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<SEC-DOCUMENT>0001137171-05-000168.txt : 20050210
<SEC-HEADER>0001137171-05-000168.hdr.sgml : 20050210
<ACCEPTANCE-DATETIME>20050210173623
ACCESSION NUMBER:		0001137171-05-000168
CONFORMED SUBMISSION TYPE:	F-10/A
PUBLIC DOCUMENT COUNT:		4
REFERENCES 429:			333-106858
FILED AS OF DATE:		20050210
DATE AS OF CHANGE:		20050210

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PAN AMERICAN SILVER CORP
		CENTRAL INDEX KEY:			0000771992
		STANDARD INDUSTRIAL CLASSIFICATION:	GOLD & SILVER ORES [1040]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			0331

	FILING VALUES:
		FORM TYPE:		F-10/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-122152
		FILM NUMBER:		05594329

	BUSINESS ADDRESS:	
		STREET 1:		1500-625 HOWE STREET
		CITY:			VANCOUVER BC CANADA
		STATE:			A1
		ZIP:			V6C 2T6

	MAIL ADDRESS:	
		STREET 1:		1500 625 HOWE ST
		CITY:			VANCOUVER BC V6C 2T6
		STATE:			A1
		ZIP:			999999999

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PAN AMERICAN MINERALS CORP
		DATE OF NAME CHANGE:	19950608
</SEC-HEADER>
<DOCUMENT>
<TYPE>F-10/A
<SEQUENCE>1
<FILENAME>mainf10.htm
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<TITLE>Filed by Filing Services Canada Inc.&nbsp; 403-717-3898</title>
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<P style="margin:0pt; font-family:CG Times" align=center><B><font size="2">As filed with the Securities and Exchange Commission on
February 10, 2005</font></B></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-right:-18pt; text-indent:402pt; font-family:CG Times"><B><U><font size="2">Registration No. 333-122152</font></U></B></P>
<P style="margin:0pt; padding-right:-18pt; text-indent:558pt; font-family:CG Times"><B><U><font size="2"><BR></font></U></B></P>
<P style="line-height: 16pt; font-family: CG Times; font-size: 14pt; border-top: 3 double #000000; margin: 0pt" align=center><B><font size="2">SECURITIES AND EXCHANGE COMMISSION</font></B></P>
<P style="margin:0pt; font-family:CG Times" align=center><B><font size="2">Washington, D.C. &nbsp;20549</font></B></P>
<P style="margin:0pt; line-height:8pt; font-family:CG Times; font-size:6pt" align=center><U><font size="2">&nbsp;&nbsp;&nbsp;</font></U></P>
<P style="margin:0pt; font-family:CG Times" align=center><b><font size="2">Amendment
No. 1 to</font></b></P>
<P style="margin:0pt; line-height:16pt; font-family:CG Times; font-size:14pt" align=center><B><font size="2">FORM F-10</font></B></P>
<P style="margin:0pt; font-family:CG Times" align=center><B><font size="2">REGISTRATION STATEMENT</font></B></P>
<P style="margin:0pt; font-family:CG Times" align=center><B><font size="2">UNDER THE</font></B></P>
<P style="margin:0pt; font-family:CG Times" align=center><B><font size="2">SECURITIES &nbsp;ACT OF 1933</font></B></P>
<P style="margin:0pt; line-height:8pt; font-family:CG Times; font-size:6pt" align=center><U><font size="2">&nbsp;&nbsp;&nbsp;</font></U></P>
<P style="line-height: 18pt; font-family: CG Times; font-size: 16pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0pt; margin-bottom: 0" align=center><B><font size="2">Pan American Silver Corp.</font></B></P>
<P style="line-height: 10pt; font-family: CG Times; font-size: 8pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0pt; margin-bottom: 0" align=center><I><font size="2">(Exact name of Registrant as specified in its charter)</font></I></P>
<P style="line-height: 10pt; font-family: CG Times; font-size: 8pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0pt; margin-bottom: 0" align=center>&nbsp;</P>
<P style="line-height: 10pt; font-family: CG Times; font-size: 8pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0pt; margin-bottom: 0" align=center>&nbsp;</P>
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<P style="text-indent: 0; line-height: 11pt; font-family: CG Times; margin-top: 0; margin-bottom: 0" align="center"><B><font size="2">British Columbia</font></B></P>
        <p style="text-indent: 0; margin-top: 0; margin-bottom: 0" align="center"><I><font size="2">(Province or other Jurisdiction
        of Incorporation or Organization)</font></I></td>
      <td width="31%" valign="bottom">
        <p style="text-indent: 0; margin-top: 0; margin-bottom: 0" align="center"><B><font size="2">1044</font></B></p>
        <p style="text-indent: 0; margin-top: 0; margin-bottom: 0" align="center"><I><font size="2">(Primary Standard Industrial
        Classification Code Number)</font></I></td>
      <td width="85%" valign="bottom">
<P style="text-indent: 0; font-family: CG Times; font-size: 9pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align="center"><B><font size="2">Not Applicable</font></B></P>
<P style="text-indent: 0; line-height: 9pt; font-family: CG Times; font-size: 7pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align="center"><I><font size="2">(I.R.S. Employer</font> </I></P>
<P style="text-indent: 0; line-height: 10.35pt; font-family: CG Times; font-size: 7pt; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align="center"><I><font size="2">Identification No.)</font></I></P>
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<P style="text-indent: 0; line-height: 11pt; font-family: CG Times; font-size: 9pt; margin-top: 0; margin-bottom: 0">&nbsp;</P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center>&nbsp;</P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center>&nbsp;</P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center><B><font size="2">1500 - 625 Howe Street</font></B></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center><B><font size="2">Vancouver, British Columbia</font></B></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center><B><font size="2">Canada &nbsp;V6C 2T6</font></B></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center><B><font size="2">(604) 684-1175</font></B></P>
<P style="margin:0pt; line-height:9pt; font-family:CG Times; font-size:7pt" align=center><I><font size="2">(Address and telephone number of Registrant's principal executive offices)</font></I></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center><B><font size="2">Pan American Minerals Inc.</font></B></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center><B><font size="2">c/o Harris, Trimmer &amp; Thompson</font></B></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center><B><font size="2">6121 Lakeside Drive, Suite 260</font></B></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center><B><font size="2">Reno, Nevada 85511</font></B></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center><B><font size="2">(775) 825-4300</font></B></P>
<P style="margin:0pt; line-height:9pt; font-family:CG Times; font-size:7pt" align=center><I><font size="2">(Name, address and telephone number of agent for service)</font></I></P>
<P style="margin:0pt; line-height:8pt; font-family:CG Times; font-size:6pt" align=center><U><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></U></P>
<P style="margin:0pt; text-indent:249.2pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">Copies to:</font></P>
<P style="margin-top:0pt; margin-bottom:-10pt; text-indent:78.75pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">Christopher W. Morgan, Esq.</font></B></P>
<P style="margin:0pt; text-indent:378.95pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">Fred R. Pletcher, Esq.</font></B></P>
<P style="margin-top:0pt; margin-bottom:-10pt; text-indent:54.65pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">Skadden, Arps, Slate, Meagher &amp; Flom LLP</font></B></P>
<P style="margin:0pt; text-indent:368.35pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">Borden Ladner Gervais LLP</font></B></P>
<P style="margin-top:0pt; margin-bottom:-10pt; text-indent:83.05pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">Suite 1750, 222 Bay Street</font></B></P>
<P style="margin:0pt; text-indent:344.15pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">1200 Waterfront Centre, 200 Burrard Street</font></B></P>
<P style="margin-top:0pt; margin-bottom:-10pt; text-indent:104.2pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">P.O. Box 256</font></B></P>
<P style="margin:0pt; text-indent:360.25pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">P.O. Box 48600, Stn. Bentall Ctr.</font></B></P>
<P style="margin-top:0pt; margin-bottom:-10pt; text-indent:81.95pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">Toronto, Ontario &nbsp;M5K 1J5</font></B></P>
<P style="margin:0pt; text-indent:349.6pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">Vancouver, British Columbia &nbsp;V7X 1T2</font></B></P>
<P style="margin-top:0pt; margin-bottom:-10pt; text-indent:101.05pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">(416) 777-4700</font></B></P>
<P style="margin-top:0pt; margin-bottom:-10pt; text-indent:389.05pt; line-height:10pt; font-family:CG Times; font-size:8pt"><B><font size="2">(604) 687-5744</font></B></P>
<B><P style="margin:0pt; text-indent:504pt; font-family:CG Times; font-size:9pt"><font size="2"><BR></font></B></P>
<P style="margin:0pt; line-height:9.8pt; font-family:CG Times; font-size:6pt" align=center><U><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></U></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center><B><font size="2">Approximate date of commencement of proposed sale of &nbsp;the securities to the public:</font></B></P>
<P style="margin:0pt; line-height:11.55pt; font-family:CG Times; font-size:8pt" align=center><font size="2">From time to time on or after the effective date of this Registration Statement as determined by market conditions.</font> </P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=center><B><font size="2">Province of British Columbia, Canada</font></B></P>
<P style="margin:0pt; line-height:12.4pt; font-family:CG Times; font-size:8pt" align=center><I><font size="2">(Principal jurisdiction regulating this offering)</font></I></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">It is proposed that this filing shall become effective (check appropriate box):</font></P>
<P style="margin:0pt; padding-left:36pt; padding-right:-18pt; line-height:10pt; font-family:CG Times; font-size:8pt">&nbsp;</P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-left:36pt; text-indent:-27pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">A.<FONT FACE="Times New Roman"> </FONT><FONT FACE="WP IconicSymbolsA">:</FONT></font></P>
<P style="margin:0pt; padding-left:36pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">Upon filing with the Commission, pursuant to Rule 467(a) (if in connection with an offering being made
contemporaneously in the United States and Canada).</font></P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-left:36pt; text-indent:-27pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">B.<FONT FACE="Times New Roman"> </FONT></font><FONT FACE="WP IconicSymbolsA" size="2">9</FONT></P>
<P style="margin:0pt; padding-left:36pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">At some future date (check the appropriate box below):</font></P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-left:108pt; text-indent:-72pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">1.</font></P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-left:108pt; text-indent:-45pt; line-height:10pt; font-family:CG Times; font-size:8pt"><FONT FACE="WP IconicSymbolsA" size="2">9</FONT></P>
<P style="margin:0pt; padding-left:108pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">pursuant to Rule 467(b) on ( &nbsp;&nbsp;&nbsp;&nbsp;) at ( &nbsp;&nbsp;&nbsp;&nbsp;) (designate a time not sooner than 7 calendar days after filing).</font></P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-left:108pt; text-indent:-72pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">2.</font></P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-left:108pt; text-indent:-45pt; line-height:10pt; font-family:CG Times; font-size:8pt"><FONT FACE="WP IconicSymbolsA" size="2">9</FONT></P>
<P style="margin:0pt; padding-left:108pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">pursuant to Rule 467(b) on ( &nbsp;&nbsp;&nbsp;&nbsp;) at ( &nbsp;&nbsp;&nbsp;&nbsp;) (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or
notification of clearance on ( &nbsp;&nbsp;&nbsp;).</font></P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-left:108pt; text-indent:-72pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">3.</font></P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-left:108pt; text-indent:-45pt; line-height:10pt; font-family:CG Times; font-size:8pt"><FONT FACE="WP IconicSymbolsA" size="2">9</FONT></P>
<P style="margin:0pt; padding-left:108pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">pursuant to Rule 467(b) as soon as practicable after notification of the
Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto.</font></P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-left:108pt; text-indent:-72pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">4.</font></P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-left:108pt; text-indent:-45pt; line-height:10pt; font-family:CG Times; font-size:8pt"><FONT FACE="WP IconicSymbolsA" size="2">9</FONT></P>
<P style="margin:0pt; padding-left:108pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">after the filing of the next amendment to this Form (if preliminary material is being filed).</font></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt"><font size="2">If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction's shelf prospectus offering procedures, check the
following box. &nbsp;<FONT FACE="WP IconicSymbolsA">:</FONT></font></P>
<P style="margin:0pt; line-height:11pt; font-family:CG Times; font-size:6pt" align=center><U><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></U></P>
<P style="margin:0pt; padding-left:36pt; padding-right:-24pt; text-indent:-36pt; font-family:CG Times; font-size:7pt"><font size="1"><BR></font></P>
<P style="margin:0pt; padding-right:-24pt; line-height:9pt; font-family:CG Times; font-size:7pt"><B><font size="1">Pursuant to Rule 429 under the Securities Act, the prospectus contained in this registration statement also relates to the Registrant's Registration Statement on Form F-10 (File No. 333- 106858).</font></B></P>
<P style="margin:0pt; line-height:9pt; font-family:CG Times; font-size:7pt"><B><font size="1">The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registration statement shall become effective as provided in Rule 467 under the Securities Act of 1933 or on such date as the Commission, acting pursuant to Section 8(a) of the Act, may determine.</font></B></P>
<B><U><P style="margin:0pt; padding-right:-18pt; text-indent:558pt; font-family:CG Times; font-size:8pt"><font size="2"><BR></font></U></B></P>
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<P style="margin:0pt; font-family:CG Times" align=center><B><font size="2">PART I</font></B></P>
<P style="margin:0pt; font-family:CG Times" align=center><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=center><B><font size="2">INFORMATION REQUIRED TO BE</font></B></P>
<P style="margin:0pt; font-family:CG Times" align=center><B><U><font size="2">DELIVERED TO OFFEREES OR PURCHASERS</font></U></B></P>
&nbsp;
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<p style="margin:0pt; line-height:10pt; font-family:Times New Roman" align="center"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><i><u>Prospectus</u></i></p>
<div align="center">
  <center>
  <table style="font-size:10pt" cellspacing="0" width="100%">
    <tr>
      <td valign="top" width="10%">
        <p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><img src="prospectus002.gif" alt="[prospectus002.gif]" align="middle" height="41.6" width="39.2"></p>
      </td>
      <td valign="top" width="90%">
        <p style="line-height: 18pt; font-family: Times New Roman; font-size: 16pt; margin: 0pt; padding-left: -54pt" align="center"><b>PAN
        AMERICAN SILVER CORP.</b></p>
        <p style="line-height: 16pt; font-family: Times New Roman; font-size: 14pt; margin: 0pt; padding-left: -54pt" align="center"><b>US$150,000,000</b></p>
        <p style="line-height: 15pt; font-family: Times New Roman; font-size: 13pt; margin: 0pt; padding-left: -54pt" align="center"><b>Common
        Shares<br>
        Debt Securities<br>
        Warrants<br>
        Subscription Receipts</b></p>
      </td>
    </tr>
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  </center>
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<p style="line-height: 13pt; font-family: Times New Roman; text-indent: 36pt; margin: 0pt" align="justify">Pan
American Silver Corp. (the "Company") may offer for sale, from time to time,
common shares ("Common Shares"), debt securities ("Debt Securities")
warrants to purchase Common Shares or Debt Securities ("Warrants") or
subscription receipts, which entitle the holder to receive upon satisfaction of
certain release conditions, and for no additional consideration, Common Shares,
Warrants or Debt Securities ("Subscription Receipts") of the Company
(collectively, the "Securities") or any combination thereof up to an
aggregate initial offering price of US$150,000,000 (or its equivalent in
Canadian dollars or any other currency or currency unit used to denominate the
Securities), during the 25-month period that this short form base shelf
prospectus (the "Prospectus"), including any amendments hereto, remains
valid.</p>
<p style="margin:0pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman" align="justify">The
specific variable terms of any offering of the Securities, will be set forth in
a shelf prospectus supplement (a "Prospectus Supplement") including, where
applicable: &nbsp;(i)&nbsp;in the case of Common Shares, the number of Common
Shares offered, the offering price and any other specific terms; (ii)&nbsp;in
the case of Debt Securities, the title of the Debt Securities, aggregate
principal amount, currency or the currency unit for which such Debt Securities
may be purchased, maturity, interest provisions, authorized denominations,
offering price, any redemption terms, any sinking fund provisions, any exchange
or conversion terms, whether payment on the Debt Securities will be senior or
subordinated to the Company's other liabilities and obligations and any other
specific terms; (iii)&nbsp;in the case of Warrants, the designation, number and
terms of the Common Shares or Debt Securities purchasable upon exercise of the
Warrants, any procedures that will result in the adjustment of those numbers,
the exercise price, dates and periods of exercise, and the currency or the
currency unit in which the exercise price must be paid and any other specific
terms; and (iv) in the case of Subscription Receipts, the designation, number
and terms of the Common Shares, Warrants or Debt Securities receivable upon
satisfaction of certain release conditions, any procedures that will result in
the adjustment of those numbers, any additional payments to be made to holders
of Subscription Receipts upon satisfaction of the release conditions, the terms
of the release conditions, terms governing the escrow of all or a portion of the
gross proceeds from the sale of the Subscription Receipts, terms for the refund
of all or a portion of the purchase price for Subscription Receipts in the event
the release conditions are not met and any other specific terms. &nbsp;The
Company reserves the right to include in a Prospectus Supplement specific
variable terms pertaining to the Securities that are not within the options and
parameters set forth in this Prospectus.</p>
<hr width="25%" noshade size="1">
<p style="margin:0pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman" align="justify"><b>This
offering is made by a Canadian issuer that is permitted, under a
multijurisdictional disclosure system adopted by the United States, to prepare
this prospectus supplement and the accompanying prospectus in accordance with
the disclosure requirements of Canada. &nbsp;Prospective investors &nbsp;should
be aware that such requirements are different from those of the United States.
&nbsp;Certain of the financial statements included or incorporated herein have
been prepared in accordance with Canadian generally accepted accounting
principles, and may be subject to Canadian auditing and auditor independence
standards, and thus may not be comparable to financial statements of United
States companies.</b></p>
<p style="margin:0pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman" align="justify"><b>Prospective
investors should be aware that the acquisition of the securities described
herein may have tax consequences both in the United States and in Canada.
&nbsp;Such consequences for investors who are resident in, or citizens of, the
United States may not be described fully herein.</b></p>
<p style="margin:0pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman" align="justify"><b>The
enforcement by investors of civil liabilities under the federal securities laws
may be affected adversely by the fact that the Company is incorporated or
organized under the laws of British Columbia, Canada, that some or all of its
officers and directors may be residents of Canada, that some or all of the
underwriters or experts named in the registration statement may be residents of
Canada and that a substantial portion of the assets of the Company and said
persons may be located outside the United States.</b></p>
<hr width="25%" noshade size="1">
<p style="margin:0pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman" align="justify"><b>These
securities have not been approved or disapproved by the Securities and Exchange
Commission or any state securities commission nor has the Securities and
Exchange Commission or any state securities commission passed upon the accuracy
or adequacy of this Prospectus. &nbsp;Any representation to the contrary is a
criminal offense.</b></p>
<hr width="25%" noshade size="1">
<p style="margin-top:0pt; margin-bottom:10pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman" align="center">The
date of this Prospectus is February 9<font face="Times New Roman">,</font>
2005.</p>
<br>
<a NAME="FooterB"></a>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:10pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman" align="justify">All
shelf information permitted under applicable laws to be omitted from this
Prospectus will be contained in one or more Prospectus Supplements that will be
delivered to purchasers together with this Prospectus. &nbsp;Each Prospectus
Supplement will be incorporated by reference into this Prospectus for the
purposes of securities legislation as of the date of the Prospectus Supplement
and only for the purposes of the distribution of the Securities to which the
Prospectus Supplement pertains.</p>
<p style="margin-top:0pt; margin-bottom:10pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman" align="justify">The
Company may offer and sell Securities to or through underwriters or dealers,
directly to one or more purchasers pursuant to applicable statutory exemptions,
or through agents designated from time to time. &nbsp;The Prospectus Supplement
relating to a particular offering of Securities will identify each underwriter,
dealer or agent engaged in connection with the offering and sale of Securities
and will set forth the plan of distribution for such Securities, including the
proceeds to the Company and any fees, discounts, concessions or other
compensation payable to the underwriters, dealers or agents, and any other
material terms of the plan of distribution.</p>
<p style="margin-top:0pt; margin-bottom:10pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman" align="justify">The
Common Shares of the Company are listed on the Toronto Stock Exchange (the "TSX")
and the Nasdaq National Market ("Nasdaq"). &nbsp;On February&nbsp;8 ,
2005, the closing price of the Common Shares on the TSX was Cdn $<font face="Times New Roman">18.17</font>
per Common Share. &nbsp;On February 8, 2005, the closing price
of the Common Shares on Nasdaq was US$14.54
per Common Share.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman" align="justify"><b>The
earnings coverage ratios of the Company for the year ended December 31, 2003 and
the 12-month period ended September 30, 2004 are less than one-to-one. &nbsp;See
"Earnings Coverage".</b></p>
<br>
<a NAME="SuppressFooterA"></a>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
2 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p align="center"><b><font size="2" face="serif">TABLE OF CONTENTS</font></b></p>
<div align="center">
  <center>
  <table border="0" width="101%">
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">DOCUMENTS
        INCORPORATED BY REFERENCE</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        4</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">SPECIAL
        NOTE REGARDING FORWARD-LOOKING INFORMATION</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        6</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">CAUTIONARY
        NOTE TO UNITED STATES INVESTORS CONCERNING ESTIMATES OF MEASURED,
        INDICATED&nbsp;AND
        INFERRED RESOURCES</font></td>
      <td width="6%" align="right" valign="bottom">
        <font size="2">
        7</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">CERTAIN
        AVAILABLE INFORMATION</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        7</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">PRESENTATION
        OF FINANCIAL INFORMATION AND EXCHANGE RATE DATA</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        8</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">THE
        COMPANY&nbsp;</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        9</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">BUSINESS
        OF THE COMPANY</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        9</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">USE
        OF PROCEEDS</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        9</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">EARNINGS
        COVERAGE&nbsp;</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        9</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">DESCRIPTION
        OF SHARE CAPITAL</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        10</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">DESCRIPTION
        OF DEBT SECURITIES</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        11</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">DESCRIPTION
        OF WARRANTS</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        17</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">DESCRIPTION
        OF SUBSCRIPTION RECEIPTS</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        18</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">PLAN
        OF DISTRIBUTION</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        22</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">CHANGES
        TO CONSOLIDATED CAPITALIZATION</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        23</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">RISK
        FACTORS</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        24</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">AUDITORS,
        TRANSFER AGENT AND REGISTRAR</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        32</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <font size="2" face="serif">DOCUMENTS
        FILED AS PART OF THE U.S. REGISTRATION STATEMENT</font></td>
      <td width="6%" align="right" valign="top">
        <font size="2">
        32</font></td>
      <td width="2%">
      </td>
    </tr>
    <tr>
      <td width="93%" valign="top">
        <p style="line-height: 100%; margin-top: 0; margin-bottom: 0"><font size="2" face="serif">INDEX
        TO FINANCIAL STATEMENTS&nbsp;</font></td>
      <td width="6%" align="right" valign="top">
        <p style="line-height: 100%; margin-top: 0; margin-bottom: 0"><font size="2">F-1</font></td>
      <td width="2%">
        <p style="line-height: 100%"></td>
    </tr>
    <tr>
      <td width="93%"></td>
    </tr>
  </table>
  </center>
</div>
<p><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
3 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><a NAME="_Toc93312460"></a><b>DOCUMENTS
INCORPORATED BY REFERENCE</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>Information
has been incorporated by reference in this Prospectus from documents filed with
securities commissions or similar authorities in each of the Provinces of
Canada.</b> &nbsp;Copies of the documents incorporated by reference in this
Prospectus may be obtained on request without charge from the Controller and
Corporate Secretary of the Company at 1500-625 Howe Street, Vancouver, British
Columbia, V6C&nbsp;2T6 (telephone: (604) 684-1175). &nbsp;These documents are
also available through the Internet on the System for Electronic Document
Analysis and Retrieval ("SEDAR"), which can be accessed at www.sedar.com.&nbsp;
For the prupose of the Province of Quebec, this simplified prospectus contains
information to be completed by consulting the permanent information
record.&nbsp; A copy of the permanent record may be obtained from the Controller
and Corporate Secretary of the Company at the above mentioned address and
telephone number.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
following documents, filed with the securities commissions or similar regulatory
authorities in each of the Provinces of Canada, are specifically incorporated by
reference into and form an integral part of this Prospectus:</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(a)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">the
Annual Information Form of the Company, dated May&nbsp;19, 2004;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(b)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">the
audited consolidated financial statements of the Company and the notes thereto
as at and for the years ended December&nbsp;31, 2003 and 2002, together with the
auditors' report thereon;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(c)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">management's
discussion and analysis of financial condition and results of operations for the
years ended December&nbsp;31, 2003 and 2002;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(d)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">the
information circular of the Company, dated April&nbsp;6, 2004, in connection
with the Company's May&nbsp;11, 2004 annual general meeting of members, other
than the sections entitled "Corporate Governance", "Executive Compensation - Compensation Committee", "Executive Compensation
- - Report on Executive
Compensation" and "Executive Compensation - Performance Graph";</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(e)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">the
amended unaudited interim financial statements of the Company and the notes
thereto for the three and nine month periods ended September&nbsp;30, 2004 and
2003, as filed on SEDAR on January 14, 2005;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(f)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">management's
discussion and analysis of financial condition and results of operations for the
three and nine month periods ended September&nbsp;30, 2004 and 2003 as filed on
SEDAR on December 16, 2004;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(g)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated January&nbsp;8, 2004, relating to
the filing of an unallocated preliminary base shelf prospectus by the Company;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(h)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated February&nbsp;10, 2004, relating to
the Company signing a binding agreement, subject to regulatory approval and
other conditions, to purchase 92.014% of the voting shares of Compania Minera
Argentum S.A. ("Argentum"), which will acquire, through a split-off process
from Sociedad Minera Corona S.A., the Anticona and Manuelita mining units of the
Morococha silver mine and related infrastructure and processing units in Peru;</p>
&nbsp;
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
4 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(i)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated February&nbsp;18, 2004, relating to
financial and operational results for the fourth quarter and year ended
December&nbsp;31, 2003;</p>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(j)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated February&nbsp;27, 2004, relating to
the offering of 3,333,333 common shares of the Company for aggregate gross
proceeds of US$55 million;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(k)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated February&nbsp;27, 2004, relating to
the intention of the Company to make an offer to encourage early conversion of
its outstanding 5.25% convertible unsecured senior subordinated debentures
maturing on July 31, 2009;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(l)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated March&nbsp;30, 2004, relating to
the offer to encourage conversion by holders of the Company's US$86.25 million
outstanding principal amount of 5.25% convertible debentures;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(m)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated May&nbsp;11, 2004, relating to
financial and operational results for the first quarter of 2004;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(n)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated July&nbsp;23, 2004, relating to the
Company's US$36.7 million cash offer to purchase the voting shares of Argentum,
which holds most of the assets comprising the Morococha mine in central Peru;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(o)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated August&nbsp;23, 2004, relating to
the filing of a shelf prospectus supplement to the Company's short form base
shelf prospectus dated January 26, 2004;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(p)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated August&nbsp;26, 2004, relating to
the closing of the Company's purchase of an 88% interest in the Morococha
silver mine in central Peru;</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(q)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated November&nbsp;22, 2004, relating to
the sale of the Company's 20% interest in the Dukat silver mine in Magadan
State, Russia for up to US$43 million;&nbsp;and</p>
<p style="margin-top:0pt; margin-bottom:-15pt; padding-left:72pt; text-indent:-36pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">(r)</p>
<p style="margin-top:0pt; margin-bottom:11pt; padding-left:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">a
material change report of the Company, dated January 20, 2005, relating to the
filing of an unallocated preliminary base shelf prospectus by the Company.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Any
documents of the types referred to in the preceding paragraph (excluding
confidential material change reports and the sections of any information
circular permitted to be excluded under National Instrument 44-101 - Short Form
Prospectus Distributions) filed by the Company with a securities commission or
similar authority in Canada after the date of this Prospectus and prior to the
termination of the offering under any Prospectus Supplement shall be deemed to
be incorporated by reference into this Prospectus. &nbsp;Any document filed by
the Company with the United States Securities and Exchange Commission (the "SEC")
or Report of Foreign Private Issuer on Form 6-K furnished to the SEC pursuant to
the United States Securities Exchange Act of 1934, as amended (the "Exchange
Act"), after the date of this Prospectus shall also be deemed to be
incorporated by reference into this Prospectus if and to the extent provided in
such document.</p>
&nbsp;
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
5 -<br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">In
addition, the unaudited interim financial statements of the Company and the
notes thereto for the three and nine month periods ended September 30, 2004 and
2003, including a reconciliation to United States generally accepted accounting
principles in accordance with Item 18 of Form 20-F, filed on SEDAR on January <font face="Times New Roman">14</font>,
2005, are incorporated by reference in this Prospectus.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>Any
statement contained in this Prospectus or in a document incorporated or deemed
to be incorporated by reference in this Prospectus shall be deemed to be
modified or superseded for the purposes of this Prospectus to the extent that a
statement contained in this Prospectus or in any</b> <b>other
subsequently filed document which also is or is deemed to be incorporated by
reference in this Prospectus modifies or supersedes that statement. &nbsp;The
modifying or superseding statement need not state that it has modified or
superseded a prior statement or include any other information set forth in the
document that it modifies or supersedes. &nbsp;The making of a modifying or
superseding statement is not to be deemed an admission for any purposes that the
modified or superseded statement, when made, constituted a misrepresentation, an
untrue statement of material fact or an omission to state a material fact that
is required to be stated or is necessary to make a statement not misleading in
light of the circumstances in which it was made. &nbsp;Any statement so modified
or superseded shall not constitute a part of this Prospectus, except as so
modified or superseded.</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">A
Prospectus Supplement containing the specific terms of an offering of Securities
and other information in relation to such offering will be delivered to
purchasers of such Securities together with this Prospectus and will be deemed
to be incorporated by reference into this Prospectus as of the date of such
Prospectus Supplement solely for the purposes of the offering of Securities
covered by that Prospectus Supplement.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Upon
a new annual information form and the related annual financial statements being
filed by the Company with, and where required, accepted by, the applicable
securities regulatory authorities during the currency of this Prospectus, the
previous annual information form, the previous annual financial statements and
all interim financial statements, material change reports and information
circulars and all Prospectus Supplements filed prior to the commencement of the
Company's financial year in which the new annual information form was filed
shall be deemed no longer to be incorporated into this Prospectus for purposes
of future offers and sales of Securities hereunder.</p>
<a NAME="_Toc93312461"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>SPECIAL
NOTE REGARDING FORWARD-LOOKING INFORMATION</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Some
of the statements included or incorporated by reference in this Prospectus
constitute "forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995. &nbsp;When used in this
Prospectus, the words "anticipate", "believe", "estimate", "expect", "target", "plan",
"budget", "may", "schedule" and similar
words or expressions, identify forward-looking statements. &nbsp;These
forward-looking statements relate to, among other things:</p>
<ul>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
    sufficiency of the Company's current working capital and anticipated
    operating cash flow;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
    sufficiency of the mineral reserves and resources at Quiruvilca, Huaron,
    Morococha, La Colorada, Alamo Dorado, Manantial Espejo or other properties;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">estimated
    production from the Quiruvilca, Huaron, Morococha, La Colorada, Alamo
    Dorado, Manantial Espejo or other properties;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
    estimated cost of and availability of funding for ongoing capital
    improvement programs;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
    estimated cost of development or expansion of Huaron, Morococha, Alamo
    Dorado, Manantial Espejo or other projects;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
    estimated cost and effectiveness of changes to the mine plan at the La
    Colorada mine;</font>
    <p>&nbsp;
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
6 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
  </li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">estimated
    exploration expenditures to be incurred on the Company's various silver
    exploration properties;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">compliance
    with environmental standards;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">forecast
    capital and non-operating spending; and</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">levels
    of silver and other metals production, production costs and metal prices.</font></li>
</ul>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">These
statements reflect the Company's current views with respect to future events
and are necessarily based upon a number of assumptions and estimates that are
inherently subject to significant uncertainties and contingencies. &nbsp;Many
factors, both known and unknown, could cause actual results, performance or
achievements to be materially different from the results, performance or
achievements that are or may be expressed or implied by such forward-looking
statements including, without limitation, the factors identified under the
caption "Risk Factors" in this Prospectus and in the Company's Annual
Information Form, dated May 19, 2004, under the caption &quot;Trends and
Uncertainties.&quot; &nbsp;Investors are cautioned against attributing undue
certainty to forward-looking statements. &nbsp;Although the Company has
attempted to identify important factors that could cause actual results to
differ materially, there may be other factors that cause results not to be
anticipated, estimated or intended. &nbsp;The Company does not intend, and does
not assume any obligation, to update these forward-looking statements to reflect
changes in assumptions or changes in circumstances or any other events affecting
such statements, other than as required by applicable law.</p>
<a NAME="_Toc93312462"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>CAUTIONARY
NOTE TO UNITED STATES INVESTORS CONCERNING<br>
ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">In
this Prospectus, the terms "measured resources", "indicated resources"
and "inferred resources" are used. &nbsp;United States investors are advised
that while such terms are recognized and required under Canadian securities
rules, the SEC does not recognize them. &nbsp;"Inferred resources" have a
great amount of uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. &nbsp;It cannot be assumed that all or any
part of an inferred resource will ever be upgraded to a higher category.
&nbsp;Under Canadian securities rules, estimates of inferred resources may not
form the basis of feasibility or other economic studies. &nbsp;<b>United States
investors are cautioned not to assume that all or any part of measured or
indicated resources will ever be converted into reserves. &nbsp;United States
investors also are cautioned not to assume that all or any part of an inferred
resource exists, or is economically or legally mineable.</b></p>
<a NAME="_Toc93312463"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>CERTAIN
AVAILABLE INFORMATION</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company has filed with the SEC a registration statement on Form F-10 (the "Registration
Statement") under the United States Securities Act of 1933, as amended (the "1933 Act"), with respect to the Securities. &nbsp;This Prospectus, which
constitutes a part of that Registration Statement, does not contain all of the
information set forth in such Registration Statement and its exhibits, to which
reference is made for further information. &nbsp;See "Documents Filed as Part
of the U.S. Registration Statement".</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company is subject to the informational reporting requirements of the Exchange
Act, and in accordance therewith files reports and other information with the
SEC. Under a multijurisdictional disclosure system adopted by the United States,
the Company is permitted to prepare such reports and other information in
accordance with the disclosure requirements of Canada, which are different from
those of the United States. &nbsp;As a foreign private issuer, the Company is
exempt from the rules under the Exchange Act prescribing the furnishing and
content of proxy statements, and its officers, directors and principal
shareholders are exempt from the reporting and short-swing profit recovery rules
contained in Section 16 of the Exchange Act. &nbsp;Under the Exchange Act, the
Company is not required to publish financial statements as frequently or as
promptly as U.S. companies.</p>
<br>
<br>
<a NAME="SuppressFooterA"></a>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
7 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company files annual reports with the SEC on Form 40-F, which includes:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      Company's Annual Information Form;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">management's
      discussion and analysis of financial condition and results of operations;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      Company's consolidated financial statements, which have been prepared in
      accordance with generally accepted accounting principles in Canada ("Canadian
      GAAP") and reconciled to generally accepted accounting principles in the
      United States ("U.S. GAAP"); and</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">other
      information specified by the Form 40-F.</font></li>
  </ul>
</blockquote>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company also furnishes the following types of information to the SEC under cover
of Form&nbsp;6-K:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">material
      information the Company otherwise makes publicly available in reports that
      it files with securities regulatory authorities in Canada;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">material
      information that the Company files with, and which is made public by, the
      TSX; and</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">material
      information that the Company distributes to its shareholders in Canada.</font></li>
  </ul>
</blockquote>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Investors
may read and copy any document the Company files with, or furnishes to, the SEC
at the SEC's public reference room at Room 1024, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549. &nbsp;Copies of the material can also be obtained
from the SEC's public reference room in Washington, D.C. by paying a fee.
&nbsp;Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. &nbsp;The SEC also maintains a website (www.sec.gov) that
makes available reports and other information that the Company files or
furnishes electronically with it.</p>
<a NAME="_Toc93312464"></a>
<p style="margin-top:5.5pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>PRESENTATION
OF FINANCIAL INFORMATION AND EXCHANGE RATE DATA</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company presents its consolidated financial statements in United States dollars.
&nbsp;All references in this prospectus to "dollars", "$" or "US$"
are to United States dollars and all references to "Cdn$" are to Canadian
dollars, unless otherwise noted. &nbsp;Except as otherwise indicated, all
financial statements and financial data contained in, or incorporated by
reference into, this Prospectus have been prepared in accordance with Canadian
GAAP, which differ in certain significant respects from U.S. GAAP. &nbsp;For a
description of the material differences between Canadian GAAP and U.S. GAAP as
they relate to the Company's financial statements, see note&nbsp;16 to the
Company's audited consolidated financial statements for the years ended
December 31, 2003 and 2002 and note&nbsp;8 to the Company's unaudited interim
consolidated financial statements for the nine months ended September&nbsp;30,
2004, each incorporated by reference into this Prospectus, and note&nbsp;15 to
the audited consolidated financial statements of Corner Bay Silver Inc., for the
years ended June&nbsp;30, 2002 and 2001 and note&nbsp;5 to the unaudited pro
forma consolidated financial statements of the Company for the year ended
December&nbsp;31, 2002 and the three months ended March&nbsp;31, 2003, each
included in this Prospectus.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
following table sets forth, for each period indicated, the exchange rates of the
Canadian dollar to the U.S. dollar for the end of each period indicated and the
high, low and average (based on the exchange rate on the last day of each month
during such period) exchange rates for each of such periods (such rates, which
are expressed in Canadian dollars are based on the noon buying rates for U.S.
dollars reported by the Bank of Canada).</p>
<br>
<br>
<a NAME="SuppressFooterA"></a>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
8 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<br>
<div align="center">
  <center>
  <table style="page-break-before:always; font-size:10pt" cellspacing="0">
    <tr>
      <td valign="top" width="102">&nbsp;</td>
      <td valign="top" width="156">
        <p style="margin:0pt; padding-right:2.2pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align="center"><b>Nine
        Months</b></p>
      </td>
      <td style="border-bottom:0.5pt solid #000000" valign="top" width="336" colspan="3">
        <p style="margin:0pt; padding-right:2.2pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align="center"><b>Year
        Ended December 31,</b></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="102">&nbsp;</td>
      <td valign="top" width="156">
        <p style="margin-top:0pt; margin-bottom:4.5pt; padding-right:2.2pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align="center"><b><u>Ended
        September 30, 2004</u></b></p>
      </td>
      <td valign="top" width="108">
        <p style="margin-top:0pt; margin-bottom:4.5pt; padding-right:2.2pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align="center"><b><u>2003</u></b></p>
      </td>
      <td valign="top" width="114">
        <p style="margin-top:0pt; margin-bottom:4.5pt; padding-right:2.2pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align="center"><b><u>2002</u></b></p>
      </td>
      <td valign="top" width="114">
        <p style="margin-top:0pt; margin-bottom:4.5pt; padding-right:2.2pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align="center"><b><u>2001</u></b></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="102">
        <p style="margin-top:0pt; margin-bottom:1.85pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">High</p>
      </td>
      <td valign="top" width="156">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:39.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Cdn$1.3968</p>
      </td>
      <td valign="top" width="108">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:12.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Cdn$1.5747</p>
      </td>
      <td valign="top" width="114">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-left:-5.4pt; padding-right:21.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Cdn$1.6132</p>
      </td>
      <td valign="top" width="114">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-left:-5.4pt; padding-right:21.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Cdn$1.6021</p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="102">
        <p style="margin-top:0pt; margin-bottom:1.85pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Low</p>
      </td>
      <td valign="top" width="156">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:39.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.2639</p>
      </td>
      <td valign="top" width="108">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:12.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">$1.2924</p>
      </td>
      <td valign="top" width="114">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:21.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.5110</p>
      </td>
      <td valign="top" width="114">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:21.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.4936</p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="102">
        <p style="margin-top:0pt; margin-bottom:1.85pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Average</p>
      </td>
      <td valign="top" width="156">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:39.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.3280</p>
      </td>
      <td valign="top" width="108">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:12.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">$1.4015</p>
      </td>
      <td valign="top" width="114">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:21.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.5704</p>
      </td>
      <td valign="top" width="114">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:21.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.5484</p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="102">
        <p style="margin-top:0pt; margin-bottom:1.85pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">End
        of Period</p>
      </td>
      <td valign="top" width="156">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:39.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.2639</p>
      </td>
      <td valign="top" width="108">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:12.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">$1.2924</p>
      </td>
      <td valign="top" width="114">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:21.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.5796</p>
      </td>
      <td valign="top" width="114">
        <p style="margin-top:0pt; margin-bottom:1.85pt; padding-right:21.6pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.5926</p>
      </td>
      <a NAME="_Toc443098849"></a>
    </tr>
  </table>
  </center>
</div>
<p style="margin-top:0pt; margin-bottom:5.5pt; text-indent:36pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">On
February 8 , 2005, the noon buying rate reported by the Bank of
Canada was $1.00 = Cdn $1.2480.</p>
<a NAME="_Toc93312465"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>THE
COMPANY</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Pan
American Silver Corp. is a company existing under the <i>Business Corporations
Act</i> (British Columbia). &nbsp;The Company's head office is located at 1500
- - 625 Howe Street, Vancouver, British Columbia, V6C&nbsp;2T6 and its registered
and records office is located at 900 Waterfront Centre, 200 Burrard Street,
Vancouver, British Columbia, V7X&nbsp;1T2. &nbsp;In this Prospectus, the term "Pan American" refers to the Company and its principal subsidiaries.</p>
<a NAME="_Toc93312466"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>BUSINESS
OF THE COMPANY</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Pan
American is principally engaged in the exploration for, and the acquisition,
development and operation of silver properties. &nbsp;</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Pan
American: (i) owns and operates the producing Quiruvilca silver mine in Peru;
(ii) owns and operates the producing Huaron silver mine in Peru; (iii) owns an
86% equity interest in, and operates, the producing Morococha silver mine in
Peru; (iv) owns and operates the producing La Colorada silver mine in Mexico;
(v) mines and sells silver-rich pyrite stockpiles at a small-scale operation in
central Peru; and (vi) holds an option to acquire the San Vincente silver mine
in Bolivia, on which small-scale toll mining currently takes place. &nbsp;Pan
American also either holds an interest in or may earn an interest in
non-producing silver resource and silver exploration properties in Peru,
Argentina, the United States and Mexico, including the Alamo Dorado deposit in
Mexico and Manantial Espejo deposit in Argentina on which the Company is
preparing feasibility studies.</p>
<a NAME="_Toc443098857"></a><a NAME="_Toc93312467"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>USE
OF PROCEEDS</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Unless
otherwise indicated in the applicable Prospectus Supplement, the net proceeds
from the sale of Securities will be used by the Company to fund development of
the Alamo Dorado project, development of the Manantial Espejo project, expansion
of the Morococha mine, other ongoing exploration programs, working capital
requirements or for other general corporate purposes. &nbsp;The Company may,
from time to time, issue common shares or other securities otherwise than
through the offering of Securities pursuant to this Prospectus.</p>
<a NAME="_Toc93312468"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>EARNINGS
COVERAGE</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
following consolidated financial earnings deficiency figures and cash flow
coverage ratios are calculated for the year ended December 31, 2003 and the
12-month period ended September 30, 2004 and give effect to all long-term
financial liabilities of Pan American and the repayment, redemption or
retirement thereof since those dates, respectively. &nbsp;The earnings coverage
deficiencies, cash flow coverage ratios, cash flow coverage deficiencies and the
amount of earnings, cash flow and interest expense set forth below do not
purport to be indicative of earnings coverage deficiencies or ratios or cash
flow</p>
<br>
<a NAME="SuppressFooterA"></a>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
9 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before: always; line-height: 13pt; font-family: Times New Roman; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify">coverage
deficiencies or ratios for any future periods. &nbsp;The deficiency figures and
coverage ratios have been calculated based on Canadian GAAP. &nbsp;These
coverage deficiencies, coverage ratios, earnings, cash flows or interest
expenses do not give effect to the issuance of any Debt Securities that may be
issued pursuant to this Prospectus and any Prospectus Supplement, since the
aggregate principal amounts and the terms of such Debt Securities are not
presently known.</p>
<div align="center">
  <center>
  <table style="font-size:10pt" cellspacing="0">
    <tr>
      <td valign="top" width="342">&nbsp;</td>
      <td valign="top" width="124.8">
        <p style="margin-top:0pt; margin-bottom:4.5pt; line-height:13pt; font-family:Times New Roman; font-size:9pt" align="center"><b>12
        Months Ended<br>
        <u>September 30, 2004</u></b></p>
      </td>
      <td valign="top" width="115.4">
        <p style="margin-top:0pt; margin-bottom:4.5pt; line-height:13pt; font-family:Times New Roman; font-size:9pt" align="center"><b>Year
        Ended<br>
        <u>December 31, 2003</u></b></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="342">&nbsp;</td>
      <td valign="top" width="240.2" colspan="2">
        <p style="margin-top:0pt; margin-bottom:4.5pt; line-height:13pt; font-family:Times New Roman; font-size:9pt" align="center"><b>(US$
        millions except ratios)</b></p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="342">
        <p style="margin-top:0pt; margin-bottom:-15pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">Earnings
        coverage deficiency <sup>(1)</sup></p>
        <p style="margin-top:0pt; margin-bottom:5.5pt; text-indent:216pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
        </p>
      </td>
      <td valign="top" width="124.8">
        <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">2.44x</p>
      </td>
      <td valign="top" width="115.4">
        <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">$6.79</p>
      </td>
    </tr>
    <tr>
      <td valign="top" width="342">
        <p style="margin-top:0pt; margin-bottom:-15pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="justify">Cash
        flow coverage/(deficiency) <sup>(2)</sup></p>
        <p style="margin:0pt; text-indent:216pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
        </p>
      </td>
      <td valign="top" width="124.8">
        <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">$0.60</p>
      </td>
      <td valign="top" width="115.4">
        <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">$3.80</p>
      </td>
    </tr>
  </table>
  </center>
</div>
<p style="margin-top:0pt; margin-bottom:5.5pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">___________________________</p>
<p style="margin-top:0pt; margin-bottom:-13pt; padding-left:54pt; text-indent:-18pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><sup><font size="2">(1)</font></sup></p>
<p style="margin-top:0pt; margin-bottom:4.5pt; padding-left:54pt; line-height:11pt; font-family:Times New Roman; font-size:11pt" align="justify"><font size="2">Earnings
coverage deficiency is the dollar amount of earnings required to attain an
earnings coverage ratio of one-to-one. &nbsp;Earnings coverage ratio is equal to
net income before interest expense and income taxes divided by interest expense
on all debt.</font></p>
<p style="margin-top:0pt; margin-bottom:-13pt; padding-left:54pt; text-indent:-18pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><sup><font size="2">(2)</font></sup></p>
<p style="margin-top:0pt; margin-bottom:9pt; padding-left:54pt; line-height:11pt; font-family:Times New Roman; font-size:9pt" align="justify"><font size="2">Cash
flow deficiency is the dollar amount of cash flow required to attain a cash flow
coverage ratio of one-to-one. &nbsp;Cash flow coverage ratio is equal to cash
flow from operating activities before interest expense and income taxes divided
by interest expense on all debt.</font></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company's interest expense requirements amounted to approximately $1,156,000
for the year ended December&nbsp;31, 2003. &nbsp;The Company's losses before
interest expense and income tax for the year ended December&nbsp;31, 2003 were
approximately $5,638,000, which is a deficiency of approximately $6,794,000 of
the earnings amount necessary to attain a earnings coverage ratio of one-to-one
for this period.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company's interest expense requirements amounted to approximately $964,000 for
the 12&nbsp;months ended September&nbsp;30, 2004. &nbsp;The Company's earnings
before interest expense and income tax for the 12 months ended
September&nbsp;30, 2004 were approximately $2,352, which is 2.44 times the
Company's interest requirement.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">If
the Company offers any Debt Securities having a term to maturity in excess of
one year under this Prospectus and a Prospectus Supplement, the Prospectus
Supplement will include earnings coverage ratios giving effect to the issuance
of such Debt Securities.</p>
<a NAME="_Toc93312469"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>DESCRIPTION
OF SHARE CAPITAL</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company is authorized to issue 100,000,000 common shares, without par value, of
which 66,814,433 are issued and outstanding as at the date of this Prospectus.
&nbsp;There are options outstanding to purchase up to 1,703,974 common shares at
prices ranging from Cdn$5.00 to Cdn$22.51 and warrants outstanding to purchase
up to 3,809,817 common shares at a price of Cdn$12.00. &nbsp;Holders of common
shares are entitled to one vote per common share at all meetings of
shareholders, to receive dividends as and when declared by the directors of the
Company and to receive a pro rata share of the assets of the Company available
for distribution to the shareholders in the event of the liquidation,
dissolution or winding-up of the Company. &nbsp;There are no pre-emptive,
conversion or redemption rights attached to the common shares.</p>
<br>
<a NAME="SuppressFooterA"></a>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
10 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><a NAME="_Toc93312470"></a><b>DESCRIPTION
OF DEBT SECURITIES</b></p>
<p style="margin-top:0pt; margin-bottom:12pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>General</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may issue Debt Securities in one or more series under an indenture (the "Trust Indenture") that it will enter into with one or more trustees (each,
a "Trustee") that will be described in the Prospectus Supplement for such
Debt Securities. &nbsp;The following summary describes certain provisions of the
Trust Indenture, although it does not purport to be complete and is subject to
and is qualified in its entirety by reference to the Trust Indenture. &nbsp;At
least one of the Trustees must be resident in British Columbia, authorized to do
business in British Columbia or authorized to carry on trust business under the <i>Financial
Institutions Act</i> (British Columbia). &nbsp;The Trust Indenture will be
subject to and governed by the <i>Business Corporations Act</i> (British
Columbia) and the United States Trust Indenture Act of 1939, as amended. &nbsp;A
copy of the form of Trust Indenture has been filed with the SEC as an exhibit to
the registration statement of which this Prospectus forms a part and has been filed with the Canadian securities regulatory authorities. &nbsp;The terms of
Debt Securities the Company offers may differ from the general information
provided below. Prospective investors should rely only on information in the
Prospectus Supplement if it is different from the following information.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may issue Debt Securities and incur additional indebtedness other than
through the offering of Debt Securities pursuant to this Prospectus.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Reference
to the "Company" in this section refers only to Pan American Silver Corp.
but not any of its subsidiaries.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Trust Indenture does not limit the amount of Debt Securities the Company can
issue thereunder and unless otherwise stated in the Prospectus Supplement does
not limit the amount of other indebtedness the Company may incur. &nbsp;The
Company may issue Debt Securities from time to time in separate series.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Prospectus Supplement for any series of Debt Securities the Company offers will
describe the specific terms of the Debt Securities and may include any of the
following:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      designation of the Debt Securities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">any
      limit on the aggregate principal amount of the Debt Securities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      price at which the Debt Securities will be issued (or the manner of
      determination thereof, if offered on a non-fixed price basis and whether
      at par, at a discount or at a premium);</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      the payment of the Debt Securities will be guaranteed by any other person
      and the terms of such guarantee;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      currency of issue of the Debt Securities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      payment on the Debt Securities will be senior or subordinated to, or pari
      passu with, the Company's other liabilities and obligations and the
      terms and provisions of any such subordination;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      the payment of the Debt Securities will be secured by any of the Company's
      assets or by any other person;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      dates on which the Company may issue the Debt Securities and the date or
      dates on which the Company will pay the principal and any premium on the
      Debt Securities and the portion</font></li>
  </ul>
</blockquote>
<br>
<br>
<a NAME="SuppressFooterA"></a>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
11 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<blockquote>
  <blockquote>
    <p style="page-break-before: always; line-height: 13pt; font-family: Times New Roman; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify">(if
    less than the principal amount) of Debt Securities to be payable on a
    declaration of acceleration of maturity;</p>
  </blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      and under what circumstances the date or dates on which the Company will
      pay the principal and any premium on the Debt Securities may be extended;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      the Debt Securities will bear interest, whether the interest is payable in
      cash, securities or a combination thereof, the interest rate or the method
      of determining the interest rate, the date from which interest will
      accrue, the dates on which the Company will pay interest and the record
      dates for interest payments;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      place or places the Company will pay principal, any premium and interest
      and the place or places where Debt Securities can be presented for
      registration of transfer or exchange;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      and under what circumstances the Company will be required to pay any
      additional amounts for withholding or deduction for Canadian taxes with
      respect to the Debt Securities, and whether the Company will have the
      option to redeem the Debt Securities rather than pay the additional
      amounts;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      and under what circumstances the Company may prepay, redeem or repurchase
      the Debt Securities at its option;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      and under what circumstances the Company will be obligated to prepay,
      redeem or repurchase the Debt Securities pursuant to any sinking fund or
      other provisions, or at the option of a holder;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">if
      other than $1,000 and any integral multiples thereof, the denominations in
      which the Company will issue the Debt Securities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      currency in which the Company will make payments on the Debt Securities
      and whether payments will be payable with reference to any index or
      formula;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      the Company will issue the Debt Securities as global securities and, if
      so, the identity of the depositary for the global securities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      the Company will issue the Debt Securities as bearer securities or only in
      registered form;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">any
      changes or additions to events of default or covenants;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">any
      changes or additions to the provisions for defeasance described under "Defeasance"
      below;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      the holders of any series of Debt Securities have special rights if
      specified events occur;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">any
      restrictions on the transfer or exchange of the Debt Securities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      terms for any conversion or exchange of the Debt Securities for any other
      securities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">provisions
      as to modification, amendment or variation of any rights or terms
      attaching to the Debt Securities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      identity of the Trustee;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">whether
      the Debt Securities will be listed on any Exchange; and</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">any
      other terms of the Debt Securities.</font></li>
  </ul>
</blockquote>
<br>
<br>
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<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Unless
stated otherwise in the applicable Prospectus Supplement, no holder will have
the right to require the Company to repurchase the Debt Securities and there
will be no increase in the interest rate if the Company becomes involved in a
highly leveraged transaction or there is a change of control of the Company.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may issue Debt Securities bearing no interest or interest at a rate
below the prevailing market rate at the time of issuance, and offer and sell
these securities at a discount below their stated principal amount. &nbsp;The
Company may also sell any of the Debt Securities for a foreign currency or
currency unit, and payments on the Debt Securities may be payable in a foreign
currency or currency unit. In any of these cases, the Company will describe in
the applicable Prospectus Supplement, any Canadian and United States federal
income tax consequences and other special considerations.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may issue Debt Securities with terms different from those of Debt
Securities previously issued and, without the consent of the holders thereof,
the Company may reopen a previous issue of a series of Debt Securities and issue
additional Debt Securities of such series (unless the reopening was restricted
when such series was created).</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Unless
stated otherwise in the applicable Prospectus Supplement, the Company will issue
Debt Securities only in fully registered form without coupons, in denominations
of $1,000 and multiples of $1,000. &nbsp;The applicable Prospectus Supplement
may indicate the denominations to be issued, the procedures for payment of
interest and principal and other matters. No service charge will be made for any
registration of transfer or exchange of the Debt Securities, but the Company
may, in certain instances, require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection with these transactions.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Payment
and Transfer</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Unless
stated otherwise in the Prospectus Supplement, the Company will make payments of
principal of (and premium, if any, on) Debt Securities of a particular series in
the designated currency against surrender of the Debt Securities at the office
of the paying agent the Company designates from time to time. &nbsp;Unless
stated otherwise in the applicable Prospectus Supplement, the Company will make
payment of any installment of interest on Debt Securities to the persons in
whose names the Debt Securities are registered on the close of business on the
day or days specified by the Company. &nbsp;Unless otherwise indicated in the
applicable Prospectus Supplement, payments of interest will be made, at the
Company's option:</p>
<ul>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">at
    the corporate trust office of the paying agent that the Company designates
    from time to time;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">by
    electronic funds transfer to an account that the holder designates from time
    to time; or</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">by
    a cheque in the designated currency mailed to each holder at the relevant
    holder's registered address.</font></li>
</ul>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Holders
may transfer or exchange fully registered Debt Securities at the corporate trust
office of the Trustee or at any other office or agency the Company maintains for
these purposes, without the payment of any service charge except for any tax or
governmental charge.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Global
Securities</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may issue Debt Securities of a series in the form of one or more global
securities ("Global Securities") which will be deposited with a depositary
(a "Depositary"), or its nominee,</p>
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</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before: always; line-height: 13pt; font-family: Times New Roman; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify">identified
in the applicable Prospectus Supplement and which will be exchangeable for
definitive Debt Securities only under certain conditions. &nbsp;The Global
Securities may be in temporary or permanent form. &nbsp;The applicable
Prospectus Supplement will describe the terms of any depositary arrangement and
the rights and limitations of owners of beneficial interests in any global
security. &nbsp;The applicable Prospectus Supplement also will describe the
exchange, registration and transfer rights relating to any global security.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Merger,
Amalgamation or Consolidation</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Trust Indenture generally permits the Company to amalgamate or consolidate with
or merge into any other person, and to transfer or dispose of substantially all
of its assets, so long as the resulting person is a Canadian or U.S. entity and
assumes the Company's obligations on the Debt Securities and under the Trust
Indenture and the Company or such successor person will not be in default under
the Trust Indenture immediately after the transaction.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">If
the resulting person assumes the Company's obligations, subject to certain
exceptions, the Company will be relieved of those obligations.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Events
of Default</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
following are summaries of events with respect to any series of Debt Security
which will constitute an "event of default" in respect of a series of Debt
Securities:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      Company fails to pay principal or any premium on any Debt Security of that
      series when it is due;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      Company fails to pay interest on any Debt Security of that series for 30
      days from the date such amounts are due;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      Company fails to comply with any of its other agreements relating to the
      Debt Securities or the Trust Indenture for 60 days after written notice by
      the Trustee or by holders of at least 25% in aggregate principal amount of
      the outstanding Debt Securities of that series;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">certain
      events involving its bankruptcy, insolvency or reorganization; and</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">any
      other event of default provided for that series of Debt Securities.</font></li>
  </ul>
</blockquote>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Prospectus Supplement for a series of Debt Securities may include additional
events of default or changes to the events of default described above. &nbsp;The
Trustee will give notice within a reasonable time (not exceeding 30 days) to the
holders of Debt Securities of any default unless it determines in good faith the
withholding of such notice is in the best interests of the holders,
collectively, and so advises the Company in writing.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">A
default under one series of Debt Securities will not necessarily be a default
under another series.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">If
an event of default for any series of Debt Securities occurs and continues, the
Trustee or the holders of at least 25% in aggregate principal amount of the Debt
Securities of that series may require the Company to repay immediately:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      entire principal of the Debt Securities of the series; or</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">if
      the Debt Securities are discounted securities, that portion of the
      principal as is described in the applicable Prospectus Supplement.</font></li>
  </ul>
</blockquote>
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</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">If
an event of default relates to events involving the Company's bankruptcy,
insolvency or reorganization, the principal of all Debt Securities will become
immediately due and payable without any action by the Trustee or any holder.
&nbsp;Subject to certain conditions, the holders of a majority of the aggregate
principal amount of the Debt Securities of the affected series can rescind the
accelerated payment requirement.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Other
than its duties in case of a default, the Trustee is not obligated to exercise
any of its rights or powers under the Trust Indenture at the request, order or
direction of any holders, unless the holders offer the Trustee reasonable
indemnity. &nbsp;If they provide this reasonable indemnity, the holders of a
majority in principal amount of any series of Debt Securities may, subject to
certain limitations, direct the time, method and place of conducting any
proceeding or any remedy available to the Trustee, or exercising any power
conferred on the Trustee, for any series of Debt Securities.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company will be required to furnish to the Trustee a statement annually as to
its compliance with all conditions and covenants under the Trust Indenture and,
if the Company is not in compliance, it must specify any defaults.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Defeasance</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">When
the Company uses the term "defeasance", it means discharge from some or all
of its obligations under the Trust Indenture. &nbsp;If the Company deposits with
the Trustee sufficient cash or government securities to pay the principal,
interest, any premium and any other sums due to the stated maturity date or a
redemption date of the Debt Securities of a series, then at its option:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      Company will be discharged from its obligations with respect to the Debt
      Securities of that series; or</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      Company will no longer be under any obligation to comply with certain
      restrictive covenants under the Trust Indenture, and certain events of
      default will no longer apply to the Company.</font></li>
  </ul>
</blockquote>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">If
this happens, the holders of the Debt Securities of the affected series will not
be entitled to the benefits of the Trust Indenture except for registration of
transfer and exchange of Debt Securities and the replacement of lost, stolen or
mutilated Debt Securities. &nbsp;These holders may look only to the deposited
fund for payment on their Debt Securities.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Unless
stated otherwise in the Prospectus Supplement, in order to exercise its
defeasance option, the Company will be required to deliver to the Trustee an
opinion of counsel to the effect that the deposit and related defeasance would
not cause the holders of the Debt Securities to recognize income, gain or loss
for Canadian federal or Canadian provincial income tax purposes (and any other
jurisdiction specified for this purpose in the Prospectus Supplement). &nbsp;The
Company also will be required to deliver a certificate of an officer of the
Company and an opinion of counsel, each stating that all of the conditions
precedent provided for relating to defeasance have been satisfied. In addition,
other conditions must be met before the Company may exercise its defeasance
option.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Modification
and Waiver</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may modify the Trust Indenture with the consent of the holders of a
majority in aggregate principal amount of the outstanding Debt Securities of
each series affected by the modification. However, without the consent of each
holder affected, no modification may:</p>
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</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">reduce
      the percentage of the unpaid principal amount of any series of Debt
      Securities whose holders must consent to any amendment or waiver under the
      Trust Indenture or which may otherwise require notice, information or
      action or effect any action, or modify the provisions in the Trust
      Indenture relating to amendment or waiver;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">reduce
      the amount of, or change the currency of payment of or to delay the time
      of any payments (whether of principal, premium, interest or otherwise) to
      be made to the holders of Debt Securities of any series;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">change
      the definition of or the manner of calculating amounts (including any
      change in the applicable rate or rates of interest) to which any holder of
      Debt Securities of any series is entitled under the Trust Indenture;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">make
      any change that adversely affects the redemption, conversion or exchange
      rights of holders of Debt Securities of any series;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">make
      any change that would result in the issuer being required to make any
      deduction or withholding from payments to be made to holders of Debt
      Securities of any series; or</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">impair
      the right of holders to institute a suit to enforce their rights to
      payment.</font></li>
  </ul>
</blockquote>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
holders of a majority in principal amount of outstanding Debt Securities of any
series may on behalf of the holders of all outstanding Debt Securities of that
series waive, only insofar as that series is concerned, any prospective or
existing defaults under the Trust Indenture and the Company's compliance with
certain restrictive provisions of the Trust Indenture. &nbsp;However, these
holders may not waive a default in any payment on any Debt Security or
compliance with a provision that cannot be modified without the consent of each
holder affected.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may modify the Trust Indenture without the consent of the holders to:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">cure
      any ambiguity, defect or inconsistency, provided, however, that the
      amendment to cure any ambiguity, defect or inconsistency does not
      materially and adversely affect the rights of any holder of Debt
      Securities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">provide
      for the assumption by a successor of the Company's obligations under the
      Trust Indenture;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">give
      effect to certain directions of the holders;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">change
      or eliminate any provisions where the change takes effect when there are
      no Debt Securities outstanding under the Trust Indenture;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">provide
      for uncertificated Debt Securities in addition to certificated Debt
      Securities, as long as those uncertificated Debt Securities are in
      registered form for United States federal income tax purposes;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">make
      any change to maintain the qualification of the Trust Indenture under the
      United States Trust Indenture Act of 1939, as amended, or to comply with
      applicable laws;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">add
      to the Company's covenants, obligations or events of default under the
      Trust Indenture for the protection of holders of Debt Securities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">add
      a guarantor to guarantee the payment of the Debt Securities of any series;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">surrender
      any right, power or option conferred by the Trust Indenture on the
      Company; or</font></li>
  </ul>
</blockquote>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">in
any other manner that would not adversely affect the rights of holders of
outstanding securities.</p>
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</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>Governing
Law</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Trust Indenture and the Debt Securities will be governed by and construed in
accordance with the laws of the Province of British Columbia and the federal
laws of Canada applicable in British Columbia.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>The
Trustee</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Trustee under the Trust Indenture or its affiliates may provide banking and
other services to the Company in the ordinary course of their business.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Trust Indenture contains certain limitations on the rights of the Trustee, as
long as it or any of its affiliates remains the Company's creditor, to obtain
payment of claims in certain cases or to realize on certain property received on
any claim as security or otherwise. &nbsp;The Trustee and its affiliates will be
permitted to engage in other transactions with the Company. &nbsp;If the Trustee
or any affiliate acquires any conflicting interest and a default occurs with
respect to the Debt Securities, the Trustee must eliminate the conflict or
resign.</p>
<a NAME="_Toc93312471"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>DESCRIPTION
OF WARRANTS</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>General</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may issue Warrants to purchase Common Shares or Debt Securities. The
Company may issue Warrants independently or together with other Securities, and
Warrants sold with other Securities may be attached to or separate from the
other Securities. &nbsp;Warrants will be issued under and governed by the terms
of one or more warrant indentures (each a "Warrant Indenture") between the
Company and a warrant trustee (the "Warrant Trustee") that the Company will
name in the relevant Prospectus Supplement. &nbsp;Each Warrant Trustee will be a
financial institution organized under the laws of Canada or any province thereof
and authorized to carry on business as a trustee.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Selected
provisions of the Warrants and any Warrant Indenture are summarized below.
&nbsp;The statements made in this Prospectus relating to any Warrant Indenture
and Warrants to be issued thereunder are summaries of certain anticipated
provisions thereof and are subject to, and are qualified in their entirety by
reference to, all provisions of the applicable Warrant Indenture and the
Prospectus Supplement describing such Warrant Indenture.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Prospectus Supplement relating to any Warrants the Company offers will describe
the Warrants and include specific terms relating to their offering. &nbsp;All
such terms will comply with the requirements of the TSX and Nasdaq relating to
Warrants. &nbsp;The Prospectus Supplement will include some or all of the
following:</p>
<ul>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
    designation and aggregate number of Warrants offered;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
    price, if any, at which the Warrants will be offered;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
    currency or currencies of the price at which the Warrants will be offered;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
    designation, number and terms of the Common Shares or Debt Securities
    purchasable upon exercise of the Warrants, and the procedures that will
    result in the adjustment of those numbers;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
    exercise price of the Warrants;</font></li>
</ul>
<br>
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<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<ul>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
    currency or currencies in which the exercise price is denominated;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
    dates or periods during which the Warrants are exercisable;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
    designation and terms of any securities with which the Warrants are issued;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">if
    the Warrants are issued as a unit with another security, the date on and
    after which the Warrants and the other security will be separately
    transferable;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">any
    minimum or maximum amount of Warrants that may be exercised at any one time;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">any
    terms, procedures and limitations relating to the transferability, exchange
    or exercise of the Warrants;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">whether
    the Warrants will be subject to redemption or call and, if so, the terms of
    such redemption or call provisions;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">any
    entitlement of the Company to purchase the Warrants in the open market by
    private agreement or otherwise;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
    identity of the Warrant Trustee;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">whether
    the Warrants will be listed on any exchange;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">material
    Canadian and United States tax consequences of owning the Warrants; and</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">any
    other terms of the Warrants.</font></li>
</ul>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Warrant
certificates will be exchangeable for new Warrant certificates of different
denominations at the office or offices indicated in the Warrant Indenture and
the Prospectus Supplement. &nbsp;Prior to the exercise of their Warrants,
holders of Warrants will not have any of the rights of holders of the Common
Shares or Debt Securities issuable upon exercise of the Warrants.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may amend any Warrant Indenture and the Warrants, without the consent of
the holders of the Warrants, to cure any ambiguity, to cure, correct or
supplement any defective or inconsistent provision, or in any other manner that
will not materially and adversely affect the interests of holders of outstanding
Warrants.</p>
<a NAME="_Toc93312472"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>DESCRIPTION
OF SUBSCRIPTION RECEIPTS</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may issue Subscription Receipts, which will entitle holders to receive
upon satisfaction of certain release conditions and for no additional
consideration, Common Shares, Debt Securities or Warrants. &nbsp;Subscription
Receipts will be issued pursuant to one or more subscription receipt agreements
(each, a "Subscription Receipt Agreement"), each to be entered into between
the Company and an Escrow Agent (the "Escrow Agent"), which will also
establish the terms and conditions of the Subscription Receipts. &nbsp;Each
Escrow Agent will be a financial institution organized under the laws of Canada
or a province thereof and authorized to carry on business as a trustee. &nbsp;A
copy of the form of Subscription Receipt Agreement will be filed with Canadian
securities regulatory authorities and as an exhibit to the Registration
Statement. &nbsp;The following description sets forth certain general terms and
provisions of Subscription Receipts and is not intended to be complete.
&nbsp;The statements made in this Prospectus relating to any Subscription
Receipt Agreement and Subscription Receipts to be issued</p>
<br>
<br>
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<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before: always; line-height: 13pt; font-family: Times New Roman; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify">thereunder
are summaries of certain anticipated provisions thereof and are subject to, and
are qualified in their entirety by reference to, all provisions of the
applicable Subscription Receipt Agreement and the Prospectus Supplement
describing such Subscription Receipt Agreement.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Prospectus Supplement relating to any Subscription Receipts the Company offers
will describe the Subscription Receipts and include specific terms relating to
their offering. &nbsp;All such terms will comply with the requirements of the
TSX and Nasdaq relating to Subscription Receipts. &nbsp;If underwriters or
agents are used in the sale of Subscription Receipts, one or more of such
underwriters or agents may also be parties to the Subscription Receipt Agreement
governing the Subscription Receipts sold to or through such underwriters or
agents.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>General</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Prospectus Supplement and the Subscription Receipt Agreement for any
Subscription Receipts the Company offers will describe the specific terms of the
Subscription Receipts and may include, but are not limited to, any of the
following:</p>
<ul>
  <li>
    <p style="text-indent: 0; line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">the
    designation and aggregate number of Subscription Receipts offered;</font></li>
  <li>
    <p style="text-indent: 0; line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">the
    price at which the Subscription Receipts will be offered;</font></li>
  <li>
    <p style="text-indent: 0; line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">the
    currency or currencies of the price at which the Subscription Receipts will
    be offered;</font></li>
  <li>
    <p style="text-indent: 0; line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">the
    designation, number and terms of the Common Shares, Debt Securities,
    Warrants or combination thereof to be received by holders of Subscription
    Receipts upon satisfaction of the release conditions, and the procedures
    that will result in the adjustment of those numbers;</font></li>
  <li>
    <p style="text-indent: 0; line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">the
    conditions (the "Release Conditions") that must be met in order for
    holders of Subscription Receipts to receive for no additional consideration
    Common Shares, Debt Securities, Warrants or a combination thereof;</font></li>
  <li>
    <p style="text-indent: 0; line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">the
    procedures for the issuance and delivery of Common Shares, Debt Securities,
    Warrants or a combination thereof to holders of Subscription Receipts upon
    satisfaction of the Release Conditions;</font></li>
  <li>
    <p style="text-indent: 0; line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">whether
    any payments will be made to holders of Subscription Receipts upon delivery
    of the Common Shares, Debt Securities, Warrants or a combination thereof
    upon satisfaction of the Release Conditions (<i>e.g.</i>, an amount equal to
    dividends declared on Common Shares by the Company to holders of record
    during the period from the date of issuance of the Subscription Receipts to
    the date of issuance of any Common Shares pursuant to the terms of the
    Subscription Receipt Agreement, or an amount equal to interest payable by
    the Company in respect of Debt Securities during the period from the date of
    issuance of the Subscription Receipts to the date of issuance of the Debt
    Securities pursuant to the terms of the Subscription Receipt Agreement);</font></li>
  <li>
    <p style="text-indent: 0; line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">the
    terms and conditions under which the Escrow Agent will hold all or a portion
    of the gross proceeds from the sale of Subscription Receipts, together with
    interest and income earned thereon (collectively, the "Escrowed Funds"),
    pending satisfaction of the Release Conditions;</font></li>
  <li>
    <p style="text-indent: 0; line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">the
    terms and conditions pursuant to which the Escrow Agent will hold Common
    Shares, Debt Securities or Warrants pending satisfaction of the Release
    Conditions;</font></li>
</ul>
<br>
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19 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<ul>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">the
    terms and conditions under which the Escrow Agent will release all or a
    portion of the Escrowed Funds to the Company upon satisfaction of the
    Release Conditions;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">if
    the Subscription Receipts are sold to or through underwriters or agents, the
    terms and conditions under which the Escrow Agent will release a portion of
    the Escrowed Funds to such underwriters or agents in payment of all or a
    portion of their fees or commission in connection with the sale of the
    Subscription Receipts;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">procedures
    for the refund by the Escrow Agent to holders of Subscription Receipts of
    all or a portion of the subscription price for their Subscription Receipts,
    plus any pro rata entitlement to interest earned or income generated on such
    amount, if the Release Conditions are not satisfied;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">any
    contractual right of rescission to be granted to initial purchasers of
    Subscription Receipts in the event this Prospectus, the Prospectus
    Supplement under which Subscription Receipts are issued or any amendment
    hereto or thereto contains a misrepresentation;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">any
    entitlement of the Company to purchase the Subscription Receipts in the open
    market by private agreement or otherwise;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">whether
    the Company will issue the Subscription Receipts as global securities and,
    if so, the identity of the depositary for the global securities;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">whether
    the Company will issue the Subscription Receipts as bearer securities,
    registered securities or both;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">provisions
    as to modification, amendment or variation of the Subscription Receipt
    Agreement or any rights or terms attaching to the Subscription Receipts;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">the
    identity of the Escrow Agent;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">whether
    the Subscription Receipts will be listed on any exchange;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">material
    Canadian and United States tax consequences of owning the Subscription
    Receipts; and</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt; padding-left: 0" align="justify"><font FACE="Times New Roman">any
    other terms of the Subscription Receipts.</font></li>
</ul>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>The
holders of Subscription Receipts will not be shareholders of the Company.
&nbsp;Holders of Subscription Receipts are entitled only to receive Common
Shares, Debt Securities, Warrants or a combination thereof on exchange of their
Subscription Receipts, plus any cash payments provided for under the
Subscription Receipt Agreement, if the Release Conditions are satisfied.
&nbsp;If the Release Conditions are not satisfied, Holders of Subscription
Receipts shall be entitled to a refund of all or a portion of the subscription
price therefor and all or a portion of the pro rata share of interest earned or
income generated thereon, as provided in the Subscription Receipt Agreement.</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Escrow</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Escrowed Funds will be held in escrow by the Escrow Agent, and such Escrowed
Funds will be released to the Company (and, if the Subscription Receipts are
sold to or through underwriters or agents, a portion of the Escrowed Funds may
be released to such underwriters or agents in payment of all or a portion of
their fees in connection with the sale of the Subscription Receipts) at the time
and under the terms specified by the Subscription Receipt Agreement. &nbsp;If
the Release Conditions are not satisfied,</p>
<br>
<br>
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20 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before: always; line-height: 13pt; font-family: Times New Roman; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify">holders
of Subscription Receipts will receive a refund of all or a portion of the
subscription price for their Subscription Receipts plus their pro-rata
entitlement to interest earned or income generated on such amount, in accordance
with the terms of the Subscription Receipt Agreement. &nbsp;Common Shares, Debt
Securities or Warrants may be held in escrow by the Escrow Agent, and will be
released to the holders of Subscription Receipts following satisfaction of the
Release Conditions at the time and under the terms specified in the Subscription
Receipt Agreement.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Anti-Dilution</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Subscription Receipt Agreement will specify that upon the subdivision,
consolidation, reclassification or other material change of the Common Shares,
Debt Securities or Warrants or any other reorganization, amalgamation, merger or
sale of all or substantially all of the Company's assets, the Subscription
Receipts will thereafter evidence the right of the holder to receive the
securities, property or cash deliverable in exchange for or on the conversion of
or in respect of the Common Shares, Debt Securities or Warrants to which the
holder of a Common Share, Debt Security or Warrant would have been entitled
immediately after such event. &nbsp;Similarly, any distribution to all or
substantially all of the holders of Common Shares of rights, options, warrants,
evidences of indebtedness or assets will result in an adjustment in the number
of Common Shares to be issued to holders of Subscription Receipts whose
Subscription Receipts entitle the holders thereof to receive Common Shares.
&nbsp;Alternatively, such securities, evidences of indebtedness or assets may,
at the option of the Company, be issued to the Escrow Agent and delivered to
holders of Subscription Receipts on exercise thereof. &nbsp;The Subscription
Receipt Agreement will also provide that if other actions of the Company affect
the Common Shares, Debt Securities or Warrants, which, in the reasonable opinion
of the directors of the Company, would materially affect the rights of the
holders of Subscription Receipts and/or the rights attached to the Subscription
Receipts, the number of Common Shares, Debt Securities or Warrants which are to
be received pursuant to the Subscription Receipts shall be adjusted in such
manner, if any, and at such time as the directors of the Company may in their
discretion reasonably determine to be equitable to the holders of Subscription
Receipts in such circumstances.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Rescission</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Subscription Receipt Agreement will also provide that any misrepresentation in
this Prospectus, the Prospectus Supplement under which the Subscription Receipts
are offered, or any amendment thereto, will entitle each initial purchaser of
Subscription Receipts to a contractual right of rescission following the
issuance of the Common Shares, Debt Securities or Warrants to such purchaser
entitling such purchaser to receive the amount paid for the Subscription
Receipts upon surrender of the Common Shares, Debt Securities or Warrants,
provided that such remedy for rescission is exercised in the time stipulated in
the Subscription Receipt Agreement. &nbsp;This right of rescission does not
extend to holders of Subscription Receipts who acquire such Subscription
Receipts from an initial purchaser, on the open market or otherwise, or to
initial purchasers who acquire Subscription Receipts in the United States.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Global
Securities</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may issue Subscription Receipts in whole or in part in the form of one
or more Global Securities, which will be registered in the name of and be
deposited with a Depositary, or its nominee, each of which will be identified in
the applicable Prospectus Supplement. &nbsp;The Global Securities may be in
temporary or permanent form. The applicable Prospectus Supplement will describe
the terms of any depositary arrangement and the rights and limitations of owners
of beneficial interests in any Global Security. The applicable Prospectus
Supplement also will describe the exchange, registration and transfer rights
relating to any Global Security.</p>
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</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
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<p style="page-break-before:always; margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>Modifications</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Subscription Receipt Agreement will provide for modifications and alterations to
the Subscription Receipts issued thereunder by way of a resolution of holders of
Subscription Receipts at a meeting of such holders or a consent in writing from
such holders. &nbsp;The number of holders of Subscriptions Receipts required to
pass such a resolution or execute such a written consent will be specified in
the Subscription Receipt Agreement. &nbsp;</p>
<a NAME="_Toc443098862"></a><a NAME="_Toc93312473"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>PLAN
OF DISTRIBUTION</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>General</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company may offer and sell the Securities, separately or together: (i) to one or
more underwriters or dealers; (ii) through one or more agents; or (iii) directly
to one or more other purchasers. The Securities offered pursuant to any
Prospectus Supplement may be sold from time to time in one or more transactions
at: (i) a fixed price or prices, which may be changed from time to time; (ii)
market prices prevailing at the time of sale; (iii) prices related to such
prevailing market prices; or (iv) other negotiated prices. &nbsp;The Company may
only offer and sell the Securities pursuant to a Prospectus Supplement during
the 25-month period that this Prospectus, including any amendments hereto,
remains valid. &nbsp;The Prospectus Supplement for any of the Securities being
offered thereby will set forth the terms of the offering of such Securities,
including the type of Security being offered, the name or names of any
underwriters, dealers or agents, the purchase price of such Securities, the
proceeds to the Company from such sale, any underwriting commissions or
discounts and other items constituting underwriters' compensation and any
discounts or concessions allowed or re-allowed or paid to dealers. &nbsp;Only
underwriters so named in the Prospectus Supplement are deemed to be underwriters
in connection with the Securities offered thereby.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>By
Underwriters or Dealers</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">If
underwriters are used in the sale, the Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. &nbsp;Unless
otherwise set forth in the Prospectus Supplement relating thereto, the
obligations of underwriters to purchase the Securities will be subject to
certain conditions, but the underwriters will be obligated to purchase all of
the Securities offered by the Prospectus Supplement if any of such Securities
are purchased. &nbsp;The Company may agree to pay the underwriters a fee or
commission for various services relating to the offering of any Securities.
&nbsp;Any such fee or commission will be paid out of the general corporate funds
of the Company.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">If
dealers are used, and if so specified in the applicable Prospectus Supplement,
the Company will sell such Securities to the dealers as principals. &nbsp;The
dealers may then resell such Securities to the public at varying prices to be
determined by such dealers at the time of resale. &nbsp;Any public offering
price and any discounts or concessions allowed or re-allowed or paid to dealers
may be changed from time to time.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>By
Agents</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Securities may also be sold through agents designated by the Company. &nbsp;Any
agent involved will be named, and any fees or commissions payable by the Company
to such agent will be set forth, in the applicable Prospectus Supplement.
&nbsp;Any such fees or commissions will be paid out of the general corporate
funds of the Company. &nbsp;Unless otherwise indicated in the Prospectus
Supplement, any agent will be acting on a best efforts basis for the period of
its appointment.</p>
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<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
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<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>Direct
Sales</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Securities
may also be sold directly by the Company at such prices and upon such terms as
agreed to by the Company and the purchaser. &nbsp;In this case, no underwriters,
dealers or agents would be involved in the offering.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:-4.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>General
Information</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Underwriters,
dealers or agents who participate in the distribution of Securities may be
entitled under agreements to be entered into with the Company to indemnification
by the Company against certain liabilities, including liabilities under Canadian
provincial and United States securities legislation, or to contribution with
respect to payments which such underwriters, dealers or agents may be required
to make in respect thereof. &nbsp;Such underwriters, dealers or agents may be
customers of, engage in transactions with, or perform services for, the Company
in the ordinary course of business.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">In
connection with any offering of Securities, underwriters may over-allot or
effect transactions which stabilize or maintain the market price of the
Securities offered at a level above that which might otherwise prevail in the
open market. &nbsp;Such transactions may be commenced, interrupted or
discontinued at any time.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">In
accordance with the rules of the National Association of Securities Dealers,
Inc., the Company will not pay a commission to a broker-dealer in connection
with any sale of Securities under this Prospectus that is in excess of 6%.</p>
<a NAME="_Toc443098863"></a><a NAME="_Toc93312474"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>CHANGES
TO CONSOLIDATED CAPITALIZATION</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Since
December 31, 2003, the following changes have occurred to the share and loan
capital of the Company, on a consolidated basis:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
      Company issued 3,333,333 common shares of the Company in connection with a
      $55 million financing that closed on March 12, 2004;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
      Company issued 764,695 common shares of the Company pursuant to the
      exercise of stock options;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
      Company issued 544,679 common shares of the Company pursuant to the
      exercise of warrants;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
      Company issued 16,624 common shares of the Company in connection with 2003
      bonuses and additional compensation to certain officers and employees of
      Pan American;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
      Company issued 9,135,251 common shares of the Company in connection with
      the conversion of US$85,431,000 principal amount of 5.25% convertible
      unsecured senior subordinated debentures due July 31, 2009;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
      Company repaid its US$3,520,834 loan on the Huaron property from Banco de
      Credito del Peru in full;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">the
      Company repaid its US$9.5 million loan on the La Colorada property from
      International Finance Corporation in full; and</font></li>
  </ul>
</blockquote>
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</p>
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</p>
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</p>
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<br>
<br>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">The
      Company currently has no outstanding forward sales contracts in respect of
      its silver production other than short term (less than 60 days) price
      fixings relating to silver that has been produced but has yet to be priced
      under concentrate agreements. &nbsp;The Company does not intend to commit
      any of its future silver production into any forward sales or option
      contracts.</font></li>
  </ul>
</blockquote>
<a NAME="_Toc93312475"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>RISK
FACTORS</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><i>Prospective
investors in a particular offering of Securities should carefully consider the
following risks, as well as the other information contained in this Prospectus
and the documents incorporated by reference herein before investing in the
Securities. &nbsp;If any of the following risks actually occurs, the Company's
business could be materially harmed. &nbsp;The risks and uncertainties described
below are not the only ones the Company faces. &nbsp;Additional risks and
uncertainties, including those of which the Company is currently unaware or that
the Company deems immaterial, may also adversely affect the Company's
business.</i></p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Risks
Relating to the Company's Business</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Metal
Price Fluctuations</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
majority of the Company's revenue is derived from the sale of silver, zinc,
and, to a lesser degree, copper and lead, and therefore fluctuations in the
price of these commodities represents one of the most significant factors
affecting the Company's operations and profitability. &nbsp;The price of
silver and other metals are affected by numerous factors beyond the Company's
control, including:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">levels
      of supply and demand;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">global
      or regional consumptive patterns;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">sales
      by government holders;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">metal
      stock levels maintained by producers and others;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">increased
      production due to new mine developments and improved mining and production
      methods;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">speculative
      activities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">inventory
      carrying costs;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">availability
      and costs of metal substitutes;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">international
      economic and political conditions.</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">interest
      rates;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">currency
      values; and</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">inflation.</font></li>
  </ul>
</blockquote>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Declining
market prices for these metals could materially adversely affect the Company's
operations and profitability.</p>
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</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
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<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Foreign
Operations</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
majority of the Company's current operations are conducted by its subsidiaries
in Peru, Mexico, Bolivia and Argentina, and all of the Company's current
production and revenue is derived from its operations in Peru and Mexico.
&nbsp;As Pan American's business is carried on in a number of foreign
countries it is exposed to a number of risks and uncertainties, including:</p>
<ul>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">terrorism
    and hostage taking;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">military
    repression;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">expropriation
    or nationalization without adequate compensation;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">difficulties
    enforcing judgments obtained in Canadian or United States courts against
    assets located outside of those jurisdictions;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">labor
    unrest;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">high
    rates of inflation;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">changes
    to royalty and tax regimes;</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">extreme
    fluctuations in currency exchange rates; and</font></li>
  <li>
    <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">volatile
    local political and economic developments.</font></li>
</ul>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Local
opposition to mine development projects has arisen in Peru in the past, and such
opposition has at times been violent. &nbsp;In particular, in November 2004,
approximately 200 farmers attacked and damaged the La Zanja exploration camp
located in Santa Cruz province, Peru, which was owned by Compania de Minas
Buenaventura and Newmont Mining Corporation. &nbsp;One person was killed and
three injured during the protest. &nbsp;There can be no assurance that such
local opposition will not arise in the future with respect to the Company's
foreign operations. If the Company were to experience resistance or unrest in
connection with its foreign operations, it could have a material adverse effect
on the Company's operations or profitability.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Governmental
Regulation</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Pan
American's operations and exploration and development activities are subject
to extensive Canadian, United States, Peruvian, Mexican, Bolivian, Argentinian
and other foreign federal, state, provincial, territorial and local laws and
regulations governing various matters, including:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">environmental
      protection;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">management
      and use of toxic substances and explosives;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">management
      of natural resources;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">exploration,
      development of mines, production, and post-closure reclamation;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">exports;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">price
      controls;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">taxation;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">mining
      royalties;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">labor
      standards and occupational health and safety, including mine safety; and</font></li>
  </ul>
</blockquote>
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</p>
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</p>
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<br>
<br>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">historic
      and cultural preservation.</font></li>
  </ul>
</blockquote>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
costs associated with compliance with these laws and regulations are substantial
and possible future laws and regulations, changes to existing laws and
regulations (including the imposition of higher taxes and mining royalties,
which have been implemented or threatened in Peru) or more stringent enforcement
of current laws and regulations by governmental authorities, could cause
additional expense, capital expenditures, restrictions on or suspensions of Pan
American's operations and delays in the development of its properties.
&nbsp;Moreover, these laws and regulations may allow governmental authorities
and private parties to bring lawsuits based upon damages to property and injury
to persons resulting from the environmental, health and safety impacts of our
past and current operations, and could lead to the imposition of substantial
fines, penalties or other civil or criminal sanctions.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Obtaining
and Renewing of Government Permits</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">In
the ordinary course of business, Pan American is required to obtain and renew
governmental permits for the operation and expansion of existing operations or
for the development, construction and commencement of new operations.
&nbsp;Obtaining or renewing the necessary governmental permits is a complex and
time-consuming process involving numerous jurisdictions and often involving
public hearings and costly undertakings on Pan American's part. &nbsp;The
duration and success of Pan American's efforts to obtain and renew permits are
contingent upon many variables not within its control including the
interpretation of applicable requirements implemented by the permitting
authority. &nbsp;Pan American may not be able to obtain or renew permits that
are necessary to its operations, or the cost to obtain or renew permits may
exceed what the Company believes it can recover from the property once in
production. &nbsp;Any unexpected delays or costs associated with the permitting
process could delay the development or impede the operation of a mine, which
could adversely affect Pan American's operations and profitability.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Compliance
With Local Laws and Standards</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">In
some of the countries in which Pan American operates, failure to comply strictly
with applicable laws, regulations and local practices relating to mineral right
applications and tenure could result in loss, reduction or expropriation of
entitlements, or the imposition of additional local or foreign parties as joint
venture partners with carried or other interests. &nbsp;Any such loss, reduction
or imposition of partners could have a material adverse effect on Pan American's
operations or business.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Operating
Hazards and Risks</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
operation and development of a mine or mineral property involves many risks
which even a combination of experience, knowledge and careful evaluation may not
be able to overcome. &nbsp;These risks include:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">environmental
      hazards;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">industrial
      accidents and explosions;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">the
      encountering of unusual or unexpected geological formations;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">ground
      fall and cave-ins;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">flooding;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">earthquakes;
      and</font></li>
  </ul>
</blockquote>
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26 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt; padding-left: ." align="justify"><font FACE="Times New Roman">periodic
      interruptions due to inclement or hazardous weather conditions. &nbsp;</font></li>
  </ul>
</blockquote>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:CG Times; font-size:11pt">These
occurrences could result in:</p>
<blockquote>
  <ul>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">environmental
      damage and liabilities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">work
      stoppages and delayed production;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">increased
      production costs;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">damage
      to, or destruction of, mineral properties or production facilities;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">personal
      injury or death;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">asset
      write downs;</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 5.5pt" align="justify"><font FACE="Times New Roman">monetary
      losses; and</font></li>
    <li>
      <p style="line-height: 13pt; font-family: Symbol; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify"><font FACE="Times New Roman">other
      liabilities.</font></li>
  </ul>
</blockquote>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Liabilities
that Pan American incurs may exceed the policy limits of its insurance coverage
or may not be insurable, in which event Pan American could incur significant
costs that could adversely affect its business, operations or profitability.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Exploration
and Development Risks</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
long-term operation of Pan American's business and its profitability is
dependent, in part, on the cost and success of its exploration and development
programs. Mineral exploration and development involves a high degree of risk and
few properties that are explored are ultimately developed into producing mines.
There is no assurance that Pan American's mineral exploration and development
programs will result in any discoveries of bodies of commercial mineralization.
There is also no assurance that even if commercial quantities of mineralization
are discovered that a mineral property will be brought into commercial
production. Development of Pan American's mineral properties will follow only
upon obtaining satisfactory exploration results. Discovery of mineral deposits
is dependent upon a number of factors, not the least of which is the technical
skill of the exploration personnel involved. The commercial viability of a
mineral deposit once discovered is also dependent upon a number of factors, some
of which are the particular attributes of the deposit (such as size, grade and
proximity to infrastructure), metal prices and government regulations, including
regulations relating to royalties, allowable production, importing and exporting
of minerals and environmental protection. Most of the above factors are beyond
the control of Pan American. As a result, there can be no assurance that Pan
American's acquisition, exploration and development programs will yield new
reserves to replace or expand current reserves. Unsuccessful exploration or
development programs could have a material adverse impact on Pan American's
operations and profitability.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
current proven and probable reserves on the Morococha property only provide for
a two year mine life. &nbsp;The estimated cash flow over this two year mine life
does not provide a payback for the Company's costs to acquire Argentum.
&nbsp;For Pan American to recover these costs, inferred resources on the
Morococha property must be converted to mineable reserves. &nbsp;There is no
certainty that inferred resources will be converted to mineable reserves or that
the Company's investment costs for the Morococha property will ever be paid
back.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Morococha mine is currently dependent on the Manuelita zone for 50% of its
monthly production. &nbsp;Barring new discoveries, this zone will be exhausted
in two to three years and in order to maintain the mine's operating cost
profile and silver production, a replacement for the Manuelita's zone</p>
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27 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before: always; line-height: 13pt; font-family: Times New Roman; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify">must
be found. &nbsp;There can be no assurance that such a replacement zone will be
found or that Pan American's production estimates will be met after the third
year of the mine plan.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Uncertainty
in the Calculation of Mineral Reserves, Resources and Silver and Base Metal
Recovery</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">There
is a degree of uncertainty attributable to the calculation of mineral reserves
and mineral resources and corresponding grades being mined or dedicated to
future production. Until mineral reserves or mineral resources are actually
mined and processed the quantity of mineral and reserve grades must be
considered as estimates only. In addition, the quantity of mineral reserves and
mineral resources may vary depending on, among other things, metal prices. Any
material change in quantity of mineral reserves, mineral resources, grade or
stripping ratio may affect the economic viability of Pan American's
properties. In addition, there can be no assurance that silver recoveries or
other metal recoveries in small scale laboratory tests will be duplicated in
larger scale tests under on-site conditions or during production.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">There
is a degree of uncertainty attributable to the calculation of mineral reserves
and mineral resources and corresponding grades being mined or dedicated to
future production. &nbsp;At the Morococha property, Pan American has observed
several inconsistent or inappropriate pre-laboratory sample preparation
procedures. &nbsp;In addition, no QA/QC program was ever established for the
analysis of mine samples at either of SMC's laboratories on the Morococha
property. &nbsp;These flaws in sample preparation procedures and lack of QA/QC
data makes it difficult to assess the performance and reliability of either
laboratory, the data from which is critical in calculating mineral reserves and
mineral resources and corresponding grades. &nbsp;Accordingly, there may be a
greater degree of uncertainty associated with the calculation of mineral
reserves and mineral resources and the grades thereof at the Morococha property
than would be the case if North American standards of pre-laboratory sample
preparation and QA/QC were observed.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Infrastructure</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Mining,
processing, development and exploration activities depend, to one degree or
another, on adequate infrastructure. &nbsp;Reliable roads, bridges, power
sources and water supply are important determinants, which affect capital and
operating costs. Unusual or infrequent weather phenomena, sabotage, government
or other interference in the maintenance or provision of such infrastructure
could adversely affect Pan American's operations and profitability.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
equipment on site at the Morococha property, particularly the Amistad plant, is
old and may require higher capital investment than Pan American has estimated.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Smelter
Supply Arrangements</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
zinc, lead and copper concentrates produced by Pan American are sold through
long-term supply arrangements to metal traders or integrated mining and smelting
companies. Should any of these counterparties not honour supply arrangements, or
should any of them become insolvent, Pan American may be forced to sell its
concentrates in the spot market or it may not have a market for its concentrates
and therefore its future operating results may be materially adversely affected.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Environmental
Hazards</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">All
phases of Pan American's operations are subject to environmental regulation in
the various jurisdictions in which it operates. Environmental legislation in all
of the jurisdictions in which Pan American operates is evolving in a manner
which will require stricter standards and will be subject to</p>
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28 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before: always; line-height: 13pt; font-family: Times New Roman; font-size: 11pt; margin-top: 0pt; margin-bottom: 11pt" align="justify">increased
enforcement, fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects and a heightened degree of
responsibility for companies and their officers, directors and employees.
Changes in environmental regulation, if any, may adversely affect Pan American's
operations and profitability. In addition, environmental hazards may exist on
Pan American's properties which are currently unknown to Pan American.
&nbsp;Pan American may be liable for losses associated with such hazards, or may
be forced to undertake extensive remedial cleanup action or to pay for
governmental remedial cleanup actions, even in cases where such hazards have
been caused by previous or existing owners or operators of the property, or by
the past or present owners of adjacent properties or natural conditions. The
costs of such cleanup actions may have a material adverse effect on Pan American's
operations and profitability.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Responsibility
for construction of a water treatment plant for the Kingsmill Tunnel and
tailings mitigation program at Huascacocha Lake, near the Morococha mine, has
been apportioned by Water Management Consultants Inc. in environmental studies
among the Morococha mine and mining companies operating neighbouring projects,
including Centromin, Soc. Minera Austria Duvaz, Soc. Minera Buquiococha and
Minera Centrominas. &nbsp;In the event that one or more of these companies
defaults on its funding obligation for the Kingsmill water treatment plant or
the Huascacocha Lake tailings mitigation program, Pan American's proportionate
share of the costs of such environmental projects could increase and reduce cash
flow from Morococha operations.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Reclamation
Obligations</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Reclamation
requirements vary depending on the location of the property and the managing
governmental agency, but they are similar in that they aim to minimize long-term
effects of exploration and mining disturbance by requiring the operating company
to control possible deleterious effluents and to re-establish to some degree
pre-disturbance land forms and vegetation. &nbsp;Pan American is actively
providing for or has carried out any requested reclamation activities on its
properties. &nbsp;Any significant environmental issues that may arise, however,
could lead to increased reclamation expenditures and have a materially adverse
impact on Pan American's financial resources.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Peruvian
Mine Closure Law</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">On
October 14, 2003, the Peruvian government published Law 28090 "Mine Closure
Law" which establishes provisions relating to mine closure plans. &nbsp;For
existing mining operations the law provides that a mine closure plan must be
submitted for certification to the Peruvian Ministry of Energy and Mines within
six months of the law entering into force. &nbsp;No enabling regulations were
published with the law. &nbsp;Therefore, the effect of the law on Pan American's
Peruvian mining and exploration activities cannot yet be determined.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
law provides that a mine operator must grant an environmental warranty for the
estimated costs associated with its mine closure plan. &nbsp;The law does not
establish when such warranties must be in place and does not specify the form of
the required warranty. &nbsp;However, the law indicates that a warranty may take
the form of insurance, cash collateral, a trust agreement or other forms, as
permitted by the Civil Code of Peru. &nbsp;Pan American's Huaron, Quiruvilca
and Morococha mines will submit closure plans as required by the law, but until
these plans have been certified and the nature and form of whatever
environmental warranty is required have been determined, the impact of this law
on Pan American's Peruvian mining and exploration activities cannot be
determined.</p>
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29 -</p>
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</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Hedging
Activities</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">From
time to time, the Company engages in hedging activities in connection with base
metals, such as forward sales contracts, to minimize the effect of declines in
metal prices on our operating results. &nbsp;While these hedging activities may
protect the Company against low metal prices, they may also limit the price the
Company can receive on hedged products. &nbsp;As a result, the Company may be
prevented from realizing possible revenues in the event that the market price of
a metal exceeds the price stated in forward sale or option contracts. &nbsp;As
of December 31, 2004, the Company's zinc forward contract position had a
negative mark-to-market value of approximately $1.56 million and its lead
forward contract position as at December 31, 2004 had a negative value of
approximately $0.83 million. &nbsp;In addition, the Company may experience
losses if a counterparty fails to purchase under a contract when the contract
price exceeds the spot price of a commodity. &nbsp;The Company's current
policy is to not hedge the price of silver and therefore it is fully exposed to
declines in the price of silver.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Employee
Relations</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Certain
of Pan American's employees and the employees of Peruvian mining contractors
indirectly employed by Pan American are represented by unions. &nbsp;Pan
American has experienced labour strikes and work stoppages in the past.
&nbsp;There can be no assurance that Pan American will not experience future
labour strikes or work stoppages.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Title
to Assets</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
validity of mining or exploration titles or claims, which constitute most of Pan
American's property holdings, can be uncertain and may be contested. Pan
American has used its best efforts to investigate its title or claims to its
various properties and, to the best of its knowledge, those titles or claims are
in good standing. However no assurance can be given that applicable governments
will not revoke or significantly alter the conditions of the applicable
exploration and mining titles or claims and that such exploration and mining
titles or claims will not be challenged or impugned by third parties. Pan
American operates in countries with developing mining laws and changes in such
laws could materially affect Pan American's rights to its various properties
or interests therein.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Although
Pan American has received title opinions for those properties in which it has a
material interest there is no guarantee that title to such properties will not
be challenged or impugned. Pan American has not conducted surveys of all the
claims in which it holds direct or indirect interests and therefore, the precise
area and location of such claims may be in doubt. Pan American's properties
may be subject to prior unregistered liens, agreements or transfers, native land
claims or undetected title defects.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Pan
American does not own certain surface lands in the areas
that overlie its mining concessions at the Morococha property. &nbsp;These
surface lands belong to Centromin. &nbsp;Although the use by Argentum's
previous owner, Sociedad Minera Corona S.A. ("SMC") and its predecessors of
Centromin's surface lands for mining and processing operations has been
exercised for decades with Centromin's acknowledgement, there is no assurance
that Centromin will continue to allow unimpeded use of these surface lands by
the Morococha operations. &nbsp;In particular, the development of the adjacent
Toromocha disseminated copper system into a mine may interfere with operations
on Morococha property. &nbsp;In such an event, Pan American could be required to
incur potentially significant costs and expense to acquire surface rights for
its Morococha operations and could be required to cease certain Morococha
operations altogether if such surface rights cannot be obtained for reasonable
consideration.</p>
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</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Acquisitions</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">An
element of the Company's business strategy is to make selected acquisitions.
&nbsp;For example, the Company completed the acquisition of Corner Bay Silver
Inc. in February 2003 and the acquisition of Argentum and the Morococha mine in
August 2004. &nbsp;The Company expects to continue to evaluate acquisition
opportunities on a regular basis and intends to pursue those opportunities that
it believes are in its long-term best interests. &nbsp;The success of the
Company's acquisitions will depend upon its ability to effectively manage the
operations of entities it acquires and to realize other anticipated benefits.
&nbsp;The process of managing acquired businesses may involve unforeseen
difficulties and may require a disproportionate amount of management resources.
&nbsp;There can be no assurance that the Company will be able to successfully
manage the operations of businesses it acquires or that the anticipated benefits
of its acquisitions will be realized.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Competition
for New Properties</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Mines
have limited lives and as a result, Pan American continually seeks to replace
and expand its reserves through the acquisition of new properties. &nbsp;In
addition, there is a limited supply of desirable mineral lands available in
areas where Pan American would consider conducting exploration and/or production
activities. &nbsp;Because Pan American faces strong competition for new
properties from other mining companies, some of which have greater financial
resources than it does, Pan American may be unable to acquire attractive new
mining properties on terms that it considers acceptable.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>United
States Mining Legislation</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">There
is a movement in the United States Congress to reform the current mining laws.
While it is not expected that any reform legislation will pass the United States
Congress in the current session, it is not unlikely that some changes to U.S.
mining laws will occur in the future. These changes may include the payment of
royalties to the government, increased holding fees and restrictions or
prohibitions on patenting mining claims. In addition, prospective legislation
could be expected to include various environmental and land use requirements,
which may restrict, or in some cases, prevent mining operations. Although none
of the mineralization on the properties on which Pan American holds direct or
indirect interests are within unpatented claims, Pan American's interest in
unpatented claims on federal land could have an overall impact on the value of
its properties in the United States.</p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Foreign
Exchange Rate Fluctuations</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Fluctuations
in currency exchange rates, particularly the weakening or strengthening of the
U.S. dollar (being the currency in which Pan American's products are sold)
against the Canadian dollar (used to pay corporate head office costs), the
Peruvian sole and the Mexican peso (being the currencies in which a significant
portion of Pan American's operating costs are incurred), could have a
significant effect on Pan American's results of operations. &nbsp;Pan American
does not engage in currency hedging transactions.</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
31 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Risks
Relating to Securities Offerings</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b><i>Enforcing
Civil Liabilities in the United States</i></b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company is organized under the laws of the Province of British Columbia, and its
principal executive office is located in British Columbia. &nbsp;Many of the
Company's directors, controlling persons, officers and the experts named in
this prospectus supplement are residents of Canada and a substantial portion of
their assets and a majority of the Company's assets are located outside the
United States. &nbsp;As a result,
it may be difficult for United States investors to effect service of process
within the United States upon the directors, controlling persons, officers and
the experts who are not residents of the United States or to enforce against
them judgments of United States courts based upon civil liability under the
federal securities laws of the United States. &nbsp;There is doubt as to the
enforceability in Canada against the Company or against any of its directors,
controlling persons, officers or experts who are not residents of the United
States, of original actions or actions for enforcement of judgments of United
States courts of liabilities based solely upon the federal securities laws of
the United States.</p>
<a NAME="_Toc443098873"></a><a NAME="_Toc93312476"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>AUDITORS,
TRANSFER AGENT AND REGISTRAR</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
auditors of the Company are Deloitte &amp; Touche LLP, Four Bentall Centre, 2800
- - 1055 Dunsmuir Street, Vancouver, British Columbia, V7X&nbsp;1P4.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
transfer agent and registrar for the Common Shares of the Company is
Computershare Trust Company of Canada at its principal offices in Vancouver and
Toronto. &nbsp;</p>
<a NAME="_Toc535630592"></a><a NAME="_Toc93312477"></a><a NAME="_Toc93312478"></a>
<p style="margin-top:11pt; margin-bottom:11pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>DOCUMENTS
FILED AS PART OF THE U.S. REGISTRATION STATEMENT</b></p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
following documents have been filed with the SEC as part of the Registration
Statement of which this Prospectus forms a part: the documents referred to under
the heading "Documents Incorporated by Reference", the consent of Deloitte
&amp; Touche LLP and the consent of PricewaterhouseCoopers LLP and a form of
Trust Indenture.</p>
<p style="margin-top:0pt; margin-bottom:11pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<br>
<a NAME="SuppressFooterA"></a>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">-
32 -</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:16.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b><a name="INDEX TO FINANCIAL STATEMENTS">INDEX
TO FINANCIAL STATEMENTS</a></b></p>
<table style="font-size: 10pt" cellspacing="0" width="621">
  <tr>
    <td valign="top" width="565">&nbsp;</td>
    <td valign="top" width="48">
      <p style="margin-top:0pt; margin-bottom:4.5pt; line-height:13pt; font-family:Times New Roman; font-size:9pt" align="center"><b><u>Page</u></b></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="565">
      <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Consolidated
      Financial Statements of Corner Bay Silver Inc.</b></p>
    </td>
    <td valign="top" width="48">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="565">
      <p style="margin-top:0pt; margin-bottom:-15pt; line-height:15pt; font-family:Times New Roman; font-size:11pt">Auditors'
      Report</p>
      <p style="margin-top:0pt; margin-bottom:5.5pt; text-indent:378pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><br>
      </p>
    </td>
    <td valign="top" width="48">
      <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-3</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="565">
      <p style="margin-top:0pt; margin-bottom:-15pt; line-height:15pt; font-family:Times New Roman; font-size:11pt">Consolidated
      Balance Sheet as at December 31, 2002 (unaudited) and as at June 30, 2002
      and June 30, 2001 (audited)</p>
      <p style="margin-top:0pt; margin-bottom:5.5pt; text-indent:540pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><br>
      </p>
    </td>
    <td valign="top" width="48">
      <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-4</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="565">
      <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Consolidated
      Statements of Operations and Deficit for the six months ended
      December&nbsp;31, 2002 and December 31, 2001 (unaudited) and for the years
      ended June&nbsp;30, 2002, June 30, 2001 and June 30, 2000 (audited)</p>
    </td>
    <td valign="top" width="48">
      <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-5</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="565">
      <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Consolidated
      Statements of Cash Flows for the six months ended December 31, 2002 and
      December 31, 2001 (unaudited) and for the years ended June 30, 2002, June
      30, 2001, and June 30, 2000 (audited)</p>
    </td>
    <td valign="top" width="48">
      <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-6</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="565">
      <p style="margin-top:0pt; margin-bottom:-15pt; line-height:15pt; font-family:Times New Roman; font-size:11pt">Notes
      to Consolidated Financial Statements</p>
      <p style="margin-top:0pt; margin-bottom:5.5pt; text-indent:378pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><br>
      </p>
    </td>
    <td valign="top" width="48">
      <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-7</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="565">
      <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Unaudited
      Pro Forma Consolidated Financial Statements of Pan American Silver Corp.</b></p>
    </td>
    <td valign="top" width="48">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="565">
      <p style="margin-top:0pt; margin-bottom:-15pt; line-height:15pt; font-family:Times New Roman; font-size:11pt">Compilation
      Report</p>
    </td>
    <td valign="top" width="48">
      <p style="margin-top:0pt; margin-bottom:-15pt; line-height:15pt; font-family:Times New Roman; font-size:11pt" align="center">F-23</p>
      <p align="center">&nbsp;
    </td>
  </tr>
  <tr>
    <td valign="top" width="565">
      <p style="margin-top:0pt; margin-bottom:-15pt; line-height:15pt; font-family:Times New Roman; font-size:11pt">Pro
      Forma Consolidated Statement of Operations for the year ended December 31,
      2002 (unaudited)</p>
      <p style="margin-top:0pt; margin-bottom:5.5pt; text-indent:468pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><br>
      </p>
    </td>
    <td valign="top" width="48">
      <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-24</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="565">
      <p style="margin-top:0pt; margin-bottom:-15pt; line-height:15pt; font-family:Times New Roman; font-size:11pt">Notes
      to the Pro Forma Consolidated Financial Statements</p>
      <p style="margin-top:0pt; margin-bottom:5.5pt; text-indent:378pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><br>
      </p>
    </td>
    <td valign="top" width="48">
      <p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-25</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="565">&nbsp;</td>
    <td valign="top" width="48">&nbsp;</td>
    <a NAME="_Toc416244695"></a><a NAME="_Toc436191008"></a><a NAME="_Toc440901263"></a>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-1</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><i>Unaudited
and Audited Consolidated Financial Statements of</i></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; line-height:18pt; font-family:Times New Roman; font-size:16pt"><b>CORNER
BAY SILVER INC.</b></p>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-2</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>AUDITORS'
REPORT</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">September
6, 2002</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">To
the Directors of</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Corner
Bay Silver Inc.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">We
have audited the consolidated balance sheets of Corner Bay Silver Inc. as at
June 30, 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 June 30,
2002. &nbsp;These financial statements are the responsibility of the Company's
management. &nbsp;Our responsibility is to express an opinion on these financial
statements based on our audits.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">We
conducted our audits in accordance with Canadian and United States generally
accepted auditing standards. &nbsp;Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. &nbsp;An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. &nbsp;An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">In
our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at June 30, 2002 and
2001 and the results of its operations and its cash flows for each of the years
in the three-year period ended June 30, 2002 in accordance with Canadian
generally accepted accounting principles. &nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify">(signed<small>)
PRICEWATERHOUSECOOPERS LLP</small></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Chartered
Accountants</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Toronto,
Ontario</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>COMMENTS
BY AUDITORS FOR U.S. READERS ON CANADA-U.S. REPORTING DIFFERENCES</b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">In
the United States, reporting standards for auditors require the addition of an
explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the Company's ability to continue as a going concern, such as those described
in note 1 to the consolidated financial statements. &nbsp;Our report to the
shareholders dated September 6, 2002 is expressed in accordance with Canadian
reporting standards, which do not permit a reference to such events and
conditions in the auditors' report when they are adequately disclosed in the
financial statements.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify">(signed<small>)
PRICEWATERHOUSECOOPERS LLP</small></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Chartered
Accountants</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Toronto,
Ontario</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="center"><br>
</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-3</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:6pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin-top:0pt; margin-bottom:6pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center"><b>CONSOLIDATED
BALANCE SHEETS</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="center">As at December
31, 2002, June 30, 2002 and 2001</p>
<p style="margin:0pt; font-family:Times New Roman" align="center">(expressed in
Canadian dollars, unless otherwise stated)</p>
<p style="margin:0pt; font-family:Arial"><br>
</p>
<p style="margin:0pt; font-family:Arial"><br>
</p>
<div align="center">
  <center>
  <table width="100%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="54%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="center" width="13%"><b><font size="2" face="serif">December 31</font></b></td>
      <td width="2%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td align="center" width="13%"><b><font size="2" face="serif">June 30</font></b></td>
      <td width="2%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td align="center" width="13%"><b><font size="2" face="serif">June 30</font></b></td>
      <td width="2%" align="center">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="13%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
      <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="13%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
      <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="13%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
      <td width="2%" align="center">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%" align="center"><b><font size="2" face="serif">(Unaudited)</font></b></td>
      <td width="2%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td width="13%" align="center">&nbsp;</td>
      <td width="2%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td width="13%" align="center">&nbsp;</td>
      <td width="2%" align="center">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><b><font size="2" face="serif">ASSETS</font></b></td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">Current</font></td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">Cash</font></td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%"><font size="2" face="serif">4,831,220</font></td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%"><font size="2" face="serif">5,323,564</font></td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%"><font size="2" face="serif">4,022,422</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">Accounts receivable</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">163,965</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">197,673</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">176,912</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Prepaid
        expenses and deposits</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">2,595</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">16,887</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">27,389</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">4,997,780</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">5,538,124</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">4,226,723</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">Deposits- reclamation bonds</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">30,000</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">30,000</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">30,000</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">Investments - quoted market
        value of $nil</font></td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">(2001 - $61,933) (note 8)</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">43,353</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">Deferred exploration
        expenditure (note 3)</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">8,781,564</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">7,705,865</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">4,551,072</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Property,
        plant and equipment (note 4)</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">3,893,658</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">3,896,461</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">96,870</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%" style="border-bottom: 3 double #000000"><font size="2" face="serif">17,703,002</font></td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%" style="border-bottom: 3 double #000000"><font size="2" face="serif">17,170,450</font></td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%" style="border-bottom: 3 double #000000"><font size="2" face="serif">8,948,018</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><b><font size="2" face="serif">LIABILITIES</font></b></td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">Current</font></td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Accounts
        payable and accrued liabilities</font></td>
      <td align="center" width="1%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,355,103</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">316,914</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">387,963</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><b><font size="2" face="serif">SHAREHOLDERS' EQUITY</font></b></td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">Capital stock (note 5)</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">25,499,004</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">24,314,504</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">14,813,154</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">Contributed surplus</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">537,005</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">537,005</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="13%"><font size="2" face="serif">537,005</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Deficit</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(9,688,110)</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(7,997,973)</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(6,790,104)</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">16,347,899</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">16,853,536</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">8,560,055</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="54%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%" style="border-bottom: 3 double #000000"><font size="2" face="serif">17,703,002</font></td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%" style="border-bottom: 3 double #000000"><font size="2" face="serif">17,170,450</font></td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="13%" style="border-bottom: 3 double #000000"><font size="2" face="serif">8,948,018</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">Nature of operations and going
        concern (note 1)</font></td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">Commitments (note 10)</font></td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><b><font size="2" face="serif">APPROVED BY THE BOARD OF
        DIRECTORS</font></b></td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">(signed) J</font><font size="1" face="serif">OHN
        </font><font size="2" face="serif">H. W</font><font size="1" face="serif">RIGHT</font><font size="2" face="serif">,
        Director</font></td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="54%"><font size="2" face="serif">(signed) R</font><font size="1" face="serif">OSS
        </font><font size="2" face="serif">J. B</font><font size="1" face="serif">EATY</font><font size="2" face="serif">,
        Director</font></td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="13%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<big><small><big>
<small><br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-4</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:6pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin-top:0pt; margin-bottom:6pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center"><b>CONSOLIDATED
STATEMENTS OF OPERATIONS AND DEFICIT</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="center">&nbsp;(expressed
in Canadian dollars, unless otherwise stated)</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<div align="center">
  <center>
  <table width="694" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="205">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="center" colspan="4" width="181"><b><font size="2" face="serif">For
        the six months ended</font></b></td>
      <td width="11" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="254" align="center" colspan="8">&nbsp;<b><font size="2" face="serif">For
        the years ended</font></b>&nbsp;</td>
    </tr>
    <tr>
      <td width="205">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="center" colspan="4" width="181" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">December
        31,</font></b></td>
      <td width="11" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="244" align="center" colspan="8" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">June
        30,</font></b></td>
    </tr>
    <tr>
      <td width="205">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79" align="center"><b><font size="2" face="serif">2002</font></b></td>
      <td width="11" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="79" align="center"><b><font size="2" face="serif">2001</font></b></td>
      <td width="11" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td align="center" width="54" colspan="2"><b><font size="2" face="serif">2002</font></b></td>
      <td width="11" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="78" align="center"><b><font size="2" face="serif">2001</font></b></td>
      <td width="11" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td align="center" width="78"><b><font size="2" face="serif">2000</font></b></td>
    </tr>
    <tr>
      <td width="205">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
    </tr>
    <tr>
      <td width="205">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79" align="center"><font size="2" face="serif">(Unaudited)</font></td>
      <td width="11" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="79" align="center"><font size="2" face="serif">(Unaudited)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
    </tr>
    <tr>
      <td width="205">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
    </tr>
    <tr>
      <td width="205"><font size="2" face="serif">OTHER INCOME</font></td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
    </tr>
    <tr>
      <td width="205">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Interest</font></td>
      <td width="6">&nbsp;</td>
      <td width="6"><font size="2" face="serif">$</font></td>
      <td align="right" width="79"><font size="2" face="serif">61,361</font></td>
      <td width="11">&nbsp;</td>
      <td align="center" width="6"><font size="2" face="serif">$</font></td>
      <td align="right" width="79"><font size="2" face="serif">49,739</font></td>
      <td width="11">&nbsp;</td>
      <td align="center" width="6"><font size="2" face="serif">$</font></td>
      <td align="right" colspan="2" width="56"><font size="2" face="serif">94,013</font></td>
      <td width="11">&nbsp;</td>
      <td align="center" width="6"><font size="2" face="serif">$</font></td>
      <td align="right" width="78"><font size="2" face="serif">127,474</font></td>
      <td width="11">&nbsp;</td>
      <td align="center" width="6"><font size="2" face="serif">$</font></td>
      <td align="right" width="78"><font size="2" face="serif">48,611</font></td>
    </tr>
    <tr>
      <td width="205" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Other</font></td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="79" style="border-bottom: 1 solid #000000"><font size="2" face="serif">14,500</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="79" style="border-bottom: 1 solid #000000"><font size="2" face="serif">73,001</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" colspan="2" width="56" style="border-bottom: 1 solid #000000"><font size="2" face="serif">201,831</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">97,500</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">64,900</font></td>
    </tr>
    <tr>
      <td width="205">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">75,861</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">122,740</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" colspan="2" width="56"><font size="2" face="serif">295,844</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">224,974</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">113,511</font></td>
    </tr>
    <tr>
      <td width="205"><font size="2" face="serif">OTHER EXPENSES</font></td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
    </tr>
    <tr>
      <td width="205">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">General
        and administrative</font></td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">1,765,998</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">497,925</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" colspan="2" width="56"><font size="2" face="serif">1,467,007</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">798,073</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">521,338</font></td>
    </tr>
    <tr>
      <td width="205" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Amortization</font></td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="79" style="border-bottom: 1 solid #000000">-</td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="79" style="border-bottom: 1 solid #000000"><font size="2" face="serif">9,109</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="39" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15" style="border-bottom: 1 solid #000000">-</td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">25,312</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">19,251</font></td>
    </tr>
    <tr>
      <td width="205">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">1,765,998</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">507,034</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" colspan="2" width="56"><font size="2" face="serif">1,467,007</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">823,385</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">540,589</font></td>
    </tr>
    <tr>
      <td colspan="2" width="213"><font size="2" face="serif">Gain on disposal
        of assets</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td align="right" width="15">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">(14,465)</font></td>
    </tr>
    <tr>
      <td colspan="2" width="213"><font size="2" face="serif">Gain on disposal
        of investments</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" colspan="2" width="56"><font size="2" face="serif">(5,805)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78">-</td>
    </tr>
    <tr>
      <td colspan="2" width="213"><font size="2" face="serif">Writedown of
        investments</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td align="right" width="15">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">22,606</font></td>
    </tr>
    <tr>
      <td width="205"><font size="2" face="serif">Write-down of property, plant</font></td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
    </tr>
    <tr>
      <td width="205">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">and
        equipment</font></td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" colspan="2" width="56"><font size="2" face="serif">42,511</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">95,833</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78">-</td>
    </tr>
    <tr>
      <td width="205"><font size="2" face="serif">Write-down of deferred</font></td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
    </tr>
    <tr>
      <td width="205" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">exploration
        expenditure</font></td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="79" style="border-bottom: 1 solid #000000">-</td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="79" style="border-bottom: 1 solid #000000">-</td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="39" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15" style="border-bottom: 1 solid #000000">-</td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">373,627</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,088,239</font></td>
    </tr>
    <tr>
      <td width="205" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="79" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,765,998</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="79" style="border-bottom: 1 solid #000000"><font size="2" face="serif">507,034</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" colspan="2" width="56" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,503,713</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,292,845</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,636,969</font></td>
    </tr>
    <tr>
      <td width="205"><font size="2" face="serif">Loss for the period</font></td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">(1,690,137)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">(384,294)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" colspan="2" width="56"><font size="2" face="serif">(1,207,869)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">(1,067,871)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">(1,523,458)</font></td>
    </tr>
    <tr>
      <td width="205" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Deficit,
        beginning of period</font></td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="79" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(7,997,973)</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="79" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(6,790,104)</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" colspan="2" width="56" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(6,790,104)</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(5,722,233)</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(4,198,775)</font></td>
    </tr>
    <tr>
      <td width="205" style="border-bottom: 3 double #000000"><font size="2" face="serif">Deficit,
        end of period</font></td>
      <td width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td width="6" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="right" width="79" style="border-bottom: 3 double #000000"><font size="2" face="serif">(9,688,110)</font></td>
      <td width="11" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="79" style="border-bottom: 3 double #000000"><font size="2" face="serif">(7,174,398)</font></td>
      <td width="11" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" colspan="2" width="56" style="border-bottom: 3 double #000000"><font size="2" face="serif">(7,997,973)</font></td>
      <td width="11" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="78" style="border-bottom: 3 double #000000"><font size="2" face="serif">(6,790,104)</font></td>
      <td width="11" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="78" style="border-bottom: 3 double #000000"><font size="2" face="serif">(5,722,233)</font></td>
    </tr>
    <tr>
      <td width="205">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
    </tr>
    <tr>
      <td width="205"><font size="2" face="serif">Basic and diluted</font></td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
    </tr>
    <tr>
      <td width="205">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">loss
        per share</font></td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">($0.09)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">($0.02)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" colspan="2" width="56"><font size="2" face="serif">($0.07)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">($0.08)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">($0.14)</font></td>
    </tr>
    <tr>
      <td width="205">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
    </tr>
    <tr>
      <td width="205"><font size="2" face="serif">Weighted average number</font></td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="79">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="39">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="78">&nbsp;</td>
    </tr>
    <tr>
      <td width="205">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">of
        shares outstanding</font></td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">19,385,808</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="79"><font size="2" face="serif">15,876,053</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" colspan="2" width="56"><font size="2" face="serif">16,697,807</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">13,912,182</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="78"><font size="2" face="serif">10,760,945</font></td>
    </tr>
  </table>
  </center>
</div>
<p><br>
<br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-5</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:6pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin-top:0pt; margin-bottom:6pt; line-height:14pt; font-family:Times New Roman; font-size:12pt" align="center"><b>CONSOLIDATED
STATEMENTS OF CASH FLOWS</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="center">&nbsp;(expressed
in Canadian dollars, unless otherwise stated)</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<div align="center">
  <center>
  <table width="704" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="233">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="center" colspan="4" width="172"><b><font size="2" face="serif">For
        the six months ended</font></b></td>
      <td width="11" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="252" align="center" colspan="8"><b><font size="2" face="serif">For
        the years ended</font></b></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="center" colspan="4" width="174" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">December
        31,</font></b></td>
      <td width="11" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="254" align="center" colspan="8" style="border-bottom: 1 solid #000000">&nbsp;<b><font size="2" face="serif">June
        30,</font></b></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="235" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="76" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
      <td width="13" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="9" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="76" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
      <td width="13" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="73" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
      <td width="12" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="73" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
      <td width="12" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="60" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2000</font></b></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="center" width="74">&nbsp;</td>
      <td align="center" width="11">&nbsp;</td>
      <td align="center" width="7">&nbsp;</td>
      <td align="center" width="74">&nbsp;</td>
      <td align="center" width="11">&nbsp;</td>
      <td align="center" width="6">&nbsp;</td>
      <td align="center" width="71">&nbsp;</td>
      <td align="center" width="10">&nbsp;</td>
      <td align="center" width="6">&nbsp;</td>
      <td align="center" width="71">&nbsp;</td>
      <td align="center" width="10">&nbsp;</td>
      <td align="center" width="6">&nbsp;</td>
      <td align="center" width="6">&nbsp;</td>
      <td align="center" width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="74" align="center"><font size="2" face="serif">(Unaudited)</font></td>
      <td width="11" align="center">&nbsp;</td>
      <td width="7" align="center">&nbsp;</td>
      <td width="74" align="center"><font size="2" face="serif">(Unaudited)</font></td>
      <td width="11" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="71" align="center">&nbsp;</td>
      <td width="10" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="71" align="center">&nbsp;</td>
      <td width="10" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="58" align="center">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233"><font size="2" face="serif">CASH PROVIDED BY (USED IN)</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233"><font size="2" face="serif">Operating activities</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Loss
        for the period</font></td>
      <td align="center" width="6"><font size="2" face="serif">$</font></td>
      <td align="right" width="74"><font size="2" face="serif">(1,690,137)</font></td>
      <td width="11">&nbsp;</td>
      <td align="center" width="7"><font size="2" face="serif">$</font></td>
      <td align="right" width="74"><font size="2" face="serif">(384,294)</font></td>
      <td width="11">&nbsp;</td>
      <td align="center" width="6"><font size="2" face="serif">$</font></td>
      <td align="right" width="71"><font size="2" face="serif">(1,207,869)</font></td>
      <td width="10">&nbsp;</td>
      <td align="center" width="6"><font size="2" face="serif">$</font></td>
      <td align="right" width="71"><font size="2" face="serif">(1,067,871)</font></td>
      <td width="10">&nbsp;</td>
      <td width="6"><font size="2" face="serif">$</font></td>
      <td align="right" colspan="2" width="66"><font size="2" face="serif">(1,523,458)</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Write-off
        of deferred</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">exploration
        expenditure</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71">-</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">373,627</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="58"><font size="2" face="serif">1,088,239</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Writedown
        of investments</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71">-</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71">-</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="58"><font size="2" face="serif">22,606</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Amortization</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74"><font size="2" face="serif">9,109</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71">-</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">25,312</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="58"><font size="2" face="serif">19,251</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Write-off
        of property, plant</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">and
        equipment</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">42,511</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">95,833</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="58">-</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Gain
        on disposal of</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">investments</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">(5,805)</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71">-</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="58">-</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="235" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Gain
        on disposal of assets</font></td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="76" style="border-bottom: 1 solid #000000">-</td>
      <td width="13" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="9" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="76" style="border-bottom: 1 solid #000000">-</td>
      <td width="13" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="73" style="border-bottom: 1 solid #000000">-</td>
      <td width="12" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="73" style="border-bottom: 1 solid #000000">-</td>
      <td width="12" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="60" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(14,465)</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74"><font size="2" face="serif">(1,690,137)</font></td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74"><font size="2" face="serif">(375,185)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">(1,171,163)</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">(573,099)</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="58"><font size="2" face="serif">(407,827)</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233"><font size="2" face="serif">Net (increase) decrease in
        non-cash</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">working
        capital balances related to</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="235" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">operations
        (note 11)</font></td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="76" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,086,189</font></td>
      <td width="13" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="9" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="76" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(184,805)</font></td>
      <td width="13" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="73" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(81,308)</font></td>
      <td width="12" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="73" style="border-bottom: 1 solid #000000"><font size="2" face="serif">82,054</font></td>
      <td width="12" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="60" style="border-bottom: 1 solid #000000"><font size="2" face="serif">237,610</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="235" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="76" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(603,948)</font></td>
      <td width="13" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="9" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="76" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(559,990)</font></td>
      <td width="13" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="73" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(1,252,471)</font></td>
      <td width="12" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="73" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(491,045)</font></td>
      <td width="12" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="60" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(170,217)</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233"><font size="2" face="serif">Investing activities</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Deferred
        exploration expenditure</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">and
        property, plant and equipment</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Expenditures</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74"><font size="2" face="serif">(1,072,896)</font></td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74"><font size="2" face="serif">(1,415,279)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">(3,147,522)</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">(1,460,057)</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" colspan="2" width="66"><font size="2" face="serif">(2,185,566)</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Option
        receipts</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71">-</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">5,975</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="58"><font size="2" face="serif">25,000</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Proceeds
        on disposal of assets</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71">-</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71">-</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="58"><font size="2" face="serif">28,057</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Proceeds
        on disposal of</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">investments</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">49,158</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71">-</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="58"><font size="2" face="serif">73,486</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Purchase
        of assets under construction</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74">-</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">(400,000)</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71">-</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="58">-</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Purchase
        of equipment</font></td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="74" style="border-bottom: 1 solid #000000">-</td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="74" style="border-bottom: 1 solid #000000">-</td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="71" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(6,873)</font></td>
      <td width="10" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="71" style="border-bottom: 1 solid #000000">-</td>
      <td width="10" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="58" style="border-bottom: 1 solid #000000">-</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="74" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(1,072,896)</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="74" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(1,415,279)</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="71" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(3,505,237)</font></td>
      <td width="10" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="71" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(1,454,082)</font></td>
      <td width="10" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" colspan="2" width="66" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(2,059,023)</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233"><font size="2" face="serif">Financing activities</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Issue
        of common shares</font></td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="74" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,184,500</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="74" style="border-bottom: 1 solid #000000"><font size="2" face="serif">350,849</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="71" style="border-bottom: 1 solid #000000"><font size="2" face="serif">6,058,850</font></td>
      <td width="10" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="71" style="border-bottom: 1 solid #000000"><font size="2" face="serif">5,038,397</font></td>
      <td width="10" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="58" style="border-bottom: 1 solid #000000"><font size="2" face="serif">2,499,391</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233"><font size="2" face="serif">Increase (decrease) in cash
        during</font></td>
      <td width="6">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="74">&nbsp;</td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="71">&nbsp;</td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="58">&nbsp;</td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">the period</font></td>
      <td width="6">&nbsp;</td>
      <td align="right" width="74"><font size="2" face="serif">(492,344)</font></td>
      <td width="11">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td align="right" width="74"><font size="2" face="serif">(1,624,420)</font></td>
      <td width="11">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">1,301,142</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="71"><font size="2" face="serif">3,093,270</font></td>
      <td width="10">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td align="right" width="58"><font size="2" face="serif">270,151</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Cash,
        beginning of the period</font></td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="74" style="border-bottom: 1 solid #000000"><font size="2" face="serif">5,323,564</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="74" style="border-bottom: 1 solid #000000"><font size="2" face="serif">4,022,422</font></td>
      <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="71" style="border-bottom: 1 solid #000000"><font size="2" face="serif">4,022,422</font></td>
      <td width="10" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="71" style="border-bottom: 1 solid #000000"><font size="2" face="serif">929,152</font></td>
      <td width="10" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="58" style="border-bottom: 1 solid #000000"><font size="2" face="serif">659,001</font></td>
      <td width="10">&nbsp;</td>
    </tr>
    <tr>
      <td width="233" style="border-bottom: 3 double #000000"><font size="2" face="serif">Cash,
        end of the period</font></td>
      <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="74" style="border-bottom: 3 double #000000"><font size="2" face="serif">4,831,220</font></td>
      <td width="11" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="7" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="74" style="border-bottom: 3 double #000000"><font size="2" face="serif">2,398,002</font></td>
      <td width="11" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="71" style="border-bottom: 3 double #000000"><font size="2" face="serif">5,323,564</font></td>
      <td width="10" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="71" style="border-bottom: 3 double #000000"><font size="2" face="serif">4,022,422</font></td>
      <td width="10" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="58" style="border-bottom: 3 double #000000"><font size="2" face="serif">929,152</font></td>
      <td width="10">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; line-height:15pt; font-family:Times New Roman">Supplemental
cash flow information (note 11)</p>
<p style="margin:0pt; line-height:15pt; font-family:Times New Roman"><br>
</p>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-6</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; line-height:15pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>Notes to the consolidated
financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002 and 2001
(unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<small><big><small><big>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:27pt; text-indent:-27pt; line-height:14pt; font-family:Times New Roman"><b>1</b></big></small></big></small><b><small><big><small><big>.</big></small></big></small></b></p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>NATURE
OF OPERATIONS AND GOING CONCERN</b></p>
<p style="margin:0pt; line-height:15pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27.35pt; text-indent:-0.35pt; font-family:Times New Roman" align="justify">The
Company is in the process of exploring its mineral properties and is
establishing the amount of ore reserves that are economically recoverable from
the Mexico property. &nbsp;The recoverability of amounts shown for these
properties and related deferred exploration expenditures are dependent upon the
discovery of economically recoverable reserves, the preservation of the Company</small></big></small></big><small><small><big><big>'</big></big></small></small><small><big><small><big>s
interest in the underlying mineral claims, the ability of the Company to obtain
the financing necessary to complete the development of the properties, and
future profitable production or, alternatively, upon the Company</big></small></big></small><big><big><small><small>'</small></small></big></big><small><big><small><big>s ability to
dispose of its interest on an advantageous basis. &nbsp;Changes in future
conditions could require material writedowns of the carrying amounts of deferred
exploration expenditure.</p>
<p style="margin:0pt; padding-left:27.35pt; text-indent:-27.35pt; font-family:Times New Roman"><br>
</p>
<small><big><small><big>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:27pt; text-indent:-27pt; line-height:14pt; font-family:Times New Roman"></big></small></big></small></big></small></big></small><b><big><big><big><big><small><small><small><small>2</small></small></small></small></big></big></big><small><big><small><big><small><big><small>.</small></big></small></big></small></big></small></big></b></p>
<small>
<big><small>
<big>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES</b></p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">These
consolidated financial statements have been prepared in accordance with Canadian
generally accepted accounting principles (GAAP). &nbsp;Significant differences
from United States accounting principles are disclosed in Note 15.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman" align="justify"><b>Basis
of consolidation</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">These
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries, Corner Bay Resources Inc. and Pan MacKenzie Resources
Inc. (including its wholly owned subsidiary Minera Corner Bay S.A. de C.V.).</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><b>Deferred
exploration expenditure</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
deferred exploration expenditure is recorded at cost, net of incidental revenues
generated from the particular properties. &nbsp;These net costs are deferred
until the properties to which they relate are placed into production, sold or
abandoned.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">In
March 2000, the Accounting Standards Board of the Canadian Institute of
Chartered Accountants (CICA) issued Accounting Guideline No. 11 entitled, </big></small></big></small><big><big><small><small>"</small></small></big></big><big><small><big><small>Enterprises
in the Development Stage</small></big></small></big><small><small><big><big>"</big></big></small></small><big><small><big><small> (AcG 11), and subsequently, on March 12, 2002,
issued Emerging Issues Committee (EIC) 126 </small></big></small></big><big><big><small><small>"</small></small></big></big><big><small><big><small>Accounting by Mining Enterprises
for Exploration Costs.</small></big></small></big><small><small><big><big>"</big></big></small></small><small><big><small><big> &nbsp;These guidelines address three distinct issues:
(i) capitalization of costs/expenditures (ii) impairment and (iii) disclosure.
&nbsp;Prior to their issuance, development state entities were exempt from
following certain aspects of Canadian generally accepted accounting principles (GAAP).
&nbsp;EIC 126 and AcG 11 require that all companies account for transactions
based on the underlying characteristics of the transactions rather than the
maturity of the enterprise. &nbsp;In addition, EIC 126 and AcG 11 require
specific disclosure of information by development stage companies. &nbsp;These
guidelines were effective for financial periods beginning on or after April 1,
2000, which affects the Company</big></small></big></small><big><big><small><small>'</small></small></big></big><small><big><small><big>s financial years ended on or after June 30,
2001.</p>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-7</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; line-height:15pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>Notes to
the consolidated financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>December
31, 2002 and 2001 (unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000" align="justify"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">EIC
126 and AcG 11 affect mining companies with respect to the deferral of
exploration costs. &nbsp;The appropriate accounting guidance is contained in
Section 3061, </big></small></big></small><big><big><small><small>"</small></small></big></big><big><small><big><small>Property, Plant and Equipment</small></big></small></big><small><small><big><big>"</big></big></small></small><small><big><small><big> of the CICA Handbook which
permits, but does not require, exploration costs to be capitalized as part of a
mining property, if the Company considers that such costs have the
characteristics of property, plant and equipment. &nbsp;Under this view,
deferred exploration expenditure would not automatically be subject to regular
assessment of recoverability, unless conditions such as those discussed in EIC
126 and AcG 11 exist.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">There
would need to be an assessment of deferred exploration expenditure.
&nbsp;Assessment of the probability of recoverability of deferred exploration
expenditure from future operations will require the preparation of a projection
based on objective evidence of economic reserves such as a feasibility study.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
status of the Company</big></small></big></small><big><big><small><small>'</small></small></big></big><big><small><big><small>s operations is such that, like most mining companies in
the exploration stage, it would not be practical to obtain a feasibility study
or provide other information that could be used to support capitalization of
deferred exploration expenditure under the alternative view.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">EIC
126 and AcG 11 did not have a significant impact on the Company</small></big></small></big><small><small><big><big>'</big></big></small></small><small><big><small><big>s consolidated
financial statements.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><b>Property,
plant and equipment</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">Land
and exploration equipment are recorded at cost. &nbsp;Exploration equipment is
amortized on a reducing balance basis at various rates from 14% to 33%.
&nbsp;Amortization relating to equipment used on the mineral properties is
capitalized as part of the deferred exploration expenditure balance.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><b>Assets
under construction</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">Assets
under construction consist of equipment to be commissioned at the Mexico
property site. &nbsp;The assets will be included as part of the equipment
balance once refurbished and transferred to the site. &nbsp;These assets are not
being amortized, as they are not currently ready for use.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><b>Financial
instruments</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
carrying amounts of cash, receivables, prepaid expenses and deposits, accounts
payable and accrued liabilities approximate the fair values of those financial
instruments due to the short-term maturities of such instruments.
&nbsp;Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash. &nbsp;The Company
places its cash with high credit quality financial institutions.</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-8</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>Notes to
the consolidated financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>December
31, 2002 and 2001 (unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000" align="justify"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><b>Income
taxes</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
provision for future income taxes is based on the liability method. &nbsp;Future
income taxes arise from the recognition of the tax consequences of temporary
differences by applying statutory income tax rates applicable to future years to
differences between the financial statements</big></small></big></small><big><big><small><small>'</small></small></big></big><big><small><big><small> carrying amounts and the income
tax bases of certain assets and liabilities. &nbsp;The Company records a
valuation allowance against any portion of those future income tax assets that
it believes is not, more likely than not, to be realized.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><b>Stock-based
compensation plan</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
Company has one stock option plan, which is described in note 5. &nbsp;No
compensation expense is recognized for this plan when stock or stock options are
issued to employees. &nbsp;Any consideration paid on exercise of stock options
or purchase of stock is credited to capital stock.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">Effective
July 1, 2002, the Company adopted the new recommendations of the Canadian
Institute of Chartered Accountants Handbook Section 3870, Stock-based
Compensation and Other Stock-based Payments. &nbsp;This section establishes
standards for the recognition, measurement and disclosure of stock-based
compensation and other stock-based payments in exchange for goods and services.
&nbsp;The section requires that all stock-based awards made to non-employees be
measured and recognized using a fair-value based method. &nbsp;The section
encourages a fair-value based method for all awards granted to directors,
officers and employees, but only requires the use of a fair value based method
for direct awards of stock, stock appreciation rights and awards that call for
settlement in cash or other assets.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">For
stock options granted to directors, officers and employees, the Company has
adopted the intrinsic value method of accounting for stock-based compensation.
&nbsp;Under this method compensation expense is recognized for the excess, if
any, of the quoted market price of the Company</small></big></small></big><small><small><big><big>'</big></big></small></small><big><small><big><small>s common shares over the common
share option exercise price on the day that options are granted.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><b>Loss
per share</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">Basic
loss per share is computed by dividing the loss for the year by the weighted
average number of common shares outstanding during the year, including
contingently issuable shares that are included when the conditions necessary for
issuance have been met. &nbsp;Diluted earnings per share are calculated in a
manner similar to basic earnings per share, except the weighted average number
of shares outstanding are increased to include potential common shares from the
assumed exercise of options and warrants, if dilutive. &nbsp;The number of
additional shares included in the calculation is based on the treasury stock
method for options and warrants and on the as if converted method for
convertible securities.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">During
the year ended June 30, 2001, the Company changed its method of accounting for
earnings per share to comply with the revised standard issued by the CICA
Handbook, Section 3500, </small></big></small></big><big><big><small><small>"</small></small></big></big><small><big><small><big>Earnings per share</big></small></big></small><big><big><small><small>"</small></small></big></big><small><big><small><big>. &nbsp;There was no difference
between the loss per share calculated under the new standard and the amount that
would have been calculated using the previous standard.</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-9</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman; font-size:12pt" align="justify"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>Notes to
the consolidated financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b>December
31, 2002 and 2001 (unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000" align="justify"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><b>Use
of estimates</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
preparation of financial statements in conformity with Canadian generally
accepted accounting principles (GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses during the reporting period. &nbsp;Actual results could differ from
these estimates.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><b>Translation
of foreign currencies</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">As
the Company considers all of its foreign operations to be fully integrated, all
items denominated in foreign currencies have been translated using the temporal
method. &nbsp;Under this method, monetary assets and liabilities and
non-monetary items carried at market values are translated at the year and
period end exchange rate. &nbsp;Other non-monetary items and revenue and
expenses are translated at approximate rates in effect at the dates of the
transactions, except depletion and amortization, which are translated at the
same rates as the related assets.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:27pt; text-indent:-27pt; line-height:14pt; font-family:Times New Roman"><b>3.</b></p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>MINERAL
PROPERTIES</b></p>
<div align="center">
  <center>
  <table width="100%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="44%"></td>
      <td width="1%">&nbsp;</td>
      <td width="10%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="10%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="12%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="12%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="10%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Mexico</font></b></td>
      <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td colspan="2" width="11%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Maritimes</font></b></td>
      <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td colspan="2" width="13%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Chibougamau</font></b></td>
      <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="12%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Total</font></b></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Balance </big></small></big></small><big><big><small><small>-</small></small></big></big><small><big><small><big>
  June 30, 1999</big></small></big></small></font></td>
<small><big><small><big>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="10%"><font size="2" face="serif">1,018,492</font></td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="10%"><font size="2" face="serif">401,611</font></td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="12%"><font size="2" face="serif">1,097,825</font></td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="12%"><font size="2" face="serif">2,517,928</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Expenditures</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">2,114,901</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">1,411</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">2,116,312</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Option receipts</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">(25,000)</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">(9,586)</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">(34,586)</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Writedown</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="10%" style="border-bottom: 1 solid #000000">-</td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="10%" style="border-bottom: 1 solid #000000">-</td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(1,088,239)</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(1,088,239)</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Balance </big></small></big></small><big><big><small><small>-</small></small></big></big><small><big><small><big>
June 30, 2000</big></small></big></small></font></td>
<small><big><small><big>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">3,133,393</font></td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="10%"><font size="2" face="serif">378,022</font></td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="12%">-</td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="12%"><font size="2" face="serif">3,511,415</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Expenditures</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">1,388,451</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">1,580</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">1,390,031</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Option receipts</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">(5,975)</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">(5,975)</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Amortization of equipment
        capitalized</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">29,228</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">29,228</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Writedown</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="10%" style="border-bottom: 1 solid #000000">-</td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="10%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(373,627)</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000">-</td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(373,627)</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Balance </big></small></big></small><big><big><small><small>-</small></small></big></big><small><big><small><big>
June 30, 2001</big></small></big></small></font></td>
<small><big><small><big>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">4,551,072</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">4,551,072</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Expenditures</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">3,147,522</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">3,147,522</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Amortization
        of equipment capitalized</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="10%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">7,271</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="10%" style="border-bottom: 1 solid #000000">-</td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000">-</td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">7,271</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Balance </big></small></big></small><big><big><small><small>-</small></small></big></big><small><big><small><big>
June 30, 2002</big></small></big></small></font></td>
<small><big><small><big>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">7,705,865</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">7,705,865</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Expenditures (Unaudited)</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">534,911</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">534,911</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Purchase of concessions (Unaudited)</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%"><font size="2" face="serif">537,985</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="10%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%">-</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">537,985</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%"><font size="2" face="serif">Amortization of equipment</font></td>
      <td width="1%">&nbsp;</td>
      <td width="10%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="10%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="12%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="12%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">capitalized
        (Unaudited)</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="10%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">2,803</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="10%" style="border-bottom: 1 solid #000000">-</td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000">-</td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">2,803</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="44%" style="border-bottom: 3 double #000000"><font size="2" face="serif">Balance
        </big></small></big></small><big><big><small><small>-</small></small></big></big><big><small><big><small>
December 31, 2002 (Unaudited)</big></font></small></small></big></td>
<big>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="10%" style="border-bottom: 3 double #000000"><font size="2" face="serif">8,781,564</font></td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="10%" style="border-bottom: 3 double #000000">-</td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="12%" style="border-bottom: 3 double #000000">-</td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="12%" style="border-bottom: 3 double #000000"><font size="2" face="serif">8,781,564</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
Alamo Dorado silver/gold property is located in the northwestern state of
Sonora, Mexico. &nbsp;Paved roads connect the state capital of Hermosillo to the
town of Alamos, which is 67 kilometers northwest of the Alamo Dorado Project.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
5,369 hectare property consists of the 504 hectare Alamo Ocho concession held
under option by the Company, and the 4,865 hectare Alamo Dorado concession,
which is owned 100% by the Company and surrounds the Alamo Ocho concession.
&nbsp;The Company can earn a 100% interest in Alamo Ocho by paying US$800,000
over six years. &nbsp;Payments are made semi-annually, of which US$441,000 (unaudited)
was paid to December 31, 2002 (June 30, 2002, 2001 and 2000 were US$450,000,
$325,000 and $nil, respectively).</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-10</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>Notes to the consolidated
financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002 and 2001
(unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">During
the year ended June 30, 2002, the Company incurred $131,147 (2001 and 2000 -
$nil) in rental payments, and is committed to annual rental payments of
$114,150. &nbsp;During the six-month periods ended December 31, 2002 and 2001,
the Company incurred $35,906 and $23,491 (unaudited), respectively, in rental
payments.</p>
<small><big><small><big>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:27pt; text-indent:-27pt; line-height:14pt; font-family:Times New Roman"></big></small></big></small><b><big><big><small><small>4</small></small></big></big><small><big><small><big>.</big></small></big></small></b></p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>PROPERTY,
PLANT AND EQUIPMENT</b></p>
<div align="center">
  <center>
  <table width="658" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td colspan="6" width="297"></td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="81">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
    <tr>
      <td width="112">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="82" align="center">&nbsp;</td>
      <td width="16" align="center">&nbsp;</td>
      <td width="8" align="center">&nbsp;</td>
      <td width="62" align="center">&nbsp;</td>
      <td width="15" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="81" align="center"><b><font size="2" face="serif">June 30</font></b></td>
      <td width="15" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="64" align="center">&nbsp;</td>
      <td width="8" align="center">&nbsp;</td>
      <td width="62" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="73" align="center"><b><font size="2" face="serif">June 30</font></b></td>
    </tr>
    <tr>
      <td width="112">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="82" align="center">&nbsp;</td>
      <td width="16" align="center">&nbsp;</td>
      <td align="center" colspan="2" width="72"><b><font size="2" face="serif">Accumulated</font></b></td>
      <td width="15" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td align="center" width="81"><b><font size="2" face="serif">2002</font></b></td>
      <td width="15" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td width="64" align="center">&nbsp;</td>
      <td align="center" colspan="2" width="72"><b><font size="2" face="serif">Accumulated</font></b></td>
      <td width="6" align="center">&nbsp;</td>
      <td align="center" width="73"><b><font size="2" face="serif">2001</font></b></td>
    </tr>
    <tr>
      <td width="112" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="82" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Cost</font></b></td>
      <td width="16" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" colspan="2" width="72" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Amortization</font></b></td>
      <td width="15" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="81" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Net</font></b></td>
      <td width="15" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="64" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Cost</font></b></td>
      <td align="center" colspan="2" width="72" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Amortization</font></b></td>
      <td width="6" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="73" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Net</font></b></td>
    </tr>
    <tr>
      <td width="112"><font size="2" face="serif">Equipment</font></td>
      <td align="center" width="7"><font size="2" face="serif">$</font></td>
      <td align="right" width="82"><font size="2" face="serif">66,683</font></td>
      <td width="16">&nbsp;</td>
      <td align="center" width="8"><font size="2" face="serif">$</font></td>
      <td align="right" width="62"><font size="2" face="serif">14,722</font></td>
      <td width="15">&nbsp;</td>
      <td align="center" width="6"><font size="2" face="serif">$</font></td>
      <td align="right" width="81"><font size="2" face="serif">53,961</font></td>
      <td width="15">&nbsp;</td>
      <td align="center" width="6"><font size="2" face="serif">$</font></td>
      <td align="right" width="64"><font size="2" face="serif">129,415</font></td>
      <td align="center" width="8"><font size="2" face="serif">$</font></td>
      <td align="right" width="62"><font size="2" face="serif">32,545</font></td>
      <td align="center" width="6"><font size="2" face="serif">$</font></td>
      <td align="right" width="73"><font size="2" face="serif">96,870</font></td>
    </tr>
    <tr>
      <td width="112"><font size="2" face="serif">Assets under</font></td>
      <td width="7">&nbsp;</td>
      <td width="82">&nbsp;</td>
      <td width="16">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="81">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
    <tr>
      <td width="112" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Construction</font></td>
      <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="82" style="border-bottom: 1 solid #000000"><font size="2" face="serif">3,842,500</font></td>
      <td width="16" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="62" style="border-bottom: 1 solid #000000">-</td>
      <td width="15" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="81" style="border-bottom: 1 solid #000000"><font size="2" face="serif">3,842,500</font></td>
      <td width="15" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="64" style="border-bottom: 1 solid #000000">-</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="62" style="border-bottom: 1 solid #000000">-</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="73" style="border-bottom: 1 solid #000000">-</td>
    </tr>
    <tr>
      <td width="112">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="82">&nbsp;</td>
      <td width="16">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="81">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
    <tr>
      <td width="112" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="7" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="82" style="border-bottom: 3 double #000000"><font size="2" face="serif">3,911,183</font></td>
      <td width="16" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="8" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="62" style="border-bottom: 3 double #000000"><font size="2" face="serif">14,722</font></td>
      <td width="15" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="81" style="border-bottom: 3 double #000000"><font size="2" face="serif">3,896,461</font></td>
      <td width="15" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="64" style="border-bottom: 3 double #000000"><font size="2" face="serif">129,415</font></td>
      <td align="center" width="8" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="62" style="border-bottom: 3 double #000000"><font size="2" face="serif">32,545</font></td>
      <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="73" style="border-bottom: 3 double #000000"><font size="2" face="serif">96,870</font></td>
    </tr>
    <tr>
      <td width="112">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="82">&nbsp;</td>
      <td width="16">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="81">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
    <tr>
      <td width="112">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="82" align="center">&nbsp;</td>
      <td width="16" align="center">&nbsp;</td>
      <td width="8" align="center">&nbsp;</td>
      <td width="62" align="center">&nbsp;</td>
      <td width="15" align="center">&nbsp;</td>
      <td align="center" colspan="2" width="89"><b><font size="2" face="serif">December
        31</font></b></td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
    <tr>
      <td width="112">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="82" align="center">&nbsp;</td>
      <td width="16" align="center">&nbsp;</td>
      <td align="center" colspan="2" width="72"><b><font size="2" face="serif">Accumulated</font></b></td>
      <td width="15" align="center">&nbsp;</td>
      <td width="6" align="center">&nbsp;</td>
      <td align="center" width="81"><b><font size="2" face="serif">2002</font></b></td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
    <tr>
      <td width="112" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">(Unaudited)</font></b></td>
      <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="82" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Cost</font></b></td>
      <td width="16" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" colspan="2" width="72" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Amortization</font></b></td>
      <td width="15" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="81" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Net</font></b></td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
    <tr>
      <td width="112"><font size="2" face="serif">Equipment</font></td>
      <td align="center" width="7"><font size="2" face="serif">$</font></td>
      <td align="right" width="82"><font size="2" face="serif">139,917</font></td>
      <td width="16">&nbsp;</td>
      <td align="center" width="8"><font size="2" face="serif">$</font></td>
      <td align="right" width="62"><font size="2" face="serif">88,759</font></td>
      <td width="15">&nbsp;</td>
      <td align="center" width="6"><font size="2" face="serif">$</font></td>
      <td align="right" width="81"><font size="2" face="serif">51,158</font></td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
    <tr>
      <td width="112"><font size="2" face="serif">Assets under</font></td>
      <td width="7">&nbsp;</td>
      <td width="82">&nbsp;</td>
      <td width="16">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="81">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
    <tr>
      <td width="112" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Construction</font></td>
      <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="82" style="border-bottom: 1 solid #000000"><font size="2" face="serif">3,842,500</font></td>
      <td width="16" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="62" style="border-bottom: 1 solid #000000">-</td>
      <td width="15" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="81" style="border-bottom: 1 solid #000000"><font size="2" face="serif">3,842,500</font></td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
    <tr>
      <td width="112">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="82">&nbsp;</td>
      <td width="16">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="81">&nbsp;</td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
    <tr>
      <td width="112" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="7" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="82" style="border-bottom: 3 double #000000"><font size="2" face="serif">3,982,417</font></td>
      <td width="16" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="8" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="62" style="border-bottom: 3 double #000000"><font size="2" face="serif">88,759</font></td>
      <td width="15" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="81" style="border-bottom: 3 double #000000"><font size="2" face="serif">3,893,658</font></td>
      <td width="15">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="64">&nbsp;</td>
      <td width="8">&nbsp;</td>
      <td width="62">&nbsp;</td>
      <td width="6">&nbsp;</td>
      <td width="73">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; padding-left:36pt; text-indent:-9pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">During
the six months ended December 31, 2002, the Company wrote off $nil (December 31,
2001 - $nil; years ended June 30, 2002, 2001 and 2000 of $42,511, $95,833 and
$nil, respectively) of property, plant and equipment.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">During
the six months ended December 31, 2002, the Company recorded amortization of
$2,803 (years ended June 30, 2002, 2001 and 2000 of $7,271, $29,228 and $nil,
respectively), which were capitalized as deferred exploration expenditure.</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-11</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>Notes to the consolidated
financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002 and 2001
(Unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<small><big><small><big>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:27pt; text-indent:-27pt; line-height:14pt; font-family:Times New Roman"></big></small></big></small></big><big><b><big><big><big><small><small><small><small>5</small></small></small></small></big></big></big><small><big><small><big><small><big><small>.</small></big></small></big></small></big></small></b></p>
<small>
<big>
<small>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>CAPITAL
STOCK</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman"><b>Authorized</b></p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman">Unlimited
number of common shares, without nominal or par value.</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman"><b>Issued
and outstanding </small></big></small></big><big><big><small><small>-</small></small></big></big><big>
<small><big><small>
 common shares</small></big></small></big></b></p>
<big>
<small><big><small>
<p>&nbsp;</p>
<div align="center">
  <center>
  <table width="100%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%">&nbsp;</td>
      <td align="center" width="12%"><b><font size="2" face="serif">Number of</font></b></td>
      <td width="2%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td width="11%" align="center">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%">&nbsp;</td>
      <td align="center" width="12%"><b><font size="2" face="serif">shares</font></b></td>
      <td width="2%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td align="center" width="11%"><b><font size="2" face="serif">Net</font></b></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="12%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">outstanding</font></b></td>
      <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Proceeds</font></b></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Balance </small></big></small></big><small><small><big><big>-</big></big></small></small><small>
<big>
<small><big> June 30, 1999</big></small></big></small></font></td>
<small>
<big>
<small><big>
      <td align="right" width="12%"><font size="2" face="serif">9,899,115</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="11%"><font size="2" face="serif">7,275,366</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Shares issued for cash in
        private placement</font></td>
      <td width="12%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">September 21, 1999</font></td>
      <td align="right" width="12%"><font size="2" face="serif">596,540</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="11%"><font size="2" face="serif">773,976</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">December 20, 1999</font></td>
      <td align="right" width="12%"><font size="2" face="serif">400,000</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="11%"><font size="2" face="serif">1,198,435</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Warrants exercised for cash
        during the year</font></td>
      <td align="right" width="12%"><font size="2" face="serif">545,454</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="11%"><font size="2" face="serif">409,080</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Options
        exercised for cash during the year</font></td>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">393,000</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">117,900</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Balance - June 30, 2000</font></td>
      <td align="right" width="12%"><font size="2" face="serif">11,834,109</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="11%"><font size="2" face="serif">9,774,757</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Shares issued in prospectus
        offering </big></small></big></small><big><big><small><small>-</small></small></big></big><big>
<small><big><small>
 December 14, 2000</small></big></small></big></font></td>
<big>
<small><big><small>
      <td align="right" width="12%"><font size="2" face="serif">3,666,667</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="11%"><font size="2" face="serif">4,978,397</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Options
        exercised for cash</font></td>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">200,000</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">60,000</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Balance - June 30, 2001</font></td>
      <td align="right" width="12%"><font size="2" face="serif">15,700,776</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="11%"><font size="2" face="serif">14,813,154</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Shares issued for cash in
        private placement </small></big></small></big><small><small><big><big>-</big></big></small></small><small>
<big>
<small><big> February 19, 2002</big></small></big></small></font></td>
<small>
<big>
<small><big>
      <td align="right" width="12%"><font size="2" face="serif">1,830,000</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="11%"><font size="2" face="serif">4,575,000</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Warrants exercised for cash</font></td>
      <td align="right" width="12%"><font size="2" face="serif">183,333</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="11%"><font size="2" face="serif">275,000</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Options exercised for cash</font></td>
      <td align="right" width="12%"><font size="2" face="serif">612,000</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="11%"><font size="2" face="serif">1,208,850</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Shares issued for assets under
        construction</font></td>
      <td width="12%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">purchased
        </big></small></big></small><big><big><small><small>-</small></small></big></big><big>
<small><big><small>
 June 18, 2002 (note 11)</small></big></small></big></font></td>
<big>
<small><big><small>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">850,000</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">3,442,500</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Balance - June 30, 2002</font></td>
      <td align="right" width="12%"><font size="2" face="serif">19,176,109</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="11%"><font size="2" face="serif">24,314,504</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%"><font size="2" face="serif">Options exercised for cash (unaudited)</font></td>
      <td align="right" width="12%"><font size="2" face="serif">465,000</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="11%"><font size="2" face="serif">1,184,500</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="2%">&nbsp;</td>
      <td width="70%" style="border-bottom: 3 double #000000"><font size="2" face="serif">Balance
        - December 31, 2002 (unaudited)</font></td>
      <td align="right" width="12%" style="border-bottom: 3 double #000000"><font size="2" face="serif">19,641,109</font></td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td width="1%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">25,499,004</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">On
September 21, 1999, the Company completed a private placement of 596,540 shares
at a price of $1.30 per share.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">On
December 20, 1999, the Company completed a private placement of 400,000 units.
&nbsp;Each unit consists of one common share at $3.00 and one-half common share
purchase warrant. &nbsp;Each whole purchase warrant entitles the holder to
purchase one additional common share at a price of $4.00 per common share at
anytime until December 20, 2001. &nbsp;Effective December 20, 2001, all options
that had not been exercised prior to this date expired.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">On
December 14, 2000, the Company publicly offered 3,666,667 units. &nbsp;Each unit
consisted of one common share at $1.50 and one-half common share purchase
warrant. &nbsp;Each whole purchase warrant entitles the holder to purchase one
additional common share at $2.25 per share at anytime until December 14, 2001.
&nbsp;In connection with the December 14, 2000 offering, the underwriters
received 183,333 warrants of the Company. &nbsp;Each warrant entitles the
underwriter to purchase one common share for $1.50 at any time until December
14, 2001. &nbsp;Effective December 14, 2001, all warrants that had not been
exercised prior to this date expired. &nbsp;Refer to the following warrants
table.</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">On
February 19, 2002, the Company completed a private placement of 1,830,000 shares
at a price of $2.50 per share.</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-12</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>Notes to the consolidated
financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002 and 2001
(unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>Warrants</b></p>
<div align="center">
  <center>
  <table width="649" border="0" cellspacing="0" cellpadding="0" height="357">
    <tr>
      <td width="398" height="21"></td>
      <td width="115" height="21">&nbsp;</td>
      <td width="17" height="21">&nbsp;</td>
      <td width="102" height="21">&nbsp;</td>
      <td width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" height="21">&nbsp;</td>
      <td width="115" align="center" height="21">&nbsp;</td>
      <td width="17" align="center" height="21">&nbsp;</td>
      <td width="102" align="center" height="21"><b><font size="2" face="serif">Weighted</font></b></td>
      <td width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" height="21">&nbsp;</td>
      <td align="center" width="115" height="21"><b><font size="2" face="serif">Number
        of</font></b></td>
      <td width="17" align="center" height="21">&nbsp;</td>
      <td width="102" align="center" height="21"><b><font size="2" face="serif">average</font></b></td>
      <td width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" style="border-bottom: 1 solid #000000" height="21">&nbsp;</td>
      <td align="center" width="115" style="border-bottom: 1 solid #000000" height="21"><b><font size="2" face="serif">Warrants</font></b></td>
      <td width="17" align="center" style="border-bottom: 1 solid #000000" height="21">&nbsp;</td>
      <td width="102" align="center" style="border-bottom: 1 solid #000000" height="21"><b><font size="2" face="serif">price</font></b></td>
      <td width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" height="21"><font size="2" face="serif">Balance </small></big></small></big><small><small><big><big>-</big></big></small></small><small>
<big>
<small><big> June
        30, 1999</big></small></big></small></font></td>
<small>
<big>
<small><big>
      <td align="right" width="115" height="21">-</td>
      <td width="17" height="21">&nbsp;</td>
      <td align="right" width="102" height="21">
        <p align="left"><font size="2" face="serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        -</font></p>
      </td>
      <td align="right" width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">Issued
        </big></small></big></small><big><big><small><small>-</small></small></big></big><big>
<small><big><small>
 December 20, 1999</small></big></small></big></font></td>
<big>
<small><big><small>
      <td align="right" width="115" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">200,000</font></td>
      <td width="17" style="border-bottom: 1 solid #000000" height="21">&nbsp;</td>
      <td align="right" width="102" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">4.00</font></td>
      <td align="right" width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" height="21"><font size="2" face="serif">Balance </small></big></small></big><small><small><big><big>-</big></big></small></small><small>
<big>
<small><big> June
        30, 2000</big></small></big></small></font></td>
<small>
<big>
<small><big>
      <td align="right" width="115" height="21"><font size="2" face="serif">200,000</font></td>
      <td width="17" height="21">&nbsp;</td>
      <td align="right" width="102" height="21"><font size="2" face="serif">4.00</font></td>
      <td align="right" width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" height="21"><font size="2" face="serif">Issued </big></small></big></small><big><big><small><small>-</small></small></big></big><big>
<small><big><small>
 December 14, 2000</small></big></small></big></font></td>
<big>
<small><big><small>
      <td align="right" width="115" height="21"><font size="2" face="serif">2,016,666</font></td>
      <td width="17" height="21">&nbsp;</td>
      <td align="right" width="102" height="21"><font size="2" face="serif">2.18</font></td>
      <td align="right" width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" height="21"><font size="2" face="serif">Balance </small></big></small></big><small><small><big><big>-</big></big></small></small><small>
<big>
<small><big> June
        30, 2001</big></small></big></small></font></td>
<small>
<big>
<small><big>
      <td align="right" width="115" height="21"><font size="2" face="serif">2,216,666</font></td>
      <td width="17" height="21">&nbsp;</td>
      <td align="right" width="102" height="21"><font size="2" face="serif">2.34</font></td>
      <td align="right" width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" height="21"><font size="2" face="serif">Expired</font></td>
      <td align="right" width="115" height="21"><font size="2" face="serif">(2,033,333)</font></td>
      <td width="17" height="21">&nbsp;</td>
      <td align="right" width="102" height="21"><font size="2" face="serif">2.42</font></td>
      <td align="right" width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">Exercised</font></td>
      <td align="right" width="115" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">(183,333)</font></td>
      <td width="17" style="border-bottom: 1 solid #000000" height="21">&nbsp;</td>
      <td align="right" width="102" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">1.50</font></td>
      <td align="right" width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" height="21"><font size="2" face="serif">Balance </big></small></big></small><big><big><small><small>-</small></small></big></big><big>
<small><big><small>
 June
        30, 2002</small></big></small></big></font></td>
<big>
<small><big><small>
      <td align="right" width="115" height="21">-</td>
      <td width="17" height="21">&nbsp;</td>
      <td align="right" width="102" height="21">-</td>
      <td align="right" width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" height="21"><font size="2" face="serif">Expired</font></td>
      <td align="right" width="115" height="21">-</td>
      <td width="17" height="21">&nbsp;</td>
      <td align="right" width="102" height="21">-</td>
      <td align="right" width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">Exercised</font></td>
      <td align="right" width="115" style="border-bottom: 1 solid #000000" height="21">-</td>
      <td width="17" style="border-bottom: 1 solid #000000" height="21">&nbsp;</td>
      <td align="right" width="102" style="border-bottom: 1 solid #000000" height="21">-</td>
      <td align="right" width="8" height="21"></td>
    </tr>
    <tr>
      <td width="398" style="border-bottom: 3 double #000000" height="22"><font size="2" face="serif">Balance
        </small></big></small></big><small><small><big><big>-</big></big></small></small><small>
<big>
<small><big> December 31, 2002 (unaudited)</big></small></big></small></font></td>
<small>
<big>
<small><big>
      <td align="right" width="115" style="border-bottom: 3 double #000000" height="22">-</td>
      <td width="17" style="border-bottom: 3 double #000000" height="22">&nbsp;</td>
      <td width="102" style="border-bottom: 3 double #000000" height="22"><font size="2" face="serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        -</font></td>
      <td width="8" height="22"></td>
    </tr>
    <tr>
      <td width="398" height="21">&nbsp;</td>
      <td width="115" height="21">&nbsp;</td>
      <td width="17" height="21">&nbsp;</td>
      <td width="102" height="21">&nbsp;</td>
      <td width="8" height="21"></td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>Options</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">On
December 15, 1995, the shareholders of the Company approved the amended stock
option plan (dated November 1, 1995) (the Plan) which provides for the issuance
of 1.0 million stock options under the terms of the Plan. &nbsp;On December 20,
1999 and December 15, 2000, the shareholders approved an amendment to provide
for the further issuance of an additional 1.4 and 2.0 million common share
options, respectively, under the terms of the Plan.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">Under
the Plan, the Company provides options to buy common shares of the Company to
directors, officers and service providers. &nbsp;The board of directors grants
such options for periods of up to ten years at prices not lower than the market
price at the date of granting.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">No
compensation expense is recognized when stock options are issued to employees
and directors. &nbsp;All consideration paid by employees from the exercise of
stock options or purchase of stock is credited to capital stock.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">Compensation
expense is recorded when stock options are issued to non-employees and is
recognized over the vesting period of the options. &nbsp;Compensation expense is
determined as the fair value of the options at the date of grant using an
option-pricing model. &nbsp;During the six months ended December 31, 2002 and
year ended June 30, 2002, no stock options were issued to non-employees.</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-13</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>Notes to the consolidated
financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002 and 2001
(unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman">As at June
30, 2002, the Company had outstanding and exercisable stock options as follows:</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<div align="center">
  <center>
  <table width="100%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="61%">&nbsp;</td>
      <td width="6%">&nbsp;</td>
      <td align="center" colspan="2" width="16%"><b><font size="2" face="serif">Exercise</font></b></td>
      <td width="3%" align="center">&nbsp;</td>
      <td width="13%" align="center"><b><font size="2" face="serif">Expiry</font></b></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="61%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="6%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" colspan="2" width="16%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Price</font></b></td>
      <td width="3%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="13%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Date</font></b></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="61%"><font size="2" face="serif">500,000</font></td>
      <td width="6%">&nbsp;</td>
      <td align="center" width="3%"><font size="2" face="serif">$</font></td>
      <td align="center" width="13%"><font size="2" face="serif">2.65</font></td>
      <td width="3%">&nbsp;</td>
      <td align="center" width="13%"><font size="2" face="serif">12/20/02</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="61%"><font size="2" face="serif">660,000</font></td>
      <td width="6%">&nbsp;</td>
      <td width="3%">&nbsp;</td>
      <td align="center" width="13%"><font size="2" face="serif">3.00</font></td>
      <td width="3%">&nbsp;</td>
      <td align="center" width="13%"><font size="2" face="serif">06/30/03</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="61%"><font size="2" face="serif">380,000</font></td>
      <td width="6%">&nbsp;</td>
      <td width="3%">&nbsp;</td>
      <td align="center" width="13%"><font size="2" face="serif">1.75</font></td>
      <td width="3%">&nbsp;</td>
      <td align="center" width="13%"><font size="2" face="serif">10/02/04</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="61%"><font size="2" face="serif">40,000</font></td>
      <td width="6%">&nbsp;</td>
      <td width="3%">&nbsp;</td>
      <td align="center" width="13%"><font size="2" face="serif">1.80</font></td>
      <td width="3%">&nbsp;</td>
      <td align="center" width="13%"><font size="2" face="serif">12/12/04</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="61%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">60,000</font></td>
      <td width="6%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="3%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">$</font></td>
      <td align="center" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">3.00</font></td>
      <td width="3%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="13%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">02/28/05</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman">As at June
30, 2002, the Company had outstanding and exercisable stock options as follows:</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<div align="center">
  <center>
  <table width="700" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="247"></td>
      <td width="87" align="center">&nbsp;</td>
      <td width="19" align="center">&nbsp;</td>
      <td colspan="2" width="87" align="center"><b><font size="2" face="serif">2002</font></b></td>
      <td width="22" align="center">&nbsp;</td>
      <td width="72" align="center">&nbsp;</td>
      <td width="19" align="center">&nbsp;</td>
      <td align="center" colspan="2" width="92"><b><font size="2" face="serif">2001</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td width="73" align="center">&nbsp;</td>
      <td width="19" align="center">&nbsp;</td>
      <td align="center" colspan="2" width="68"><b><font size="2" face="serif">2000</font></b></td>
      <td width="19" align="center">&nbsp;</td>
    </tr>
    <tr>
      <td width="247"></td>
      <td width="87" align="center"><b><font size="2" face="serif">Number</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td colspan="2" width="87" align="center"><b><font size="2" face="serif">Weighted</font></b></td>
      <td width="22" align="center">&nbsp;</td>
      <td align="center" width="72"><b><font size="2" face="serif">Number</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td align="center" colspan="2" width="92"><b><font size="2" face="serif">Weighted</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td align="center" width="73"><b><font size="2" face="serif">Number</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td align="center" colspan="2" width="68"><b><font size="2" face="serif">Weighted</font></b></td>
      <td width="19" align="center">&nbsp;</td>
    </tr>
    <tr>
      <td width="247"></td>
      <td width="87" align="center"><b><font size="2" face="serif">of</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td colspan="2" width="87" align="center"><b><font size="2" face="serif">average</font></b></td>
      <td width="22" align="center">&nbsp;</td>
      <td align="center" width="72"><b><font size="2" face="serif">of</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td align="center" colspan="2" width="92"><b><font size="2" face="serif">average</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td align="center" width="73"><b><font size="2" face="serif">of</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td align="center" colspan="2" width="68"><b><font size="2" face="serif">average</font></b></td>
      <td width="19" align="center">&nbsp;</td>
    </tr>
    <tr>
      <td width="247" style="border-bottom: 1 solid #000000"></td>
      <td width="87" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">options</font></b></td>
      <td width="19" align="center" style="border-bottom: 1 solid #000000"></td>
      <td width="85" colspan="2" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">price</font></b></td>
      <td width="22" align="center" style="border-bottom: 1 solid #000000"></td>
      <td width="72" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">options</font></b></td>
      <td width="19" align="center" style="border-bottom: 1 solid #000000"></td>
      <td width="90" colspan="2" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">price</font></b></td>
      <td width="19" align="center" style="border-bottom: 1 solid #000000"></td>
      <td width="73" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">options</font></b></td>
      <td width="19" align="center" style="border-bottom: 1 solid #000000"></td>
      <td width="66" colspan="2" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">price</font></b></td>
      <td width="19" align="center"></td>
    </tr>
    <tr>
      <td width="247"><font size="2" face="serif">Outstanding</font></td>
      <td width="87" align="center">&nbsp;</td>
      <td width="19" align="center">&nbsp;</td>
      <td width="13" align="center">&nbsp;</td>
      <td width="72" align="center">&nbsp;</td>
      <td width="22" align="center">&nbsp;</td>
      <td width="72" align="center">&nbsp;</td>
      <td width="19" align="center">&nbsp;</td>
      <td width="12" align="center">&nbsp;</td>
      <td width="78" align="center">&nbsp;</td>
      <td width="19" align="center">&nbsp;</td>
      <td width="73" align="center">&nbsp;</td>
      <td width="19" align="center">&nbsp;</td>
      <td width="12" align="center">&nbsp;</td>
      <td width="54" align="center">&nbsp;</td>
      <td width="19" align="center">&nbsp;</td>
    </tr>
    <tr>
      <td align="left" width="247"><font size="2" face="serif">- Beginning of
        year</font></td>
      <td align="right" width="87"><font size="2" face="serif">1,607,000</font></td>
      <td width="19">&nbsp;</td>
      <td align="center" width="13"><font size="2" face="serif">$</font></td>
      <td align="center" width="72"><font size="2" face="serif">2.60</font></td>
      <td width="22">&nbsp;</td>
      <td align="right" width="72"><font size="2" face="serif">1,707,000</font></td>
      <td width="19">&nbsp;</td>
      <td align="center" width="12"><font size="2" face="serif">$</font></td>
      <td align="center" width="78"><font size="2" face="serif">2.38</font></td>
      <td width="19">&nbsp;</td>
      <td align="right" width="73"><font size="2" face="serif">700,000</font></td>
      <td width="19">&nbsp;</td>
      <td align="center" width="12"><font size="2" face="serif">$</font></td>
      <td align="center" width="54"><font size="2" face="serif">0.30</font></td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td align="left" width="247"><font size="2" face="serif">Granted</font></td>
      <td align="right" width="87"><font size="2" face="serif">645,000</font></td>
      <td width="19">&nbsp;</td>
      <td width="13">&nbsp;</td>
      <td align="center" width="72"><font size="2" face="serif">1.95</font></td>
      <td width="22">&nbsp;</td>
      <td align="right" width="72"><font size="2" face="serif">100,000</font></td>
      <td width="19">&nbsp;</td>
      <td width="12">&nbsp;</td>
      <td align="center" width="78"><font size="2" face="serif">1.70</font></td>
      <td width="19">&nbsp;</td>
      <td align="right" width="73"><font size="2" face="serif">1,400,000</font></td>
      <td width="19">&nbsp;</td>
      <td width="12">&nbsp;</td>
      <td align="center" width="54"><font size="2" face="serif">2.84</font></td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td align="left" width="247" style="border-bottom: 1 solid #000000"><font size="2" face="serif">&nbsp;Exercised</font></td>
      <td align="right" width="87" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(612,000)</font></td>
      <td width="19" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="13" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="72" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1.98</font></td>
      <td width="22" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="72" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(200,000)</font></td>
      <td width="19" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="12" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">0.30</font></td>
      <td width="19" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="73" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(393,000)</font></td>
      <td width="19" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="12" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="54" style="border-bottom: 1 solid #000000"><font size="2" face="serif">0.30</font></td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td width="247"><font size="2" face="serif">Outstanding</font></td>
      <td width="87">&nbsp;</td>
      <td width="19">&nbsp;</td>
      <td width="13">&nbsp;</td>
      <td width="72">&nbsp;</td>
      <td width="22">&nbsp;</td>
      <td width="72">&nbsp;</td>
      <td width="19">&nbsp;</td>
      <td width="12">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="19">&nbsp;</td>
      <td width="73">&nbsp;</td>
      <td width="19">&nbsp;</td>
      <td width="12">&nbsp;</td>
      <td width="54">&nbsp;</td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td align="left" width="247" style="border-bottom: 3 double #000000"><font size="2" face="serif">&nbsp;-
        End of year</font></td>
      <td align="right" width="87" style="border-bottom: 3 double #000000"><font size="2" face="serif">1,640,000</font></td>
      <td width="19" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="13" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="center" width="72" style="border-bottom: 3 double #000000"><font size="2" face="serif">2.57</font></td>
      <td width="22" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="right" width="72" style="border-bottom: 3 double #000000"><font size="2" face="serif">1,607,000</font></td>
      <td width="19" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="12" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="center" width="78" style="border-bottom: 3 double #000000"><font size="2" face="serif">2.60</font></td>
      <td width="19" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="right" width="73" style="border-bottom: 3 double #000000"><font size="2" face="serif">1,707,000</font></td>
      <td width="19" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="12" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="center" width="54" style="border-bottom: 3 double #000000"><font size="2" face="serif">2.38</font></td>
      <td width="19">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman">As at
December 31, 2002, the Company had outstanding and exercisable stock options as
follows:</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<div align="center">
  <center>
  <table width="700" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="513">&nbsp;</td>
      <td colspan="4" width="162" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">December
        31, 2002</font></b></td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td width="513">&nbsp;</td>
      <td width="78" align="center"><b><font size="2" face="serif">Number</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td colspan="2" width="61" align="center"><b><font size="2" face="serif">Weighted</font></b></td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td width="513">&nbsp;</td>
      <td width="78" align="center"><b><font size="2" face="serif">of</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td colspan="2" width="61" align="center"><b><font size="2" face="serif">average</font></b></td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td width="513">&nbsp;</td>
      <td width="78" align="center"><b><font size="2" face="serif">Options</font></b></td>
      <td width="19" align="center">&nbsp;</td>
      <td colspan="2" width="61" align="center"><b><font size="2" face="serif">price</font></b></td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td width="513">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="19">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="52">&nbsp;</td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td width="513"><font size="2" face="serif">Outstanding </big></small></big></small><big><big><small><small>-</small></small></big></big><big>
<small><big><small>
 Beginning of
        period</small></big></small></big></font></td>
<big>
<small><big><small>
      <td align="right" width="78"><font size="2" face="serif">1,640,000</font></td>
      <td width="19">&nbsp;</td>
      <td align="center" width="7"><font size="2" face="serif">$</font></td>
      <td align="center" width="52"><font size="2" face="serif">2.57</font></td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td width="513" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Exercised
        (unaudited)</font></td>
      <td align="right" width="78" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(465,000)</font></td>
      <td width="19" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="52" style="border-bottom: 1 solid #000000"><font size="2" face="serif">2.55</font></td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td width="513" style="border-bottom: 3 double #000000"><font size="2" face="serif">Outstanding
        </small></big></small></big><small><small><big><big>-</big></big></small></small><big>
<small><big><small>
 End of period (unaudited)</font></small></big></small></big></td>
      <td align="right" width="78" style="border-bottom: 3 double #000000"><font size="2" face="serif">1,175,000</font></td>
      <td width="19" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="7" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="center" width="52" style="border-bottom: 3 double #000000"><font size="2" face="serif">2.59</font></td>
      <td width="19">&nbsp;</td>
    </tr>
    <tr>
      <td width="513">&nbsp;</td>
      <td width="78">&nbsp;</td>
      <td width="19">&nbsp;</td>
      <td width="7">&nbsp;</td>
      <td width="52">&nbsp;</td>
      <td width="19">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><br>
</p>
<small><big><small><big>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:27pt; text-indent:-27pt; line-height:14pt; font-family:Times New Roman"></big></small></big></small><b><big><big><big><big><small><small><small><small>6</small></small></small></small></big></big></big></big><small><big><small><big><big><small><big><small>.</small></big></small></big></big></small></big></small></b></p>
<small>
<big>
<small>
<big>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>INCOME
TAXES</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">As
at December 31, 2002, the Company has non-capital loss carry-forwards of
approximately $4,200,000, unaudited, (June 30, 2002 - $2,500,000) available to
reduce future taxable income. &nbsp;These losses will expire between 2003 and
2009. &nbsp;In addition, the Company has $7,300,000 in unclaimed exploration and
development expenses in Canada. &nbsp;No recognition is given in these
consolidated financial statements to any potential benefit from the utilization
of these non-capital losses or unclaimed exploration and development expenses.</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-14</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>Notes to the consolidated
financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002 and 2001
(unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><b>7.</b></p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman"><b>RELATED
PARTY TRANSACTIONS</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">Certain
geological, consulting and corporate services were provided to the Company and
its subsidiaries by seven directors and/or officers, and/or companies controlled
by directors and/or officers. &nbsp;The cost of such services (including
salaries) for the six months ended December 31, 2002 was $nil, unaudited, (years
ended June 30, 2002, 2001 and 2000 were $680,213, $354,989 and $230,279,
respectively). &nbsp;The services provided were at rates similar to those
charged to non-related parties.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
Company, as prime tenant of share corporate offices with the above-mentioned
related party companies, charge rent of $nil for the six months ended December
31, 2002 (years ended June 30, 2002, 2001 and 2000 were $6,000, $51,400 and
$46,800, respectively) and had overhead recoveries of $nil for the six months
ended December 31, 2002 (years ended June 30, 2002, 2001 and 2000 were $7,500,
$97,575 and $71,913, respectively).</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:27pt; text-indent:-27pt; line-height:14pt; font-family:Times New Roman" align="justify"><b>8.</b></p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><b>INVESTMENT</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">As
at December 31, 2002, the Company held nil (unaudited) (June 30, 2002, 2001 and
2000 </big></small></big></small><big><big><small><small>-</small></small></big></big>
<small>
<big>
<small>
<big>
 nil, 309,665 and 309,665, respectively) shares of MSV Resources Inc.
&nbsp;The investment was disposed of during the year ended June 30, 2002.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman" align="justify"><b>9.</b></p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman" align="justify"><b>SEGMENT
INFORMATION</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">Working
capital balances are retained in Canada and principal property balances are
located as described in note 3.</p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman" align="justify"><b>10.</b></p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman" align="justify"><b>COMMITMENTS</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
Company leases office space under leases expiring November 30, 2004.
&nbsp;Future minimum lease payments are as follows:</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<div align="center">
  <center>
  <table width="86%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="25%"><b><font size="2" face="serif">Year ended June 30</font></b></td>
      <td width="57%">&nbsp;</td>
      <td width="3%">&nbsp;</td>
      <td width="12%">&nbsp;</td>
      <td width="4%">&nbsp;</td>
    </tr>
    <tr>
      <td align="left" width="25%"><font size="2" face="serif">2003</font></td>
      <td width="57%">&nbsp;</td>
      <td align="center" width="3%"><font size="2" face="serif">$</font></td>
      <td align="right" width="12%"><font size="2" face="serif">69,660</font></td>
      <td width="4%">&nbsp;</td>
    </tr>
    <tr>
      <td align="left" width="25%"><font size="2" face="serif">2004</font></td>
      <td width="57%">&nbsp;</td>
      <td width="3%">&nbsp;</td>
      <td align="right" width="12%"><font size="2" face="serif">69,660</font></td>
      <td width="4%">&nbsp;</td>
    </tr>
    <tr>
      <td align="left" width="25%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">2005</font></td>
      <td width="57%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="3%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="12%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">29,025</font></td>
      <td width="4%">&nbsp;</td>
    </tr>
    <tr>
      <td width="25%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td width="57%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="3%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="12%" style="border-bottom: 3 double #000000"><font size="2" face="serif">168,345</font></td>
      <td width="4%">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; line-height:14pt; font-family:Times New Roman"><b>11.</b></p>
<p style="margin:0pt; text-indent:27pt; font-family:Times New Roman"><b>SUPPLEMENTAL
CASH FLOW INFORMATION</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">During
the six months ended December 31, 2002 and 2001 and the years ended June 30,
2002, 2001 and 2000, the Company paid no income taxes or interest.</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-15</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>Notes to the consolidated
financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002 and 2001
(unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman">Net
(increase) decrease in non-cash working capital balances related to operations:</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<div align="center">
  <center>
  <table width="100%" border="0" cellspacing="0" cellpadding="0" height="210">
    <tr>
      <td width="40%" height="21">&nbsp;</td>
      <td width="1%" height="21">&nbsp;</td>
      <td colspan="4" width="25%" align="center" height="21"><b><font size="2" face="serif">Six
        months ended</font></b></td>
      <td width="2%" align="center" height="21">&nbsp;</td>
      <td width="1%" align="center" height="21">&nbsp;</td>
      <td width="8%" align="center" height="21">&nbsp;</td>
      <td width="2%" align="center" height="21">&nbsp;</td>
      <td width="1%" align="center" height="21">&nbsp;</td>
      <td width="8%" align="center" height="21">&nbsp;</td>
      <td width="2%" align="center" height="21">&nbsp;</td>
      <td width="1%" align="center" height="21">&nbsp;</td>
      <td width="9%" align="center" height="21">&nbsp;</td>
      <td width="2%" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" height="21">&nbsp;</td>
      <td width="1%" height="21">&nbsp;</td>
      <td colspan="4" width="25%" align="center" height="21" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">December
        31,</font></b></td>
      <td width="2%" align="center" height="21">&nbsp;</td>
      <td width="1%" align="center" height="21">&nbsp;</td>
      <td colspan="7" width="30%" align="center" height="21" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Years
        ended December 31,</font></b></td>
      <td width="2%" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
      <td height="20">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="11%" height="21" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
      <td width="2%" height="21" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" height="21" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="11%" height="21" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
      <td width="2%" height="21" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" height="21" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8%" height="21" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
      <td width="2%" height="21" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" height="21" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8%" height="21" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
      <td width="2%" height="21" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" height="21" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="9%" height="21" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2000</font></b></td>
      <td width="2%" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" height="21">&nbsp;</td>
      <td width="1%" height="21">&nbsp;</td>
      <td width="11%" height="21"><font size="2" face="serif">(Unaudited)</font></td>
      <td width="2%" height="21">&nbsp;</td>
      <td width="1%" height="21">&nbsp;</td>
      <td width="11%" height="21"><font size="2" face="serif">(Unaudited)</font></td>
      <td width="2%" height="21">&nbsp;</td>
      <td colspan="2" width="9%" height="21"><font size="2" face="serif">(Audited)</font></td>
      <td width="2%" height="21">&nbsp;</td>
      <td colspan="2" width="9%" height="21"><font size="2" face="serif">(Audited)</font></td>
      <td width="2%" height="21">&nbsp;</td>
      <td width="1%" height="21">&nbsp;</td>
      <td width="9%" height="21"><font size="2" face="serif">(Audited)</font></td>
      <td width="2%" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" height="22"><font size="2" face="serif">Receivables</font></td>
      <td align="center" width="1%" height="22"><font size="2" face="serif">$</font></td>
      <td align="right" width="11%" height="22"><font size="2" face="serif">33,708</font></td>
      <td width="2%" height="22">&nbsp;</td>
      <td align="center" width="1%" height="22"><font size="2" face="serif">$</font></td>
      <td width="11%" height="22" align="right"><font size="2" face="serif">(150,298)</font></td>
      <td width="2%" height="22">&nbsp;</td>
      <td align="center" width="1%" height="22"><font size="2" face="serif">$</font></td>
      <td width="8%" height="22" align="right"><font size="2" face="serif">(20,761)</font></td>
      <td width="2%" height="22" align="right">&nbsp;</td>
      <td align="right" width="1%" height="22"><font size="2" face="serif">$</font></td>
      <td width="8%" height="22" align="right"><font size="2" face="serif">(17,438)</font></td>
      <td width="2%" height="22" align="right">&nbsp;</td>
      <td align="right" width="1%" height="22"><font size="2" face="serif">$</font></td>
      <td width="9%" height="22" align="right"><font size="2" face="serif">32,625</font></td>
      <td width="2%" height="22">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" height="21"><font size="2" face="serif">Prepaid expenses
        and deposits</font></td>
      <td width="1%" height="21">&nbsp;</td>
      <td align="right" width="11%" height="21"><font size="2" face="serif">14,292</font></td>
      <td width="2%" height="21">&nbsp;</td>
      <td width="1%" height="21">&nbsp;</td>
      <td width="11%" height="21" align="right"><font size="2" face="serif">18,147</font></td>
      <td width="2%" height="21">&nbsp;</td>
      <td width="1%" height="21">&nbsp;</td>
      <td width="8%" height="21" align="right"><font size="2" face="serif">10,502</font></td>
      <td width="2%" height="21" align="right">&nbsp;</td>
      <td width="1%" height="21" align="right">&nbsp;</td>
      <td width="8%" height="21" align="right"><font size="2" face="serif">(1,452)</font></td>
      <td width="2%" height="21" align="right">&nbsp;</td>
      <td width="1%" height="21" align="right">&nbsp;</td>
      <td width="9%" height="21" align="right"><font size="2" face="serif">(21,502)</font></td>
      <td width="2%" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" height="21" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Accounts
        payable and accrued liabilities</font></td>
      <td width="1%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="11%" height="21" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,038,187</font></td>
      <td width="2%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="11%" height="21" align="right" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(52,654)</font></td>
      <td width="2%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" height="21" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8%" height="21" align="right" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(71,049)</font></td>
      <td width="2%" height="21" align="right" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" height="21" align="right" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="8%" height="21" align="right" style="border-bottom: 1 solid #000000"><font size="2" face="serif">100,944</font></td>
      <td width="2%" height="21" align="right" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" height="21" align="right" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="9%" height="21" align="right" style="border-bottom: 1 solid #000000"><font size="2" face="serif">226,487</font></td>
      <td width="2%" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21" align="right">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
      <td height="21">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" height="21" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" height="21" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="11%" height="21" style="border-bottom: 3 double #000000"><font size="2" face="serif">1,086,189</font></td>
      <td width="2%" height="21" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" height="21" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td width="11%" height="21" align="right" style="border-bottom: 3 double #000000"><font size="2" face="serif">(184,805)</font></td>
      <td width="2%" height="21" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" height="21" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td width="8%" height="21" align="right" style="border-bottom: 3 double #000000"><font size="2" face="serif">(81,308)</font></td>
      <td width="2%" height="21" align="right" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="right" width="1%" height="21" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td width="8%" height="21" align="right" style="border-bottom: 3 double #000000"><font size="2" face="serif">82,054</font></td>
      <td width="2%" height="21" align="right" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="right" width="1%" height="21" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td width="9%" height="21" align="right" style="border-bottom: 3 double #000000"><font size="2" face="serif">237,610</font></td>
      <td width="2%" height="21">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">On
June 18, 2002, assets under construction were acquired for $3,442,500, through
issuance of common shares (note 4). &nbsp;The purchase price was based on the
value of the common shares.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:27pt; text-indent:-27pt; line-height:14pt; font-family:Times New Roman" align="justify"><b>12.</b></p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify"><b>ACQUISITION
OF COMPANY BY PAN AMERICAN SILVER CORP.</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">On
May 21, 2002, the Company and Pan American Silver Corp. (Pan American) announced
a proposed plan of arrangement whereby Pan American would acquire all of the
issued and outstanding shares of the Company. &nbsp;On June 28, 2002, both
companies announced amended terms to the proposed plan of arrangement. &nbsp;The
amended proposal for a plan of arrangement is subject to approval of the
shareholders of the Company and Pan American and approval by the Ontario
Superior Court of Justice and various regulatory authorities. &nbsp;The
shareholders of the Company and Pan American approved the plan of arrangement on
September 4 and 5, 2002, respectively. &nbsp;If remaining approvals are obtained
and all material covenants are satisfied in a timely fashion, the plan of
arrangement would become effective in September 2002.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">Under
the terms of the amended plan of arrangement, each Corner Bay Silver Inc. common
share would be exchanged for 0.3846 of a Pan American common share and 0.1923 of
a Pan American common share purchase warrant. &nbsp;Each whole Pan American
common share purchase warrant (the Pan American Warrant) provides the holder
with the rights to purchase a Pan American common share at CAN$12 for a
five-year period after the effective date of the plan of arrangement (</big></small></big></small><small><small><big><big>"</big></big></small></small><small><big><small><big>Plan of
Arrangement</big></small></big></small><big><big><small><small>"</small></small></big></big><small><big><small><big>). &nbsp;The Pan American Warrants will trade on the Toronto Stock
Exchange.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><br>
</p>
<small><big><small><big>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:27pt; text-indent:-27pt; line-height:14pt; font-family:Times New Roman"><b>1</b></big></small></big></small></big></small></big></small><b><big><big><big><big><small><small><small><small>3</small></small></small></small></big></big></big></big></b><big><small><big><small><b><small><big><small><big>.</big></small></big></small></b></p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>SUBSEQUENT
EVENT</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">In
July 2002, the principal mineral concession, which hosts the Alamo Dorado
concession, was purchased outright from the concession owners by paying the
remaining option payments in a final lump sum payment of US$345,000 (US$300,000
plus Impuesto Al Valor Agregado (IVA) taxes).</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>SUBSEQUENT
EVENT (UNAUDITED)</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
Company received regulatory approval on the plan on arrangement and on February
20, 2003 the Company and Pan American Silver Corp. completed the Plan of
Arrangement.</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-16</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>Notes to the consolidated
financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002 and 2001
(unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
</small></big></small></big><small><big><small><big>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:27pt; text-indent:-27pt; line-height:14pt; font-family:Times New Roman"><b>1</b></big></small></big></small><b><big><big><small><small>4</small></small></big></big><small><big><small><big>.</big></small></big></small></b></p>
<small><big><small><big>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b><font size="2">COMPARATIVES</font></b></p>
</big></small></big></small>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><font size="2">Certa</font><big><small><big><small>in
prior years</small></big></small></big><small><small><big><big>'</big></big></small></small><small><big><small><big> comparative numbers have been restated to reflect the current
year</big></small></big></small><big><big><small><small>'</small></small></big></big><small><big><small><big>s presentation.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:27pt; text-indent:-27pt; line-height:14pt; font-family:Times New Roman"><b>15.</b></p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>DIFFERENCE
BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">Canadian
GAAP varies in certain significant respects from the principles and practices
generally accepted in the United States (</big></small></big></small><big><big><small><small>"</small></small></big></big><small><big><small><big>U.S. GAAP</big></small></big></small><big><big><small><small>"</small></small></big></big><big><small><big><small>). &nbsp;The effect of
these principal measurement differences on the Company</small></big></small></big><small><small><big><big>'</big></big></small></small><big><small><big><small>s consolidated
financial statements are quantified below and described in the accompanying
notes.</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><b>Consolidated
statement of operations</b></p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman">&nbsp;</p>
<div align="center">
  <center>
  <table width="100%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <small><big><small><big>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      </big></small></big></small>
    </tr>
    <tr>
      <small><big><small><big>
      <td width="33%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="center" colspan="4" width="24%"><b><font size="2" face="serif">Six
        months ended</font></b></td>
      <td width="2%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td width="11%" align="center">&nbsp;</td>
      <td width="2%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td width="11%" align="center">&nbsp;</td>
      <td width="2%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td width="11%" align="center">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      </big></small></big></small>
    </tr>
    <tr>
      <small><big><small><big>
      <td width="33%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td align="center" colspan="4" width="24%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">December
        31</font></b></td>
      <td width="2%" align="center">&nbsp;</td>
      <td width="1%" align="center">&nbsp;</td>
      <td width="38%" colspan="7" align="center" style="border-bottom: 1 solid #000000">&nbsp;<b><font size="2" face="serif">Years
        ended June 30,</font></b></td>
      <td width="2%">&nbsp;</td>
      </big></small></big></small>
    </tr>
    <tr>
      <small><big><small><big>
      <td width="33%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
      <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
      <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
      <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="11%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
      <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2000</font></b></td>
      <td width="2%">&nbsp;</td>
      </big></small></big></small>
    </tr>
    <tr>
      <small><big><small><big>
      <td width="33%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%"><font size="2" face="serif">(Unaudited)</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%"><font size="2" face="serif">(Unaudited)</font></td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      </big></small></big></small>
    </tr>
    <tr>
      <small><big><small><big>
      <td width="33%"><font size="2" face="serif">Loss for the period reported
        under</font></td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      </big></small></big></small>
    </tr>
    <tr>
      <small><big><small><big>
      <td width="33%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Canadian
        GAAP</font></td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="11%"><font size="2" face="serif">(1,690,137)</font></td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="11%"><font size="2" face="serif">(384,294)</font></td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="11%"><font size="2" face="serif">(1,207,869)</font></td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="center" width="11%"><font size="2" face="serif">(1,067,871)</font></td>
      <td width="2%">&nbsp;</td>
      <td align="center" width="1%"><font size="2" face="serif">$</font></td>
      <td align="right" width="11%"><font size="2" face="serif">(1,523,458)</font></td>
      <td width="2%">&nbsp;</td>
      </big></small></big></small>
    </tr>
    <tr>
      <small><big><small><big>
      <td width="33%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Exploration
        expenses adjustment</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(537,714)</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(1,415,279)</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(3,154,793)</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="center" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(1,039,657)</font></td>
      <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(993,487)</font></td>
      <td width="2%">&nbsp;</td>
      </big></small></big></small>
    </tr>
    <tr>
      <small><big><small><big>
      <td width="33%"><font size="2" face="serif">Loss for the period reported
        under</font></td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      </big></small></big></small>
    </tr>
    <tr>
      <small><big><small><big>
      <td width="33%" style="border-bottom: 3 double #000000">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">U.S.
        GAAP</font></td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(2,227,851)</font></td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(1,799,573)</font></td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(4,362,662)</font></td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="center" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(2,107,528)</font></td>
      <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(2,516,945)</font></td>
      <td width="2%">&nbsp;</td>
      </big></small></big></small>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin:0pt; padding-left:27pt; font-family:Times New Roman">&nbsp;</p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><br>
</p>
</small></big></small></big>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:45pt; text-indent:-18pt; line-height:14pt; font-family:Times New Roman" align="justify"><font size="2">a)</font></p>
<small><big><small><big><p style="margin:0pt; padding-left:45pt; font-family:Times New Roman" align="justify">In
accordance with U.S. GAAP, the Company would be required to charge all costs of
deferred exploration expenditures to earnings as operating expenses as incurred
until proven economic reserves are established. &nbsp;As a result of accounting
for these expenditures in this manner, the unaudited loss for the six months
ended December 31, 2002 and 2001 would be increased by $537,714 and $1,415,279,
respectively, and loss for the years ended June 30, 2002, 2001 and 2000 would be
increased by $3,154,793, $1,039,657 and $993,487, respectively.</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:45pt; text-indent:-18pt; line-height:14pt; font-family:Times New Roman" align="justify">b)</p>
<p style="margin:0pt; padding-left:45pt; font-family:Times New Roman" align="justify">The
Company accounts for its share options using the intrinsic value method, which
in the Company</big></small></big></small><big><big><small><small>'</small></small></big></big><small><big><small><big>s circumstances amounts does not result in different from the
amounts that would be determined under the provisions of the Accounting
Principles Board (APB) Opinion No. 25, </big>
</small></big>
</small><small><small><big><big>"</big></big></small></small><small><big><small><big>Accounting for Stock Issued to
Employees,</big></small></big></small><big><big><small><small>"</small></small></big></big><big><small><big><small> (APB 25) and related interpretations. &nbsp;Accordingly, no
compensation expense for its share option plan has been recognized or recorded
in the consolidated statement of operations and deficit for any of the years
presented. &nbsp;A company that does not adopt the fair value method must
disclose the cost of the stock compensation awards at their fair value at the
date the award is granted. &nbsp;The unaudited value of the Company</small></big></small></big><small><small><big><big>'</big></big></small></small><big><small><big><small>s options
that were granted during six months ended December 31, 2002 was $nil (2001 -
$17,846) (three years ended June 30, 2002 were $447,952, $37,605 and $878,747,
respectively). &nbsp;The fair value for 2002 was estimated using the Black-Scholes
model with assumptions of a three-year expected term volatility ranging from 50%
to 56% and interest rates from 3.75% to 4.04%. &nbsp;The fair value for 2001 and
2000 was estimated using the Black-Scholes model with assumptions of a two-year
expected term, 60% volatility and interest rates ranging from 6.0% to 6.5%.</p>
<br>
<br>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-17</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<p style="page-break-before:always; margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
BAY SILVER INC.</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>Notes to the consolidated
financial statements</b></p>
<p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002 and 2001
(unaudited) and June 30, 2002, 2001 and 2000</b></p>
<p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><b>(expressed
in Canadian dollars)</b></p>
<p style="margin:0pt; padding-left:27pt; padding-top:3pt; text-indent:-27pt; font-family:Times New Roman; font-size:9pt; border-top:0.5pt solid #000000"><br>
</p>
<p style="font-family: Times New Roman; text-indent: 0; margin: 0pt; padding-left: 27pt">&nbsp;</p>
</small></big></small></big>
<div align="center">
  <center>
  <table width="100%" border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td width="34%"><b><font size="2">Basic loss per share</font></b></td>
      <big><small><big><small>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="11%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td align="center" colspan="3" width="23%"><b><font size="2" face="serif">Six
          months ended</font></b></td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%" align="center">&nbsp;</td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%" align="center">&nbsp;</td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td align="center" colspan="3" width="23%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">December
          31,</font></b></td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="39%" colspan="7" align="center" style="border-bottom: 1 solid #000000">&nbsp;<b><font size="2" face="serif">Years
          ended June 30,</font></b></td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="11%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
        <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="11%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
        <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
        <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="11%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
        <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2000</font></b></td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%" align="center"><font size="2" face="serif">(Unaudited)</font></td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center"><font size="2" face="serif">(Unaudited)</font></td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%" align="center">&nbsp;</td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%"><font size="2" face="serif">Loss for the period under</font></td>
        <td width="1%">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%" align="center">&nbsp;</td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">U.S. GAAP</font></td>
        <td align="center" width="1%"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%"><font size="2" face="serif">(2,227,851)</font></td>
        <td align="right" width="1%"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%"><font size="2" face="serif">(1,799,573)</font></td>
        <td align="right" width="1%"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%"><font size="2" face="serif">(4,362,662)</font></td>
        <td width="2%" align="right">&nbsp;</td>
        <td align="right" width="1%"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%"><font size="2" face="serif">(2,107,528)</font></td>
        <td width="2%" align="right">&nbsp;</td>
        <td align="right" width="1%"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%"><font size="2" face="serif">(2,516,945)</font></td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%"><font size="2" face="serif">Weighted average number of</font></td>
        <td width="1%">&nbsp;</td>
        <td width="11%" align="right">&nbsp;</td>
        <td width="1%" align="right">&nbsp;</td>
        <td width="11%" align="right">&nbsp;</td>
        <td width="1%" align="right">&nbsp;</td>
        <td width="11%" align="right">&nbsp;</td>
        <td width="2%" align="right">&nbsp;</td>
        <td width="1%" align="right">&nbsp;</td>
        <td width="11%" align="right">&nbsp;</td>
        <td width="2%" align="right">&nbsp;</td>
        <td width="1%" align="right">&nbsp;</td>
        <td width="11%" align="right">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Common
          shares outstanding</font></td>
        <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">19,385,808</font></td>
        <td width="1%" align="right" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">15,876,053</font></td>
        <td width="1%" align="right" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">16,697,807</font></td>
        <td width="2%" align="right" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="1%" align="right" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">13,912,182</font></td>
        <td width="2%" align="right" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="1%" align="right" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">10,760,945</font></td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td align="right">&nbsp;</td>
        <td align="right">&nbsp;</td>
        <td align="right">&nbsp;</td>
        <td align="right">&nbsp;</td>
        <td align="right">&nbsp;</td>
        <td align="right">&nbsp;</td>
        <td align="right">&nbsp;</td>
        <td align="right">&nbsp;</td>
        <td align="right">&nbsp;</td>
        <td align="right">&nbsp;</td>
        <td align="right">&nbsp;</td>
        <td>&nbsp;</td>
      </tr>
      <tr>
        <td width="34%" style="border-bottom: 3 double #000000"><font size="2" face="serif">Loss
          per share under U.S. GAAP</font></td>
        <td width="1%" style="border-bottom: 3 double #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">($0.11)</font></td>
        <td width="1%" align="right" style="border-bottom: 3 double #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">($0.11)</font></td>
        <td width="1%" align="right" style="border-bottom: 3 double #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">($0.26)</font></td>
        <td width="2%" align="right" style="border-bottom: 3 double #000000">&nbsp;</td>
        <td width="1%" align="right" style="border-bottom: 3 double #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">($0.15)</font></td>
        <td width="2%" align="right" style="border-bottom: 3 double #000000">&nbsp;</td>
        <td width="1%" align="right" style="border-bottom: 3 double #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">($0.23)</font></td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
      </tr>
      <tr>
        <td colspan="3" width="46%"><b><font size="2" face="serif">Consolidated
          statements of comprehensive loss</font></b></td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td align="center" colspan="3" width="23%"><b><font size="2" face="serif">Six
          months ended</font></b></td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%" align="center">&nbsp;</td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%" align="center">&nbsp;</td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td align="center" colspan="3" width="23%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">December
          31,</font></b></td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="39%" colspan="7" align="center" style="border-bottom: 1 solid #000000">&nbsp;<b><font size="2" face="serif">Years
          ended June 30,</font></b></td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
        <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
        <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
        <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
        <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2000</font></b></td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td align="center" width="11%"><font size="2" face="serif">(Unaudited)</font></td>
        <td width="1%" align="center">&nbsp;</td>
        <td align="center" width="11%"><font size="2" face="serif">(Unaudited)</font></td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%" align="center">&nbsp;</td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%" align="center">&nbsp;</td>
        <td width="1%" align="center">&nbsp;</td>
        <td width="11%" align="center">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
      </tr>
      <tr>
        <td width="34%"><font size="2" face="serif">Loss for the period under</font></td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">U.S. GAAP</font></td>
        <td align="center" width="1%"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%"><font size="2" face="serif">(2,227,851)</font></td>
        <td align="center" width="1%"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%"><font size="2" face="serif">(1,799,573)</font></td>
        <td align="center" width="1%"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%"><font size="2" face="serif">(4,362,662)</font></td>
        <td width="2%">&nbsp;</td>
        <td align="center" width="1%"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%"><font size="2" face="serif">(2,107,528)</font></td>
        <td width="2%">&nbsp;</td>
        <td align="center" width="1%"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%"><font size="2" face="serif">(2,516,945)</font></td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%"><font size="2" face="serif">Other comprehensive
          earnings, net</font></td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">of income
          taxes</font></td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Unrealized
          gain on marketable</font></td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">securities</font></td>
        <td width="1%">&nbsp;</td>
        <td align="right" width="11%">-</td>
        <td width="1%">&nbsp;</td>
        <td align="right" width="11%">-</td>
        <td width="1%">&nbsp;</td>
        <td align="right" width="11%">-</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td align="right" width="11%"><font size="2" face="serif">18,580</font></td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td align="right" width="11%"><font size="2" face="serif">9,290</font></td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Realized
          (gain) loss on sale of</font></td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">marketable
          securities</font></td>
        <td width="1%">&nbsp;</td>
        <td align="right" width="11%">-</td>
        <td width="1%">&nbsp;</td>
        <td align="right" width="11%">-</td>
        <td width="1%">&nbsp;</td>
        <td align="right" width="11%"><font size="2" face="serif">(18,580)</font></td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td align="right" width="11%">-</td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td align="right" width="11%"><font size="2" face="serif">33,948</font></td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td width="34%" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Writedown
          to fair value</font></td>
        <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 1 solid #000000">-</td>
        <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 1 solid #000000">-</td>
        <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 1 solid #000000">-</td>
        <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 1 solid #000000">-</td>
        <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
        <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">22,606</font></td>
        <td width="2%">&nbsp;</td>
      </tr>
      <tr>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
        <td>&nbsp;</td>
      </tr>
      <tr>
        <td width="34%" style="border-bottom: 3 double #000000"><font size="2" face="serif">Comprehensive
          loss for the period</font></td>
        <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(2,227,851)</font></td>
        <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(1,799,573)</font></td>
        <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(4,381,242)</font></td>
        <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
        <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(2,088,948)</font></td>
        <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
        <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
        <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(2,451,101)</font></td>
        <td width="2%">&nbsp;</td>
      </tr>
      </table>
      </center>
      </div>
      <p style="margin:0pt; padding-left:27pt; font-family:Times New Roman; font-size:12pt"><br>
      </p>
      <p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">The
      consolidated statements of comprehensive loss provide a measure of all
      changes in equity of the Company that result from transactions, other than
      those with shareholders, and other economic events that occurred during
      the period.</p>
      <p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27pt; font-family:Times New Roman" align="justify">Under
      U.S. GAAP, the Company</small></big></small></big><small><small><big><big>'</big></big></small></small><big><small><big><small>s holding of marketable securities with quoted
      market values that would be marked to market with the resulting unrealized
      gain or loss being taken to the consolidated statement of comprehensive
      loss in the relevant period.</p>
      <br>
      <br>
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-18</p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
      </p>
      <hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
      <br>
      <br>
      <p style="page-break-before:always; margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
      BAY SILVER INC.</b></p>
      <p style="margin:0pt; font-family:Times New Roman"><b>Notes to the
      consolidated financial statements</b></p>
      <p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002
      and 2001 (unaudited) and June 30, 2002, 2001 and 2000</b></p>
      <p style="margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman"><b>(expressed
      in Canadian dollars)</b></p>
      <p style="margin:0pt; padding-left:27pt; padding-top:3pt; text-indent:-27pt; font-family:Times New Roman; font-size:9pt; border-top:0.5pt solid #000000"><br>
      </p>
      <div align="center">
        <center>
        <table width="100%" border="0" cellspacing="0" cellpadding="0">
          <tr>
            <td width="34%"><b><font size="2" face="serif">Consolidated
              statement of cash flows</font></b></td>
            <td width="1%">&nbsp;</td>
            <td width="12%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="11%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td width="11%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td width="11%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td width="11%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
          </tr>
          <tr>
            <td width="34%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td align="center" colspan="3" width="25%"><b><font size="2" face="serif">Six
              months ended</font></b></td>
            <td width="2%" align="center">&nbsp;</td>
            <td width="1%" align="center">&nbsp;</td>
            <td width="11%" align="center">&nbsp;</td>
            <td width="2%" align="center">&nbsp;</td>
            <td width="1%" align="center">&nbsp;</td>
            <td width="11%" align="center">&nbsp;</td>
            <td width="2%" align="center">&nbsp;</td>
            <td width="1%" align="center">&nbsp;</td>
            <td width="11%" align="center">&nbsp;</td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td width="34%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td align="center" colspan="3" width="25%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">December
              31</font></b></td>
            <td width="2%" align="center">&nbsp;</td>
            <td width="1%" align="center">&nbsp;</td>
            <td width="38%" colspan="7" align="center" style="border-bottom: 1 solid #000000">&nbsp;<b><font size="2" face="serif">Years
              ended June 30,</font></b></td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td width="34%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="12%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
            <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
            <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
            <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="11%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
            <td width="2%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="1%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="center" width="11%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2000</font></b></td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td width="34%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td width="12%" align="center"><font size="2" face="serif">(Unaudited)</font></td>
            <td width="2%" align="center">&nbsp;</td>
            <td width="11%" align="center"><font size="2" face="serif">(Unaudited)</font></td>
            <td width="2%" align="center">&nbsp;</td>
            <td width="1%" align="center">&nbsp;</td>
            <td width="11%" align="center">&nbsp;</td>
            <td width="2%" align="center">&nbsp;</td>
            <td width="1%" align="center">&nbsp;</td>
            <td width="11%" align="center">&nbsp;</td>
            <td width="2%" align="center">&nbsp;</td>
            <td width="1%" align="center">&nbsp;</td>
            <td width="11%" align="center">&nbsp;</td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td width="34%"><font size="2" face="serif">Operating activities</font></td>
            <td align="center" width="1%"><font size="2" face="serif">$</font></td>
            <td width="12%" align="right"><font size="2" face="serif">(1,138,859)&nbsp;</font></td>
            <td width="2%">&nbsp;<font size="2" face="serif"> $</font></td>
            <td align="right" width="11%"><font size="2" face="serif">(1,975,269)</font></td>
            <td width="2%">&nbsp;</td>
            <td align="center" width="1%"><font size="2" face="serif">$</font></td>
            <td align="right" width="11%"><font size="2" face="serif">(4,399,993)</font></td>
            <td width="2%">&nbsp;</td>
            <td align="center" width="1%"><font size="2" face="serif">$</font></td>
            <td align="right" width="11%"><font size="2" face="serif">(1,900,413)</font></td>
            <td width="2%">&nbsp;</td>
            <td align="center" width="1%"><font size="2" face="serif">$</font></td>
            <td align="right" width="11%"><font size="2" face="serif">(2,258,579)</font></td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td width="34%"><font size="2" face="serif">Investing activities</font></td>
            <td width="1%">&nbsp;</td>
            <td width="12%" align="right"><font size="2" face="serif">(537,985)</font></td>
            <td width="2%">&nbsp;</td>
            <td align="right" width="11%">-</td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td align="right" width="11%"><font size="2" face="serif">(357,715)</font></td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td align="right" width="11%"><font size="2" face="serif">(44,714)</font></td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td align="right" width="11%"><font size="2" face="serif">29,339</font></td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td width="34%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Financing
              activities</font></td>
            <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="12%" style="border-bottom: 1 solid #000000" align="right"><font size="2" face="serif">1,184,500</font></td>
            <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">350,849</font></td>
            <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">6,058,850</font></td>
            <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">5,038,397</font></td>
            <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">2,499,391</font></td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td width="34%"><font size="2" face="serif">Increase (decrease) in
              cash and cash</font></td>
            <td width="1%">&nbsp;</td>
            <td width="12%" align="right">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="11%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td width="11%" align="right">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td width="11%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td width="11%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td width="34%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">equivalent
              during the period</font></td>
            <td width="1%">&nbsp;</td>
            <td width="12%" align="right"><font size="2" face="serif">(492,344)</font></td>
            <td width="2%">&nbsp;</td>
            <td align="right" width="11%"><font size="2" face="serif">(1,624,420)</font></td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td align="right" width="11%"><font size="2" face="serif">1,301,142</font></td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td align="right" width="11%"><font size="2" face="serif">3,093,270</font></td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td align="right" width="11%"><font size="2" face="serif">270,151</font></td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td width="34%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Opening
              cash and cash equivalents</font></td>
            <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="12%" style="border-bottom: 1 solid #000000" align="right"><font size="2" face="serif">5,323,564</font></td>
            <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">4,022,422</font></td>
            <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">4,022,422</font></td>
            <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">929,152</font></td>
            <td width="2%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="11%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">659,001</font></td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td width="34%" style="border-bottom: 3 double #000000"><font size="2" face="serif">Closing
              cash and cash equivalents</font></td>
            <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td width="12%" style="border-bottom: 3 double #000000" align="right"><font size="2" face="serif">4,831,220</font></td>
            <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
            <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$
              2,398,002</font></td>
            <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
            <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">5,323,564</font></td>
            <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
            <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">4,022,422</font></td>
            <td width="2%" style="border-bottom: 3 double #000000">&nbsp;</td>
            <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" width="11%" style="border-bottom: 3 double #000000"><font size="2" face="serif">929,152</font></td>
            <td width="2%">&nbsp;</td>
          </tr>
          <tr>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
            <td>&nbsp;</td>
          </tr>
          <tr>
            <td width="34%"><b><font size="2" face="serif">Consolidated balance
              sheets</font></b></td>
            <td width="1%">&nbsp;</td>
            <td width="12%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="11%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td width="11%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td width="11%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
            <td width="1%">&nbsp;</td>
            <td width="11%">&nbsp;</td>
            <td width="2%">&nbsp;</td>
          </tr>
        </table>
        </center>
      </div>
      <div align="center">
        <center>
        <table width="700" border="0" cellspacing="0" cellpadding="0">
          <tr>
            <td width="378">&nbsp;</td>
            <td width="7">&nbsp;</td>
            <td align="center" width="101" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">December
              31</font></b></td>
            <td width="11" align="center">&nbsp;</td>
            <td width="6" align="center">&nbsp;</td>
            <td width="172" colspan="4" align="center" style="border-bottom: 1 solid #000000">&nbsp;<b><font size="2" face="serif">June
              30,</font></b>&nbsp;</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="center" width="101" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b></td>
            <td width="11" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="6" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="center" width="83" colspan="2" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2002</font></b>&nbsp;</td>
            <td width="8" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="center" width="77" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">2001</font></b></td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378">&nbsp;</td>
            <td width="7">&nbsp;</td>
            <td width="101">
              <p align="center"><font size="2" face="serif">(Unaudited)</font></p>
            </td>
            <td width="11">&nbsp;</td>
            <td width="6">&nbsp;</td>
            <td width="45">&nbsp;</td>
            <td width="36">&nbsp;</td>
            <td width="8">&nbsp;</td>
            <td width="77">&nbsp;</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378"><font size="2" face="serif">Investments under
              Canadian GAAP</font></td>
            <td align="center" width="7"><font size="2" face="serif">$</font></td>
            <td align="right" width="101">-</td>
            <td width="11">&nbsp;</td>
            <td align="center" width="6"><font size="2" face="serif">$</font></td>
            <td width="81" colspan="2" align="right">&nbsp;-</td>
            <td align="center" width="8"><font size="2" face="serif">$</font></td>
            <td align="right" width="77"><font size="2" face="serif">43,353</font></td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Unrealized
              gain on marketable securities</font></td>
            <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="101" style="border-bottom: 1 solid #000000">-</td>
            <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="81" colspan="2" align="right" style="border-bottom: 1 solid #000000">&nbsp;-</td>
            <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="77" style="border-bottom: 1 solid #000000"><font size="2" face="serif">18,580</font></td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378">&nbsp;</td>
            <td width="7">&nbsp;</td>
            <td width="101">&nbsp;</td>
            <td width="11">&nbsp;</td>
            <td width="6">&nbsp;</td>
            <td width="45" align="right">&nbsp;</td>
            <td width="36" align="right">&nbsp;</td>
            <td width="8">&nbsp;</td>
            <td width="77">&nbsp;</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378" style="border-bottom: 3 double #000000"><font size="2" face="serif">Investments
              under US GAAP</font></td>
            <td align="center" width="7" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" width="101" style="border-bottom: 3 double #000000">-</td>
            <td width="11" style="border-bottom: 3 double #000000">&nbsp;</td>
            <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td width="45" align="right" style="border-bottom: 3 double #000000">&nbsp;</td>
            <td align="right" width="36" style="border-bottom: 3 double #000000">-</td>
            <td align="center" width="8" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" width="77" style="border-bottom: 3 double #000000"><font size="2" face="serif">61,933</font></td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378">&nbsp;</td>
            <td width="7">&nbsp;</td>
            <td width="101">&nbsp;</td>
            <td width="11">&nbsp;</td>
            <td width="6">&nbsp;</td>
            <td width="45" align="right">&nbsp;</td>
            <td width="36" align="right">&nbsp;</td>
            <td width="8">&nbsp;</td>
            <td width="77">&nbsp;</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378"><font size="2" face="serif">Deferred exploration
              expenditure under</font></td>
            <td width="7">&nbsp;</td>
            <td width="101">&nbsp;</td>
            <td width="11">&nbsp;</td>
            <td width="6">&nbsp;</td>
            <td width="45" align="right">&nbsp;</td>
            <td width="36" align="right">&nbsp;</td>
            <td width="8">&nbsp;</td>
            <td width="77">&nbsp;</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Canadian
              GAAP</font></td>
            <td align="center" width="7"><font size="2" face="serif">$</font></td>
            <td align="right" width="101"><font size="2" face="serif">8,781,564</font></td>
            <td width="11">&nbsp;</td>
            <td align="center" width="6"><font size="2" face="serif">$</font></td>
            <td align="right" colspan="2" width="83"><font size="2" face="serif">7,705,865</font></td>
            <td align="center" width="8"><font size="2" face="serif">$</font></td>
            <td align="right" width="77"><font size="2" face="serif">4,551,072</font></td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Deferred
              exploration expenditure</font></td>
            <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="101" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(8,243,579)</font></td>
            <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" colspan="2" width="83" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(7,705,865)</font></td>
            <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="77" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(4,551,072)</font></td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378"><font size="2" face="serif">Deferred exploration
              expenditure under</font></td>
            <td width="7">&nbsp;</td>
            <td width="101">&nbsp;</td>
            <td width="11">&nbsp;</td>
            <td width="6">&nbsp;</td>
            <td width="45" align="right">&nbsp;</td>
            <td width="36" align="right">&nbsp;</td>
            <td width="8">&nbsp;</td>
            <td width="77">&nbsp;</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378" style="border-bottom: 3 double #000000">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">U.S.
              GAAP</font></td>
            <td align="center" width="7" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" width="101" style="border-bottom: 3 double #000000"><font size="2" face="serif">537,985</font></td>
            <td width="11" style="border-bottom: 3 double #000000">&nbsp;</td>
            <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td width="45" align="right" style="border-bottom: 3 double #000000">&nbsp;</td>
            <td align="right" width="36" style="border-bottom: 3 double #000000">-</td>
            <td align="center" width="8" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" width="77" style="border-bottom: 3 double #000000">-</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378">&nbsp;</td>
            <td width="7">&nbsp;</td>
            <td width="101">&nbsp;</td>
            <td width="11">&nbsp;</td>
            <td width="6">&nbsp;</td>
            <td width="45" align="right">&nbsp;</td>
            <td width="36" align="right">&nbsp;</td>
            <td width="8">&nbsp;</td>
            <td width="77">&nbsp;</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378"><font size="2" face="serif">Deficit under Canadian
              GAAP</font></td>
            <td align="center" width="7"><font size="2" face="serif">$</font></td>
            <td align="right" width="101"><font size="2" face="serif">(9,688,110)</font></td>
            <td width="11">&nbsp;</td>
            <td align="center" width="6"><font size="2" face="serif">$</font></td>
            <td align="right" colspan="2" width="83"><font size="2" face="serif">(7,997,973)</font></td>
            <td align="center" width="8"><font size="2" face="serif">$</font></td>
            <td align="right" width="77"><font size="2" face="serif">(6,790,104)</font></td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Exploration
              expenditures</font></td>
            <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="101" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(8,243,579)</font></td>
            <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" colspan="2" width="83" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(7,705,865)</font></td>
            <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="77" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(4,551,072)</font></td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378">&nbsp;</td>
            <td width="7">&nbsp;</td>
            <td width="101">&nbsp;</td>
            <td width="11">&nbsp;</td>
            <td width="6">&nbsp;</td>
            <td width="45" align="right">&nbsp;</td>
            <td width="36" align="right">&nbsp;</td>
            <td width="8">&nbsp;</td>
            <td width="77">&nbsp;</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378" style="border-bottom: 3 double #000000"><font size="2" face="serif">Deficit
              under U.S. GAAP</font></td>
            <td align="center" width="7" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" width="101" style="border-bottom: 3 double #000000"><font size="2" face="serif">(17,931,689)</font></td>
            <td width="11" style="border-bottom: 3 double #000000">&nbsp;</td>
            <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" colspan="2" width="83" style="border-bottom: 3 double #000000"><font size="2" face="serif">(15,703,838)</font></td>
            <td align="center" width="8" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" width="77" style="border-bottom: 3 double #000000"><font size="2" face="serif">(11,341,176)</font></td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378">&nbsp;</td>
            <td width="7">&nbsp;</td>
            <td width="101">&nbsp;</td>
            <td width="11">&nbsp;</td>
            <td width="6">&nbsp;</td>
            <td width="45" align="right">&nbsp;</td>
            <td width="36" align="right">&nbsp;</td>
            <td width="8">&nbsp;</td>
            <td width="77">&nbsp;</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378"><font size="2" face="serif">Cumulative comprehensive
              other income</font></td>
            <td width="7">&nbsp;</td>
            <td width="101">&nbsp;</td>
            <td width="11">&nbsp;</td>
            <td width="6">&nbsp;</td>
            <td width="45" align="right">&nbsp;</td>
            <td width="36" align="right">&nbsp;</td>
            <td width="8">&nbsp;</td>
            <td width="77">&nbsp;</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">under
              Canadian GAAP</font></td>
            <td align="center" width="7"><font size="2" face="serif">$</font></td>
            <td align="right" width="101">-</td>
            <td width="11">&nbsp;</td>
            <td align="center" width="6"><font size="2" face="serif">$</font></td>
            <td width="81" colspan="2" align="right">&nbsp;-</td>
            <td align="center" width="8"><font size="2" face="serif">$</font></td>
            <td align="right" width="77">-</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Unrealized
              gain (loss) on marketable securities</font></td>
            <td width="7" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="101" style="border-bottom: 1 solid #000000">-</td>
            <td width="11" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="6" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td width="81" colspan="2" align="right" style="border-bottom: 1 solid #000000">&nbsp;-</td>
            <td width="8" style="border-bottom: 1 solid #000000">&nbsp;</td>
            <td align="right" width="77" style="border-bottom: 1 solid #000000"><font size="2" face="serif">18,580</font></td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378"><font size="2" face="serif">Cumulative comprehensive
              other income</font></td>
            <td width="7">&nbsp;</td>
            <td width="101">&nbsp;</td>
            <td width="11">&nbsp;</td>
            <td width="6">&nbsp;</td>
            <td width="45" align="right">&nbsp;</td>
            <td width="36" align="right">&nbsp;</td>
            <td width="8">&nbsp;</td>
            <td width="77">&nbsp;</td>
            <td width="11">&nbsp;</td>
          </tr>
          <tr>
            <td width="378" style="border-bottom: 3 double #000000">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">under
              U.S. GAAP</font></td>
            <td align="center" width="7" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" width="101" style="border-bottom: 3 double #000000">-</td>
            <td width="11" style="border-bottom: 3 double #000000">&nbsp;</td>
            <td align="center" width="6" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td width="81" colspan="2" align="right" style="border-bottom: 3 double #000000">&nbsp;-</td>
            <td align="center" width="8" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
            <td align="right" width="77" style="border-bottom: 3 double #000000"><font size="2" face="serif">18,580</font></td>
            <td width="11">&nbsp;</td>
          </tr>
        </table>
        </center>
      </div>
      <br>
      <br>
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-19</p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
      </p>
      <hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
      <br>
      <br>
      <p style="page-break-before:always; margin:0pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
      BAY SILVER INC.</b></p>
      <p style="margin:0pt; font-family:Times New Roman"><b>Notes to the
      consolidated financial statements</b></p>
      <p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002
      and 2001 (unaudited) and June 30, 2002, 2001 and 2000</b></p>
      <p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000"><b>(expressed
      in Canadian dollars)</b></p>
      <p style="margin:0pt; padding-left:27pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27.35pt; line-height:18pt; font-family:Times New Roman"><b>New
      standards for U.S. GAAP</b></p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman" align="justify">In
      June 2001, the Financial Accounting Standards Board (FASB) issued
      Statement of Financial Accounting Standard (SFAS) No. 142, </small></big></small></big>
  <big><big><small><small>"</small></small></big></big><small><big><small><big>Goodwill and
      Other Intangible Assets</big></small></big></small><big><big><small><small>"</small></small></big></big><small><big><small><big>. &nbsp;This new standard features new
      accounting rules for goodwill and intangible assets. &nbsp;The Company
      does not foresee any impact on a cumulative effect of an accounting change
      or on the carrying value of assets and liabilities recorded in the
      consolidated balance sheets upon adoption. &nbsp;SFAS No. 142 will be
      adopted on July 1, 2002.</p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman" align="justify">Also
      issued in June 2001 was SFAS No. 143, </big>
  </small></big></small><small><small><big><big>"</big></big></small></small><big><small><big><small>Accounting for Asset Retirement
      Obligations.</small></big></small></big><small><small><big><big>"</big></big></small></small><big><small><big><small> &nbsp;This statement addresses financial accounting and
      reporting for obligations associated with the retirement of tangible
      long-lived assets and the associated asset retirement costs. &nbsp;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 a fair value can be made. &nbsp;The associated
      asset retirement costs are capitalized as part of the carrying amount of
      the long-lived asset. &nbsp;The Company is analyzing the impact of SFAS
      No. 143 and will adopt this standard on July 1, 2002.</p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman" align="justify">In
      August 2001, the FASB issued SFAS No. 144, </small></big></small></big>
  <big><big><small><small>"</small></small></big></big><small><big><small><big>Accounting for the
      Impairment or Disposal of Long-lived Assets.</big></small></big></small><big><big><small><small>"</small></small></big></big><small><big><small><big> &nbsp;This statement
      supersedes SFAS No. 121 and the accounting and reporting provisions of APB
      30, and also amends ARB 51. &nbsp;This statement will require one
      accounting model be used for long-lived assets to be disposed of by sale,
      whether previously held and used or newly acquired, and will broaden the
      presentation of discontinued operations to include more disposal
      transactions. &nbsp;The Company is analyzing the impact of SFAS No. 144
      and will adopt this standard on July 1, 2002.</p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman" align="justify">Effective
      July 1, 2002, the Company will adopt, for United States reporting
      purposes, SFAS No. 145, </big>
  </small></big></small><small><small><big><big>"</big></big></small></small><big><small><big><small>Rescission of FASB Statements No. 4, 44 and 64,
      Amendments of SFAS No. 13, and Technical Corrections as of April 2002.</small></big></small></big><small><small><big><big>"</big></big></small></small><big><small><big><small>
      &nbsp;This statement rescinds SFAS No. 4, </small></big></small></big>
  <big><big><small><small>"</small></small></big></big><small><big><small><big>Reporting Gains and Losses
      from Extinguishment of Debt,</big></small></big></small><big><big><small><small>"</small></small></big></big><small><big><small><big> and an amendment of that statement, SFAS
      No. 64, </big>
  </small></big></small><small><small><big><big>"</big></big></small></small><big><small><big><small>Extinguishment of Debt Made to Satisfy Sinking-Fund
      Requirements</small></big></small></big><small><small><big><big>"</big></big></small></small><big><small><big><small>.</p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman" align="justify">This
      statement also rescinds SFAS No. 44, </small></big></small></big>
  <big><big><small><small>"</small></small></big></big><small><big><small><big>Accounting for Intangible Assets
      of Motor Carriers.</big></small></big></small><big><big><small><small>"</small></small></big></big><small><big><small><big> &nbsp;This statement amends SFAS No. 13,
  </big>
  </small></big></small><small><small><big><big>"</big></big></small></small><big><small><big><small>Accounting
      for Leases</small></big></small></big><small><small><big><big>"</big></big></small></small><small><big><small><big>, to eliminate an inconsistency between the required
      accounting for sale-leaseback transactions and the required accounting for
      certain lease modifications that have economic effects that are similar to
      sale-leaseback transactions. &nbsp;This statement also amends other
      existing authoritative pronouncements to make various technical
      corrections, clarify meanings or describe their applicability under
      changed conditions. &nbsp;The adoption of the new standard is not
      currently expected to have a significant impact on the Company</big></small></big></small><big><big><small><small>'</small></small></big></big><big><small><big><small>s results
      of operations or financial position.</p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><b>New
      Standards for U.S. GAAP, unaudited to December 31, 2002</b></p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman" align="justify">The
      Company adopted the following standards on July 1, 2002:</p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin-top:0pt; margin-bottom:-14pt; padding-left:63.35pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman" align="justify">i)</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">the
      adoption of SFAS No. 142, Goodwill and Other Intangible Assets, did not
      have a material affect on the</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">Company</small></big></small></big><small><small><big><big>'</big></big></small></small><small><big><small><big>s consolidated financial position
      or results of operations.</p>
      <p style="margin-top:0pt; margin-bottom:5pt; font-family:Times New Roman"><br>
      </p>
      <br>
      <br>
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-20</p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
      </p>
      <hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
      <br>
      <br>
      <p style="page-break-before:always; margin:0pt; padding-left:27pt; text-indent:-27pt; font-family:Times New Roman; font-size:12pt"><b>CORNER
      BAY SILVER INC.</b></p>
      <p style="margin:0pt; font-family:Times New Roman"><b>Notes to the
      consolidated financial statements</b></p>
      <p style="margin:0pt; font-family:Times New Roman"><b>December 31, 2002
      and 2001 (unaudited) and June 30, 2002, 2001 and 2000</b></p>
      <p style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000"><b>(expressed
      in Canadian dollars)</b></p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin-top:0pt; margin-bottom:-14pt; padding-left:63.35pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman" align="justify">ii)</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">the
      adoption of SFAS No. 143, Accounting for Asset Retirement Obligations, did
      not have a material impact on the</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">Company</big></small></big></small><big><big><small><small>'</small></small></big></big><big><small><big><small>s results of operations or
      shareholders</small></big></small></big><small><small><big><big>'</big></big></small></small><small><big><small><big> equity.</big></small></big></small></p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">&nbsp;</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify"><small><big><small><big> </p>
      <p style="margin-top:0pt; margin-bottom:-14pt; padding-left:63.35pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman" align="justify">iii)</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">the
      adoption of SFAS No. 144, Accounting for the Impairment or Disposal of
      Long-lived Assets, did not have a</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">material affect on the Company</big></small></big></small><big><big><small><small>'</small></small></big></big><big><small><big><small>s
      consolidated financial position or results of operations.</small></big></small></big></p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">&nbsp;</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify"><big><small><big><small></p>
      <p style="margin-top:0pt; margin-bottom:-14pt; padding-left:63.35pt; text-indent:-36pt; line-height:14pt; font-family:Times New Roman" align="justify">iv)</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">the
      adoption of SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64,
      Amendments of SFAS No. 13, and</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">Technical Corrections as of April 2002, did
      not have a material affect on the Company</small></big></small></big><small><small><big><big>'</big></big></small></small><big><small><big><small>s results of operations or its </small></big></small></big>
</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify"><big><small><big><small>financial position. </small></big></small></big>
</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">&nbsp;</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">&nbsp;</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">&nbsp;</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify">&nbsp;</p>
  <p style="text-indent: -18.35pt; font-family: Times New Roman; margin-top: 0pt; margin-bottom: 0; padding-left: 63.35pt" align="justify"><big><small><big><small></p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><b>Financial
      Accounting Standards Board (FASB)</b></p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman" align="justify">On
      July 30, 2002, the FASB issued SFAS No. 146, </small></big></small></big>
  <big><big><small><small>"</small></small></big></big><small><big><small><big>Accounting for Costs
      Associated with Exit or Disposal Activities.</big></small></big></small><big><big><small><small>"</small></small></big></big><big><small><big><small> &nbsp;The standard
      requires companies to recognize costs associated with exit or disposal
      activities when they are incurred rather than at the date of a commitment
      to an exit or disposal plan. &nbsp;Examples of costs covered by the
      standard include lease termination costs and certain employee severance
      costs that are associated with a restructuring, discontinued operation,
      plant closing or other exit or disposal activity. &nbsp;SFAS No. 146 is to
      be applied retroactively to exit or disposal activities initiated after
      December 31, 2002. &nbsp;The adoption of the new standard is not currently
      expected to have a significant impact on the Company</small></big></small></big><small><small><big><big>'</big></big></small></small><big><small><big><small>s result of
      operations or financial position.</p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><b>New
      Standard for Canadian GAAP</b></p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; padding-left:27.35pt; font-family:Times New Roman" align="justify">The
      CICA approved a new Handbook Section 3062, </small></big></small></big>
  <small><small><big><big>"</big></big></small></small><big><small><big><small>Goodwill and Other
      Intangible Assets,</small></big></small></big><small><small><big><big>"</big></big></small></small><small><big><small><big> which require intangible assets with an indefinite
      life and goodwill to be tested for impairment on annual basis.
      &nbsp;Goodwill and indefinite life intangible assets will no longer be
      amortized. &nbsp;Intangible assets with definite lives will continue to be
      amortized over their useful lives. &nbsp;The new section is consistent
      with those recently approved by the FASB (SFAS No. 142). &nbsp;The
      adoption of this new standard is not expected to have any material effect
      on the Company</big></small></big></small><big><big><small><small>'</small></small></big></big><big><small><big><small>s financial position, results of operations or cash
      flows. &nbsp;Section 3026 was adopted on July 1, 2002 and the Company does
      not expect this adoption to have a significant impact on the Company</small></big></small></big><small><small><big><big>'</big></big></small></small><small><big><small><big>s
      results of operations or financial position.</p>
      <p style="margin:0pt; padding-left:27.35pt; line-height:18pt; font-family:Times New Roman"><br>
      </p>
      <br>
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">F-21</p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
      </p>
      <hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
      <br>
      <br>
      <p style="page-break-before:always; margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><i>Unaudited
      Pro Forma Statement of Operations of</i></p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:11pt"><br>
      </p>
      <p style="margin:0pt; line-height:18pt; font-family:Times New Roman; font-size:16pt"><b>PAN
      AMERICAN SILVER CORP.</b></p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;
      </p>
      <p style="margin:0pt; font-family:Times New Roman; font-size:12pt">&nbsp;
      </p>
      <br>
      <br>
  <p style="margin:0pt; font-family:Times New Roman" align="center">F-2</big></small></big></small><big><big><small><small>2</small></small></big></big></p>
<p style="margin:0pt; font-family:Times New Roman" align="center">&nbsp;</p>
<small><big><small><big>
      <p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
      </p>
<small><big><small><big><small><big><small><big>
      <hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
</big></small></big></small></big></small></big></small>&nbsp;
      <p style="page-break-before:always; margin:0pt; font-family:Times New Roman; font-size:12pt"><font size="2"><br>
      </font>
      </p>
<small><big><small><big>
      <a NAME="_Toc93312479"></a>
</big>
</small></big></small>
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b><font size="2">COMPILATION
      REPORT</font></b></p>
      <p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
      </font>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2"><br>
      </font>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">To the
      Directors of</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Pan
      American Silver Corp.</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2"><br>
      </font>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">We have
      read the accompanying unaudited pro forma statement of operations of Pan
      American Silver Corp. (the "Company") for the year ended December 31,
      2003 and have performed the following procedures.</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2"><br>
      </font>
      </p>
      <p style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; font-family:Times New Roman" align="justify"><font size="2">1.</font></p>
      <p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2">Compared
      the figures in the columns captioned "Pan American Silver Corp." to
      the audited financial statements of the Company for the year ended
      December 31, 2003 and found them to be in agreement.</font></p>
      <p style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; font-family:Times New Roman" align="justify"><font size="2">2.</font></p>
      <p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2">Made
      enquiries of certain officials of the Company who have responsibility for
      financial and accounting matters about:</font></p>
      <p style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; font-family:Times New Roman" align="justify"><font size="2">a)</font></p>
      <p style="margin:0pt; padding-left:72pt; font-family:Times New Roman" align="justify"><font size="2">the
      basis for determination of the pro forma adjustments; and</font></p>
      <p style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; font-family:Times New Roman" align="justify"><font size="2">b)</font></p>
      <p style="margin:0pt; padding-left:72pt; font-family:Times New Roman" align="justify"><font size="2">whether
      the pro forma financial statements comply as to form in all material
      respects with the applicable securities acts and the related regulations.</font></p>
      <p style="font-family: Times New Roman; margin: 0pt; padding-left: 36pt" align="justify"><font size="2">The
      officials:</font></p>
      <p style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; font-family:Times New Roman" align="justify"><font size="2">a)</font></p>
      <p style="margin:0pt; padding-left:72pt; font-family:Times New Roman" align="justify"><font size="2">described
      to us the basis for determination of the pro forma adjustments; and</font></p>
      <p style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; font-family:Times New Roman" align="justify"><font size="2">b)</font></p>
      <p style="margin:0pt; padding-left:72pt; font-family:Times New Roman" align="justify"><font size="2">stated
      that the pro forma statements comply as to form in all material respects
      with the applicable securities acts and the related regulations. &nbsp;</font></p>
      <p style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; font-family:Times New Roman" align="justify"><font size="2">3.</font></p>
      <p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2">Read
      the notes to the pro forma statements, and found them to be consistent
      with the basis described to us for determination of the pro forma
      adjustments.</font></p>
      <p style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; font-family:Times New Roman" align="justify"><font size="2">4.</font></p>
      <p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2">Recalculated
      the application of the pro forma adjustments to the aggregate of the
      amount in the column captioned "Pro Forma Adjustment" for the year
      ended December 31, 2003, and found the amounts in the column captioned "Pro
      Forma Pan American Silver Corp." to be arithmetically correct.</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2"><br>
      </font>
      </p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">A pro
      forma financial statement is based on management's assumptions and
      adjustments which are inherently subjective. &nbsp;The foregoing
      procedures are substantially less than either an audit or a review, the
      objective of which is the expression of assurance with respect to
      management's assumptions, the pro forma adjustments, and the application
      of the adjustments to the historical financial information.
      &nbsp;Accordingly, we express no such assurance. &nbsp;The foregoing
      procedures would not necessarily reveal matters of significance to the pro
      forma financial statements, and we therefore make no representation about
      the sufficiency of the procedures for the purposes of a reader of such
      statements.</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2"><br>
      </font>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">(signed)
      DELOITTE &amp; TOUCHE LLP</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2"><br>
      </font>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Chartered
      Accountants</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Vancouver,
      Canada</font></p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">March
      19, 2004</font></p>
      <p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
      </font>
      </p>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><b><font size="2">Comments
for United States Readers on differences between Canadian and United States
reporting standards.</font></b></p>
<big><small><small><big><small><big>
<p style="margin:0pt; font-family:Times New Roman" align="justify">&nbsp;</p>
</big></small></big></small></small></big>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">The
above report, provided solely pursuant to Canadian requirements, is expressed in
accordance with standards of reporting generally accepted in Canada.&nbsp; To
report in conformity with the United States standards on the reasonableness of
the pro forma adjustments and their application to the pro forma financial
statements requires an examination or review substantially greater in scope than
the review we have conducted.&nbsp; Consequently, we are unable to express any
opinion in accordance with standards of reporting generally accepted in the
United States with respect to the compilation of the accompanying unedited pro
forma financial information.<br>
</font></p>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<p style="margin:0pt; font-family:Times New Roman"><font size="2">(signed)
DELOITTE &amp; TOUCHE LLP</font></p>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Chartered
Accountants</font></p>
<p style="margin:0pt; font-family:Times New Roman" align="justify"><font size="2">Vancouver,
Canada</font></p>
<p style="margin:0pt; font-family:Times New Roman"><font size="2">March 19, 2004</font></p>
<p style="margin:0pt; font-family:Times New Roman"><font size="2"><br>
</font></p>
<font size="2"><br>
<br>
</font>
<p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">F-23</font></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><font size="2"><br>
</font>
</p>
      <p style="margin:0pt; text-indent:468pt; font-family:Times New Roman; font-size:8pt">&nbsp;
      </p>
</big>
 </small><small><big><small><big><small><big>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<br>
<br>
<p style="page-break-before:always; margin:0pt; font-family:Times New Roman; font-size:9pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman" align="center"><b>PAN
AMERICAN SILVER CORP.</b></p>
<p style="margin:0pt; font-family:Times New Roman" align="center">PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS</p>
<p style="margin:0pt; font-family:Times New Roman" align="center">For the year
ended December 31, 2003</p>
<p style="margin:0pt; font-family:Times New Roman" align="center">(Unaudited)</p>
<p style="margin:0pt; font-family:Times New Roman" align="center">(Expressed in
Thousands of United States Dollars)</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman"><br>
</p>
<div align="center">
  <center>
  <table style="font-size:10pt" cellspacing="0">
    <tr>
      <td width="42%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="9%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td align="center" colspan="2" width="16%"><b><font size="2" face="serif">Pro
        Forma</font></b></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%">&nbsp;</td>
      <td align="center" colspan="2" width="16%"><b><font size="2" face="serif">Pan
        American</font></b></td>
      <td width="9%" align="center">&nbsp;</td>
      <td align="center" width="15%"><b><font size="2" face="serif">Pro forma</font></b></td>
      <td align="center" colspan="2" width="16%"><b><font size="2" face="serif">Pan
        American</font></b></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%">&nbsp;</td>
      <td align="center" colspan="2" width="16%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Silver
        Corp.</font></b></td>
      <td width="9%" align="center" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Note
        4</font></b></td>
      <td align="center" width="15%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">adjustment</font></b></td>
      <td align="center" colspan="2" width="16%" style="border-bottom: 1 solid #000000"><b><font size="2" face="serif">Silver
        Corp.</font></b></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="42%"><font size="2" face="serif">REVENUE</font></td>
    </center>
    <td align="center" width="1%">
      <p align="right"><font size="2" face="serif">$</font></p>
    </td>
    <center>
    <td align="right" width="15%"><font size="2" face="serif">45,122</font></td>
    <td width="9%">&nbsp;</td>
    <td width="15%"><font size="2" face="serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      -</font></td>
    <td align="center" width="1%"><font size="2" face="serif">$</font></td>
    <td align="right" width="15%"><font size="2" face="serif">45,122</font></td>
    <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="42%"><font size="2" face="serif">EXPENSES</font></td>
      <td width="1%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="9%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Operating</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">39,778</font></td>
      <td width="9%">&nbsp;</td>
      <td align="right" width="15%">-</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">39,778</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">General and
        administration</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">2,732</font></td>
      <td width="9%" align="center"><font size="2" face="serif">a)</font></td>
      <td align="right" width="15%"><font size="2" face="serif">297</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">3,029</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Stock-based
        compensation</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">2,893</font></td>
      <td width="9%" align="center">&nbsp;</td>
      <td align="right" width="15%">-</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">2,893</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Depreciation
        and</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">3,325</font></td>
      <td width="9%" align="center">&nbsp;</td>
      <td align="right" width="15%">-</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">3,325</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">amortization</font></td>
      <td width="1%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="9%" align="center">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Reclamation</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">303</font></td>
      <td width="9%" align="center">&nbsp;</td>
      <td align="right" width="15%">-</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">303</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Exploration</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">2,543</font></td>
      <td width="9%" align="center"><font size="2" face="serif">b)</font></td>
      <td align="right" width="15%"><font size="2" face="serif">343</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">2,886</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Interest
        and financing costs</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,156</font></td>
      <td width="9%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000">-</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,156</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td align="center">&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="42%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">52,730</font></td>
      <td width="9%" align="center" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">640</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">53,370</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td align="center">&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="42%"><font size="2" face="serif">LOSS FROM OPERATIONS</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">(7,608)</font></td>
      <td width="9%" align="center">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">(640)</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">(8,248)</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%"><font size="2" face="serif">INTEREST INCOME</font></td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">403</font></td>
      <td width="9%" align="center">&nbsp;</td>
      <td align="right" width="15%">-</td>
      <td width="1%">&nbsp;</td>
      <td align="right" width="15%"><font size="2" face="serif">403</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">OTHER
        INCOME</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">411</font></td>
      <td width="9%" align="center" style="border-bottom: 1 solid #000000"><font size="2" face="serif">a)</font></td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">12</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">423</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td align="center">&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="42%" style="border-bottom: 3 double #000000"><font size="2" face="serif">NET
        LOSS FOR THE YEAR</font></td>
      <td align="center" width="1%" style="border-bottom: 3 double #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="15%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(6,794)</font></td>
      <td width="9%" align="center" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(628)</font></td>
      <td width="1%" style="border-bottom: 3 double #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 3 double #000000"><font size="2" face="serif">(7,434)</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td align="center">&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="42%"><font size="2" face="serif">LOSS PER SHARE</font></td>
      <td width="1%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="9%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Basic
        and fully diluted</font></td>
      <td align="center" width="1%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(0.20)</font></td>
      <td width="9%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000">-</td>
      <td align="center" width="1%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">$</font></td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">(0.21)</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
    <tr>
      <td width="42%"><font size="2" face="serif">WEIGHTED-AVERAGE</font></td>
      <td width="1%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="9%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="1%">&nbsp;</td>
      <td width="15%">&nbsp;</td>
      <td width="2%">&nbsp;</td>
    </tr>
    <tr>
      <td width="42%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">SHARES
        OUTSTANDING</font></td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">51,058,212</font></td>
      <td width="9%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000">-</td>
      <td width="1%" style="border-bottom: 1 solid #000000">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom: 1 solid #000000"><font size="2" face="serif">52,125,252</font></td>
      <td width="2%">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<br>
<br>
  </big></small></big></small></big></small></big>
</small><p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">F-24</font></p>
<big><small><big><small><big><small><small><big>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; text-indent:468pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
</big>
</small></small></big></small></big></small>
</big>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>PAN
AMERICAN SILVER CORP.</b></font></p>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>Notes
to the Pro Forma Consolidated Financial Statements</b></font></p>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>For
the year ended December 31, 2003</b></font></p>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>(Unaudited)</b></font></p>
<p style="font-family: Times New Roman; border-bottom: 1 solid #000000; margin: 0pt" align="left"><font size="2"><b>(Expressed
in Thousands of United States Dollars)</b></font></p>
<big><small>
<small><big><small><big><small>
<big><br>
<br>
<br>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align="justify"><b>1.</b></p>
<p style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align="justify"><b>BASIS
OF PRESENTATION</b></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><br>
</p>
</big></small></big></small></big></small></small></big>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2">The
unaudited pro forma consolidated statement of operations of Pan American Silver
Corp. ("Pan American") as at December 31, 2003 has been prepared by
management after giving effect to the acquisition by Pan American of Corner Bay
Silver Inc. ("Corner Bay").&nbsp;</font></p>
<big><small><big><small><big><small><small><big>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
</big></small></small></big></small></big></small></big>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2">The
pro forma statement of operations combines the audited statements of operations
of Pan American for the year ended December 31, 2003 with the results of
operations of Corner Bay for the 50 day period ended February 20, 2003.&nbsp;
(The Corner Bay results of the 50 day period ended February 20, 2003 were
prepared from internal unaudited financial statements.)</font></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman; font-size:12pt" align="justify"><font size="2"><br>
</font></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2">It
is management's opinion that the pro forma consolidated statement of
operations includes all adjustments necessary for the fair presentation of the
transactions described in Note 3 in accordance with Canadian generally accepted
accounting principles applied on a basis consistent with Pan American's
accounting policies. &nbsp;The pro forma consolidated statement of operations is
not intended to reflect the results of operations of Pan American which would
have actually resulted had the proposed transactions been effected on the dates
indicated. &nbsp;Further, the pro forma financial information is not necessarily
indicative of the results of operations that may be obtained in the future.</font></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2"><br>
</font></p>
<big><small><big><small><big><small><small><big>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align="justify"><b>2.</b></p>
<p style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align="justify"><b>SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES</b></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify">The
unaudited pro forma consolidated statement of operations has been compiled using
the significant accounting policies as set out in the audited financial
statements of Pan American for the year ended December 31, 2003. &nbsp;The
significant accounting policies of Corner Bay conform in all material respects
to those of Pan American, except as described in and adjusted for in Note 4.</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align="justify"><b>3.</b></p>
<p style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align="justify"><b>BUSINESS
COMBINATION</b></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><i>Acquisition
of Corner Bay</i></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify">On
February 20, 2003, Pan American completed its proposed merger with Corner Bay.
&nbsp;Under the terms of the acquisition common shares of Corner Bay were,
directly or indirectly, exchanged for common shares of Pan American and warrants
to purchase Pan American common shares, on the basis of one Pan American common
share for every 2.60 Corner Bay shares and one Pan American warrant for every
5.20 Corner Bay common shares. &nbsp;Pan American also agreed to issue 553,846
stock options to replace 960,000 fully vested stock options currently held by
Corner Bay employees and directors.</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify">Each
whole Pan American warrant will allow the holder to purchase a Pan American
common share for a price of Cdn.$12 for a five-year period ended February 20,
2008.</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify">Pan
American issued 7,636,659 common shares to the shareholders of Corner Bay, and
3,818,330 warrants to purchase common shares valued at $54,203,000 and
$8,889,000, respectively. &nbsp;The value of the stock options granted was
determined to be $1,136,000.</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<br>
<br>
</big></small></small></big></small></big></small></big><p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">F-25</font></p>
<big>
<small><small><big><small><big><small>
<big>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; text-indent:468pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>PAN
AMERICAN SILVER CORP.</b></font></p>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>Notes
to the Pro Forma Consolidated Financial Statements</b></font></p>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>For
the year ended December 31, 2003</b></font></p>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>(Unaudited)</b></font></p>
<p style="font-family: Times New Roman; border-bottom: 1 solid #000000; margin: 0pt" align="left"><font size="2"><b>(Expressed
in Thousands of United States Dollars)</b></font></p>
<big><small><small><big><small><big><small><big><br>
</big></small></big></small></big></small></small></big>
<p><br>
<br>
</p>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align="justify"><b>3.</b></p>
<p style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align="justify"><b>BUSINESS
COMBINATION (Continued)</b></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify">The
business combination has been accounted for as an acquisition by Pan American of
Corner Bay and the purchase method of accounting has been applied. &nbsp;The
consideration given has been allocated to the fair value of net assets acquired
as follows:</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify">&nbsp;</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify">&nbsp;</p>
<div align="center">
  <center>
  <table width="687" border="0" cellspacing="0" cellpadding="0" height="418">
    <tr>
      <td width="61" height="21">&nbsp;</td>
      <td width="483" height="21">&nbsp;</td>
      <td align="right" colspan="2" width="130" height="21"><font size="2" face="serif">As
        at</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td width="61" height="21">&nbsp;</td>
      <td width="483" height="21">&nbsp;</td>
      <td align="right" colspan="2" width="130" height="21"><font size="2" face="serif">February
        20,</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td width="61" height="21">&nbsp;</td>
      <td width="483" height="21">&nbsp;</td>
      <td align="right" colspan="2" width="132" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">2003</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" width="546" height="21"><font size="2" face="serif">Fair
        value of net assets acquired</font></td>
      <td width="7" height="21">&nbsp;</td>
      <td width="121" height="21">&nbsp;</td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" width="546" height="21"><font size="2" face="serif">Current
        assets</font></td>
      <td width="7" height="21"><font size="2" face="serif">$</font></td>
      <td align="right" width="121" height="21"><font size="2" face="serif">2,512,000</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" width="546" height="21"><font size="2" face="serif">Plant
        and equipment</font></td>
      <td width="7" height="21">&nbsp;</td>
      <td align="right" width="121" height="21"><font size="2" face="serif">2,500,000</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" width="546" height="21"><font size="2" face="serif">Mineral
        properties</font></td>
      <td width="7" height="21">&nbsp;</td>
      <td align="right" width="121" height="21"><font size="2" face="serif">79,008,000</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" width="548" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">Other
        assets</font></td>
      <td width="9" style="border-bottom: 1 solid #000000" height="21">&nbsp;</td>
      <td align="right" width="123" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">29,000</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td width="61" height="21">&nbsp;</td>
      <td width="483" height="21">&nbsp;</td>
      <td width="7" height="21">&nbsp;</td>
      <td align="right" width="121" height="21"><font size="2" face="serif">84,049,000</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td width="61" height="21">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Less:</font></td>
      <td width="483" height="21"><font size="2" face="serif">Current
        liabilities</font></td>
      <td width="7" height="21">&nbsp;</td>
      <td align="right" width="121" height="21"><font size="2" face="serif">(104,000)</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td width="63" style="border-bottom: 1 solid #000000" height="21">&nbsp;</td>
      <td width="485" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">Provision
        for future income tax liability</font></td>
      <td align="right" colspan="2" width="132" style="border-bottom: 1 solid #000000" height="21"><font size="2" face="serif">(19,035,000)</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td width="63" style="border-bottom: 2 solid #000000" height="21">&nbsp;</td>
      <td width="485" style="border-bottom: 2 solid #000000" height="21">&nbsp;</td>
      <td width="9" style="border-bottom: 2 solid #000000" height="21"><font size="2" face="serif">$</font></td>
      <td align="right" width="123" style="border-bottom: 2 solid #000000" height="21"><font size="2" face="serif">64,910,000</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td height="21" width="61">&nbsp;</td>
      <td height="21" width="483">&nbsp;</td>
      <td height="21" width="7">&nbsp;</td>
      <td height="21" width="121">&nbsp;</td>
      <td height="21" width="5">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" width="546" height="21"><font size="2" face="serif">Consideration
        given by Pan American</font></td>
      <td width="7" height="21">&nbsp;</td>
      <td width="121" height="21">&nbsp;</td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" width="546" height="21"><font size="2" face="serif">Issue
        of 7,636,659 common shares</font></td>
      <td width="7" height="21"><font size="2" face="serif">$</font></td>
      <td align="right" width="121" height="21"><font size="2" face="serif">54,203,000</font></td>
      <td width="5" height="21">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="2" width="546" height="21"><font size="2" face="serif">Issue
        of 3,818,3</font></big></small></big></small></big></small></small></big><font size="2" face="serif"><big><big><big><big><small><small><small><small>3</small></small></small></small></big></big></big></big>0<big>
<small><big><small><small><big><small><big>share purchase warrants</big></small></big></small></small></big></small></big></font></td>
<td width="7" height="21">&nbsp;</td>
<td align="right" width="121" height="21"><font size="2" face="serif">8,889,000</font></td>
<td width="5" height="21">&nbsp;</td>
</tr>
<tr>
  <td colspan="2" width="548" height="19" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Issue
    of 553,846 replacement stock options</font></td>
  <td width="9" height="19" style="border-bottom: 1 solid #000000">&nbsp;</td>
  <td align="right" width="123" height="19" style="border-bottom: 1 solid #000000"><font size="2" face="serif">1,136,000</font></td>
  <td width="5" height="19">&nbsp;</td>
</tr>
<tr>
  <td width="61" height="21">&nbsp;</td>
  <td width="483" height="21">&nbsp;</td>
  <td width="7" height="21">&nbsp;</td>
  <td align="right" width="121" height="21"><font size="2" face="serif">64,228,000</font></td>
  <td width="5" height="21">&nbsp;</td>
</tr>
<tr>
  <td width="63" height="21" style="border-bottom: 1 solid #000000">&nbsp;&nbsp;&nbsp;<font size="2" face="serif">Add:</font></td>
  <td width="485" height="21" style="border-bottom: 1 solid #000000"><font size="2" face="serif">Costs
    of acquisition</font></td>
  <td width="9" height="21" style="border-bottom: 1 solid #000000">&nbsp;</td>
  <td align="right" width="123" height="21" style="border-bottom: 1 solid #000000"><font size="2" face="serif">682,000</font></td>
  <td width="5" height="21">&nbsp;</td>
</tr>
<tr>
  <td width="63" height="21" style="border-bottom: 2 solid #000000">&nbsp;</td>
  <td width="485" height="21" style="border-bottom: 2 solid #000000">&nbsp;</td>
  <td width="9" height="21" style="border-bottom: 2 solid #000000"><font size="2" face="serif">$</font></td>
  <td align="right" width="123" height="21" style="border-bottom: 2 solid #000000"><font size="2" face="serif">64,910,000</font></td>
  <td width="5" height="21">&nbsp;</td>
</tr>
</table>
</center>
</div>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify">&nbsp;</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify">&nbsp;</p>
<p style="margin:0pt; padding-left:36.8pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:36.8pt; font-family:Times New Roman" align="justify">The
purchase consideration of $64,228,000 for 100% of Corner Bay exceeds the
carrying value of the net assets at February 20, 2003 by $54,108,000 which has
been applied to increase the carrying value of mineral properties. &nbsp;The
resulting future income tax liability of $19,035,000 has also been applied to
increase the carrying value of mineral properties.</p>
<p style="margin:0pt; padding-left:36.8pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:36.8pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-12pt; padding-left:36.8pt; text-indent:-36.8pt; font-family:Times New Roman" align="justify"><b>4.</b></p>
<p style="margin:0pt; padding-left:36.8pt; font-family:Times New Roman" align="justify"><b>PRO
FORMA ADJUSTMENTS</b></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify">The
pro forma consolidated statement of operations for the year ended December 31,
2003 has been adjusted as follows:</p>
<p style="margin-top:0pt; margin-bottom:-12pt; padding-left:71.3pt; text-indent:-34.5pt; font-family:Times New Roman" align="justify">(a)</p>
<p style="margin:0pt; padding-left:71.3pt; font-family:Times New Roman" align="justify">record
general and administration expenses of Corner Bay for the 50 day period ended
February&nbsp;20, 2004; and &nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-12pt; padding-left:71.3pt; text-indent:-34.5pt; font-family:Times New Roman" align="justify"><font size="2">(b)</font></p>
<big>
<small>
<big><small><small><big>
<small>
<big>
<p style="font-family: Times New Roman; margin: 0pt; padding-left: 71.3pt" align="justify"><font size="2">write
off deferred exploration expenditures in Corner Bay to comply with Pan Amer</big></small></big></small></small></big></small></big>ican's
<small><big><small><small><big><small><big><big>
accounting policy.</big></font></p>
</big></small>
</big></small></small></big>
</small><big><small><small><big><small><big><small>
<big>
<p style="margin:0pt; padding-left:106.5pt; text-indent:-34.5pt; font-family:Times New Roman Bold" align="justify"><br>
</p>
<br>
<br>
</big></small></big></small></big></small></small></big><p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">F-26</font></p>
<small>
<big><small><big><small><small><big><big>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; text-indent:468pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
<hr style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size="1.333">
<br>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>PAN
AMERICAN SILVER CORP.</b></font></p>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>Notes
to the Pro Forma Consolidated Financial Statements</b></font></p>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>For
the year ended December 31, 2003</b></font></p>
<p style="margin:0pt; font-family:Times New Roman" align="left"><font size="2"><b>(Unaudited)</b></font></p>
<p style="font-family: Times New Roman; border-bottom: 1 solid #000000; margin: 0pt" align="left"><font size="2"><b>(Expressed
in Thousands of United States Dollars)</b></font></p>
<big><small><small><big><small><big><small><big><br>
</big></small></big></small></big></small></small></big>
<p><br>
<br>
</p>
</big>
</big></small></small></big></small></big>
</small>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:-12pt; padding-left:34.5pt; text-indent:-34.5pt; font-family:Times New Roman Bold" align="justify"><b><font size="2">5.</font></b></p>
<p style="margin:0pt; padding-left:34.5pt; font-family:Times New Roman Bold" align="justify"><b><font size="2">DIFFERENCES
BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES</font></b></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2"><br>
</font></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2">The
pro forma consolidated statement of operations is prepared in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP") which
differ in certain respects with accounting principles generally accepted in the
United States ("US GAAP").</font></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2"><br>
</font></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2">Material
differences between Canadian and US GAAP and their effect on the pro forma
consolidated statement of operations are summarized below and more fully
discussed in Note&nbsp;18 of the Company's 2003 annual audited consolidated
financial statements.</font></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><font size="2"><br>
</font></p>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><b><font size="2">Pro
Forma Consolidated Statement of Operations</font></b></p>
<big><small><big><small><big><small><small><big>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><br>
</p>
<div align="center">
  <center>
  <table style="font-size:10pt" cellspacing="0">
    <tr>
      <td valign="bottom" width="452">
        <p style="margin:0pt; font-family:Times New Roman">Pro forma loss for
        the year under Canadian GAAP</p>
      </td>
    </big></small></small></big></small></big></small></big>
      <td valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;$
        &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7,422)</font></p>
      </td>
    </tr>
<big><small><big><small><big><small><small><big>
    <tr>
      <td valign="bottom" width="452">
        <p style="margin:0pt; font-family:Times New Roman">Unrealized loss on
        short-term investments</p>
      </td>
</big></small></small></big></small></big></small></big>
      <td valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;80</font></p>
      </td>
    </tr>
<big><small><small><big><small><big><small><big>
    <tr>
      <td valign="bottom" width="452">
        <p style="margin:0pt; font-family:Times New Roman">Amortization of
        mineral property</p>
      </td>
</big></small></big></small></big></small></small></big>
      <td valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,700)</font></p>
      </td>
    </tr>
<big><small><big><small><big><small><small><big>
    <tr>
      <td valign="bottom" width="452">
        <p style="margin:0pt; font-family:Times New Roman">SFAS 150 adjustments</p>
      </td>
</big></small></small></big></small></big></small></big>
      <td valign="bottom" width="107.6"><font size="2">&nbsp;</font></td>
    </tr>
<big><small><small><big><small><big><small><big>
    <tr>
      <td valign="bottom" width="452">
        <p style="margin:0pt; text-indent:2.4pt; font-family:Times New Roman">Interest
        expense</p>
      </td>
</big></small></big></small></big></small></small></big>
      <td valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,887)</font></p>
      </td>
    </tr>
<big><small><big><small><big><small><small><big>
    <tr>
      <td valign="bottom" width="452">
        <p style="margin:0pt; text-indent:2.4pt; font-family:Times New Roman">Interest
        accretion</p>
      </td>
</big></small></small></big></small></big></small></big>
      <td valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;595</font></p>
      </td>
    </tr>
<big><small><small><big><small><big><small><big>
    <tr>
      <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="452">
        <p style="margin:0pt; text-indent:2.4pt; font-family:Times New Roman">Amortization
        of debt issue costs</p>
      </td>
</big></small></big></small></big></small></small></big>
      <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(454)</font></p>
      </td>
    </tr>
<big><small><big><small><big><small><small><big>
    <tr>
      <td valign="bottom" width="452">&nbsp;</td>
</big></small></small></big></small></big></small></big>
      <td valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10,788)</font></p>
      </td>
    </tr>
<big><small><small><big><small><big><small><big>
    <tr>
      <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="452">
        <p style="margin:0pt; font-family:Times New Roman">Future income tax
        provision</p>
      </td>
</big></small></big></small></big></small></small></big>
      <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;595</font></p>
      </td>
    </tr>
<big><small><big><small><big><small><small><big>
    <tr>
      <td valign="bottom" width="452">
        <p style="margin:0pt; font-family:Times New Roman">Pro forma net loss
        under US GAAP</p>
      </td>
</big></small></small></big></small></big></small></big>
      <td valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10,193)</font></p>
      </td>
    </tr>
<big><small><big><small><big><small><small><big>
    <tr>
      <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="452">
        <p style="margin:0pt; font-family:Times New Roman">Unrealized loss on
        available-for-sale securities</p>
      </td>
</big></small></small></big></small></big></small></big>
      <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(80)</font></p>
      </td>
    </tr>
<big><small><small><big><small><big><small><big>
    <tr>
      <td style="border-bottom:1pt solid #000000" valign="bottom" width="452">
        <p style="margin:0pt; font-family:Times New Roman">Comprehensive pro
        forma net loss under US GAAP</p>
      </td>
</big></small></big></small></big></small></small></big>
      <td style="border-bottom:1pt solid #000000" valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;$
        &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10,273)</font></p>
      </td>
    </tr>
<big><small><big><small><big><small><small><big>
    <tr>
      <td valign="bottom" width="452">&nbsp;</td>
</big></small></small></big></small></big></small></big>
      <td valign="bottom" width="107.6"><font size="2">&nbsp;</font></td>
    </tr>
<big><small><small><big><small><big><small><big>
    <tr>
      <td style="border-bottom:1pt solid #000000" valign="bottom" width="452">
        <p style="margin:0pt; font-family:Times New Roman">Basic pro forma loss
        per share under US GAAP</p>
      </td>
</big></small></big></small></big></small></small></big>
      <td style="border-bottom:1pt solid #000000" valign="bottom" width="107.6">
        <p style="margin:0pt; font-family:Times New Roman"><font size="2">&nbsp;$
        &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.20)</font></p>
      </td>
    </tr>
<big><small><small><big><small><big><small><big>
    <tr>
      <td valign="bottom" width="452">&nbsp;</td>
      <td valign="bottom" width="107.6">&nbsp;</td>
    </tr>
  </table>
  </center>
</div>
<p style="margin:0pt; padding-left:36pt; font-family:Times New Roman" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt" align="justify"><br>
</p>
<br>
<br>
<p style="margin:0pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
</big></small></big></small></big></small></small></big><p style="margin:0pt; font-family:Times New Roman" align="center"><font size="2">F-27</font></p>
<big>
<small><small><big><small><big><small>
<big>
<p style="margin:0pt; text-indent:468pt; font-family:Times New Roman; font-size:8pt"><br>
</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:12pt"><br>
</p>
</big>
</small></big></small></big></small></small>
</big>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p><font size="2">
<BR>
<BR>
<BR>
</font></p>
<P style="page-break-before:always; margin:0pt; font-family:CG Times" align=center><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=center><B><font size="2">PART II</font></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=center><B><font size="2">INFORMATION NOT REQUIRED TO BE</font> </B></P>
<P style="margin:0pt; font-family:CG Times" align=center><B><U><font size="2">DELIVERED TO OFFEREES OR PURCHASERS</font></U></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><B><U><font size="2">Indemnification.</font></U></B></P>
<P style="margin:0pt; font-family:CG Times"><font size="2"><BR></font></P>
<P style="margin:0pt; text-indent:36pt; font-family:CG Times"><font size="2">Section 128 of the Company Act (British Columbia) (the &quot;BCCA&quot;) authorizes a company, with the approval of the court, to indemnify past and present directors and officers of the company and past and present directors and officers of a corporation of which the company is or was a shareholder, against liabilities incurred in connection with the provision of their services as such if the director or officer acted honestly and in good faith with a view to the best interests of the company and, in the case of a criminal or administrative proceeding, if he or she had reasonable grounds for believing that his or her conduct was lawful. &nbsp;Section 128 of the BCCA provides that a company may purchase and maintain liability insurance for the benefit of such directors and officers.</font> </P>
<P style="margin:0pt; font-family:CG Times"><font size="2"><BR></font></P>
<P style="margin:0pt; text-indent:36pt; font-family:CG Times"><font size="2">In accordance with the BCCA, the Articles of the Registrant provide that the Registrant will indemnify its directors, former directors, Secretary or Assistant Secretary, and may indemnify its officers, employees or agents and those of its subsidiaries, and directors and former directors of its subsidiaries, and each of their respective heirs and representatives, against all losses, charges and expenses howsoever incurred by them as a result of their actions in such capacities. &nbsp;The Registrant has entered into agreements with each of its directors confirming this indemnity. &nbsp;The failure of a director or officer of the Registrant to comply with the provisions of the BCCA or the Registrant's Memorandum or Articles, however, will invalidate any indemnity which he or she is entitled to.</font></P>
<P style="margin:0pt; font-family:CG Times"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></P>
<P style="margin:0pt; text-indent:36pt; font-family:CG Times"><font size="2">A policy of directors' and officers' liability insurance is maintained by the Registrant which insures directors and officers for losses as a result of claims against the directors and officers of the Registrant in the indemnity provisions under the Articles and the BCCA.</font></P>
<P style="margin:0pt; font-family:CG Times"><font size="2"><BR></font></P>
<P style="margin:0pt; text-indent:36pt; font-family:CG Times"><font size="2">Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the &quot;Securities Act&quot;) may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.</font></P>
<font size="2">
<BR>
<BR>
</font>
<P style="margin:0pt; font-family:Times New Roman" align=center><font size="2">II-1</font></P>
<P style="margin:0pt; line-height:8pt; font-family:Times New Roman; font-size:6pt"><font size="2">&nbsp;<BR></font></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<font size="2">
<BR>
<BR>
<BR>
</font>
<P style="page-break-before:always; margin:0pt; font-family:CG Times" align=justify><B><U><font size="2">Exhibits.</font></U></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2">The following exhibits have been filed or incorporated by reference as part of the Registration Statement:</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><B><font size="2">Exhibit</font></B></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:CG Times" align=justify><B><U><font size="2">Number</font> </U></B></P>
<P style="margin:0pt; text-indent:72pt; font-family:CG Times" align=justify><B><U><font size="2">Description</font></U> </B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.1</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Annual Information Form of the Registrant, dated May 19, 2004.<SUP> (1)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.2</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Management's Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2003.<SUP> (1)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.3</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Audited Consolidated Financial Statements of the Registrant and the notes thereon as at and for the years ended December 31, 2002 and 2003, together with the auditors' report thereon.<SUP>(2)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.4</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Unaudited Consolidated Financial Statements of the Registrant and the notes thereto as at and for the nine months ended September 30, 2004, together with management's discussion and analysis of financial condition and results of operations for the nine months ended September 30, 2004.<SUP>(3)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.5</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Information Circular of the Registrant, dated April 6, 2004, in connection with the Registrant's May 11, 2004 annual meeting of members, other than the sections titled &quot;Corporate Governance&quot;, &quot;Executive Compensation
- - Compensation Committee&quot;, &quot; Executive Compensation - Report on Executive Compensation&quot; and &quot; Executive Compensation
- - Performance Graph&quot;.<SUP>(4)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.6</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated January 8, 2004 relating to the filing of a prospectus.<SUP> (5)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.7</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated February 10, 2004, relating to an agreement to purchase 92.014% of the voting shares of Compania Minera Argentum S.A.<SUP> (6)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.8</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated February 18, 2004, relating to financial and operational results for the fourth quarter and year ended December 31, 2003.<SUP> (3)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.9</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated February 27, 2004, relating to an offering of common shares.<SUP> (7)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.10</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated February 27, 2004, relating to its intention to make an offer to encourage early conversion of its outstanding 5.25% convertible debentures.<SUP> (7)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.11</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated March 30, 2004, relating to the offer to encourage conversion by holders of its 5.25% convertible debentures.<SUP> (8)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.12</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated May 11, 2004, relating to financial and operational results for the first quarter of 2004.<SUP> (9)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.13</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated July 23, 2004, relating the Registrant's offer to purchase the voting shares of Compania Minera Argentum S.A.<SUP> (10)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.14</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated August 23, 2004, relating to the filing of a prospectus supplement.<SUP> (11)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.15</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated August 26, 2004, relating to the purchase of an 88% interest in the Morococha mine.<SUP> (11)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.16</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated November 22, 2004, relating to the sale of its interest in the Dukat mine.<SUP> (12)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.17</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material
Change Report of the Registrant, dated January 20, 2005, relating to the filing
of an unallocated preliminary base shelf prospectus by the Registrant.<SUP>(13)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.18</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Unaudited
Consolidated Financial Statements of the Registrant and the notes, including a
US GAAP reconciliation, for the nine months ended September 30, 2004<SUP>   (14)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">5.1</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Consent of Deloitte &amp; Touche LLP</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">5.2</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Consent of PricewaterhouseCoopers LLP</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">6.1*</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Powers of Attorney&nbsp;</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">7.1*</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Form of Indenture</font></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times">&nbsp; </P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2">_______________</font></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">*Previously
filed.</font> </P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(1)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Annual Report on Form 40-F, filed with the Commission on May 20, 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(2)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on March 18, 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(3)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on December 22, 2004.</font> </P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times">&nbsp; </P>
&nbsp;
<P style="margin:0pt; font-family:Times New Roman" align=center><font size="2">II-2</font></P>
<P style="margin:0pt; line-height:8pt; font-family:Times New Roman; font-size:6pt"><font size="2">&nbsp;<BR></font></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(4)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on April 22, 2004.</font></P>
<P style="page-break-before:always; margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(5)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on January 9. 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(6)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on February 11, 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(7)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on March 1, 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(8)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Registration Statement on Form F-10 (File No. 333-113806) filed with the Commission on March 30, 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(9)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on May 13, 2004.</font></P>
<P style="text-indent: -13.5pt; font-family: CG Times; margin-top: 0pt; margin-bottom: 0; padding-left: 13.5pt"><font size="2"><SUP>(10)</SUP>
Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on July 27, 2004.</font></P>
<P style="text-indent: -13.5pt; font-family: CG Times; margin-top: 0pt; margin-bottom: 0; padding-left: 13.5pt"><font size="2"><SUP>(11)</SUP>
Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on December 13, 2004.</font></P>
<P style="text-indent: -13.5pt; font-family: CG Times; margin-top: 0pt; margin-bottom: 0; padding-left: 13.5pt"><font size="2"><SUP>(12)</SUP>
Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on November 22, 2004.</font></P>
<P style="text-indent: -13.5pt; font-family: CG Times; margin-top: 0pt; margin-bottom: 0; padding-left: 13.5pt"><font size="2"><SUP>(13)</SUP>
Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on
January 20, 2005.</font></P>
<P style="text-indent: -13.5pt; font-family: CG Times; margin-top: 0pt; margin-bottom: 0; padding-left: 13.5pt"><font size="2"><SUP>(14)</SUP>
Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on
January 18, 2005.</font></P>
<font size="2">
<BR>
<BR>
</font>
<P style="margin:0pt; font-family:Times New Roman" align=center><font size="2">II-3<BR></font></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<font size="2">
<BR>
<BR>
<BR>
</font>
<P style="page-break-before:always; margin:0pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=center><B><font size="2">PART III</font></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=center><B><U><font size="2">UNDERTAKING AND CONSENT TO SERVICE OF PROCESS</font></U></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:CG Times" align=justify><B><font size="2">Item 1.</font></B></P>
<P style="margin:0pt; text-indent:36pt; font-family:CG Times" align=justify><B><U><font size="2">Undertaking.</font></U></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; text-indent:36pt; font-family:CG Times" align=justify><font size="2">The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities
registered pursuant to Form F-10 or to transactions in such securities.</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:CG Times" align=justify><B><font size="2">Item 2.</font></B></P>
<P style="margin:0pt; text-indent:36pt; font-family:CG Times" align=justify><B><U><font size="2">Consent to Service of Process.</font></U></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; font-family:CG Times" align=justify><font size="2">(a)</font></P>
<P style="margin-top:0pt; margin-bottom:10pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Prior
to filing this Amendment No.1 to the Registration Statement on Form F-10, the Registrant&nbsp;
filed with the Commission a written irrevocable consent and power of attorney on Form F-X. &nbsp;</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; font-family:CG Times" align=justify><font size="2">(b)</font></P>
<P style="margin-top:0pt; margin-bottom:10pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939, as amended, the Registrant will designate a trustee under the indenture included as exhibit 7.1 hereto at a later date and will file an application for determining such trustee's eligibility, if required, under such section or, if required, will have the Trustee file with the Commission a written irrevocable consent and power of attorney on Form F-X at such time. &nbsp;</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-18pt; font-family:CG Times" align=justify><font size="2">(c)</font></P>
<P style="margin-top:0pt; margin-bottom:10pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Any change to the name or address of the agent for service of the Registrant or the Trustee will be communicated promptly to the Commission by amendment to Form F-X referencing the file number of the relevant registration statement.</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<font size="2">
<BR>
<BR>
</font>
<P style="margin:0pt; font-family:Times New Roman" align=center><font size="2">III-1</font></P>
<P style="margin:0pt; line-height:8pt; font-family:Times New Roman; font-size:6pt"><font size="2">&nbsp;<BR></font></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<font size="2">
<BR>
<BR>
<BR>
</font>
<P style="page-break-before:always; margin:0pt; font-family:CG Times" align=center><B><font size="2">SIGNATURES</font></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; text-indent:36pt; font-family:CG Times" align=justify><font size="2">Pursuant to the requirements of the Securities Act, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing on Form F-10 and has duly caused this
Amendment No.1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Vancouver, British Columbia, Canada on
February&nbsp;9, 2005.</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; text-indent:216pt; font-family:CG Times" align=justify><B><font size="2">PAN AMERICAN SILVER CORP.</font></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; text-indent:216pt; font-family:CG Times" align=justify><font size="2">By:<u>&nbsp;/s/
Geoffrey A. Burns&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font></P>
<P style="margin:0pt; text-indent:432pt; font-family:CG Times" align=justify><U><font size="2"><BR></font></U></P>
<P style="margin:0pt; text-indent:234pt; font-family:CG Times" align=justify><font size="2">Geoffrey A. Burns</font></P>
<P style="margin:0pt; text-indent:234pt; font-family:CG Times" align=justify><font size="2">President and Chief Executive Officer</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<font size="2">
<BR>
<BR>
</font>
<P style="margin:0pt; font-family:Times New Roman" align=center><font size="2">III-2<BR></font></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<p>
<font size="2">
<BR>
</font>
</p>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2">Pursuant to the requirements of the Securities Act, this
Amendment No.1 to the Registration Statement has been signed below by or on behalf of the following
persons in the capacities indicated on
February&nbsp;9, 2005</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; text-indent:36pt; font-family:CG Times" align=justify><B><U><font size="2">Signature</font></U></B></P>
<P style="margin:0pt; text-indent:252pt; font-family:CG Times" align=justify><B><U><font size="2">Title</font></U></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<p style="text-indent: 144pt; font-family: CG Times; margin: 0pt" align="justify">&nbsp;</p>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:CG Times" align=justify>&nbsp;</P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:CG Times" align=justify>&nbsp;</P>
<P style="font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><u><font size="2">&nbsp;/s/
Geoffrey A. Burns &nbsp;&nbsp;&nbsp;&nbsp;</font></u></P>
<P style="font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><font size="2">Geoffrey A. Burns&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
President, Chief Executive Officer and Director</font></P>
<P style="margin:0pt; text-indent:207pt; font-family:CG Times" align=justify><font size="2">(Principal Executive Officer)</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; text-indent:144pt; font-family:CG Times" align=justify><U><font size="2"><BR></font></U></P>
<P style="margin:0pt; text-indent:144pt; font-family:CG Times" align=justify>&nbsp;</P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:CG Times" align=justify>&nbsp;</P>
<P style="font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><u><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;</font></u></P>
<P style="font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><font size="2">A. Robert Doyle&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Chief Financial Officer (Principal Financial Officer and&nbsp;</font></P>
<P style="font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Principal Accounting Officer)</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; text-indent:144pt; font-family:CG Times" align=justify><U><font size="2"><BR></font></U></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:CG Times" align=justify>&nbsp;</P>
<P style="font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><u><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;</font></u></P>
<P style="font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><font size="2">Ross J. Beaty&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Director</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; text-indent:144pt; font-family:CG Times" align=justify><U><font size="2"><BR></font></U></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:CG Times" align=justify>&nbsp;</P>
<P style="font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><u><font size="2">&nbsp;/s/
William A. Fleckenstein&nbsp;&nbsp;</font></u></P>
<P style="font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><font size="2">William A. Fleckenstein&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Director</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="text-indent: 144pt; font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><U><font size="2"><BR></font></U></P>
<P style="font-family: CG Times; margin-top: 0; margin-bottom: 0" align=justify><u><font size="2">/s/
Michael
Larson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></u></P>
<P style="font-family: CG Times; margin-top: 0; margin-bottom: 0" align=justify><font size="2">Michael Larson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Director</font></P>
<P style="font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><font size="2"><BR></font></P>
<P style="font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><font size="2"><BR></font></P>
<P style="text-indent: 144pt; font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><U><font size="2"><BR></font></U></P>
<p style="font-family: CG Times; margin-top: 0; margin-bottom: 0" align="justify"><u><font size="2">&nbsp;/s/
Michael J.J. Maloney&nbsp;</font></u></p>
<P style="font-family: CG Times; margin-top: 0; margin-bottom: 0" align=justify><font size="2">Michael J.J. Maloney&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Director</font></P>
<P style="font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><font size="2"><BR></font></P>
<P style="font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><font size="2"><BR></font></P>
<P style="text-indent: 144pt; font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><U><font size="2"><BR></font></U></P>
<P style="font-family: CG Times; margin-top: 0; margin-bottom: 0" align=justify><u><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;</font></u></P>
<P style="font-family: CG Times; margin-top: 0; margin-bottom: 0" align=justify><font size="2">Paul B. Sweeney&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Director</font></P>
<P style="font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><font size="2"><BR></font></P>
<P style="font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><font size="2"><BR></font></P>
<P style="text-indent: 144pt; font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><U><font size="2"><BR></font></U></P>
<P style="font-family: CG Times; margin-top: 0; margin-bottom: 0" align=justify><u><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;</font></u></P>
<P style="font-family: CG Times; margin-top: 0; margin-bottom: 0" align=justify><font size="2">John M. Willson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Director</font></P>
<P style="font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><font size="2"><BR></font></P>
<P style="font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><font size="2"><BR></font></P>
<P style="text-indent: 144pt; font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0; margin-bottom: 0" align=justify><U><font size="2"><BR></font></U></P>
<P style="font-family: CG Times; margin-top: 0; margin-bottom: 0" align=justify><u><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;</font></u></P>
<P style="font-family: CG Times; margin-top: 0; margin-bottom: 0" align=justify><font size="2">John H. Wright&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Director</font></P>
<p>&nbsp;</p>
<p>&nbsp;</p>
<P style="font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><u><font size="2">*&nbsp;/s/
Geoffrey A. Burns &nbsp;&nbsp;&nbsp;&nbsp;</font></u></P>
<P style="font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><font size="2">Geoffrey A. Burns&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Attorney-in-fact</font></P>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p align="center">III-3</p>
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<P style="page-break-before:always; margin:0pt; font-family:CG Times" align=center><B><font size="2">AUTHORIZED REPRESENTATIVE</font></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; text-indent:36pt; font-family:CG Times" align=justify><font size="2">Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, the Authorized Representative has duly caused this
Amendment No.1 to the Registration Statement to be signed on its behalf by the undersigned, solely in its capacity as the duly authorized representative of Pan American Silver Corp. in the United States, in the City of Reno, State of Nevada on
February&nbsp;9, 2005.</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; text-indent:216pt; font-family:CG Times" align=justify><B><font size="2">PAN AMERICAN MINERALS INC.</font></B></P>
<P style="margin:0pt; text-indent:216pt; font-family:CG Times" align=justify><font size="2">(Authorized Representative)</font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0pt; margin-bottom: 0" align=justify><font size="2"><BR></font></P>
<P style="text-indent: 216pt; font-family: CG Times; margin-top: 0pt; margin-bottom: 0" align=justify><font size="2">By:<U>&nbsp;
/s/ Ross J. Beaty</U></font></P>
<P style="text-indent: 234pt; font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0pt; margin-bottom: 0" align=justify><font size="2">Ross J. Beaty</font></P>
<P style="text-indent: 234pt; font-family: CG Times; margin-left: 0pt; margin-right: 0pt; margin-top: 0pt; margin-bottom: 0" align=justify><font size="2">Director</font></P>
<font size="2">
<BR>
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<P style="margin:0pt; font-family:Times New Roman" align=center><font size="2">III-4</font></P>
<P style="margin:0pt; line-height:8pt; font-family:Times New Roman; font-size:6pt"><font size="2">&nbsp;<BR></font></P>
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<P style="page-break-before:always; margin:0pt; font-family:CG Times" align=center><B><U><font size="2">EXHIBIT INDEX</font></U></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=justify><B><font size="2">Exhibit</font></B></P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-right:-12pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=justify><B><U><font size="2">Number</font> </U></B></P>
<P style="margin-top:0pt; margin-bottom:-10pt; padding-right:-12pt; text-indent:72pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=justify><B><U><font size="2">Description</font></U> </B></P>
<P style="margin:0pt; padding-right:-12pt; text-indent:438pt; line-height:10pt; font-family:CG Times; font-size:8pt" align=right><B><U><font size="2">Page No.</font></U></B></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2"><BR></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.1</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Annual Information Form of the Registrant, dated May 19, 2004.<SUP> (1)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.2</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Management's Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2003.<SUP> (1)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.3</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Audited Consolidated Financial Statements of the Registrant and the notes thereon as at and for the years ended December 31, 2002 and 2003, together with the auditors' report thereon.<SUP>(2)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.4</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Unaudited Consolidated Financial Statements of the Registrant and the notes thereto as at and for the nine months ended September 30, 2004, together with management's discussion and analysis of financial condition and results of operations for the nine months ended September 30, 2004.<SUP>(3)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.5</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Information Circular of the Registrant, dated April 6, 2004, in connection with the Registrant's May 11, 2004 annual meeting of members, other than the sections titled &quot;Corporate Governance&quot;, &quot;Executive Compensation
- - Compensation Committee&quot;, &quot; Executive Compensation - Report on Executive Compensation&quot; and &quot; Executive Compensation
- - Performance Graph&quot;.<SUP>(4)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.6</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated January 8, 2004 relating to the filing of a prospectus.<SUP> (5)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.7</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated February 10, 2004, relating to an agreement to purchase 92.014% of the voting shares of Compania Minera Argentum S.A.<SUP> (6)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.8</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated February 18, 2004, relating to financial and operational results for the fourth quarter and year ended December 31, 2003.<SUP> (3)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.9</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated February 27, 2004, relating to an offering of common shares.<SUP> (7)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.10</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated February 27, 2004, relating to its intention to make an offer to encourage early conversion of its outstanding 5.25% convertible debentures.<SUP> (7)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.11</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated March 30, 2004, relating to the offer to encourage conversion by holders of its 5.25% convertible debentures.<SUP> (8)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.12</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated May 11, 2004, relating to financial and operational results for the first quarter of 2004.<SUP> (9)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.13</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated July 23, 2004, relating the Registrant's offer to purchase the voting shares of Compania Minera Argentum S.A.<SUP>(10)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.14</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated August 23, 2004, relating to the filing of a prospectus supplement.<SUP> (11)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.15</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated August 26, 2004, relating to the purchase of an 88% interest in the Morococha mine.<SUP> (11)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.16</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Material Change Report of the Registrant, dated November 22, 2004, relating to the sale of its interest in the Dukat mine.<SUP> (12)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.17</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Material
Change Report of the Registrant, dated January 20, 2005, relating to the filing
of an unallocated preliminary base shelf prospectus by the Registrant.<SUP>(13)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">4.18</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Unaudited
Consolidated Financial Statements of the Registrant and the notes, including a
US GAAP reconciliation, for the nine months ended September 30, 2004<SUP>   (14)</SUP></font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">5.1</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Consent of Deloitte &amp; Touche LLP</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; padding-right:48pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">5.2</font></P>
<P style="margin:0pt; padding-left:72pt; padding-right:48pt; font-family:CG Times" align=justify><font size="2">Consent of PricewaterhouseCoopers LLP</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">6.1*</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Powers of Attorney&nbsp;</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:72pt; text-indent:-58.5pt; font-family:CG Times" align=justify><font size="2">7.1*</font></P>
<P style="margin:0pt; padding-left:72pt; font-family:CG Times" align=justify><font size="2">Form of Indenture</font></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times">&nbsp; </P>
<P style="margin:0pt; font-family:CG Times" align=justify><font size="2">_______________</font></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">*Previously
filed.</font> </P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(1)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Annual Report on Form 40-F, filed with the Commission on May 20, 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(2)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on March 18, 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(3)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on December 22, 2004.</font> </P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times">&nbsp; </P>
<font size="2">
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<P style="page-break-before:always; margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(4)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on April 22, 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(5)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on January 9. 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(6)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on February 11, 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(7)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on March 1, 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(8)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Registration Statement on Form F-10 (File No. 333-113806) filed with the Commission on March 30, 2004.</font></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><SUP><font size="2">(9)</font></SUP></P>
<P style="margin:0pt; padding-left:13.5pt; font-family:CG Times"><font size="2">Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on May 13, 2004.</font></P>
<P style="text-indent: -13.5pt; font-family: CG Times; margin-top: 0pt; margin-bottom: 0; padding-left: 13.5pt"><font size="2"><SUP>(10)
</SUP>Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on July 27, 2004.</font></P>
<P style="text-indent: -13.5pt; font-family: CG Times; margin-top: 0pt; margin-bottom: 0; padding-left: 13.5pt"><font size="2"><SUP>(11)</SUP>
Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on December 13, 2004.</font></P>
<P style="text-indent: -13.5pt; font-family: CG Times; margin-top: 0pt; margin-bottom: 0; padding-left: 13.5pt"><font size="2"><SUP>(12)</SUP>
Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on November 22, 2004.</font></P>
<P style="text-indent: -13.5pt; font-family: CG Times; margin-top: 0pt; margin-bottom: 0; padding-left: 13.5pt"><font size="2"><SUP>(13)</SUP>
Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on
January 20, 2005.</font></P>
<P style="text-indent: -13.5pt; font-family: CG Times; margin-top: 0pt; margin-bottom: 0; padding-left: 13.5pt"><font size="2"><SUP>(14)</SUP>
Incorporated by reference to the Registrant's Report on Form 6-K, furnished to the Commission on
January 18, 2005.</font></P>
<P style="margin:0pt; padding-left:13.5pt; text-indent:-13.5pt; font-family:CG Times"><font size="2"><BR></font></P>
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<P style="page-break-before:always; margin:0pt; font-family:CG Times" align=right><B><font size="2">Exhibit 5.1</font></B></P>
<font size="2">
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<a name="page_1"></a>
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<p><img border="0" src="ex51.gif" width="612" height="792"></p>
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<P style="page-break-before:always; margin:0pt; font-family:CG Times" align=right><B><font size="2">Exhibit 5.2</font></B></P>
<font size="2">
<BR>
</font>
<p>&nbsp;</p>
<a name="page_1"></a>
<p>&nbsp;</p>
<a name="page_2"></a>
<p align="center"><img border="0" src="ex52.gif" width="612" height="792"></p>
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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
