax asset valuation allowance. Actual results could
>       differ from those estimates. By their nature, these estimates are subject to measurement
>       uncertainty, and the impact on the consolidated financial statements of future changes in
>       such estimates could be material.

c)       Mineral Claim Interests

The Company capitalizes acquisition and related exploration costs of
      mineral claim interests until such time as the mineral claim interest to which they relate
      is brought into production, or is sold, allowed to lapse or abandoned. The costs will be
      amortized on a unit of production basis following commencement of production or written
      off to operations if the mineral claim interest is abandoned. Mineral option payments are
      recorded when received and are charged against the related mineral claim interest cost.
      General exploration, overhead and administration costs are expensed in the period they are
      incurred.





DRC RESOURCES CORPORATION
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

2. SIGNIFICANT ACCOUNTING POLICIES (CONT' D)

c)      Mineral Claim Interests (Cont'd)

> The Company reviews capitalized costs on its mineral claim interests on
>       a periodic, or annual, basis and will recognize an impairment in value based upon current
>       exploration results and upon management' s assessment of the future probability of
>       profitable revenues from the mineral claim interests or from the sale of the mineral claim
>       interests . Management's assessment of the mineral claim interest = s estimated current
>       fair market value may also be based upon a review of other mineral claim interest
>       transactions that have occurred in the same geographic area as that of the mineral claim
>       interest under review.

d)       Marketable Securities

> The following portfolio investments are recorded at the lower of cost
>       and market value:

Name ofIssuer
    Class of Security
    Quantity
    
    Cost ofSecurities
    
    Market
    Value of Securities quarterSept. 30, 2003
    
    Market Value of
    Securities quarterSept. 30, 2002
    
    Market
    Value of Securities quarter Sept. 30, 2001(Unaudited)
    
    (Unaudited)
    
    (Unaudited)Planet
    Ventures Inc.
    Common
    shares
    25,000
    
    $ 5,750
    
    $ 3,125
    
    $ 1,500
    
    $ 3,750


> e)       Capital Assets
>       Capital assets are stated at cost less accumulated amortization.
>         Amortization is calculated over the estimated useful life of the capital assets.
>       f)        Grant Recoveries
>       Grant recoveries represent British Columbia Mining Exploration Tax
>         Credit claim refunds of 20% of eligible Canadian exploration expenditures. These grants
>         are for qualifying exploration expenditures at a grassroots level for mineral claim
>         interests in the Province of B.C.
>       g)      Foreign Currency Translation
>       The Company's foreign operation is considered fully integrated with the
>         Company and is translated into Canadian dollars using the weighted average rates for the
>         period for items included in the statement of operations and deficit, except for
>         amortization which is translated at historical rates, the rate prevailing at the balance
>         sheet date for monetary assets and liabilities, and historical rates for all other items.
>         Exchange gains or losses on translation are included in the current period's operations.
>       DRC RESOURCES CORPORATION
>       (An Exploration Stage Company)
>       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
>       SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
>     
>   
>   2. SIGNIFICANT ACCOUNTING POLICIES (CONT' D)
>   h)       Income Taxes
>     The Company recognizes and measures, as assets and liabilities, income
>       taxes currently payable or recoverable as well as future taxes which will arise from the
>       realization of assets or settlement of liabilities at their carrying amounts, which differ
>       from their tax bases. Future tax assets and liabilities are measured using substantially
>       enacted or enacted tax rates expected to apply to taxable income in the years in which
>       such temporary differences are expected to be recovered or settled. A valuation allowance
>       is recognized to the extent the recoverability of future income tax assets is not
>       considered more likely than not.
>     i)        Adoption of New
>     Accounting Standards
>     Share capital includes flow-through shares issued pursuant to certain
>       provisions of the Income Tax Act of Canada ("the Act"). The Act provides that,
>       where the share issuance proceeds are used for exploration and development expenditures,
>       the related income tax deductions may be renounced to subscribers. Accordingly, these
>       expenditures provide no tax deduction to the Company.
>       The Company reduces share capital and deferred exploration costs by the
>       estimated amount of the related future tax liability arising when the capital expenditures
>       are incurred.
>     j)       Stock-based Compensation
>     The Company grants stock options to executive officers and directors,
>       employees and consultants. Effective January 1, 2002, the Company adopted the new Canadian
>       Institute of Chartered Accountants accounting standards for stock-based compensation and
>       other stock-based payments. These new standards establish the method for the recognition,
>       measurement and disclosure of stock-based compensation and other stock-based payments.
>       The Company has elected to adopt the intrinsic value method, which
>       recognizes compensation cost for awards to employees only when the market price exceeds
>       the exercise price at the date of the grant, but requires pro-forma disclosure of earnings
>       and earnings per share as if the fair value method had been adopted. Any consideration
>       paid by the option holders to purchase shares is credited to share capital.
>       Had the Company followed the fair value method of accounting, the
>       Company would have recorded a compensation expense of $115,281 pursuant to the share
>       options issued during the year 2002. Pro-forma loss information determined under the fair
>       value method of accounting for stock options is as follows:DRC RESOURCES CORPORATION
>       (An Exploration Stage Company)
>       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
>       SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
>       2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)j)      Stock-based Compensation (Cont'd)
>       Nine Months
>           Ended
>           Sept. 30,2003
>           
>           Year
>           Ended
>           Dec. 31,2002
>           
>           Year
>           Ended
>           Dec. 31,2001
>           
>           Year
>           Ended
>           Dec. 31,2000(Unaudited)
>           
>           (Audited)
>           
>           (Audited)
>           
>           (Audited)Loss for
>           the period
>           As reported
>           $
>           (408,674)
>           $
>           (185,907)
>           $
>           (114,809)
>           $
>           (227,166)Pro Forma
>           $
>           (408,674)
>           $
>           (301,188)
>           $
>           (114,809)
>           $
>           (227,166)Loss per
>           share
>           As reported
>           $
>           (0.04)
>           $
>           (0.02)
>           $
>           (0.02)
>           $
>           (0.04)Pro forma
>           $
>           (0.04)
>           $
>           (0.03)
>           $
>           (0.02)
>           $
>           (0.04)The pro-forma amounts exclude the effect of stock options granted
>             prior to January 1, 2002. The fair value of each stock option grant was estimated on the
>             date of the grant using the Black-Scholes option pricing model with the following
>             assumptions:
>           $ risk free interest rate of 2.8%, dividend yield of 0%, expected life
>                 of 2 years, and volatility of 56%.k)      Loss Per Share
>           Loss per share data is computed by dividing the loss by the weighted
>             average number of common shares and common share equivalents outstanding during the year.
>             Shares issuable upon the exercise of share purchase warrants and stock options were
>             excluded from the computation of loss per share because their effect would be
>             anti-dilutive.**3. RESTRICTED CASH**

> During the years ended December 31, 2000
>   - 2002, the Company raised a total of $3,935,515 in proceeds from the private placement of
>   flow-through common shares. These proceeds can only be used on exploration of Canadian
>   mineral claim interests and the tax benefits flow-through to the subscribers. As at
>   September 30, 2003, the unspent cash balance was $639,146.

> **4. MINERAL CLAIM INTERESTS**Kamloops, B.C. " Afton" Mineral
>       InterestThe Company entered into an option agreement
>     dated September 22, 1999 to acquire the Afton Mineral Claims Group, in the Kamloops Mining
>     Division of B.C. Consideration is the issuance of 2,000,000 common shares of the Company
>     in stages, being 1,000,000 shares on effective date of the shareholders= approval of the
>     agreement, and 200,000 shares annually for the next five years beginning in year 2, a work
>     commitment of $6,500,000 over nine years and a 10% net profit royalty. The Company can
>     purchase back the 10% net profit royalty interest, on or before December 1, 2010 for
>     $2,000,000. Minimum work commitments vary from $400,000 to $1,000,000 each year and are
>     $600,000 in year 2001 and $1,000,000 in year 2002.



> **4. MINERAL CLAIM INTERESTS
>   (CONT'D)**

> Kamloops, B.C., A Afton@ Mineral
>       Interest (Cont'd)

> On July 19, 2000, 1,000,000 common shares of the Company were issued in
>     accordance with the agreement. During the first quarter ending March 31, 2002, the Company
>     issued 200,000 common shares in accordance with the agreement for year 2 and in the final
>     quarter ending December 31, 2002 the Company issued 200,000 common shares in accordance
>     with the agreement for year 3. The value as per the terms of the agreement was $0.30 per
>     share for a total cost to the Company of $120,000. Claim work completed has extended the
>     claims in good standing until March 8, 2011.



> Kamloops, B.C., Mineral Interest



> Alberta Mineral Interest



> Timmins, Ontario, Mineral Interest



> **5. INVESTMENT PROPERTY**
>   The Company owns a 25% interest in approximately 358 acres of land
>   located in Texas, U.S.A., which land provide its oil and gas property royalty interests.
>   The market value of the property approximates the value of the property reported in the
>   financial statements.

- 

> 6.   CAPITAL ASSETS



> **7. INCOME TAXES**

> a)    Profit (loss) before
>     income taxes are as follows:



> 7. INCOME TAXES (CONT'D)

> c)   Temporary
>     differences that give rise to future income taxes are as follows:

- Nine
        
        Months
        Ended
        Sept. 30,2003
        
        Year
        
        Ended
        Dec. 312002
        
        Year
        
        Ended
        Dec. 31, 200**(Unaudited)**
        
        **(Audited)**
        
        **(Audited)**Long-Term Future Income Tax AssetsLoss carry forwards
        $
        485,739
        $
        363,267
        $
        165,536Share issue costs
        
        101,262
        
        142,505
        
        132,326Total Long-Term Future Income Tax Assets
        
        587,001
        
        505,772
        
        297,862Less valuation allowance
        
        587,001
        
        505,772
        
        297,862NET LONG-TERM FUTURE INCOME TAX ASSETS
        $
        -
        $
        -
        $
        -

> 



> 8. SHARE CAPITAL



> Year 2003 to date



> 8. SHARE CAPITAL (CONT'D)

> b)    Issued
>     (Cont'd)

> Year 2002



> Year 2001



> c)
>            Stock Options



**Options****Outstanding**
    **Option Price**Balance, December 31, 2000
    (Audited)
    664,000Cancelled
    (25,000)
    $7.00Exercised
    (160,000)
    $0.20Exercised
    (51,000)
    $0.30Granted
    90,000
    $4.00*Balance, December 31, 2001
    (Audited)
    518,000Granted
    100,000
    $3.05Granted
    320,000
    $3.00Granted
    50,000
    $3.50Expired
    (33,000)
    $3.00Cancelled
    (65,000)
    $3.00Balance, December 31, 2002
    (Audited)
    890,000Exercised
    (43,000)
    $3.00Balance, September 30, 2003
    (Unaudited)
    847,000*option price amended from $4.00 to $3.00 in
    current year.






DRC RESOURCES CORPORATION
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

**8. SHARE CAPITAL (CONT'D)**

c)       Stock Options (Cont'd)

> The expiry dates of the options are:

September 13, 2004
    395,000
    options @ $3.00* (extended from Sept. 13, 2002)February 1, 2004
    302,000
    options @ $3.00September 18, 2004
    100,000
    options @ $3.05December 5, 2004
    50,000
    options @ $3.50




> On September 18, 2002, 100,000 options @ $3.05 per share were granted
>       for ongoing financial consulting services to a related person of the President. The
>       options expire on September 18, 2004.

**9. SPECIAL WARRANTS**

On August 3, 2000 the Company, by a brokered private placement, issued
  1,304,750 special warrants and 100,000 agents special warrants at a price of $4.00 per
  special warrant. Each special warrant was exchangeable for one common share and one
  non-transferable share purchase warrant at an exercise price of $5.00 up to December 15,
  2001 entitling the holder to purchase one common share. The special warrants issued to
  Ontario residents were exchanged for common shares pursuant to a final prospectus dated
  August 3, 2001. During the year ended December 31, 2001, 1,392,250 warrants were exercised
  for common shares (See Note 8(b)). No share purchase warrants were exercised and all
  expired December 15, 2001.

**10 BROKER WARRANTS**

On July 24, 2002 the Company by a private placement, issued 70,000
  broker warrants exchangeableon or before July 24, 2003 into common shares at a
  purchase price of $3.00 per warrant. No warrants were exercised in the year 2002.5,000
  of the warrants were exercised in the first quarter of 2003 and 65,000 of the warrants in
  the second quarter at $3.00 per share.





DRC RESOURCES CORPORATION
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

**11. RELATED PARTY TRANSACTIONS**

Nine 
    Months EndedSept. 30, 2003
    
    Nine 
    Months EndedSept. 30, 2002
    
    Year EndedDec. 31, 2002
    
    Year EndedDec. 31, 2001
    
    Year Ended
    Dec. 31, 2000(Unaudited)
    
    (Unaudited)
    
    (Audited)
    
    (Audited)
    
    (Audited)For consulting, administration and
    exploration costs charged by a private company controlled by the President/Director of the
    Company
    $
    105,375
    $
    87,675
    $
    112,845
    $
    113,440
    $
    86,300For shares issued in payment on
    "Afton" mineral claim option agreement to the President/Director of the Company.200,000 shares were issued during
    2002 (cumulative total is 700,000 shares to date) $
    $
    -
    $
    $30,000
    $
    60,000
    $
    150,000
    $
    -For consulting services charged by
    a related person of the President
    $
    $49,250
    $
    -
    $
    11,250
    $
    -
    $
    -For secretarial and administrative
    services charged by a private company which a director has a 50% interest and any director
    = s fees paid.
    $
    $ 44,914
    $
    33,872
    $
    41,405
    $
    33,481
    $
    27,691


12. SUPPLEMENTARY CASH FLOW INFORMATION

The statement of cash flows reflected the new requirement under
  Section 1540 of the Canadian Institute of Chartered Accountants Handbook.

> The Company conducted non-cash activities as follows:

Nine 
    Months EndedSept. 30, 2003
    
    Nine 
    Months EndedSept. 30, 2002
    
    Year EndedDec. 31, 2002
    
    Year EndedDec. 31, 2001
    
    Year Ended
    Dec. 31, 2000(Unaudited)
    
    (Unaudited)
    
    (Audited)
    
    (Audited)
    
    (Audited)Financing Activities
       Common shares issued for 
          mineral properties
    $
    -
    $
    60,000
    $
    120,000
    $
    -
    $
    300,000






DRC RESOURCES CORPORATION
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

> 13.SEGMENTED INFORMATION

The Company's operations consist of mineral exploration in Canada.
  The other principal assets which are held in Canada consist primarily of cash, term
  deposits, and corporate notes.

Nine
    Months Ended
    Sept. 30, 2003
    
    Year Ended
    Dec. 31, 2002
    
    Year Ended
    Dec. 31, 2001(Unaudited)
    
    (Audited)
    
    (Audited)CANADACurrent
    Assets
    $3,056,374
    $
    4,035,551
    $
    4,278,201Mineral
    Claim Interests
    2,889,399
    
    2,293,327
    
    1,493,004Capital
    Assets
    32,484
    
    41,535
    
    14,3675,978,257
    
    6,370,413
    
    5,785,572U.S.A.Current
    Assets
    9,683
    
    11,545
    
    2,744Investment
    Property
    110,867
    
    110,867
    
    110,867120,550
    
    122,412
    
    113,611TOTAL ASSETS
    $6,098,807
    $
    6,492,825
    $
    5,899,183


14. FINANCIAL INSTRUMENTS

The Company's financial instruments consist of cash, term deposits,
  corporate notes, amounts receivable and accounts payable. Unless otherwise noted, it is
  management's opinion that the Company is not exposed to significant interest, currency, or
  credit risks arising from these financial instruments.The fair values of cash,
  term deposits, corporate notes, amounts receivable and accounts payable approximate their
  carrying values due to the relatively short period to maturity of these instruments.At
  September 30, 2003 the Company had $267,187 in US dollars, comprised of $7,187 in a
  current account and $260,000 in a bankers acceptance note, due November 17, 2003.

15. COMMITMENTS

The Company, under the terms of the option agreement to acquire the
  A Afton@ mineral claim interests, is required to
  issue an additional 600,000 shares in 200,000 share instalments over the next three yearsand, to perform a work commitment of $6,500,000 over nine years. To date $4,210,726
  has been expended.

847,000 common shares are reserved for issuance for stock options and
  brokers warrants. (See notes 8(c) and 10)





DRC RESOURCES CORPORATION
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

16. ENVIRONMENTAL RISKS

Existing and possible future environmental legislation, regulations
  and action could give rise to additional expense, capital expenditures, restrictions and
  delays in the activities of the Company, the extent of which cannot be predicted.
  Regulatory requirements and environmental standards are subject to constant evaluation and
  may be significantly increased, which could materially and adversely affect the business
  of the Company or its ability to develop its mineral claim interests on an economic basis.
  Before production can commence on any property, the Company must obtain regulatory and
  environmental approvals. There is no assurance that such approvals will be obtained on a
  timely basis or at all. The cost of compliance with changes in government regulations has
  the potential to reduce the profitability of operations or preclude entirely the economic
  development of mineral claim interests.

17. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN
  CANADA AND THE UNITED STATES

These financial statements have been prepared in accordance with
  Canadian generally accepted accounting principles (Canadian GAAP) which differ in certain
  material respects from United States generally accepted accounting principles and
  practices (U.S. GAAP).

(a)      Mineral Claim Interests

> Under Canadian GAAP, applicable to junior exploration companies,
>       mineral claim interests acquisitions and exploration expenditures are capitalized until
>       such interest is placed into production, sold or abandoned.

> Under U.S. GAAP, the recoverability of capitalized mineral claim
>       interest expenditures is generally considered insupportable until a commercially mineable
>       deposit is determined; therefore all mineral claim interests expenditures are expensed as
>       incurred.

(b)     Common Stock

> Under U.S. GAAP., compensation cost must be considered for all stock
>       options granted requiring the Company to utilize both the intrinsic value-based and the
>       fair value based methods of accounting and reporting stock-based compensation. Under
>       Canadian GAAP, effective January 1, 2002, all stock-based awards made to non-employees
>       must be measured and recognized using the fair value based method. The Company has elected
>       to adopt the intrinsic value method, which recognizes compensation cost for awards to
>       employees only when the market price exceeds the exercise price at date of grant, but
>       requires pro-forma disclosure of earnings and earnings per share as if the fair value
>       method had been adopted.

> The Company, if required to report under U.S. GAAP, would elect to
>       apply Accounting Principles Board Opinion No. 25: Accounting for Stock Issued to Employees
>       (A APB 25") to account for all
>       stock options granted. Further, Statement of Financial Accounting Standards No. 123:
>       Accounting for Stock-Based Compensation (A
>       SFAS 123") requires additional disclosure to reflect the results of the Company as if
>       it had elected to follow SFAS 123. SFAS 123 requires a fair value based method of
>       accounting for stock options using the Black-Scholes option pricing model. This model was
>       developed for use in estimating the fair value of traded options and require the input of
>       and are highly sensitive to subjective assumptions including the expected stock price
>       volatility. Stock options granted by the Company have characteristics significantly
>       different from those traded options. In the opinion of management, the existing model does
>       not provide a reliable single measure of the fair value of stock options granted by the
>       Company.





DRC RESOURCES CORPORATION
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

17. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN
  CANADA AND THE UNITED STATES (CONT'D)

(b)    Common Stock (Cont'd)

> Under APB 25, compensation cost must be recognized for all compensatory
>       stock options granted whenever the market price of Company's shares on the date of grant
>       exceeds the exercise price. The year 2002 was the only year where compensation was
>       required to be reported (see note 2(j)).
>       In accordance with SFAS 123, the following is a summary of the changes
>       in the Company's stock options for the 2002, 2001 and 2000 fiscal years:

2002
    2001
    2000Number 
    Of
    Shares
    Average
    Exercise 
    Price
    Number 
    Of
    Shares
    Weighted
    Average
    Exercise 
    Price
    Weighted
    Number Of
    Shares
    Weighted
    Average
    Exercise PriceBalance exercisable
    at
    beginning of year518,000
    $  3.17
    664,000
    $  4.84
    423,000
    $  .23Granted
    470,000
    $
      3.06
    90,000
    $   4.00
    453,000
    $   7.00Exercised
    -
    -
    (211,000)
    $  .23
    (212,000)
    $  .23Expired
    (33,000)
    $   4.00
    -
    -
    -Cancelled
    (65,000)
    $    3.00
    (25,000)
    $
       7.00
    -
    -Options Price Reduction
    -(2)
    $    1.00
    -
    (1)
    3.00
    -
    -Balance exercisable at end of year(3)
    890,000
    
    $2.65
    518,000
    664,000
    $  4.84(1)     Option price amended from $7.00 to
    $4.00 on 428,000 options(2)     Option price amended from $4.00 to
    $3.00 on 395,000 options(3)     There was no change in the weighted
    average exercise price for the nine months ended September 30, 2003. There were 43,000
    options exercised during the nine months ended September 30, 2003.


> 

2002
    2001
    2000Number 
    Of
    Shares
    Weighted Average
    Exercise 
    Price
    Number 
    Of
    Shares
    Weighted
    Average
    Exercise 
    Price
    Weighted
    Number Of
    Shares
    Weighted
    Average
    Exercise PriceWeighted-average fair 
    value of options 
    granted during 
    the year
    470,000
    $3.06
    90,000
    $4.00
    453,000
    $7.00


For the 2002 fiscal year, the weighted-average fair values for stock
    options were estimated at the date of grant or amendment using a Black-Scholes option
    pricing model with the following weighted-average assumptions: risk-free interest rate of
    2.8% volatility factor of the expected market price of the Company's common stock of 56%;
    option lives of two years; and no expected dividends.

The following is a summary of the Company's net loss and basic and
    diluted loss per share as reported and pro forma as if the fair value based method of
    accounting defined in SFAS 123 had been applied for the 2002, 2001, and 2000 fiscal years:





DRC RESOURCES CORPORATION
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

17. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN
  CANADA AND THE UNITED STATES (CONT'D)

(b)     Common Stock (Cont'd)

2002
    2001
    2000As Reported
    Pro Forma
    As Reported
    Pro Forma
    As Reported
    Pro FormaNet loss for the year
    (185,907)
    (301,188)
    (114,809)
    (114,809)
    (227,166)
    (227,166)Basic and
    diluted loss per share
    (0.02)
    (0.03)
    (0.02)
    (0.02)
    (0.04)
    (0.04)


(c)    Application of U.S. GAAP to Financial Statements

> The impact of the application of U.S. GAAP to the Company's financial
>       statements are summarized as follows:

BALANCE SHEETS
    
    Nine
    Months EndedSept. 30, 2003
    
    Year EndedDec. 31, 2002
    
    Year EndedDec. 31, 2001
    
    Year EndedDec. 31, 2000(Unaudited)
    
    (Audited)
    
    (Audited)
    
    (Audited)AssetsMineral claim
    interests under Canadian GAAP
    
    $2,889,399
    $
    2,293,327
    $
    1,493,004
    $
    $1,044,429Add back
    write-off of mineral claim interests under Canadian GAAP
    
    1
    
    5,999
    
    96,360
    
    41,718Mineral claim
    interests expenditures expensed under U.S. GAAP
    
    (596,073)
    
    (806,322)
    
    (544,935)
    
    (816,364)Cumulative
    historical adjustments
    
    (2,293,327)
    
    (1,493,004)
    
    (1,044,429)
    
    (269,783)Mineral claim interests under U.S. GAAP
    
    -
    
    -
    
    -
    
    -Total Assets
    under U.S. GAAP
    
    3,209,408
    $
    4,199,498
    $
    4,406,179
    $
    5,336,278Shareholders' EquityDeficit under
    Canadian GAAP
    
    (2,161,588)
    
    $(1,752,914)
    
    $(1,567,007)
    $
    (1,452,198)Deduct net loss under Canadian
    GAAP
    
    (408.674)
    
    185,907
    
    114,809
    
    227,166Add net loss
    under U.S. GAAP
    
    (1,004,746)
    
    (986,230)
    
    (563,384)
    
    (1,001,812)Cumulative
    historical adjustments
    
    (2,293,327)
    
    (1,493,004)
    
    (1,044,429)
    
    (269,783)Deficit under U.S. GAAP
    
    (5,050,987)
    
    (4,046,241)
    
    (3,080,011)
    
    (2,496,627)Total Shareholders' Equity
    under U.S. GAAP
    $
    2,986,998
    $
    4,040,562
    $
    4,073,567
    $
    5,031,426






DRC RESOURCES CORPORATION
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

17. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN
  CANADA AND THE UNITED STATES (CONT'D)

> (c)  Application of U.S. GAAP to Financial Statements (Cont'd)

**STATEMENTS OF OPERATIONS**Nine
    Months Ended
    Sept. 30, 2003
    
    Nine
    Months Ended
    Sept. 30, 2002
    
    Year Ended
    Dec. 31, 2002
    
    Year Ended
    Dec. 31, 2001
    
    Year Ended
    Dec. 31, 2000(Unaudited)
    
    (Unaudited)
    
    (Audited)
    
    (Audited)
    
    (Audited)Loss for the period under Canadian GAAP
    $
    (408,674)
    $
    (85,291)
    $
    (185,907)
    $
    (114,809)
    $
    (227,166)Add back write-off of mineral claim interests
            under Canadian GAAP
    
    1
    
    -
    
    5,999
    
    96,360
    
    41,718Mineral claim interests
    expenditures expensed     under U.S. GAAP
    
    (596,073)
    
    (310,422)
    
    (806,322)
    
    (544,935)
    
    (816,364)Loss for the
    period under U.S. GAAP
    
    $(1,004,746)
    
    $(395,713)
    
    $(986,230)
    
    $(563,384)
    
    $(1,001,812)




STATEMENTS OF CASH FLOWSNine
    Months Ended
    Sept. 30, 2003
    
    Nine
    Months Ended
    Sept. 30, 2002
    
    Year Ended
    Dec. 31, 2002
    
    Year Ended
    Dec. 31, 2001
    
    Year Ended
    Dec. 31, 2000(Unaudited)
    
    (Unaudited)
    
    (Audited)
    
    (Audited)
    
    (Audited)Operating ActivitiesLoss for the year under
    U.S.
        GAAP
    $
    (1,004,746)
    $
    (395,713)
    $
    (986,320)
    $
    (563,384)
    $
    (1,001,812)Non-cash issue of shares
    for
        mineral claim interests
    
    -
    
    60,000
    
    120,000
    
    -
    
    300,000Other components of
    operating
    activities which are similar  under Canadian and U.S. GAAP
    
    62,350
    
    303,547
    
    244,775
    
    67,170
    
    238,691Net cash provided by (used for)
       operating activities unde
       U.S. GAAP
    
    (942,396)
    
    (32,166)
    
    (621,545)
    
    (496,214)
    
    (473,121)Investing ActivitiesMineral claim interests
    costs
        under U.S. GAAP
    
    -
    
    -
    
    -
    
    -
    
    -Net cash used for investment
      activities under U.S. GAAP
    $
    -
    $
    -
    $
    -
    $
    -
    $
    -






DRC RESOURCES CORPORATION
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

17. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN
  CANADA AND THE UNITED STATES (CONT'D)

(d)      Loss Per Share

> Under U.S. GAAP, the presentation of both basic and diluted earnings
>       per share (A EPS@ ) is required for all entities with
>       complex capital structures including a reconciliation of each numerator and denominator.
>       Basic EPS excludes dilutive securities and is computed by dividing income available to
>       common stockholders by the weighted-average number of common shares outstanding in the
>       year. Diluted EPS reflects the potential dilution that could occur if dilutive securities
>       were converted into common shares and is computed similarly to fully diluted EPS pursuant
>       to previous accounting pronouncements. These requirements under U.S. GAAP apply equally to
>       loss per share presentations.
>       The following is a reconciliation of the numerators and denominators of
>       the basic and diluted loss per share calculations:

Nine
    Months Ended
    Sept. 30, 2003
    
    Nine
    Months Ended
    Sept. 30, 2002
    
    Year Ended
    Dec. 31, 2002
    
    Year Ended
    Dec. 31, 2001
    
    Year Ended
    Dec. 31, 2000(Unaudited)
    
    (Unaudited)
    
    (Audited)
    
    (Audited)
    
    (Audited)Numerator, net loss for the
    year under U.S. GAAP
    $
    (1,004,746)
    $
    (395,713)
    $
    (986,230)
    $
    (563,384)
    $
    (1,001,812)Denominator:Weighted-average number of shares under Canadian GAAP
    
    9,188,544
    
    8,584,366
    
    8,704,716
    
    7,792,620
    
    5,742,938Effect of escrow shares
    excluded from the denominator under U.S. GAAP
    
    -
    
    -
    
    -
    
    -
    
    -Weighted-average number of shares under U.S. GAAP
    
    9,188,544
    
    8,584,366
    
    8,704,716
    
    7,792,620
    
    5,742,938Basic and diluted loss per
    share under U.S. GAAP
    $
    (0.11)
    $
    (0.05)
    $
    (0.11)
    $
    (0.07)
    $
    (0.17)Stock options and warrants outstanding were not
    included in the computation of diluted loss per share as their inclusion would be
    antidilutive.


(e)      Flow-Through Shares

> Under U.S. GAAP, a liability is recognized on the sale of flow-through
>       shares for the premium obtained by the Company, if any, of the sale price per share over
>       the market value at the time of issuance. Under Canadian GAAP, no such premium is
>       recognized. Upon renunciation of the flow-through share proceeds to investors, the
>       liability under U.S. GAAP is reversed and the Company recognizes a deferred tax benefit
>       for this amount. The Company follows the policy or renouncing fully to investors the
>       proceeds of all flow-through financings received during the year, whether the underlying
>       exploration expenditures have been incurred or not, as at its fiscal year end, which
>       coincides with the personal taxation year of individuals in Canada. Accordingly, the
>       Company under a pro-forma application of U.S. GAAP would have recognized no deferred tax
>       benefits or amounts included in current operations, in connection with issuances of
>       flow-through shares.





DRC RESOURCES CORPORATION
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002

17. DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN
  CANADA AND THE UNITED STATES (CONT=
  D)

(f)       Recent Accounting
    Pronouncements

> The FASB has issued No. 143, A Accounting for Asset Retirement
>       Obligations@ . This statement
>       addresses financial accounting and reporting for obligations associated with the
>       retirement of tangible long-lived assets and the associated asset retirement costs. It
>       requires that the fair value of a liability for an asset retirement obligation be
>       recognized in the period in which it is incurred if a reasonable estimate of fair value
>       can be made. The associated asset retirement costs are capitalized as part of the carrying
>       amount of the long-lived asset. The Company does not expect that the implementation of
>       SFAS No. 143 will have a material impact on its financial position or results of
>       operations.
>       The FASB has issued SFAS No. 146, A Accounting for Costs Associated with
>       Exit or Disposal Activities@ . Under
>       this standard, exit costs and restructuring liabilities generally will be recognized only
>       when incurred. SFAS No. 146 is effective for exit or disposal activities that are
>       initiated after December 31, 2002. The Company does not expect that the implementation of
>       these guidelines will have a material impact on its financial position or results of
>       operations.

> The Accounting Standards Board of the Canadian Institute of Chartered
>       Accountants (CICA) has issued CICA 3063, "Impairment of Long-Lived Assets". This
>       statement establishes standards for recognition, measurement and disclosure of the
>       impairment of non-monetary long-lived assets, including property, plant and equipment,
>       intangible assets with finite useful lives, deferred pre-operating costs and long-term
>       prepaid assets. The Company does not expect that the implementation of this new standard
>       will have a material impact on its financial position or results of operations.
>       The CICA has approved, subject to written ballot, a new Handbook
>       section, A Asset Retirement
>       Obligations@ , to replace the
>       current guidance on future removal and site restoration costs included in CICA 3061, A Property, Plant and Equipment@ . The standard, which is similar to SFAS
>       No. 143, is effective for years beginning on or after January 1, 2004. Ths standard
>       requires recognition of a liability at its fair value for the obligation associated with
>       the retirement of a tangible long-lived asset. A corresponding asset retirement cost would
>       be added to the carrying amount of the related asset and amortized to expense over the
>       useful life of the asset. The Company does not expect that the implementation of these
>       guidelines will have a material impact on its financial position or results of operation.

18. SUBSEQUENT EVENT

On November 6, 2003 the Company completed a private placing
  financing with a syndicate of underwriters. The Company realized gross proceeds of
  $24,150,000 on issuance of 3,450,000 common shares, which included 450,000 Underwriter
  options exercised, all at a price of $7 per share.

The Underwriters received 345,000 compensation options to purchase
  345,000 common shares at a price of $7.50 per share up to November 6, 2005.