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<SEC-DOCUMENT>0001137171-05-000727.txt : 20050512
<SEC-HEADER>0001137171-05-000727.hdr.sgml : 20050512
<ACCEPTANCE-DATETIME>20050512165220
ACCESSION NUMBER:		0001137171-05-000727
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20050511
FILED AS OF DATE:		20050512
DATE AS OF CHANGE:		20050512

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DRC RESOURCES CORP                                      /FI
		CENTRAL INDEX KEY:			0000800166
		STANDARD INDUSTRIAL CLASSIFICATION:	METAL MINING [1000]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-31722
		FILM NUMBER:		05825113

	BUSINESS ADDRESS:	
		STREET 1:		#601 - 595 HOWE STREET
		CITY:			VANCOUVER BC CANADA
		STATE:			A1
		ZIP:			V6C  2T5
		BUSINESS PHONE:		(604) 687-1629
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>drc6k0511.htm
<TEXT>
<!DOCTYPE HTML PUBLIC "">


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   <TITLE> Filed By Filing Services Canada Inc.&nbsp; 403-717-3898</TITLE>
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<P align="center">
&nbsp;

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&nbsp;
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<B><FONT face="serif">U.S. SECURITIES AND EXCHANGE COMMISSION</FONT></B><BR>
<B><FONT size=2 face="serif">Washington, D.C. 20549</FONT></B><BR>
</TD></TR></TABLE>
<P align="center">
<TABLE><TR><TD nowrap>
<B><FONT size=4 face="serif">FORM 6-K</FONT></B><BR>
</TD></TR></TABLE>
<div align="center">
  <center>
<TABLE><TR><TD nowrap>
<B><FONT face="serif">REPORT OF FOREIGN PRIVATE ISSUER</FONT></B><BR>
<B><FONT face="serif">PURSUANT TO RULE 13a-16 or 15d-16 OF</FONT></B><BR>
<B><FONT face="serif">THE SECURITIES EXCHANGE ACT OF 1934</FONT></B><BR>
</TD></TR></TABLE>
  </center>
</div>
<P align="center">
<TABLE><TR><TD nowrap>
<FONT face="serif">For the month of May, 2005</FONT><BR>
<FONT face="serif">Commission File Number 1-31722</FONT><BR>
</TD></TR></TABLE>
<P align="center">
<TABLE><TR><TD nowrap>
<B><FONT size=4 face="serif">DRC RESOURCES CORPORATION</FONT></B><BR>
<I><FONT size=2 face="serif">(Exact name of registrant as specified in its charter)</FONT></I><BR>
<B><FONT size=2 face="serif">595 Howe Street, Suite #601, Vancouver, British Columbia, Canada V6C 2T5</FONT></B><BR>
<B><FONT size=2 face="serif">(604) 687-1629</FONT></B><BR>
<I><FONT size=2 face="serif">(Address of principal executive offices)</FONT></I><BR>
</TD></TR></TABLE>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.</FONT></P>
<P>
<FONT face="serif">Form 20-F </FONT><U><FONT face="serif">__X__ </FONT></U><FONT face="serif">Form 40-F </FONT><U><FONT face="serif">___</FONT></U></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(1): ___</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ___</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.</FONT></P>
<P>
<FONT face="serif">Yes </FONT><U><FONT face="serif">_X__ </FONT></U><FONT face="serif">No __ _</FONT></P>
<P>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): </FONT><U><FONT face="serif">82- 713___</FONT></U><FONT face="serif">.</FONT></P>

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<P align="right">
<B><FONT face="serif">EXHIBIT INDEX</FONT></B></P>
<P>
<FONT face="serif">The following is a list of Exhibits included as part of this Report on Form 6-K.</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
	<TD nowrap valign=top>
<FONT face="serif">1</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<FONT face="serif">MD&amp;A 1</FONT><SUP><FONT face="serif">st </FONT></SUP><FONT face="serif">Quarter 2005, dated May 11, 2005</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD nowrap valign=top>
<FONT face="serif">2</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<FONT face="serif">1</FONT><SUP><FONT face="serif">st </FONT></SUP><FONT face="serif">Quarter 2005 Audited Financial Statements</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>

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<P>
<B><FONT face="serif">SIGNATURES</FONT></B></P>
<P>
<FONT face="serif">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</FONT></P>
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&nbsp;
	</TD>
	<TD width=29% nowrap align=left>
&nbsp;
	</TD>
	<TD width=63% nowrap colspan=2 align=left>
<B><FONT face="serif">DRC RESOURCES CORPORATION</FONT></B>&nbsp;
	</TD>
</TR>
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	<TD width=6% nowrap align=left>
&nbsp;
	</TD>
	<TD width=29% nowrap align=left>
&nbsp;
	</TD>
	<TD width=63% nowrap colspan=2 align=left>
<FONT face="serif">(Registrant)</FONT>&nbsp;
	</TD>
</TR>
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	<TD colspan=4>
&nbsp;
	</TD>
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	<TD width=6% nowrap align=left>
<FONT face="serif">Date:</FONT>&nbsp;
	</TD>
	<TD width=29% nowrap align=left>
<FONT face="serif">May 12, 2005</FONT>&nbsp;
	</TD>
	<TD width=19% nowrap align=left>
<B><FONT face="serif">By:</FONT></B>&nbsp;
	</TD>
	<TD width=44% nowrap align=left>
<B><I><FONT face="serif">&#147;Christopher J. Bradbrook&#148;</FONT></I></B>&nbsp;
	</TD>
</TR>
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	<TD colspan=3>
	</TD>
	<TD>
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	</TD>
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	<TD width=6% nowrap align=left>
&nbsp;
	</TD>
	<TD width=29% nowrap align=left>
&nbsp;
	</TD>
	<TD width=19% nowrap align=left>
&nbsp;
	</TD>
	<TD width=44% nowrap align=left>
<FONT face="serif">Christopher J. Bradbrook,</FONT>&nbsp;
	</TD>
</TR>
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&nbsp;
	</TD>
	<TD width=29% nowrap align=left>
&nbsp;
	</TD>
	<TD width=19% nowrap align=left>
&nbsp;
	</TD>
	<TD width=44% nowrap align=left>
<FONT face="serif">President and Chief Executive Officer</FONT>&nbsp;
	</TD>
</TR>
</TABLE><BR>

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&nbsp;

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&nbsp;

<P align="center">
&nbsp;

<P align="center">
&nbsp;
<TABLE><TR><TD nowrap>
<B><I><FONT size=6 face="sans-serif">DRC RESOURCES CORPORATION</FONT></I></B><BR>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
</TD></TR></TABLE>
<P align="center">
<TABLE><TR><TD nowrap>
<B><I><FONT size=6 face="sans-serif">2005</FONT></I></B>
<p><BR>
<B><I><FONT size=6 face="sans-serif">FIRST QUARTER REPORT</FONT></I></B><BR>
</p>
</TD></TR></TABLE>
<p>&nbsp;</p>
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<B><I><FONT face="sans-serif">Content</FONT></I></B>&nbsp;</p>
<p align="left" style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
	</TD>
</TR>
<TR valign="bottom">
	<TD width=99% nowrap align=left>
<FONT face="serif">&middot; </FONT><B><I><FONT face="sans-serif">Letter to Shareholders</FONT></I></B>&nbsp;
<p>&nbsp;</p>
	</TD>
</TR>
<TR valign="bottom">
	<TD width=99% nowrap align=left>
<FONT face="serif">&middot; </FONT><B><I><FONT face="sans-serif">Management Discussion and Analysis</FONT></I></B>&nbsp;
<p>&nbsp;</p>
	</TD>
</TR>
<TR valign="bottom">
	<TD width=99% nowrap align=left>
<FONT face="serif">&middot; </FONT><B><I><FONT face="sans-serif">Financial Statements (Unaudited) March 31, 2005</FONT></I></B>&nbsp;
	</TD>
</TR>
</TABLE><BR>
<p>&nbsp;</p>
<p>&nbsp;</p>
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face="sans-serif">_</FONT><FONT face="sans-serif">_ </FONT><FONT color="#c0c0c0" face="sans-serif">_</FONT><FONT face="sans-serif">_ </FONT><FONT color="#c0c0c0"
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face="sans-serif">_</FONT><FONT face="sans-serif">_ </FONT><FONT color="#c0c0c0" face="sans-serif">_
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face="sans-serif">_</FONT><FONT face="sans-serif">_ </FONT><FONT color="#c0c0c0" face="sans-serif">_</FONT><FONT face="sans-serif">_ </FONT><FONT color="#c0c0c0"
face="sans-serif">_</FONT><FONT face="sans-serif">_ </FONT><FONT color="#c0c0c0" face="sans-serif">_</FONT><FONT face="sans-serif">_ </FONT><FONT color="#c0c0c0"
face="sans-serif">_</FONT><FONT face="sans-serif">_ </FONT><FONT color="#c0c0c0" face="sans-serif">_</FONT><FONT face="sans-serif">_ </FONT><FONT color="#c0c0c0"
face="sans-serif">_</FONT><FONT face="sans-serif">_ </FONT><FONT color="#c0c0c0" face="sans-serif">_</FONT></I></B><BR>
<B><I><FONT face="sans-serif">#601 - 595 Howe Street, Vancouver, B. C. V6C 2T5</FONT></I></B><BR>
<B><I><FONT face="sans-serif">Telephone: (604) 687-1629 ~ Fax: (604) 687-2845</FONT></I></B><BR>
<B><I><FONT face="sans-serif">E-mail address: drcresources@uniserve.com</FONT></I></B><BR>
<B><I><FONT face="sans-serif">Website: drcresources.com</FONT></I></B><BR>
<B><I><FONT face="sans-serif">TSX Symbol - DRC - AMEX Symbol - DRJ</FONT></I></B><BR>
</TD></TR></TABLE>

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<TABLE><TR><TD nowrap>
<B><FONT size=4 face="serif">Letter to Shareholders</FONT></B><BR>
</TD></TR></TABLE>
<P>
<I><FONT size=2 face="serif">(All dollar amounts in Canadian dollars unless otherwise indicated)</FONT></I></P>
<P>
<FONT face="serif">It is a pleasure to once again write to my fellow shareholders and potential new investors as I provide an update on the activities of the Company during the 1st quarter, 2005. The quarter was an eventful one, with the highest
level of activity the Company has yet seen at its Afton copper-gold Project, located 10 kilometres west of Kamloops, British Columbia, Canada. There are now approximately 30 contractors and employees on site. Things are really moving now!</FONT></P>
<P>
<FONT face="serif">The progress on the exploration decline continued to be excellent. Subsequent to quarter end we were able to announce (April 11, 2005) that the decline had been advanced more than 650 metres.  This represented more than 30% of the
planned total underground decline work, and more than 50% of the length of the main portion of the exploration decline. The ground conditions continued to be good, better than anticipated and one of the main reasons why we were able to advance the
decline at such a rapid rate. The exploration decline commenced in December, 2004 and is a major component of the feasibility study that the Company is undertaken.  The decline provides the access required to complete systematic infill drilling
which is required to better define the grade and geometry of the mineralization and which will also provide the information necessary to ultimately convert the resources to reserves.  The decline will also provide direct access to the mineralization
in order to analyze potential mining methods and the metallurgy. The information obtained from this work will be used as the basis for the technical studies required to complete the feasibility study. This study will determine the potential, nature
and economic parameters for developing an underground mine to extract this mineralization.</FONT></P>
<P>
<FONT face="serif">The 20,000 metre underground diamond drill program commenced during the quarter, with one diamond drill rig. During the quarter a second was brought to the site. With two diamond drill rigs operating underground we are
accelerating the program of infill drilling in order to gain the information required to complete the feasibility study as quickly as possible. We anticipate releasing results of this drilling on a systematic basis starting in the 2nd quarter, 2005.
We hope that the results will introduce the potential of the Afton Project to many new investors. Total forecast costs and time required for the feasibility study are &#36;18 million over 18 months. The project is on budget and ahead of
schedule.</FONT></P>
<P>
<FONT face="serif">We continue to systematically add the skills required at management, project and board levels to accomplish the transition of DRC Resources from an exploration company to an operating mining company. During the quarter we were
very pleased to add underground bulk mining and legal expertise to the board of directors with the additions of Cliff Davis and Greg Laing. Cliff brings more than 40 years underground mining expertise to the Company, and we believe that his
willingness to join our board is a ringing endorsement of the potential of the project.  Greg adds extensive legal expertise in securities and corporate law. His skills will be invaluable to us as the Company grows and evolves.</FONT></P>
<p align="center">
<FONT size=2 face="serif">2</FONT><BR>
</p>

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<P>
<FONT face="serif">We continue to be excited about the future prospects of the DRC Resources Corp. and our Afton copper-gold Project.  While preliminary studies indicate the project is potentially economic at conservative metal prices, we
nonetheless were pleased to see the strength of the metal prices throughout the quarter.</FONT></P>
<P>
<FONT face="serif">In closing I would like to thank all our shareholders for their continued support and I look forward to welcoming new shareholders in the months ahead.  I would also like to acknowledge the outstanding efforts of our growing group
of DRC employees who have been the driving force behind the good news that I am able to report.</FONT></P>
<IMG src="q1x2x1.jpg" border=0 width="192" height="42">
<BR>
<TABLE><TR><TD nowrap>
<FONT face="serif">Chris Bradbrook</FONT><BR>
<FONT face="serif">President and CEO</FONT><BR>
<FONT face="serif">DRC Resources Corporation</FONT><BR>
<FONT face="serif">May 11, 2005</FONT><BR>
</TD></TR></TABLE>
<P align="center">
<FONT size=2 face="serif">3</FONT></P>

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<br>
<br>
<p style="margin:0pt; text-indent:36pt; line-height:18pt; font-family:Times New Roman; font-size:16pt" align="center"><b><i>MANAGEMENT'S
DISCUSSION AND ANALYSIS</i></b></p>
<p style="margin:0pt; text-indent:36pt; font-family:Times New Roman; font-size:11pt" align="center"><br>
</p>
<p style="margin:0pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATION AT MARCH 31, 2005</b></p>
<p style="margin:0pt; text-indent:36pt; font-family:Times New Roman; font-size:11pt" align="center"><br>
</p>
<p style="margin:0pt; text-indent:36pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>DATED
MAY 11, 2005</b></p>
<p style="margin:0pt; text-indent:36pt; font-family:Times New Roman; font-size:11pt" align="center"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Management's
Discussion and Analysis ("MD&amp;A") of financial condition and results of
operation of DRC Resources Corporation ("the Company" or "DRC") for the
quarter ended March 31, 2005 should be read in conjunction with the Company's
financial statements and corresponding notes for the period ending March 31,
2005. &nbsp;The focus of this discussion is on material changes and information
relating to the current period and may exclude certain information disclosed in
the previous period's discussion.</p>
<p style="margin:0pt; text-indent:36pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="text-indent: 0pt; line-height: 13pt; font-family: Times New Roman; font-size: 11pt; margin: 0pt" align="justify">DRC
prepares and files its financial statements and MD&amp;A in Canadian ("CDN")
dollars and in accordance with Canadian generally accepted accounting principles
("GAAP"). A note to the financial statement reconciling the figures to
United States generally accepted accounting principles ("USGAAP") is
included in the YE (Dec 31<sup>st</sup>) Audited Statement only. &nbsp;</p>
<p style="margin:0pt; text-indent:36pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="text-indent: 0pt; line-height: 13pt; font-family: Times New Roman; font-size: 11pt; margin: 0pt" align="justify"><b>Overview</b></p>
<p style="text-indent: 0pt; line-height: 13pt; font-family: Times New Roman; font-size: 11pt; margin: 0pt" align="justify">DRC
Resources Corporation with head office located in Vancouver, British Columbia,
was incorporated in 1980. &nbsp;The Company is a development stage resource
company engaged in the location, acquisition, evaluation, exploration and
development of mineral interests. &nbsp;The Company's presently issued
13,941,766 shares are listed on the Toronto Stock Exchange (TSX symbol DRC) and
the American Stock Exchange (AMEX symbol DRJ). &nbsp;The main project of the
Company is the Afton Copper-Gold Project, located 10 kilometres west of Kamloops,
British Columbia. &nbsp;The Company also owns a mineral interest in Ontario
which is being maintained with no further work program presently planned.</p>
<p style="text-indent: 0pt; font-family: Times New Roman; font-size: 11pt; margin: 0pt" align="justify"><br>
</p>
<p style="text-indent: 0pt; line-height: 13pt; font-family: Times New Roman; font-size: 11pt; margin: 0pt" align="justify">The
Company's business is managed by directors and executives with professional
backgrounds and many years experience in the mining industry, augmented by
independent geological and mining professionals (qualified persons) retained to
advise the Company on its main project.</p>
<p style="margin:0pt; text-indent:36pt; 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
evaluating the Company's financial condition and performance, management looks
at DRC's relative position in the context of reporting mineral exploration
companies in Canada. &nbsp;In that context, management sees the Company as
emerging from junior to advanced exploration stage, in which its decision making
capabilities will undergo more rigorous testing as DRC moves toward the
development and production stages on its advanced Afton Copper-Gold Project.
&nbsp;How effectively the Company meets the new issues and challenges will
depend upon recently made and planned staff additions and the management of
priorities in conduct of the Afton Copper-Gold Project. &nbsp;Management
perceives the advancement of DRC's status as due to selection of highly
qualified technical advisors, on-site attention of management to conduct
exploration work, understanding of what constitutes a successful exploration
attempt and careful cash management. &nbsp;All of those qualities must continue,
and be improved upon, to meet the challenges of higher cost activities (both
underground and surface exploration). &nbsp;While a generally improved economic
climate in the mining industry has greatly assisted in the money raising area,
the main risks to achievement of objectives will be increased competition for
both expert personnel and contract labour which is expected to result in a
general increase in costs and, possibly, delay in getting jobs completed.
&nbsp;The federal and provincial election and political uncertainty could effect
the mining sector which would indirectly effect the Company. Hence, staffing and
cost management are expected to be the main challenges to company stewardship in
the near term.</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"><b>Progress
and Outlook</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">During
the first quarter the Company focused on the exploration of the Afton
Copper-Gold Project ("Afton Project"), located near Kamloops, British
Columbia. &nbsp;As a mineral exploration company, the future liquidity of DRC
will be affected principally by the level of exploration expenditures and by its
ability to raise capital through the equity markets. &nbsp;The Company's cash
position is more than sufficient to fund planned exploration</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">&nbsp;</p>
<p align="center"><font size="2" face="serif">4</font></p>
<hr noshade align="center" width="100%" size="2">
<p>&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">expenditures
at Afton and meet ongoing obligations as they become due. &nbsp;Subsequent to
the end of the 1<sup>st</sup> Quarter the additional financing required to
conduct further exploration on the Afton and Ajax Properties, also located near
Kamloops, British Columbia was raised by way of a CDN$3 million financing
completed on April 21, 2005. &nbsp;Additional financing may still be required to
expand the Company's inventory of mineral resource properties and conduct
future exploration on these properties. &nbsp;Several financial institutions
have approached the Company with proposals to further strengthen the Company's
working capital. &nbsp;Management is investigating the ways in which it may
advantageously maximize these financing proposals.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:16pt; font-family:Times New Roman; font-size:14pt" align="justify"><b><i>AFTON
COPPER-GOLD PROJECT</i></b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company is moving forward with its plan to advance the Afton Project through the
feasibility stage by carrying out an underground exploration and development
program. In the first quarter 2005 progress continued toward the completion of
the 2000 metre Afton Exploration Decline for which the services of Procon Mining
and Tunnelling Ltd. was engaged in 2004. &nbsp;Todate approximately 800 meters
have been completed. &nbsp;An Underground Diamond Drill contract was awarded to
Boisvenue Drilling Ltd. in December, 2004. &nbsp;The underground diamond
drilling commenced in late January, 2005, with two hydraulic diamond drills in
operation from drill station established in the Exploration Decline. &nbsp;To
date 10 &nbsp;diamond drill holes have been completed totaling 4,327 meters feet
&nbsp;and assay results are pending. &nbsp;<b><i>&nbsp;</i></b>&nbsp;&nbsp;This
is an essential step in advancing the project through completion of a bankable
feasibility study by providing underground working access to conduct additional
exploration work and confirmation sampling and probing of the known deposit in
cross-cutting the Afton Mineral Zone. &nbsp;Definition diamond drilling, bulk
sampling and technical studies will be carried on concurrently with development
of the decline to complete the Afton Feasibility Study. &nbsp;The underground
definition diamond drilling is designed to provide the information necessary to
upgrade resources to the reserve category. &nbsp;The bulk sampling program taken
in cross-cut of the mineral zone will provide grade continuity data required for
final mine design and metallurgical information for refinement of mill and
process design as well as reserve estimates. &nbsp;The Feasibility Study will
include commissioning an independent mine engineering consulting group to
finalize a plan for placing the Afton Copper-Gold Project into production.
&nbsp;The decline excavation comprises the major part of an $18 Million final
feasibility program that includes extensive definition drilling. &nbsp;&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Subsequent
to the end of the first quarter, a surface exploration program commenced to
outline and define additional mineralization on the Afton property.
&nbsp;&nbsp;In April, 2005, Atlas Drilling Ltd., the company which previously
completed over 100 diamond drill holes on the Afton and Ajax properties from
2000-2004, &nbsp;was engaged to conduct further drilling on the Afton Property.
&nbsp;To date they have completed 548 meters feet of drilling. &nbsp;</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">&nbsp;The
2005 surface exploration program is designed to take a fresh look at the entire
Afton and Ajax Properties. The program will include a new geophysical airborne
study, scheduled for the summer of 2005 which will include high resolution
magnetometer, E.M. and radio metrics as well as a density survey. &nbsp;&nbsp;A
compilation of all available data will ensue with the integration of the
prospective targets from the geophysical survey plotted for a diamond drill
program proposed for later in the year. Limited geophysical work has been
conducted on the Afton or Ajax Properties since the late 1970's and early 1980's.
&nbsp;Geophysical studies have resulted in success in other areas in British
Columbia. &nbsp;</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
early 2004 Behre Dolbear &amp; Company Ltd. of Vancouver, British Columbia
finalized an advanced Scoping Study that included an economic evaluation of the
Afton Project, Kamloops, BC in compliance with National Policy 43-101. &nbsp;The
study addressed the mineral resource, a number of possible mining methods,
mineral processing, and permitting for the Afton Project. &nbsp;The study
provided an estimate of capital and operating costs related to the potential
development of an underground bulk tonnage mining operation at Afton. &nbsp;This
study was filed on SEDAR. &nbsp;The relevant project statistics are outlined
below:</p>
<br>
<br>
<p align="center"><font size="2" face="serif">5</font></p>
<hr noshade align="center" width="100%" size="2">
<br>
<br>
<table style="page-break-before:always; font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td style="border:0.5pt solid #000000" valign="top" width="590.4" colspan="7">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>Afton
      Project Statistics</b></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Mineral
      Resource</p>
    </td>
    <td valign="top" width="167.467">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Measured
      and Indicated<sup>1</sup></p>
    </td>
    <td valign="top" width="143.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">68,700,000
      tonnes</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="88">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.68%
      Cu <sub>Eq</sub></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="167.467">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Inferred
      Resource</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="143.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">7,450,000
      tonnes</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="88">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.61%
      Cu <sub>Eq</sub></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Mineral
      Resource Within the</p>
    </td>
    <td valign="top" width="167.467">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Measured
      and Indicated</p>
    </td>
    <td valign="top" width="143.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">46,983,000
      tonnes</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="88">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.72%
      Cu <sub>Eq</sub></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Proposed
      Mine Plan</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="167.467">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Inferred
      Resource</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="143.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">4,543,000
      tonnes</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="88">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.72%
      Cu <sub>Eq</sub></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Total
      Material to be Mined</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="167.467">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">All
      Categories<sup>2</sup></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="143.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">51,526,000
      tonnes</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="88">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1.72%
      Cu <sub>Eq</sub></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Metallurgical
      Recovery</p>
    </td>
    <td valign="top" width="167.467">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Copper</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="231.6" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">90%</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">&nbsp;</td>
    <td valign="top" width="167.467">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Gold</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="231.6" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">90%</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">&nbsp;</td>
    <td valign="top" width="167.467">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Silver</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="231.6" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">75%</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="167.467">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Palladium</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="231.6" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">74%</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Mining
      Method</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="399.067" colspan="4">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Underground
      Panel (Block) Caving</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="382.933" colspan="5">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Production
      Rate (Mine &amp; Mill)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">9,000
      tonnes per day</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Mine
      Life</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="191.6" colspan="2">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">17.8
      years</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Average
      Annual Production</p>
    </td>
    <td valign="top" width="191.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Copper</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">29,350
      &nbsp;tonnes</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">&nbsp;</td>
    <td valign="top" width="191.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Gold</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">71,000
      ounces</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">&nbsp;</td>
    <td valign="top" width="191.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Silver</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">178,100
      ounces</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="191.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Palladium</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">7,700
      ounces</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Initial
      Capital Cost<sup>3</sup></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="191.6" colspan="2">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">$140,034,000</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="382.933" colspan="5">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Working
      Capital and Initial Inventory</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">$9,700,000</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">On-going
      Capital</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="191.6" colspan="2">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">$191,351,000</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Unit
      Operating Cost</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="191.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">(at
      full production)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">$9.77/tonne
      milled</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Net
      Present Value</p>
    </td>
    <td valign="top" width="191.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">0%</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">$418,206,437</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">&nbsp;</td>
    <td valign="top" width="191.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">5%</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">$203,578,770</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">&nbsp;</td>
    <td valign="top" width="191.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">7.5%</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">$140,373,936</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="191.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">10%</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">$94,306,153</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Internal
      Rate of Return</p>
    </td>
    <td valign="top" width="191.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">(pre-tax)</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">26.68%</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="191.6" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">(after
      tax)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">19.94%</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="191.333" colspan="3">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Payback
      Period</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="191.6" colspan="2">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="207.467" colspan="2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">3.7
      years</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="64.8">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Notes:</p>
    </td>
    <td valign="top" width="64.2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">1</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="461.4" colspan="5">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Afton
      Main Zone Only (@ 0.7% Cu <sub>Eq</sub> cut-off grade)</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="64.8">&nbsp;</td>
    <td valign="top" width="64.2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">2</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="461.4" colspan="5">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">See
      Note on Page 17, Section 3.0</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="64.8">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="64.2">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">3</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="461.4" colspan="5">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Currency
      used throughout is $Canadian</p>
    </td>
  </tr>
</table>
<p style="margin:0pt; text-indent:36pt; 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">A
Mineral Resource Study completed by Behre Dolbear established the Afton Project
as a large high-grade copper-gold mineral deposit with potential of developing
additional tonnage through further exploration. &nbsp;The study estimates
significant tonnage and grade for the Afton Project using cutoff grades ranging
from 0.1% to 4.0% Copper Equivalent. &nbsp;This Mineral Resource Study was
incorporated in the Afton Advanced Scoping Study.</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="center"><b><u>Afton
Main Zone</u></b></p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="center"><br>
</p>
<p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Measured,
indicated and inferred resources were calculated using a geological block model
with 10 x 10 x 10 metre blocks and ordinary kriging. &nbsp;A resource summary is
presented below for the Afton Main Zone at a cut off grade of 0.7% Cu <sub>Eq</sub>.</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">Mineral
Resource Estimate</p>
<table style="font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td style="border:0.5pt solid #000000" valign="top" width="77.533" rowspan="2">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;<b>Resource
      Category</b></p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="117.8" rowspan="2">
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>Tonnes&gt;Cutoff</b></p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>(tonnes)</b></p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="160.4" colspan="2">
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>Grade&gt;Cutoff</b></p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="184.8" colspan="2">
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>Contained
      Product</b></p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>&nbsp;In-situ</b></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="74">
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>CuEQ%</b></p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="86.4">
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>AuEQ(g/t)</b></p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="106.4">
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>Copper
      (lb)</b></p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78.4">
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>Gold
      (oz)</b></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="77.533">
      <p style="margin:0pt; font-family:Times New Roman">Measured</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="117.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right">9,540,000</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="74">
      <p style="margin:0pt; font-family:Times New Roman" align="right">1.956</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="86.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">3.039</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="106.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">271,000,000</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">290,000</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="77.533">
      <p style="margin:0pt; font-family:Times New Roman">Indicated</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="117.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right">59,160,000</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="74">
      <p style="margin:0pt; font-family:Times New Roman" align="right">1.635</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="86.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">2.541</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="106.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">1,368,000,000</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">1,577,000</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="77.533">
      <p style="margin:0pt; font-family:Times New Roman">Measured and Indicated</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="117.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right">68,700,000</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="74">
      <p style="margin:0pt; font-family:Times New Roman" align="right">1.679</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="86.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">2.609</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="106.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">1,639,000,000</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">1,866,000</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="77.533">
      <p style="margin:0pt; font-family:Times New Roman">Inferred</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="117.8">
      <p style="margin:0pt; font-family:Times New Roman" align="right">7,450,000</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="74">
      <p style="margin:0pt; font-family:Times New Roman" align="right">1.480</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="86.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">2.300</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="106.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">151,790,000</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78.4">
      <p style="margin:0pt; font-family:Times New Roman" align="right">188,000</p>
    </td>
  </tr>
</table>
<p align="center"><font size="2" face="serif">6</font></p>
<hr noshade align="center" width="100%" size="2">
<p>&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
copper and gold equivalents are based on the following metal price assumptions:</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<table style="font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td style="border-left:0.5pt solid #000000; border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">Metal</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">Price
      (US$)</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">Recovery</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">Copper</p>
    </td>
    <td valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">$0.85/lb.</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">90%</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">Gold</p>
    </td>
    <td valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">$375/oz.</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">90%</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000" valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">Silver</p>
    </td>
    <td valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">$5.25/oz.</p>
    </td>
    <td style="border-right:0.5pt solid #000000" valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">75%</p>
    </td>
  </tr>
  <tr>
    <td style="border-left: 0.5pt solid #000000; border-bottom: 1 solid #000000" valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">Palladium</p>
    </td>
    <td valign="top" width="182" style="border-bottom: 1 solid #000000">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">$200/oz.</p>
    </td>
    <td style="border-right: 0.5pt solid #000000; border-bottom: 1 solid #000000" valign="top" width="182">
      <p style="margin:0pt; line-height:18.5pt; font-family:Times New Roman; font-size:11pt" align="center">74%</p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="center">&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Afton mineral resource estimates, based on 2000-2003 diamond drill results from
90 drill holes totaling 42,450 metres, were calculated by Mr. Gary Giroux, P.
Eng., and incorporated into the Advanced Scoping Study under the direction of
Mr. James A. Currie, P. Eng. &nbsp;Both Mr. Giroux and Mr. Currie are
independent Qualified Persons as defined under the National Instrument 43-101.
&nbsp;All drill hole samples were prepared under the supervision of DRC
personnel and shipped to Eco Tech Laboratories Ltd., a British Columbia
Certified Assayer, for analysis. &nbsp;DRC employs a comprehensive QA/QC program
including the use of standards and internal and external check samples. &nbsp;Behre
Dolbear has reviewed the QA/QC program and is of the opinion that it meets or
exceeds industry standards. &nbsp;Industry-accepted methods were used for grade
estimation using ordinary kriging (a method of determining a weighted average in
such a way that the geostatistical estimation variance of the weighted average
is minimized). &nbsp;The assays were composited into 10 metre down-hole
composites. Reasonableness of grade interpolation was reviewed by visual
inspection of sections displaying block model grades, drill-hole composites and
geology with good agreement being observed. &nbsp;In accordance with National
Instrument 43-101, both the updated Mineral Resource Study and the updated
advanced Scoping Study were filed on SEDAR.</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">The
resources developed by DRC Resources are not reserves and, until such time as
resources are proven to be reserves, there is a risk that the Company may not
achieve ongoing operations from which it may derive significant income.</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:14pt" align="justify"><b><i>AJAX
PROPERTY</i></b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Ajax Property, consisting of 77 mineral claims, covering 4500 acres, is
connected by an existing 10 km mine haulage road to the Afton Copper-Gold
Property to the west. &nbsp;Subsequent to the end of the 1<sup>st</sup> Quarter
&nbsp;the additional financing required to conduct further surface exploration
on both the Afton and Ajax Properties, located near Kamloops, British Columbia
was raised by way of a CDN$3 million financing completed on April 21, 2005.
During the 2004 field season six diamond drill holes were completed on the
Company's Ajax property located on the Company's 100% owned Ajax Property,
located 10 km east of the Afton Property, Kamloops, BC. &nbsp;The purpose of the
diamond drill program was to test for sulphide mineralization between the two
Ajax open pits and below the previously mined depths. &nbsp;Drilling
successfully indicated a large near-surface copper sulphide system with an
associated gold credit between and deeper than the previously mined Ajax East
and Ajax West pits. &nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
results of the Company's exploration programs prompted a geological
interpretation of the area that represents a significant departure from the
concept on which the shallow surface pits of copper-gold ore were developed and
mined by the previous operator in the early nineteen nineties. &nbsp;The
exploration drill program has outlined copper-gold mineralization with an
interpreted vertical depth of 300 metres below surface and with an apparent
thickness of 400 metres which is consistent with the zone mined in the two open
pits. &nbsp;Three of the six drill holes were drilled over a strike length of
approximately 400 metres. &nbsp;Two drill holes completed to the northwest of
the Ajax East and West pits did not intersect the mineralized zone as the holes
were collared too far in the foot wall of the zone. &nbsp;</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">The
Ajax East and West pits have been described as porphyry deposits in geological
publications. &nbsp;The Company is encouraged by the size and depth of the
system and intends to continue to explore for a higher grade core. &nbsp;</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">Significant
assay results for three drill holes intersecting the mineral zone over a length
of 400 metres and&nbsp;</p>
<p align="center"><font size="2" face="serif">7</font></p>
<hr noshade align="center" width="100%" size="2">
<p>&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">to
a depth of 300 metres below surface are as follows:</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="center"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b><u>ASSAY
INTERSECTIONS FOR AX-01 @ -55</u></b><font face="Symbol"><b><sup>o</sup></b></font><b><u>/121</u></b><font face="Symbol"><b><sup>o</sup></b></font></p>
<table style="font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="120">
      <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>Core
      Length (m)</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="80.267">
      <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>Depth
      (m)</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.267">
      <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>Copper
      (%)</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.267">
      <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>Gold
      (g/t)</b></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>51</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="80.267">
      <p style="margin:0pt; padding-right:-9.85pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>75-126</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.232</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.145</b></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="120">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="80.267">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>121</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="80.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>156-277</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.240</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.169</b></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="120">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="80.267">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>63</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="80.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>307-370</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.362</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.165</b></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="120">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="80.267">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">&nbsp;</td>
  </tr>
  <tr>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>31.2</b></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="80.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>421-452.2</b></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.249</b></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.126</b></p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="center"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b><u>ASSAY
INTERSECTIONS FOR AX-02 @ -52</u></b><font face="Symbol"><b><sup>o</sup></b></font><b><u>/120</u></b><font face="Symbol"><b><sup>o</sup></b></font></p>
<table style="font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="120">
      <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>Core
      Length (m)</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="80.267">
      <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>Depth
      (m)</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.267">
      <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>Copper
      (%)</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.267">
      <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>Gold
      (g/t)</b></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>194</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="80.267">
      <p style="margin:0pt; padding-right:-9.85pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>26-220</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.223</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.141</b></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="120">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="80.267">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">&nbsp;</td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">&nbsp;</td>
  </tr>
  <tr>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>123</b></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="80.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>277-400</b></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.221</b></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.082</b></p>
    </td>
  </tr>
</table>
<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="center"><b><u>ASSAY
INTERSECTION FOR AX-04 @ -55</u></b><font face="Symbol"><b><sup>o</sup></b></font><b><u>/120</u></b><font face="Symbol"><b><sup>o</sup></b></font></p>
<table style="font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="120">
      <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>Core
      Length (m)</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="80.267">
      <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>Depth
      (m)</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.267">
      <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>Copper
      (%)</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td style="border-bottom:1.5pt solid #000000" valign="top" width="92.267">
      <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>Gold
      (g/t)</b></p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>278</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="80.267">
      <p style="margin:0pt; padding-right:-9.85pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>27-305</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.233</b></p>
    </td>
    <td valign="top" width="15.733">&nbsp;</td>
    <td valign="top" width="92.267">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>0.159</b></p>
    </td>
  </tr>
</table>
<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">All
drill hole samples were prepared under the supervision of DRC personnel and
shipped to Eco Tech Laboratories Ltd., a British Columbia Certified Assayer, for
analysis. &nbsp;</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"><b>Selected
Quarterly Information</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
selected financial data appearing below for the first quarter ending March 31,
2005, 2004, and 2003 are set forth in Canadian dollars and extracted from the
audited Consolidated Financial Statements (filed on SEDAR).</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">DRC's
financial statements are prepared in accordance with generally accepted
accounting principles (GAAP) that apply in Canada with a note to the financial
statement reconciling the figures to United States generally accepted accounting
principles ("USGAAP"). &nbsp;The selected financial data appearing in the
first table below is presented in accordance with Canadian GAAP. &nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
following selected financial data should be read in conjunction with, and is
qualified in its entirety by reference to DRC Resources' audited Consolidated
Financial Statements.</p>
<table style="font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td style="background-color:#DFDFDF; border:0.5pt solid #000000" valign="top" width="216">&nbsp;</td>
    <td style="background-color:#DFDFDF; border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Quarter
      Ended</b></p>
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>March
      31, 2005</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; padding-right:-19.25pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Quarter
      Ended</b></p>
      <p style="margin:0pt; padding-right:-19.25pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>March
      31, 2004</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; padding-right:-19.25pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Quarter
      Ended</b></p>
      <p style="margin:0pt; padding-right:-19.25pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>March
      31, 2003</b></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="216">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Net
      Operating Revenue</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">148,874</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">171,231</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">24,720</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="216">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Net
      Income (Loss)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">(825,908)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">62,395</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">(119,800)</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="216">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Income
      (Loss) per Share</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">(0.06)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">0.01</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">(0.01)</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="216">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Total
      Assets</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; padding-right:-0.55pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">31,639,796</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">31795,645</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">6,358,849</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="216">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Net
      Assets</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">29,402,428</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">28,404,971</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">6,195,689</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="216">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Deferred
      Income Taxes</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">(787)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">(9,110)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">(15,944)</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="216">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Cash
      Dividends per share</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Nil</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Nil</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Nil</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="216">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Deficit</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">(5,046,738)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">(2,908,890)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">(1,872,714)</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="216">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Capital
      Stock</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">33,008,361</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">31,313,861</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">8,068,403</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="216">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Weighted
      Average Number of Shares</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">13,390,604</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">12,920,359</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="120">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">9,131,766</p>
    </td>
  </tr>
</table>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p align="center"><font size="2" face="serif">8</font></p>
<hr noshade align="center" width="100%" size="2">
<p>&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">With
approximately $23 million in cash assets, DRC currently has sufficient funds to
meet its obligations and to carry out its exploration plans and complete the
feasibility study. &nbsp;There is no assurance that DRC will in the future be
able to obtain all the financing it requires on acceptable terms and conditions,
or at all. &nbsp;The only sources of future funds presently available to DRC are
the sale of equity capital, or the offering of an interest in its properties to
be earned by another person or firm carrying out further exploration or
development of the properties.</p>
<p style="margin:0pt; text-indent:72pt; 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"><b>Operating
Results</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">During
the first quarter of 2005 the main focus of the Company has been the exploration
of the Afton Project in Kamloops, BC as described in the Progress and Outlook
section above. &nbsp;</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">The
advanced Scoping Study on the Afton Main Mineral Zone prepared by Behre Dolbear
and Company Ltd., is based on a Mineral Resource (all categories) of 76 million
tonnes and indicates that panel cave mining and conventional flotation
technology are viable methods of application for mining and processing of a 51.5
Million Tonne Mineral Resource. &nbsp;The Study indicates an estimated
life-of-mine cash operating cost of US$0.15 per pound of copper and a total
operating cost of less than US$0.40 per pound of copper, both costs being net of
precious metal credits. &nbsp;A copper price of US$0.85/lb was used in the
economic calculation for this study. &nbsp;Persistence of the current robust
metals market, in which copper prices have exceeded US$1.40 per pound, would
enhance the economic potential of the Afton Project. &nbsp;&nbsp;The Company has
now proceeded to the feasibility stage. &nbsp;This will enable a more detailed
analysis of all potential mining methods and economic scenarios (including that
envisaged in the scoping study) in order to determine the optimum method of
developing a mine at the Afton Project site.</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">To
the beginning of 2004, a total of $5 million had been expended to take the Afton
Project through the initial surface exploration stage which included the
2000-2003 diamond drill programs. &nbsp;Preparation, engineering studies and
government approvals for the start-up of the underground development began in
early 2004, with the physical work on underground ancillary decline commencing
in early November 2004. &nbsp;Approximately $9 million has been expended on the
Afton Project to date.</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Behre
Dolbear's Advanced Scoping Study completed in 2004, estimated the additional
costs to take the Afton Project to feasibility study and through permitting over
a period of 18 months will involve the following work:</p>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:72pt; line-height:14pt; font-family:Times New Roman; font-size:11pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:108pt; line-height:14pt; font-family:Times New Roman; font-size:11pt"><u>Item</u></p>
<p style="margin:0pt; text-indent:144pt; font-family:Times New Roman; font-size:11pt"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost___
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
<p style="margin:0pt; text-indent:72pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; text-indent:72pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Underground
Development</p>
<p style="margin:0pt; padding-left:36pt; text-indent:287pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">$13,626,000</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:238.5pt; text-indent:-130.5pt; line-height:14pt; font-family:Times New Roman; font-size:11pt">Definition
Drilling from Underground</p>
<p style="margin:0pt; padding-left:238.5pt; text-indent:95.5pt; font-family:Times New Roman; font-size:11pt">1,862,000</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:238.5pt; text-indent:-130.5pt; line-height:14pt; font-family:Times New Roman; font-size:11pt">Metallurgical
Testing</p>
<p style="margin:0pt; padding-left:238.5pt; text-indent:103.75pt; font-family:Times New Roman; font-size:11pt">250,000</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:238.5pt; text-indent:-130.5pt; line-height:14pt; font-family:Times New Roman; font-size:11pt">Environmental/Permitting</p>
<p style="margin:0pt; padding-left:238.5pt; text-indent:103.75pt; font-family:Times New Roman; font-size:11pt">610,000</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:238.5pt; text-indent:-130.5pt; line-height:14pt; font-family:Times New Roman; font-size:11pt">Technical
Studies</p>
<p style="margin:0pt; padding-left:238.5pt; text-indent:103.75pt; font-family:Times New Roman; font-size:11pt">250,000</p>
<p style="margin-top:0pt; margin-bottom:-14pt; padding-left:238.5pt; text-indent:-130.5pt; line-height:14pt; font-family:Times New Roman; font-size:11pt">Feasibility
Study</p>
<p style="margin:0pt; padding-left:238.5pt; text-indent:103.75pt; font-family:Times New Roman; font-size:11pt">750,000</p>
<p style="margin-top:0pt; margin-bottom:-14pt; text-indent:108pt; line-height:14pt; font-family:Times New Roman; font-size:11pt"><u>DRC
Supplied Personnel</u></p>
<p style="margin:0pt; text-indent:342.25pt; font-family:Times New Roman; font-size:11pt"><u>400,000</u></p>
<p style="margin:0pt; padding-left:238.5pt; text-indent:-166.5pt; font-family:Times New Roman; font-size:11pt"><br>
</p>
<p style="margin-top:0pt; margin-bottom:-13pt; padding-left:238.5pt; text-indent:-130.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Total</p>
<p style="margin:0pt; padding-left:238.5pt; text-indent:84.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">$17,748,000</p>
<p style="margin:0pt; padding-left:238.5pt; text-indent:-166.5pt; 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">This
feasibility study is fully funded as the result of a $24 million financing
completed in November 2003. &nbsp;To date, approximately $6.5 million has been
expended on the feasibility study.</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">Note:
&nbsp;Certain technical reports outlining the above have been filed on SEDAR.
&nbsp;A direct link to SEDAR may be found on the Company's website: <font COLOR="#0000FF"><u>www.drcresources.com</u>.</font></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"><b>Summary
of Quarterly Information</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
following selected financial data should be read in conjunction with, and is
qualified in its entirety by reference to DRC's audited and interim
Consolidated Financial Statements.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p align="center"><font size="2" face="serif">9</font></p>
<hr noshade align="center" width="100%" size="2">
<p>&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Afton Copper-Gold Project exploration programs are the only significant
expenditures in progress. &nbsp;All exploration has been funded by external
financing through issue of securities of DRC. &nbsp;The Company has no current
ongoing mining operations and no significant income. &nbsp;</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">Foreign
currency fluctuations had a limited negative effect on DRC's other income and
expenses. &nbsp;The impact of a rising Canadian dollar (or devaluing US dollar)
could have significant effect on concentrate product sales in the future, since
all such sales are conducted in US currency, while costs are incurred in
Canadian dollars. &nbsp;Decrease in interest income is primarily due to lower
interest rates earned on working capital.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Foreign
exchange gains and losses result primarily from the translation of US dollar
denominated monetary assets to Canadian dollars. &nbsp;</p>
<p style="margin-top:0pt; margin-bottom:5.5pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">For
purposes of illustrating management explanation and discussion of the Company's
financial condition and results of operations, please refer to the following
table of selected financial information that appears in more detail in the
financial statements that accompany this application.</p>
<table style="font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td style="background-color:#DFDFDF; border:0.5pt solid #000000" valign="bottom" width="127.333" align="center">
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><b>Quarter
      Ending</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="bottom" width="79.267" align="center">
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>March
      31</b></p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>2005</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="bottom" width="84" align="center">
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>Dec
      31</b></p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>2004</b></p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>(YE)
      figures</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="bottom" width="72" align="center">
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>Sep
      30</b></p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>2004</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="bottom" width="72" align="center">
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>June
      30</b></p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>2004</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="bottom" width="72" align="center">
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="justify"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>March
      31</b></p>
      <p style="margin:0pt; font-family:Times New Roman" align="center"><b>2004</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="bottom" width="84" align="center">
      <p style="margin:0pt; font-family:Times New Roman"><b>Dec 31</b></p>
      <p style="margin:0pt; font-family:Times New Roman"><b>&nbsp;2003</b></p>
      <p style="margin:0pt; font-family:Times New Roman"><b>(YE) figures</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="bottom" width="72" align="center">
      <p style="margin:0pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman"><b>Sep 30 2003</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="bottom" width="72" align="center">
      <p style="margin:0pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman"><br>
      </p>
      <p style="margin:0pt; font-family:Times New Roman"><b>June 30 2003</b></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="127.333">
      <p style="margin:0pt; font-family:Times New Roman">Net Operating Revenue
      (Loss)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="79.267">
      <p style="margin:0pt; font-family:Times New Roman" align="right">148,874</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="84">
      <p style="margin:0pt; font-family:Times New Roman" align="right">565,506</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">94,883</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; padding-right:-5.45pt; font-family:Times New Roman" align="right">199,304</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">171,231</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="84">
      <p style="margin:0pt; font-family:Times New Roman" align="right">108,482</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">21,613</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(8,747)</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="127.333">
      <p style="margin:0pt; font-family:Times New Roman">(Loss) Before Taxes</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="79.267">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(825,121)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="84">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(1,202,805)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">140,903</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(18,310)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">71,505</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="84">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(415,702)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(70,410)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(141,907)</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="127.333">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;(Loss) per Share</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="79.267">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.06)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="84">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.09)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.01)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.01)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.01)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="84">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.04)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.01)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.02)</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="127.333">
      <p style="margin:0pt; font-family:Times New Roman">Net Income(Loss)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="79.267">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(825,908)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="84">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(1,249,545)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">146,626</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(20,422)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">62,395</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="84">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(1,218,371)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(105,943)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(182,903)</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="127.333">
      <p style="margin:0pt; font-family:Times New Roman">&nbsp;(Loss) per Share</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="79.267">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.06)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="84">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.09)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.01)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.01)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.01)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="84">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.13)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.01)</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="72">
      <p style="margin:0pt; font-family:Times New Roman" align="right">(0.02)</p>
    </td>
  </tr>
</table>
<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"><b>Liquidity
&amp; Capital Resources</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify"><b><i>Working
Capital</i></b> <b><i>at Quarter-end &nbsp;</i></b>&nbsp;&nbsp;DRC Resources had
working capital of $24,200,000, $24,700,000 and &nbsp;$4,000,000 and no debt at
March 31<sup>st</sup> in, respectively, the years 2005, 2004 and 2003. &nbsp;Net
equity financings of $4,904,120 in 2000, $1,935,515 in 2002 and $22,500,250 in
2003 and options exercised totaling $2,550,000 in 2004 were the principal
sources of working capital.</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">During
first quarter 2005 interest income and a small foreign exchange gain, provided
for approximately 15.28% of the Company's administrative costs. &nbsp;&nbsp;In
2004 and 2003, interest, royalty income, sale of investment property, gain of
marketable securities and a foreign exchange gains provided for, respectively,
approximately 62.83% and 34.98% of the Company's administrative costs.</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">&nbsp;&nbsp;</p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">In
2000 DRC Resources' working capital increased significantly due to funding
provided by a $5 million Special Warrants Private Placement Offering, which put
the Company in a position to make a commitment to a large exploration program on
its Afton Copper-Gold Project. &nbsp;In 2002 a $2.1 million private placement of
flow-through shares was added to exploration funding, and in 2003 a $24.1
million private place of common shares significantly increased the working
capital. &nbsp;In 2004 the exercise of director and employee stock options
infused $2,550,000 into the Company's working capital. &nbsp;</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">These
infusions of capital funds into the treasury of the Company established the work
capital to meet the fiscal administrative costs and carry out the budgeted
exploration programs todate. Without further capital infusion the working
capital will steadily deplete through the year 2005. &nbsp;DRC's working
capital is sufficient to meet all its present requirements as an exploration
company. &nbsp;In order to be in a position to move to the development stage of
its Afton Copper-Gold Project, DRC realized that it would be expected to raise
at least 10% of the expected capital requirement of about $140 million, in order
to attract an institutional lender or mine financing partner, such as a smelter,
to the project. &nbsp;</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p align="center"><font size="2" face="serif">10</font></p>
<hr noshade align="center" width="100%" size="2">
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify">&nbsp;</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"><b><i>Contractual
Obligation for Acquisition of the Afton Copper-Gold Property</i></b></p>
<p style="margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">By
Option to Purchase Agreement ("the Option") dated September 22, 1999 DRC
Resources acquired the exclusive right for 90 days to purchase a 100% undivided
working interest in the Afton 1 - 11 (incl.) mineral claims, Record Nos.
372023 - 372026 (incl.) and 372641 - 372647 (incl.) (the "Original Claims")
as to 50% from Westridge Enterprises Ltd., a non-reporting British Columbia
company wholly owned by John H. Kruzick, a director, the Chairman of the Board
of the Company; and as to 50% from Indo-Gold Development Ltd., a non-reporting
British Columbia company owned by John Ball, a geologist. &nbsp;The Option
provided for consideration to be a 10% Net Profit Royalty to and a property
management agreement with the optionors, with exercise to be by carrying out
exploration work and paying Common Shares of DRC Resources as follows:</p>
<table style="font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td style="background-color:#DFDFDF; border-left:2pt double #000000; border-top:2pt double #000000; border-bottom:0.5pt solid #000000" valign="top" width="162">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>Due
      Date</b><font FACE="Times New Roman Bold"><b><sup>(1)</sup></b></font></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:2pt double #000000; border-bottom:0.5pt solid #000000" valign="top" width="18">&nbsp;</td>
    <td style="background-color:#DFDFDF; border-left:0.5pt solid #000000; border-top:2pt double #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="132">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b><i>Option
      Payment</i></b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:2pt double #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt"><b>Status</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:2pt double #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="108">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>Exploration
      ($)</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:2pt double #000000; border-right:2pt double #000000; border-bottom:0.5pt solid #000000" valign="top" width="90">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center"><b>Status</b></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:2pt double #000000" valign="top" width="162">
      <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">On
      regulatory approval</p>
    </td>
    <td valign="top" width="18">&nbsp;</td>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="132">
      <p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
      </p>
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1,000,000
      Shares</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78">
      <p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="center"><br>
      </p>
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">Paid</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="108">
      <p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="right"><br>
      </p>
    </td>
    <td style="border-right:2pt double #000000" valign="top" width="90">&nbsp;</td>
  </tr>
  <tr>
    <td style="border-left:2pt double #000000; border-top:0.5pt solid #000000" valign="top" width="162">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Year
      1 &nbsp;(2000)</p>
    </td>
    <td style="border-top:0.5pt solid #000000" valign="top" width="18">&nbsp;</td>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="132">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">-</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="108">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">400,000</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:2pt double #000000" valign="top" width="90">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Performed</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:2pt double #000000; border-top:0.5pt solid #000000" valign="top" width="162">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Year
      2 &nbsp;(2001)</p>
    </td>
    <td style="border-top:0.5pt solid #000000" valign="top" width="18">&nbsp;</td>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="132">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">200,000
      Shares</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">Paid</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="108">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">600,000</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:2pt double #000000" valign="top" width="90">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Performed</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:2pt double #000000; border-top:0.5pt solid #000000" valign="top" width="162">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Year
      3 &nbsp;(2002)</p>
    </td>
    <td style="border-top:0.5pt solid #000000" valign="top" width="18">&nbsp;</td>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="132">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">200,000
      Shares</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">Paid</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="108">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1,000,000</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:2pt double #000000" valign="top" width="90">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Performed</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:2pt double #000000; border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="162">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Year
      4 &nbsp;(2003)</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="18">&nbsp;</td>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="132">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">200,000
      Shares</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">Paid</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="108">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1,000,000</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:2pt double #000000; border-bottom:0.5pt solid #000000" valign="top" width="90">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Performed</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:2pt double #000000" valign="top" width="162">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Year
      5 &nbsp;(2004)</p>
    </td>
    <td valign="top" width="18">&nbsp;</td>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="132">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">200,000
      Shares</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">Paid</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="108">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1,000,000</p>
    </td>
    <td style="border-right:2pt double #000000" valign="top" width="90">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Performed</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:2pt double #000000; border-top:0.5pt solid #000000" valign="top" width="162">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Year
      6 &nbsp;(2005)</p>
    </td>
    <td style="border-top:0.5pt solid #000000" valign="top" width="18">&nbsp;</td>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="132">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">200,000
      Shares</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="108">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">1,000,000</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:2pt double #000000" valign="top" width="90">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Performed</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:2pt double #000000; border-top:0.5pt solid #000000" valign="top" width="162">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Year
      7 &nbsp;(2006)</p>
    </td>
    <td style="border-top:0.5pt solid #000000" valign="top" width="18">&nbsp;</td>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="132">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="108">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">500,000</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:2pt double #000000" valign="top" width="90">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Performed</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:2pt double #000000; border-top:0.5pt solid #000000" valign="top" width="162">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Year
      8 &nbsp;(2007)</p>
    </td>
    <td style="border-top:0.5pt solid #000000" valign="top" width="18">&nbsp;</td>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="132">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="108">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">500,000</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:2pt double #000000" valign="top" width="90">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Performed</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:2pt double #000000; border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="162">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">Year
      9 &nbsp;(2008)</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="18">&nbsp;</td>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="132">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="78">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign="top" width="108">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">500,000</p>
    </td>
    <td style="border-top:0.5pt solid #000000; border-right:2pt double #000000; border-bottom:0.5pt solid #000000" valign="top" width="90">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Performed</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:2pt double #000000" valign="top" width="162">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt">TOTALS</p>
    </td>
    <td valign="top" width="18">&nbsp;</td>
    <td style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:2pt double #000000" valign="top" width="132">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">2,000,000
      Shares</p>
    </td>
    <td style="border-right:0.5pt solid #000000; border-bottom:2pt double #000000" valign="top" width="78">&nbsp;</td>
    <td style="border-right:0.5pt solid #000000; border-bottom:2pt double #000000" valign="top" width="108">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">6,500,000</p>
    </td>
    <td style="border-right:2pt double #000000" valign="top" width="90">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="right">Performed</p>
    </td>
  </tr>
</table>
<p style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align="justify"><i>Note:
</i>(1)</p>
<p style="margin:0pt; text-indent:49.65pt; font-family:Times New Roman" align="justify">The
initial option payment was due and paid following acceptance of the filing of
the Formal Option by the then governing regulatory body, the Canadian Venture
Exchange. &nbsp;Subsequent option payments are due to be paid in full on or
before the anniversary of the Due Date on November 10<sup>th</sup> in all future
years unless otherwise agreed upon by both parties.</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">Other
than relatively nominal property maintenance costs on projects, the only
commitment for material expenditures in either the near or long term is the
contractual obligations for completion of the Afton Underground Ancillary
Decline, totaling approximately $18 million. &nbsp;</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">The
Company's source of liquidity is its cash and cash equivalents; however, this
is supplemented by interest earned and these sources of cash are considered
sufficient to meet near-term financial requirements.</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"><b>Off-Balance
Sheet Arrangements</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
Company has concluded service contracts with three persons who are directors
and/or members of administrative, supervisory or management bodies.</p>
<ul>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13pt; font-family:Wingdings; font-size:11pt" align="justify"><font FACE="Times New Roman">Since
founding DRC Resources, John H. Kruzick has provided the Company's direction
and management as a consultant through a private company, Westridge Enterprises
Ltd., controlled by him and paid on a per diem basis with reimbursement for
out-of-pocket expenses until December 31, 2004. On January 1, 2005 Mr. Kruzick
was made a salaried employee. &nbsp;By Services Agreement made and approved
April 23, 2003 by the Board of Directors and amended October 18, 2004 and
January 1, 2005, John H. Kruzick's employment as Chairman of the Board was
formalized.</font><br>
  </li>
</ul>
<p style="margin-top:0pt; margin-bottom:-15.6pt; padding-left:36pt; text-indent:-18pt; line-height:15.6pt; font-family:Wingdings; font-size:11pt" align="justify">&nbsp;</p>
<ul>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13.6pt; font-family:Wingdings; font-size:11pt" align="justify"><font FACE="Times New Roman">Since
May 12, 1981, Sharon L. Ross has provided the Company with secretarial and
office administrative services as a consultant through a private company,
Allshare Holdings Ltd., controlled by her and paid on a per diem basis with
reimbursement for out-of-pocket expenses until December 31 2004. &nbsp;On
January 1, 2005 Ms. Ross was made a salaried employee. &nbsp;By Services
Agreement made and approved April 23, 2003 by the Board of Directors and amended
January 1, 2005, Sharon L. Ross' employment as Corporate Secretary to perform
the duties customary to that position was formalized.</font></li>
</ul>
<p style="margin:0pt; line-height:13.6pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p align="center"><font size="2" face="serif">11</font></p>
<hr noshade align="center" width="100%" size="2">
<ul>
  <li>
    <p style="margin:0pt; padding-left:36pt; line-height:13.6pt; font-family:Wingdings; font-size:11pt" align="justify"><font FACE="Times New Roman">On
October 12, 2004, Christopher J. Bradbrook was retained to provide the Company
with services pertaining to the position of President and CEO as a consultant
paid on an annual basis with re-imbursement for out-of-pocket expenses until
December 31, 2004. &nbsp;On January 1, 2005 Mr. Bradbrook was made a salaried
employee and continued in his role as President and CEO. &nbsp;</font></li>
</ul>
<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>Related
Party Transactions</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">During
the period ending March 31, 2005, the Company paid wages of $24,156 compared to
contract fees of $17,628 in the same period for 2004, for secretarial and
accounting services invoiced in 2004 by Allshare Holdings Ltd., a private
company in which a director has a 50% interest. &nbsp;</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">During
the year ending March 31, 2005 the Company paid wages of $50,000 compared to
contract fees &nbsp;of $36,500 in the same period for 2004 for consulting and
deferred exploration costs invoiced by Westridge Enterprises Ltd., a private
company owned by a director of the Company.</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">During
the period ending March 31, 2005, a related person of a Director was paid wages
of $24,000 compared to contract fees of $16,250 for consulting services in the
same period for 2004.</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">During
the period ending March 31, 2005, a director and officer of the Company was paid
wages of $62,500.00 for consulting services relating to the office of
President,.</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">During
the period ending March 31, 2005, an officer of the Company was paid wages of
$37,500 for services as Vice President of Exploration and Development for the
Afton Project, no comparative figure for the period as the starting date was
March 23, 2004.</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"><b>First
Quarter, 2005</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">During
the first quarter project costs remained steady to the &nbsp;2005 budgeted
average cost of approximately $1.5 million per month as work progresses on the
2000 metre underground ancillary decline and construction of the portal
facility. &nbsp;The decline provides access for the underground diamond drilling
program which commenced late January, 2005 and is designed to achieve two very
important goals. &nbsp;Firstly, it will enable completion of infill drilling in
order to upgrade current resources to the reserve category. &nbsp;Secondly, it
will facilitate an aggressive exploration program to search for extensions of
the known mineralization, and to investigate the potential for additional zones
of mineralization. &nbsp;To date, the currently identified mineralization
remains open.</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"><b>Risks</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Mineral
exploration is a high risk business and there is no assurance that economic
mineral deposits will be found on any of DRC's mineral interests.
&nbsp;Positive surface indications and drill results are no guarantee that an
economic mineral deposit exists at depth. &nbsp;Fluctuating mineral commodity
prices and exchange rates may adversely affect the economics of a mineral
deposit. &nbsp;Financial markets can sometimes be negative toward junior
exploration companies.</p>
<p style="margin:0pt; font-family:Times New Roman; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:11.5pt; font-family:Times New Roman; font-size:11pt" align="justify"><b>Capital</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">The
information below, relating the capital structure of the company, is at March
31, 2005.</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">Authorized
share capital: &nbsp;&nbsp;40,000,000 common shares without par value</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">Issued
and outstanding: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13,941,766 common shares without
par value</p>
<br>
<br>
<p align="center"><font size="2" face="serif">12</font></p>
<hr noshade align="center" width="100%" size="2">
<p>&nbsp;</p>
<p><br>
</p>
<p style="page-break-before:always; margin-top:0pt; margin-bottom:5.5pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Incentive
Stock Options Outstanding:</p>
<table style="font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td style="background-color:#DFDFDF; border:1pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:6pt; 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="center"><b>Number
      of Options</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:1pt solid #000000; border-right:1pt solid #000000; border-bottom:1pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:6pt; 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="center"><b>Exercise
      Price</b></p>
    </td>
    <td style="background-color:#DFDFDF; border-top:1pt solid #000000; border-right:1pt solid #000000; border-bottom:1pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:6pt; 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="center"><b>Expiry
      Date</b></p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.9pt solid #000000; border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">175,000</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">$7.00</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">March
      22, 2010</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.9pt solid #000000; border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">100,000</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">$6.50</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">April
      13, 2009</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.9pt solid #000000; border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">600,000</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">$4.60</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">October
      12, 2009</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.9pt solid #000000; border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">50,000</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">$6.81</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">March
      10, 2010</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.9pt solid #000000; border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">50,000</p>
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">(Compensation
      Options)</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">$4.60</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">October
      13, 2006</p>
    </td>
  </tr>
  <tr>
    <td style="border-left:0.9pt solid #000000; border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">345,000</p>
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">(Broker's
      Compensation Options)</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">$7.50</p>
    </td>
    <td style="border-right:0.9pt solid #000000; border-bottom:0.9pt solid #000000" valign="top" width="208">
      <p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="center">November
      6, 2005</p>
    </td>
  </tr>
</table>
<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"><b>Additional
Information</b></p>
<p style="margin:0pt; line-height:13pt; font-family:Times New Roman; font-size:11pt" align="justify">Additional
information on the Company may be found on SEDAR at <font COLOR="#0000FF"><u>www.sedar.com
</u></font>or the Company's website at <font COLOR="#0000FF"><u>www.drcresources.com</u></font>.</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; font-family:Arial; font-size:11pt" align="justify"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Arial; font-size:11pt" align="justify"><b><i>Disclaimer</i></b></p>
<p style="margin:0pt; line-height:13pt; font-family:Arial; font-size:11pt" align="justify"><i>The
information contained herein is prepared by the company and believed to be
accurate but has not been independently audited or verified, and is provided for
informational purposes. &nbsp;This information is not to be construed as an
offer nor as a recommendation to buy or sell securities. &nbsp;DRC Resources
Corporation, its officers and directors, assume no responsibility for use of
this information in any way whatsoever and do not guarantee its accuracy.</i></p>
<p style="margin:0pt; font-family:Arial; font-size:11pt"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Arial; font-size:11pt"><b><i>Cautionary
Note</i></b></p>
<p style="margin:0pt; line-height:13pt; font-family:Arial; font-size:11pt" align="justify"><i>It
should be noted that some of the statements contained in this presentation are
not historical facts but may be forward-looking statements. &nbsp;Estimates and
statements that describe the Company's future plans, objectives or goals are
examples of forward-looking statements and such statements may include words to
the effect that the Company or management expects a stated condition or result
to occur. &nbsp;Since forward-looking statements address future events and
conditions, by their very nature they involve inherent risks and uncertainties.
&nbsp;Actual results in each case could differ materially from those currently
anticipated in such statements by reason of factors such as the productivity of
the Company's mining properties, changes in general economic conditions and
conditions in the financial markets, changes in demand and prices for the
minerals, legislative, environmental and other regulatory, political and
competitive developments in areas in which the Company operates.</i></p>
<p style="margin:0pt; font-family:Arial; font-size:11pt"><br>
</p>
<p style="margin:0pt; line-height:13pt; font-family:Arial; font-size:11pt" align="justify"><b><i>US
Investors Should Note: &nbsp;</i></b><i>The United States Securities and
Exchange Commission permits mining companies in their filings with the SEC to
disclose only those mineral deposits that a company can economically and legally
extract or produce. &nbsp;We may use certain terms in our publications such as
"resources," that are prescribed by Canadian regulatory policy and
guidelines but are not provided for in the SEC guidelines on publications and
filings.</i></p>
<br>
<br>
<p align="center"><font size="2" face="serif">13</font></p>
<hr noshade align="center" width="100%" size="2">
<p>&nbsp;</p>
<p style="margin:0pt; padding-right:18pt; 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>&nbsp;</p>
<a name="page_1"></a>
<p align="center">&nbsp;
<table>
  <tr>
    <td nowrap>
      <p style="margin-top: 0; margin-bottom: 0"><b><font size="2" face="sans-serif">DRC
      RESOURCES CORPORATION</font></b><br>
      <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b></p>
      <p style="margin-top: 0; margin-bottom: 0"><br>
      <b><font size="2" face="sans-serif">INTERIM FINANCIAL STATEMENTS</font></b><br>
      <b><font size="2" face="sans-serif">MARCH 31, 2005</font></b></p>
      <p align="center" style="margin-top: 0; margin-bottom: 0"><br>
      <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
      </p>
    </td>
  </tr>
</table>
<p align="center">&nbsp;
<table>
  <tr>
    <td nowrap><font size="2" face="serif">14</font><br>
    </td>
  </tr>
</table>
<hr noshade align="center" width="100%" size="2">
<a name="page_2"></a>
<table>
  <tr>
    <td nowrap><b><font size="2" face="sans-serif">BEAUCHAMP &amp; COMPANY</font></b><br>
      <b><font size="2" face="sans-serif">CHARTERED ACCOUNTANTS</font></b><br>
      <b><font size="2" face="sans-serif">#205 - 788 BEATTY STREET</font></b><br>
      <b><font size="2" face="sans-serif">VANCOUVER, B.C. V6B 2M1</font></b><br>
      <b><font size="2" face="sans-serif">PHONE: 604-688-2850</font></b><br>
      <b><font size="2" face="sans-serif">FAX: 604-688-2777</font></b><br>
    </td>
  </tr>
</table>
<p align="center">&nbsp;
<table>
  <tr>
    <td nowrap><b><font size="2" face="sans-serif">NOTICE TO READER</font></b><br>
    </td>
  </tr>
</table>
<p><font size="2" face="sans-serif">We have compiled the interim balance sheet
of DRC Resources Corporation as at March 31, 2005 and the interim statements of
operations and deficit, and cash flows, and schedule of mineral claim interest
for the three months then ended from information provided by management. We have
not audited, reviewed or otherwise attempted to verify the accuracy or
completeness of such information. Readers are cautioned that these statements
may not be appropriate for their purposes.</font></p>
<table border="0" cellspacing="1" cellpadding="0" width="706">
  <tr valign="bottom">
    <td width="332" nowrap align="left"><font size="2" face="sans-serif">Vancouver,
      B.C.</font>&nbsp;</td>
    <td width="364" nowrap align="right"><b><i><font face="sans-serif">&quot;BEAUCHAMP
      &amp; COMPANY&quot;</font></i></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="332" nowrap align="left"><font size="2" face="sans-serif">April
      29, 2005</font>&nbsp;</td>
    <td width="364" nowrap align="right"><font size="2" face="sans-serif">Chartered
      Accountants</font>&nbsp;</td>
  </tr>
</table>
<br>
<p align="center"><font size="2" face="serif">15</font></p>
<hr noshade align="center" width="100%" size="2">
<a name="page_4"></a>
<p align="center">&nbsp;
<table>
  <tr>
    <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
      <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
      <b><font size="2" face="sans-serif">INTERIM BALANCE SHEETS</font></b><br>
      <b><font size="2" face="sans-serif">AS AT MARCH 31, 2005 AND DECEMBER 31,
      2004</font></b><br>
      <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b>
      <p><br>
      </p>
    </td>
  </tr>
</table>
<div align="left">
  <table border="0" cellspacing="1" cellpadding="0">
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="13%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
        14)</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
        31,</font></b>&nbsp;</td>
      <td width="13%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
        31,</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><b><u><font size="2" face="sans-serif">2005</font></u></b>&nbsp;</td>
      <td width="13%" nowrap align="right"><b><u><font size="2" face="sans-serif">2004</font></u></b>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td align="center" width="100%" colspan="4"><b><font size="2" face="sans-serif">ASSETS</font></b></td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">CURRENT
        ASSETS</font></b>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="13%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Cash
        and cash equivalents</font>&nbsp;</td>
      <td width="8%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">21,326,584</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">$
        25,029,585</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Accrued
        interest receivable</font>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">14,029</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">71,912</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Amounts
        receivable - government</font>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">328,451</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">170,636</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Prepaid
        expenses</font>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">187,214</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">81,442</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">21,856,278</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">25,353,575</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">MINERAL
        CLAIM INTERESTS - SCHEDULE </font></b><font size="2" face="sans-serif">[Notes
        2 and 3]</font>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">9,287,510</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">5,933,932</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">PROPERTY
        AND EQUIPMENT </font></b><font size="2" face="sans-serif">[Notes 2 and
        4]</font>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">496,008</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">508,138</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">31,639,796</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">$
        31,795,645</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="2">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td align="center" width="100%" colspan="4"><b><font size="2" face="sans-serif">LIABILITIES</font></b></td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">CURRENT
        LIABILITIES</font></b>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="13%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Accounts
        payable and accruals</font>&nbsp;</td>
      <td width="8%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">1,266,674</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">$
        1,164,350</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Current
        portion of capital lease payable [Note 5]</font>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">22,671</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">22,671</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">1,289,345</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">1,187,021</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">CAPITAL
        LEASE PAYABLE </font></b><font size="2" face="sans-serif">[Note 5]</font>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">24,561</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">30,228</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">FUTURE
        INCOME TAXES </font></b><font size="2" face="sans-serif">[Note 6[c]]</font>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">923,462</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">922,675</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">2,237,368</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">2,139,924</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td align="center" width="100%" colspan="4"><b><font size="2" face="sans-serif">SHAREHOLDERS'
        EQUITY</font></b></td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">SHARE
        CAPITAL </font></b><font size="2" face="sans-serif">[Note 7]</font>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">33,008,361</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">33,008,361</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">CONTRIBUTED
        SURPLUS</font></b>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">1,440,805</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">868,190</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">DEFICIT</font></b>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(5,046,738)</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">(4,220,830)</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">29,402,428</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">29,655,721</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">31,639,796</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">$
        31,795,645</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="2">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">COMMITMENTS
        AND CONTINGENT LIABILITIES </font></b><font size="2" face="sans-serif">[Note
        11]</font>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="13%" nowrap align="left">&nbsp;</td>
    </tr>
  </table>
</div>
<br>
<table border="0" cellspacing="1" cellpadding="0">
  <tr valign="bottom">
    <td width="77%" nowrap align="left"><b><font size="2" face="sans-serif">APPROVED
      BY THE BOARD:</font></b>&nbsp;</td>
    <td width="22%" nowrap align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="77%" nowrap align="left"><font size="2"><i><font face="sans-serif">&quot;Chris
      Bradbrook&quot;</font></i>&nbsp;</font></td>
    <td width="22%" nowrap align="left"><font size="2"><b><font face="sans-serif">Director</font></b>&nbsp;</font></td>
  </tr>
  <tr>
    <td>
      <hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="bottom">
    <td width="77%" nowrap align="left"><font size="2"><i><font face="sans-serif">&quot;John
      Kruzick&quot;</font></i>&nbsp;</font></td>
    <td width="22%" nowrap align="left"><font size="2"><b><font face="sans-serif">Director</font></b>&nbsp;</font></td>
  </tr>
  <tr>
    <td>
      <hr noshade size="1">
    </td>
    <td></td>
  </tr>
</table>
<br>
<p align="right"><font size="2" face="sans-serif">See accompanying notes.</font></p>
<p align="center"><font size="2" face="serif">16</font></p>
<hr noshade align="center" width="100%" size="2">
<a name="page_5"></a><a name="page_6"></a>
<p align="center">&nbsp;
<table>
  <tr>
    <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
      <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
      <b><font size="2" face="sans-serif">INTERIM STATEMENTS OF OPERATIONS AND
      DEFICIT</font></b><br>
      <b><font size="2" face="sans-serif">THREE MONTHS ENDED MARCH 31, 2005 AND
      2004</font></b><br>
      <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
    </td>
  </tr>
</table>
<div align="justify">
  <table border="0" cellspacing="1" cellpadding="0">
    <tr valign="bottom">
      <td width="62%" nowrap align="left">&nbsp;</td>
      <td width="24%" nowrap align="right"><b><u><font size="2" face="sans-serif">2005</font></u></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><u><font size="2" face="sans-serif">2004</font></u></b>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><b><font size="2" face="sans-serif">INCOME</font></b>&nbsp;</td>
      <td width="24%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Interest
        and other income</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">$
        146,355</font>&nbsp;</td>
      <td width="3%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">159,001</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Gain
        on sale of marketable security</font>&nbsp;</td>
      <td width="24%" nowrap align="center">
        <p align="right">-</p>
      </td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">8,290</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Foreign
        exchange gain</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">2,519</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">3,940</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left">&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">148,874</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">171,231</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><b><font size="2" face="sans-serif">EXPENSES</font></b>&nbsp;</td>
      <td width="24%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Amortization</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">22,040</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">3,134</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Consulting
        and management fees</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">2,579</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">26,500</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Insurance</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">60,159</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Office
        and miscellaneous</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">26,543</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">26,892</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Professional
        fees</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">17,616</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">21,602</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Regulatory
        and filing fees</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">15,569</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">7,592</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Rent</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">15,419</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">6,285</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Stock-based
        compensation [Note 7[c] and [d]]</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">572,615</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Telephone</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">1,730</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">945</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Transfer
        agent</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">1,783</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">2,042</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Travel,
        conferences and promotion</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">47,910</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">4,734</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><font size="2" face="sans-serif">Wages
        and benefits</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">190,032</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left">&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">973,995</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">99,726</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><b><font size="2" face="sans-serif">(LOSS)
        INCOME BEFORE INCOME TAXES</font></b>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">(825,121)</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">71,505</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><b><font size="2" face="sans-serif">FUTURE
        INCOME TAXES </font></b><font size="2" face="sans-serif">[Note 6]</font>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">(787)</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">(9,110)</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><b><font size="2" face="sans-serif">NET
        (LOSS) INCOME FOR THE PERIOD</font></b>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">(825,908)</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">62,395</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><b><font size="2" face="sans-serif">DEFICIT,
        BEGINNING OF PERIOD</font></b>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">(4,220,830)</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">(2,971,285)</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><b><font size="2" face="sans-serif">DEFICIT,
        END OF PERIOD</font></b>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">$
        (5,046,738)</font>&nbsp;</td>
      <td width="3%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">(2,908,890)</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="2">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><b><font size="2" face="sans-serif">WEIGHTED
        AVERAGE NUMBER OF SHARES OUTSTANDING</font></b>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">13,390,604</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">12,920,359</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="2">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="62%" nowrap align="left"><b><font size="2" face="sans-serif">(LOSS)
        EARNINGS PER SHARE</font></b>&nbsp;</td>
      <td width="24%" nowrap align="right"><font size="2" face="sans-serif">$
        (0.06)</font>&nbsp;</td>
      <td width="3%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">0.01</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="2">
      </td>
    </tr>
  </table>
</div>
<br>
<p align="right"><font size="2" face="sans-serif">See accompanying notes.</font></p>
<p align="center"><font size="2" face="serif">17</font></p>
<hr noshade align="center" width="100%" size="2">
<a name="page_5"></a><a name="page_6"></a>
<p align="center">&nbsp;
<table>
  <tr>
    <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
      <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
      <b><font size="2" face="sans-serif">INTERIM STATEMENTS OF CASH FLOWS</font></b><br>
      <b><font size="2" face="sans-serif">THREE MONTHS ENDED MARCH 31, 2005 AND
      2004</font></b><br>
      <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
    </td>
  </tr>
</table>
<div align="justify">
  <table border="0" cellspacing="1" cellpadding="0">
    <tr valign="bottom">
      <td width="71%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><b><u><font size="2" face="sans-serif">2005</font></u></b>&nbsp;</td>
      <td width="13%" nowrap align="right"><b><u><font size="2" face="sans-serif">2004</font></u></b>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><b><font size="2" face="sans-serif">CASH
        PROVIDED BY [USED FOR]:</font></b>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="13%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><b><font size="2" face="sans-serif">OPERATING
        ACTIVITIES</font></b>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="13%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Net
        (loss) income for the period</font>&nbsp;</td>
      <td width="4%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(825,908)</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">$
        62,395</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Items
        not involving cash:</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="13%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Amortization</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">22,040</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">3,134</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Stock-based
        compensation</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">572,615</font>&nbsp;</td>
      <td width="13%" nowrap align="right">-</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Gain
        on sale of marketable security</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right">-</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">(8,290)</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Future
        income taxes</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">787</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">9,110</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(230,466)</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">66,349</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Net
        change in non-cash working capital items</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(376,141)</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">(224,537)</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Cash
        used for operating activities</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(606,607)</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">(158,188)</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><b><font size="2" face="sans-serif">INVESTING
        ACTIVITIES</font></b>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="13%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Proceeds
        on sale of marketable security</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right">-</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">9,790</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Payments
        for mineral claim interest exploration costs</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(3,080,817)</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">(77,326)</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Acquisition
        of property and equipment</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(9,910)</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">(161,600)</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Cash
        used for investing activities</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(3,090,727)</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">(229,136)</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><b><font size="2" face="sans-serif">FINANCING
        ACTIVITIES</font></b>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right">&nbsp;</td>
      <td width="13%" nowrap align="right">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Payments
        on capital lease</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(5,667)</font>&nbsp;</td>
      <td width="13%" nowrap align="right">-</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Cash
        proceeds from shares issued</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right">-</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">915,500</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Cash
        (used for) provided by financing activities</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(5,667)</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">915,500</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><b><font size="2" face="sans-serif">(DECREASE)
        INCREASE IN CASH AND CASH EQUIVALENTS</font></b>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(3,703,001)</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">528,176</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><b><font size="2" face="sans-serif">CASH
        AND CASH EQUIVALENTS, BEGINNING OF PERIOD</font></b>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">25,029,585</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">24,737,161</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><b><font size="2" face="sans-serif">CASH
        AND CASH EQUIVALENTS, END OF PERIOD</font></b>&nbsp;</td>
      <td width="4%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">21,326,584</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">$
        25,265,337</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="2">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><b><font size="2" face="sans-serif">CASH
        AND CASH EQUIVALENTS COMPRISES:</font></b>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="13%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Cash</font>&nbsp;</td>
      <td width="4%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">160,329</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">$
        81,769</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">Term
        deposits and short-term discount notes</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">21,166,255</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">25,183,568</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">21,326,584</font>&nbsp;</td>
      <td width="13%" nowrap align="right"><font size="2" face="sans-serif">$
        25,265,337</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4">
        <hr noshade size="2">
      </td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="71%" nowrap align="left"><font size="2" face="sans-serif">*
        Supplemental disclosure of non-cash financing and investing activities:
        refer to note 9</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="13%" nowrap align="left">&nbsp;</td>
    </tr>
  </table>
</div>
<br>
<p align="right"><font size="2" face="sans-serif">See accompanying notes.</font></p>
<p align="center"><font size="2" face="serif">18</font></p>
<hr noshade align="center" width="100%" size="2">
<a name="page_5"></a><a name="page_6"></a>
<p align="center">&nbsp;
<table>
  <tr>
    <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
      <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
      <b><font size="2" face="sans-serif">INTERIM SCHEDULE OF MINERAL CLAIM
      INTERESTS</font></b><br>
      <b><font size="2" face="sans-serif">FOR THE THREE MONTHS ENDED MARCH 31,
      2005</font></b><br>
      <b><font size="2" face="sans-serif">AND YEAR ENDED DECEMBER 31, 2004</font></b><br>
      <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
    </td>
  </tr>
</table>
<div align="justify">
  <table border="0" cellspacing="1" cellpadding="0">
    <tr valign="bottom">
      <td width="38%" nowrap align="left">&nbsp;</td>
      <td width="19%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
        14)</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left">&nbsp;</td>
      <td width="19%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
        31,</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
        31,</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left">&nbsp;</td>
      <td width="19%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><u><font size="2" face="sans-serif">2005</font></u></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><u><font size="2" face="sans-serif">2004</font></u></b>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><b><u><font size="2" face="sans-serif">Acquisition
        Costs</font></u></b>&nbsp;</td>
      <td width="19%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Kamloops
        &quot;Afton&quot; Claims</font>&nbsp;</td>
      <td width="19%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">541,734</font>&nbsp;</td>
      <td width="3%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">541,734</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Kamloops
        &quot;Ajax-Python&quot; Claims</font>&nbsp;</td>
      <td width="19%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">48,732</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">48,732</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Timmins,
        Ontario Claims</font>&nbsp;</td>
      <td width="19%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">1</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">1</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><b><font size="2" face="sans-serif">Balance,
        End Of Period</font></b>&nbsp;</td>
      <td width="19%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">590,467</font>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">590,467</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="8">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><b><u><font size="2" face="sans-serif">Deferred
        Exploration Costs</font></u></b>&nbsp;</td>
      <td width="19%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left">&nbsp;</td>
      <td width="19%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left"><b><font size="2" face="sans-serif">Ajax-</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
        14)</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left">&nbsp;</td>
      <td width="19%" nowrap align="right"><b><font size="2" face="sans-serif">Afton</font></b>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="center"><b><font size="2" face="sans-serif">Python</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
        31,</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
        31,</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left">&nbsp;</td>
      <td width="19%" nowrap align="right"><b><u><font size="2" face="sans-serif">Claims</font></u></b>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="center"><b><u><font size="2" face="sans-serif">Claims</font></u></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><u><font size="2" face="sans-serif">2005</font></u></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><u><font size="2" face="sans-serif">2004</font></u></b>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><b><font size="2" face="sans-serif">Balance,
        Beginning Of Period</font></b>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">$
        5,118,047</font>&nbsp;</td>
      <td width="4%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="center"><font size="2" face="sans-serif">225,418</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">5,343,465</font>&nbsp;</td>
      <td width="3%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">2,956,829</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><b><font size="2" face="sans-serif">Above-ground
        Exploration Costs</font></b>&nbsp;</td>
      <td width="19%" nowrap align="right">&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Assays
        and testing</font>&nbsp;</td>
      <td width="19%" nowrap align="right">-</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">11,019</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Drilling</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">6,750</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">6,750</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">131,944</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Engineering</font>&nbsp;</td>
      <td width="19%" nowrap align="right">-</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">37,380</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Geological
        consulting</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">160</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">160</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">51,615</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Miscellaneous</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">854</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">854</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">7,278</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Staking
        and filing fees</font>&nbsp;</td>
      <td width="19%" nowrap align="right">-</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">4,781</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Supplies
        and equipment</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">9,896</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">9,896</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">3,829</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Travel
        and accommodation</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">686</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">686</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">10,529</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Grant
        recoveries [Note 2[d]]</font>&nbsp;</td>
      <td width="19%" nowrap align="right">-</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">(40,311)</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Wages
        and benefits</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">15,761</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">15,761</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">9,348</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left">&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">34,107</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">34,107</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">227,412</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><b><font size="2" face="sans-serif">Underground
        Exploration Costs</font></b>&nbsp;</td>
      <td width="19%" nowrap align="right">&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Assays
        and testing</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">17,291</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">17,291</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">1,049</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Drilling</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">173,363</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">173,363</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">59,556</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Engineering</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">7,814</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">7,814</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">184,494</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Geological
        consulting</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">46,748</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">46,748</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">233,552</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Insurance</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">3,488</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">3,488</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">36,161</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Miscellaneous</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">1,653</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">1,653</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">6,728</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Road
        construction and maintenance</font>&nbsp;</td>
      <td width="19%" nowrap align="right">-</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">221,240</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Supplies
        and equipment rental</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">51,316</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">51,316</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">49,636</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Travel
        and accommodation</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">14,555</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">14,555</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">24,990</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Tunnelling
        and decline costs</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">2,855,688</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">2,855,688</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">1,319,167</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><font size="2" face="sans-serif">Wages
        and benefits</font>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">147,555</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">147,555</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">22,651</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left">&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">3,319,471</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">3,319,471</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">2,159,224</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">
        <hr noshade size="2">
      </td>
    </tr>
    <tr>
      <td colspan="8">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><b><font size="2" face="sans-serif">Balance,
        End Of Period</font></b>&nbsp;</td>
      <td width="19%" nowrap align="right"><font size="2" face="sans-serif">$
        8,471,625</font>&nbsp;</td>
      <td width="4%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">225,418</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">8,697,043</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">5,343,465</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="8">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="38%" nowrap align="left"><b><font size="2" face="sans-serif">Mineral
        Claim Interests</font></b>&nbsp;</td>
      <td width="19%" nowrap align="right">&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">9,287,510</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">5,933,932</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="8">
        <hr noshade size="2">
      </td>
    </tr>
  </table>
</div>
<br>
<p align="right"><font size="2" face="sans-serif">See accompanying notes.</font></p>
<p align="center"><font size="2" face="serif">19</font></p>
<hr noshade align="center" width="100%" size="2">
<a name="page_9"></a>
<p align="center">&nbsp;
<div align="center">
  <center>
  <table>
    <tr>
      <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
        <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
        <b><font size="2" face="sans-serif">NOTES TO INTERIM FINANCIAL
        STATEMENTS</font></b><br>
        <b><font size="2" face="sans-serif">MARCH 31, 2005</font></b><br>
        <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
      </td>
    </tr>
  </table>
  </center>
</div>
&nbsp;
<p align="left"><b><font size="2" face="sans-serif">1.</font></b>&nbsp;&nbsp;&nbsp;
&nbsp;<b><font size="2" face="sans-serif">NATURE OF BUSINESS</font></b></p>
<font size="2" face="sans-serif">DRC Resources Corporation is a public company
incorporated under the Company Act (British Columbia). The common shares of the
Company are traded on the Toronto Stock Exchange (&quot;TSX&quot;) and the
American Stock Exchange [&quot;AMEX&quot;].</font>
<p><font size="2" face="sans-serif">The Company is in the process of exploring
its mineral claim interests to determine whether the properties contain ore
reserves that are economically recoverable.</font></p>
<font size="2" face="sans-serif">The continued operations of the Company and the
recoverability of the amounts shown as mineral claim interests are dependent
upon the existence of recoverable reserves, the ability of the Company to obtain
financing to complete the developments, and upon future profitable production or
proceeds from disposition of its mineral claim interests.</font>
<p><font size="2" face="sans-serif">Although the Company has taken steps to
verify title to mineral claim interests in which it has an interest in
accordance with industry standards for the current stage of exploration of such
properties, these procedures do not guarantee the Company's title. Property
title may be subject to unregistered prior agreements or transfers and may be
affected by undetected defects.</font></p>
&nbsp;
<p><font size="2" face="sans-serif"><b>2.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<font size="2" face="sans-serif"><b>SIGNIFICANT ACCOUNTING POLICIES</b></font></p>
<p style="margin-top: 0; margin-bottom: 0">&nbsp;</p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">a] Cash and Cash Equivalents</font></td>
  </tr>
</table>
<p align="left" style="text-indent: 0"><font size="2" face="sans-serif">Cash and
cash equivalents consist of cash on deposit with banks and highly liquid
short-term interest bearing securities with maturities at purchase dates of five
months or less.</font></p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">b] Mineral Claim Interests</font></td>
  </tr>
</table>
<p><font size="2" face="sans-serif">The Company records its mineral claim
interests at cost. Exploration expenditures relating to mineral claim interests
that have economically recoverable reserves or significant mineralization, which
in the view of management justify additional exploration and are deferred until
such time as the mineral claim interest to which they relate is brought into
production, or is sold, allowed to lapse or abandoned. The costs will be
amortized on a unit of production basis following commencement of production or
written off to operations if the mineral claim interest is abandoned. Mineral
option payments are recorded when received and are charged against the related
mineral claim interest cost. General exploration, overhead and administration
costs are expensed in the year they are incurred.</font></p>
<p><font size="2" face="sans-serif">The Company reviews capitalized costs on its
mineral claim interests on a periodic, or annual, basis and will recognize an
impairment in value based upon current exploration results and upon management's
assessment of the future probability of profitable revenues from the mineral
claim interests or from the sale of the mineral claim interests. Management's
assessment of the mineral claim interest's estimated current fair market value
may also be based upon a review of other mineral claim interest transactions
that have occurred in the same geographic area as that of the mineral claim
interest under review.</font></p>
<p>&nbsp;</p>
<p align="center"><font size="2" face="serif">20</font></p>
<hr noshade align="center" width="100%" size="2">
<a name="page_10"></a>
<div align="center">
  <center>
  <table>
    <tr>
      <td nowrap align="center"><b><font size="2" face="sans-serif">DRC
        RESOURCES CORPORATION</font></b><br>
        <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
        <b><font size="2" face="sans-serif">NOTES TO INTERIM FINANCIAL
        STATEMENTS</font></b><br>
        <b><font size="2" face="sans-serif">MARCH 31, 2005</font></b><br>
        <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
      </td>
    </tr>
  </table>
  </center>
</div>
<p>&nbsp;</p>
<table>
  <tr>
    <td nowrap><b><font size="2" face="sans-serif">2. SIGNIFICANT ACCOUNTING
      POLICIES [CONT'D]</font></b></td>
  </tr>
</table>
<p>&nbsp;</p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">b] Mineral Claim Interests
      [Cont'd]</font></td>
  </tr>
</table>
<p><font size="2" face="sans-serif">The Company has accounted for its mineral
interests as tangible assets under the Canadian GAAP CICA Accounting Standards
3061. The standard states that &quot;mining interests are items of property,
plant and equipment represented by the capitalized costs of acquired mineral
rights and the costs associated with exploration for and development of mineral
reserves.&quot;</font></p>
<p><font size="2" face="sans-serif">Upon the issuance of CICA Accounting
Standards 3062 for goodwill and other intangible assets the Company's management
concluded that the definition given of an intangible asset [&quot;an asset,
other than a financial asset, that lacks physical substance&quot;. [3062.05[c]]
does not apply to its mineral claim interests and therefore is not applicable to
the Company.</font></p>
<p><font size="2" face="sans-serif">Under the Canadian GAAP Accounting Standards
CICA 3061, the amortization of the asset would be over its useful life once the
asset is in production. Under the Canadian GAAP Accounting Standard CICA 3062 a
recognized intangible asset should be amortized over its useful life. Under each
of these standards the amortization process would be the same in respect to the
Company's mineral interests.</font></p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">c] Property and Equipment</font><br>
    </td>
  </tr>
</table>
<p><font size="2" face="sans-serif">Property and equipment are stated at cost
less accumulated amortization. Amortization is calculated using the
straight-line method at a rate of 5% per annum for building, 20% per annum for
transportation vehicles and 20% per annum for mining, office and computer
equipment. Amortization is recorded when the asset is fully operational.</font></p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">d] Grant Recoveries</font><br>
    </td>
  </tr>
</table>
<p><font size="2" face="sans-serif">Grant recoveries represent British Columbia
Mining Exploration Tax Credit claim refunds of 20% of eligible Canadian
exploration expenditures. These grants are for qualifying exploration
expenditures at a grassroots level for mineral claim interests in the Province
of B.C.</font></p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">e] (Loss) Earnings Per Share</font><br>
    </td>
  </tr>
</table>
<p><font size="2" face="sans-serif">Basic loss per common share is computed by
dividing the loss by the weighted average number of common shares outstanding
during the year. Diluted per share amounts reflect the potential dilution that
could occur if securities or other contracts to issue common shares were
exercised or converted to common shares. The treasury stock method is used to
determine the dilutive effect of stock options, warrants and other dilutive
instruments. No dilutive loss per share has been presented as the effect would
be antidilutive.</font></p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">f] Use of Estimates</font><br>
    </td>
  </tr>
</table>
<p><font size="2" face="sans-serif">The preparation of interim financial
statements in conformity with Canadian generally accepted accounting principles
requires the Company's management to make estimates and assumptions that affect
the amounts reported in these interim financial statements and accompanying
notes. Significant areas of estimate relate to mineral claim interests and
related deferred exploration costs, future site restoration costs, and the
future income tax asset valuation allowance. Actual results could differ from
those estimates. By their nature, these estimates are subject to measurement
uncertainty, and the impact on the interim financial statements of future
changes in such estimates could be material.</font></p>
<p align="center"><font size="2" face="serif">21</font></p>
<hr noshade align="center" width="100%" size="2">
<a name="page_12"></a>
<div align="center">
  <center>
  <table>
    <tr>
      <td nowrap align="center"><b><font size="2" face="sans-serif">DRC
        RESOURCES CORPORATION</font></b><br>
        <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
        <b><font size="2" face="sans-serif">NOTES TO INTERIM FINANCIAL
        STATEMENTS</font></b><br>
        <b><font size="2" face="sans-serif">MARCH 31, 2005</font></b><br>
        <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
      </td>
    </tr>
  </table>
  </center>
</div>
<p align="left"><b><font size="2" face="sans-serif">2. SIGNIFICANT ACCOUNTING
POLICIES (CONT'D)&nbsp;</font></b></p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">g] Income Taxes</font><br>
    </td>
  </tr>
</table>
<p><font size="2" face="sans-serif">The Company recognizes and measures, as
assets and liabilities, income taxes currently payable or recoverable as well as
future taxes which will arise from the realization of assets or settlement of
liabilities at their carrying amounts, which differ from their tax bases. Future
tax assets and liabilities are measured using substantially enacted or enacted
tax rates expected to apply to taxable income in the years in which such
temporary differences are expected to be recovered or settled. A valuation
allowance is recognized to the extent the recoverability of future income tax
assets is not likely.</font></p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">h] Foreign Currency Translation</font><br>
    </td>
  </tr>
</table>
<p><font size="2" face="sans-serif">The Company's foreign operation is
considered fully integrated with the Company and is translated into Canadian
dollars using the weighted average rates for the period for items included in
the statement of operations and deficit, except for amortization which is
translated at historical rates, the rate prevailing at the balance sheet date
for monetary assets and liabilities, and historical rates for all other items.
Exchange gains or losses on translation are included in the current period's
operations.</font></p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">i] Flow-Through Shares</font><br>
    </td>
  </tr>
</table>
<p><font size="2" face="sans-serif">The Company has adopted the new accounting
pronouncement relating to flow-through shares effective for all flow-through
share renunciations occurring after March 19, 2004. Under the Canadian Income
Tax Act an enterprise may issue securities referred to as flow-through shares
whereby the investor may claim the tax deductions arising from the related
resource expenditures. When resource expenditures are renounced to the investors
and the Company has reasonable assurance that the expenditures will be
completed, future income tax liabilities are recognized (renounced expenditures
multiplied by the effective corporate tax rate), thereby reducing share capital.
As the Company did not issue any flow through shares during the period, there is
no impact on the financial statements for the current period.</font></p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">j] Asset Retirement Obligations</font><br>
    </td>
  </tr>
</table>
<p><font size="2" face="sans-serif">The Company recognizes a liability for an
asset retirement obligation when it is determinable and calculates the liability
based upon undiscounted future payments to be made. A corresponding amount is
added to the carrying amount of the related long-lived asset, and this amount is
subsequently allocated to expense over its expected life. Adjustments will also
be made in subsequent periods to changes on asset retirement obligations due to
changes in estimates. As at March 31, 2005, the Company does not have any asset
retirement obligations.</font></p>
<table>
  <tr>
    <td width="12">&nbsp;</td>
    <td nowrap><font size="2" face="sans-serif">k] Stock-Based Compensation</font><br>
    </td>
  </tr>
</table>
<p><font size="2" face="sans-serif">The Company adopted the recommendations of
CICA Handbook Section 3870, stock-based compensation and other stock-based
payments, effective to all awards granted on or after January 1, 2003. This
established standards for the recognition, measurement and disclosure of
stock-based compensation and other stock-based payments made in exchange for
goods and services as the options vest with the recipients.</font></p>
<p><font size="2" face="sans-serif">As encouraged by CICA Handbook Section 3870,
the Company has enacted prospectively early adoption of the fair value based
method of accounting for awards issued to employees for the fiscal year
beginning January 1, 2003.</font></p>
<p><font size="2" face="sans-serif">The new standard requires that all
stock-based awards made to employees and non-employees be measured and
recognized using a fair value based method. In prior years, stock-based
compensation expense was only recognized when stock-based compensation awards
were made to non-employees, while pro-forma disclosure was acceptable for awards
made to employees and directors.</font></p>
<p align="center"><font size="2" face="serif">22</font></p>
<hr noshade align="center" width="100%" size="2">
<a name="page_13"></a>
<p align="center">&nbsp;
<table>
  <tr>
    <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
      <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
      <b><font size="2" face="sans-serif">NOTES TO INTERIM FINANCIAL STATEMENTS</font></b><br>
      <b><font size="2" face="sans-serif">MARCH 31, 2005</font></b><br>
      <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
    </td>
  </tr>
</table>
<p>&nbsp;</p>
<div align="justify">
  <table>
    <tr>
      <td nowrap><b><font size="2" face="sans-serif">3. MINERAL CLAIM INTERESTS</font></b></td>
    </tr>
  </table>
</div>
<ul>
  <li>
    <p style="margin-top: 0; margin-bottom: 10"><font size="2" face="sans-serif">Kamloops,
    B.C., &quot;Afton&quot; Mineral Interest</font><br>
    <p style="word-spacing: 0; margin-left: 0; margin-right: 0; margin-top: 10; margin-bottom: 10"><font size="2" face="sans-serif">The
    Company entered into an option agreement dated September 22, 1999 to acquire
    the Afton Mineral Claims Group, located in the Kamloops Mining Division of
    B.C. Consideration is the issuance of 2,000,000 common shares of the Company
    in stages, with 1,000,000 shares issuable on the effective date of
    shareholders' approval of the agreement, and 200,000 shares annually for the
    next five years thereafter. The Company also agreed to complete an aggregate
    work commitment of $6,500,000 over nine years and the vendor retains a 10%
    net profit royalty in the property. The Company can purchase back the 10%
    net profit royalty interest on or before December 1, 2010 for $2,000,000.</font></p>
    <p><font size="2" face="sans-serif">On July 19, 2000, 1,000,000 common
    shares of the Company were issued in accordance with the agreement. During
    the quarter ending March 31, 2002, the Company issued 200,000 common shares
    in accordance with the agreement for year two and in the quarter ending
    December 31, 2002, the Company issued 200,000 common shares in accordance
    with the agreement for year three. During the quarter ending December 31,
    2003, the Company issued 200,000 common shares in accordance with the
    agreement for year four. During the quarter ended December 31, 2004, the
    Company issued 200,000 common shares in accordance with the agreement for
    year five. The cost per share issued pursuant to the terms of the agreement
    was $0.30, for a total acquisition cost to the Company of $60,000. Claim
    work completed has extended the claims in good standing until March 8, 2011.</font></p>
    <p style="margin-top: 10; margin-bottom: 10"><font size="2" face="sans-serif">A
    director of the Company has a one-half interest in the option agreement
    above as one of the optionors. [See Notes 8 and 11]</font></p>
  </li>
</ul>
<ul>
  <li>
    <p style="margin-top: 10; margin-bottom: 10"><font size="2" face="sans-serif">Kamloops,
    B.C., &quot;Ajax&quot; Mineral Interest</font><br>
    <p style="word-spacing: 0; margin-left: 0; margin-right: 0; margin-top: 10; margin-bottom: 10"><font size="2" face="sans-serif">The
    Company owns a 100% interest in the Ajax - Python Claim Group, subject to a
    2% net smelter royalty, consisting</font> <font size="2" face="sans-serif">of
    72 mineral claims and 5 crown grants in the Kamloops Mining Division of B.C.
    The cost of the claims acquired was</font> <font size="2" face="sans-serif">100,000
    common shares of the Company at a market value of $0.50 per share. Claim
    work completed has extended</font> <font size="2" face="sans-serif">the
    claims in good standing until September 26, 2011.</font></p>
  </li>
  <li>
    <p style="margin-top: 10; margin-bottom: 10"><font size="2" face="sans-serif">Timmins,
    Ontario, Mineral Interest</font><br>
    </p>
    <p style="word-spacing: 0; margin: 0"><font size="2" face="sans-serif">The
    Company has a 100% interest in 11 mineral claims located in the Porcupine
    Mining Division of Ontario. The</font> <font size="2" face="sans-serif">mineral
    claims are in good standing until October 14, 2006.</font></p>
  </li>
</ul>
<p>&nbsp;</p>
<table border="0" cellspacing="1" cellpadding="0">
  <tr valign="bottom">
    <td width="1%" nowrap align="left"><b><font size="2" face="sans-serif">4.</font></b>&nbsp;</td>
    <td width="34%" nowrap align="left"><b><font size="2" face="sans-serif">PROPERTY
      AND EQUIPMENT</font></b>&nbsp;</td>
    <td width="11%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="left">&nbsp;</td>
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="12%" nowrap align="left">&nbsp;</td>
    <td width="4%" nowrap align="left">&nbsp;</td>
    <td width="15%" nowrap colspan="2" align="left"><b><font size="2" face="sans-serif">Net
      Book Value</font></b>&nbsp;</td>
    <td width="7%" nowrap align="left">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="6"></td>
    <td colspan="4">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="1%" nowrap align="left">&nbsp;</td>
    <td width="34%" nowrap align="left">&nbsp;</td>
    <td width="11%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="left">&nbsp;</td>
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="12%" nowrap align="left">&nbsp;</td>
    <td width="4%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="left">&nbsp;</td>
    <td width="5%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
      14)</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="1%" nowrap align="left">&nbsp;</td>
    <td width="34%" nowrap align="left">&nbsp;</td>
    <td width="11%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="left">&nbsp;</td>
    <td width="14%" nowrap colspan="2" align="right"><b><font size="2" face="sans-serif">Accumulated</font></b>&nbsp;</td>
    <td width="4%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Mar,
      31,</font></b>&nbsp;</td>
    <td width="5%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
      31,</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="1%" nowrap align="left">&nbsp;</td>
    <td width="34%" nowrap align="left">&nbsp;</td>
    <td width="11%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><u><font size="2" face="sans-serif">Cost</font></u></b>&nbsp;</td>
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="12%" nowrap align="right"><b><u><font size="2" face="sans-serif">Amortization</font></u></b>&nbsp;</td>
    <td width="4%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><u><font size="2" face="sans-serif">2005</font></u></b>&nbsp;</td>
    <td width="5%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="right"><b><u><font size="2" face="sans-serif">2004</font></u></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="1%" nowrap align="left">&nbsp;</td>
    <td width="34%" nowrap align="left"><font size="2" face="sans-serif">Land</font>&nbsp;</td>
    <td width="11%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">56,900</font>&nbsp;</td>
    <td width="2%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="12%" nowrap align="right">
      <p align="right">-</p>
    </td>
    <td width="4%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">56,900</font>&nbsp;</td>
    <td width="5%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">56,900</font>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="1%" nowrap align="left">&nbsp;</td>
    <td width="34%" nowrap align="left"><font size="2" face="sans-serif">Building</font>&nbsp;</td>
    <td width="11%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">104,700</font>&nbsp;</td>
    <td width="2%" nowrap align="right">&nbsp;</td>
    <td width="12%" nowrap align="right"><font size="2" face="sans-serif">6,543</font>&nbsp;</td>
    <td width="4%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">98,157</font>&nbsp;</td>
    <td width="5%" nowrap align="right">&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">99,465</font>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="1%" nowrap align="left">&nbsp;</td>
    <td width="34%" nowrap align="left"><font size="2" face="sans-serif">Transportation
      vehicles</font>&nbsp;</td>
    <td width="11%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">130,071</font>&nbsp;</td>
    <td width="2%" nowrap align="right">&nbsp;</td>
    <td width="12%" nowrap align="right"><font size="2" face="sans-serif">38,923</font>&nbsp;</td>
    <td width="4%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">91,148</font>&nbsp;</td>
    <td width="5%" nowrap align="right">&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">97,651</font>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="1%" nowrap align="left">&nbsp;</td>
    <td width="34%" nowrap align="left"><font size="2" face="sans-serif">Mining
      equipment</font>&nbsp;</td>
    <td width="11%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">212,926</font>&nbsp;</td>
    <td width="2%" nowrap align="right">&nbsp;</td>
    <td width="12%" nowrap align="right"><font size="2" face="sans-serif">10,646</font>&nbsp;</td>
    <td width="4%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">202,280</font>&nbsp;</td>
    <td width="5%" nowrap align="right">&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">212,926</font>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="1%" nowrap align="left">&nbsp;</td>
    <td width="34%" nowrap align="left"><font size="2" face="sans-serif">Office
      and computer equipment</font>&nbsp;</td>
    <td width="11%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">81,569</font>&nbsp;</td>
    <td width="2%" nowrap align="right">&nbsp;</td>
    <td width="12%" nowrap align="right"><font size="2" face="sans-serif">34,046</font>&nbsp;</td>
    <td width="4%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">47,523</font>&nbsp;</td>
    <td width="5%" nowrap align="right">&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">41,196</font>&nbsp;</td>
  </tr>
  <tr>
    <td></td>
    <td colspan="9">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="1%" nowrap align="left">&nbsp;</td>
    <td width="34%" nowrap align="left">&nbsp;</td>
    <td width="11%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">586,166</font>&nbsp;</td>
    <td width="2%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="12%" nowrap align="right"><font size="2" face="sans-serif">90,158</font>&nbsp;</td>
    <td width="4%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">496,008</font>&nbsp;</td>
    <td width="5%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">508,138</font>&nbsp;</td>
  </tr>
  <tr>
    <td></td>
    <td colspan="9">
      <hr noshade size="2">
    </td>
  </tr>
</table>
<br>
<p align="center"><font size="2" face="serif">23</font></p>
<hr noshade align="center" width="100%" size="2">
<a name="page_14"></a>
<p align="center">&nbsp;
<table>
  <tr>
    <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
      <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
      <b><font size="2" face="sans-serif">NOTES TO INTERIM FINANCIAL STATEMENTS</font></b><br>
      <b><font size="2" face="sans-serif">MARCH 31, 2005</font></b><br>
      <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b>
      <p><br>
      </p>
    </td>
  </tr>
</table>
<div align="justify">
  <table border="0" cellspacing="1" cellpadding="0">
    <tr valign="bottom">
      <td width="60%" nowrap align="left"><b><font size="2" face="sans-serif">5.
        CAPITAL LEASE PAYABLE</font></b>&nbsp;</td>
      <td width="16%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Three</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
        14)</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="60%" nowrap align="left">&nbsp;</td>
      <td width="16%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Months</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Year</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="60%" nowrap align="left">&nbsp;</td>
      <td width="16%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="60%" nowrap align="left">&nbsp;</td>
      <td width="16%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
        31,</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
        31,</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="60%" nowrap align="left">&nbsp;</td>
      <td width="16%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><u><font size="2" face="sans-serif">2005</font></u></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><u><font size="2" face="sans-serif">2004</font></u></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="60%" nowrap align="left"><font size="2" face="sans-serif">GMAC,
        0%, repayable in monthly instalments of $1,889,</font>&nbsp;</td>
      <td width="16%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="60%" nowrap align="left"><font size="2" face="sans-serif">matures
        April 30, 2007</font>&nbsp;</td>
      <td width="16%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">47,232</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">52,899</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="5">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="60%" nowrap align="left"><font size="2" face="sans-serif">Less:
        current portion due within one year</font>&nbsp;</td>
      <td width="16%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">(22,671)</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">(22,671)</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="5">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="60%" nowrap align="left">&nbsp;</td>
      <td width="16%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">24,561</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">30,228</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="5">
        <hr noshade size="2">
      </td>
    </tr>
  </table>
</div>
<br>
<p><b><font size="2" face="sans-serif">6. INCOME TAXES</font></b></p>
<table border="0" cellspacing="1" cellpadding="0">
  <tr valign="bottom">
    <td width="2%" nowrap align="left"><font size="2" face="sans-serif">a]</font>&nbsp;</td>
    <td width="65%" nowrap align="left"><font size="2" face="sans-serif">Profit
      [loss] before income taxes are as follows:</font>&nbsp;</td>
    <td width="7%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Three</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
      14)</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Months</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Year</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
      31,</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
      31,</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">2005</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">2004</font></b>&nbsp;</td>
  </tr>
  <tr>
    <td></td>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
  <tr>
    <td colspan="6">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left"><font size="2" face="sans-serif">Canada</font>&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">(252,606)</font>&nbsp;</td>
    <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">(1,222,636)</font>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left"><font size="2" face="sans-serif">U.S.A.</font>&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right">-</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">19,831</font>&nbsp;</td>
  </tr>
  <tr>
    <td></td>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left"><b><font size="2" face="sans-serif">TOTAL</font></b>&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">(252,606)</font>&nbsp;</td>
    <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">(1,202,805)</font>&nbsp;</td>
  </tr>
  <tr>
    <td></td>
    <td colspan="5">
      <hr noshade size="2">
    </td>
  </tr>
  <tr>
    <td colspan="6">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left"><font size="2" face="sans-serif">b]</font>&nbsp;</td>
    <td width="65%" nowrap align="left"><font size="2" face="sans-serif">The
      provision for income taxes consist of the following:</font>&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Three</font></b>&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
      14)</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Months</font></b>&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Year</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
      31,</font></b>&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
      31,</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">2005</font></b>&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">2004</font></b>&nbsp;</td>
  </tr>
  <tr>
    <td></td>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left"><font size="2" face="sans-serif">Future</font>&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right">&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left"><font size="2" face="sans-serif">Canada</font>&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">787</font>&nbsp;</td>
    <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">46,470</font>&nbsp;</td>
  </tr>
  <tr>
    <td></td>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left"><b><font size="2" face="sans-serif">TOTAL
      INCOME TAX EXPENSE</font></b>&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">787</font>&nbsp;</td>
    <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">46,470</font>&nbsp;</td>
  </tr>
  <tr>
    <td></td>
    <td colspan="5">
      <hr noshade size="2">
    </td>
  </tr>
  <tr>
    <td colspan="6">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left"><font size="2" face="sans-serif">c]</font>&nbsp;</td>
    <td width="65%" nowrap align="left"><font size="2" face="sans-serif">Temporary
      differences that give rise to future income taxes are as follows:</font>&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Three</font></b>&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
      14)</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Months</font></b>&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Year</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
      31,</font></b>&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
      31,</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left">&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">2005</font></b>&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">2004</font></b>&nbsp;</td>
  </tr>
  <tr>
    <td></td>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
  <tr>
    <td colspan="6">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left"><font size="2" face="sans-serif">Long-term
      future tax liability</font>&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right">&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left"><font size="2" face="sans-serif">Mineral
      Claim Interests</font>&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">919,159</font>&nbsp;</td>
    <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">909,057</font>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left"><font size="2" face="sans-serif">Equipment</font>&nbsp;</td>
    <td width="7%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">4,303</font>&nbsp;</td>
    <td width="3%" nowrap align="right">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">13,618</font>&nbsp;</td>
  </tr>
  <tr>
    <td></td>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="2%" nowrap align="left">&nbsp;</td>
    <td width="65%" nowrap align="left"><b><font size="2" face="sans-serif">TOTAL
      LONG-TERM FUTURE INCOME TAX LIABILITY</font></b>&nbsp;</td>
    <td width="7%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">923,462</font>&nbsp;</td>
    <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">922,675</font>&nbsp;</td>
  </tr>
  <tr>
    <td></td>
    <td colspan="5">
      <hr noshade size="2">
    </td>
  </tr>
</table>
<br>
<p align="center"><font size="2" face="serif">24</font></p>
<hr noshade align="center" width="100%" size="2">
<a name="page_15"></a>
<p align="center">&nbsp;
<table>
  <tr>
    <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
      <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
      <b><font size="2" face="sans-serif">NOTES TO INTERIM FINANCIAL STATEMENTS</font></b><br>
      <b><font size="2" face="sans-serif">MARCH 31, 2005</font></b><br>
      <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b>
      <p><br>
      </p>
    </td>
  </tr>
</table>
<div align="justify">
  <table border="0" cellspacing="1" cellpadding="0">
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">6.
        INCOME TAXES [CONT'D]</font></b>&nbsp;</td>
      <td width="7%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="5">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">d]
        Temporary differences that could give rise to future income tax assets:</font>&nbsp;</td>
      <td width="7%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><b><font size="2" face="sans-serif">Three</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
        14)</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="7%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><b><font size="2" face="sans-serif">Months</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Year</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="7%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="7%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
        31,</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
        31,</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="7%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="right"><b><font size="2" face="sans-serif">2005</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">2004</font></b>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="5">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Long-Term
        Future Income Tax Assets</font>&nbsp;</td>
      <td width="7%" nowrap align="left">&nbsp;</td>
      <td width="11%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Loss
        carry forwards</font>&nbsp;</td>
      <td width="7%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">1,021,735</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">948,462</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Share
        issue costs</font>&nbsp;</td>
      <td width="7%" nowrap align="right">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">348,382</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">403,265</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="5">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Total
        Long-Term Future Income Tax Assets</font>&nbsp;</td>
      <td width="7%" nowrap align="right">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">1,370,117</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">1,351,727</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Less
        Valuation Allowance</font>&nbsp;</td>
      <td width="7%" nowrap align="right">&nbsp;</td>
      <td width="11%" nowrap align="right"><font size="2" face="sans-serif">(1,370,117)</font>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">(1,351,727)</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="5">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">NET
        LONG-TERM FUTURE INCOME TAX ASSETS</font></b>&nbsp;</td>
      <td width="7%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="11%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right">-</td>
    </tr>
    <tr>
      <td colspan="5">
        <hr noshade size="2">
      </td>
    </tr>
  </table>
</div>
<br>
<p><font size="2" face="sans-serif">e] Subject to confirmation by the income tax
authorities, the Company has the following undeducted tax pools:</font></p>
<table border="0" cellspacing="1" cellpadding="0">
  <tr valign="bottom">
    <td width="58%" nowrap align="left">&nbsp;</td>
    <td width="15%" nowrap align="left">&nbsp;</td>
    <td width="11%" nowrap align="right"><b><font size="2" face="sans-serif">Three</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
      14)</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="58%" nowrap align="left">&nbsp;</td>
    <td width="15%" nowrap align="left">&nbsp;</td>
    <td width="11%" nowrap align="right"><b><font size="2" face="sans-serif">Months</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Year</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="58%" nowrap align="left">&nbsp;</td>
    <td width="15%" nowrap align="left">&nbsp;</td>
    <td width="11%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="58%" nowrap align="left">&nbsp;</td>
    <td width="15%" nowrap align="left">&nbsp;</td>
    <td width="11%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
      31,</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
      31,</font></b>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="58%" nowrap align="left">&nbsp;</td>
    <td width="15%" nowrap align="left">&nbsp;</td>
    <td width="11%" nowrap align="right"><b><font size="2" face="sans-serif">2,005</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">2004</font></b>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="58%" nowrap align="left"><font size="2" face="sans-serif">Canadian
      Exploration Expenses</font>&nbsp;</td>
    <td width="15%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="11%" nowrap align="right"><font size="2" face="sans-serif">6,219,607</font>&nbsp;</td>
    <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">2,866,209</font>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="58%" nowrap align="left"><font size="2" face="sans-serif">Canadian
      Development Expenses</font>&nbsp;</td>
    <td width="15%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="11%" nowrap align="right"><font size="2" face="sans-serif">651,480</font>&nbsp;</td>
    <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">651,480</font>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="58%" nowrap align="left"><font size="2" face="sans-serif">Undepreciated
      Capital Costs</font>&nbsp;</td>
    <td width="15%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="11%" nowrap align="right"><font size="2" face="sans-serif">400,821</font>&nbsp;</td>
    <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">415,039</font>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="58%" nowrap align="left"><font size="2" face="sans-serif">Share
      Issue Costs</font>&nbsp;</td>
    <td width="15%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="11%" nowrap align="right"><font size="2" face="sans-serif">978,653</font>&nbsp;</td>
    <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">1,071,942</font>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="58%" nowrap align="left"><font size="2" face="sans-serif">Non-Capital
      Losses, expiring at various dates to 2015</font>&nbsp;</td>
    <td width="15%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="11%" nowrap align="right"><font size="2" face="sans-serif">2,868,432</font>&nbsp;</td>
    <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">2,521,165</font>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5">
      <hr noshade size="1">
    </td>
  </tr>
</table>
<br>
<p><b><font size="2" face="sans-serif">7. SHARE CAPITAL</font></b></p>
<p><font size="2" face="sans-serif">a] Authorized</font></p>
<p><font size="2" face="sans-serif">40,000,000 common shares without par value</font></p>
<p><font size="2" face="sans-serif">b] Issued</font></p>
<table border="0" cellspacing="1" cellpadding="0">
  <tr valign="bottom">
    <td width="59%" nowrap align="left">&nbsp;</td>
    <td width="26%" nowrap align="right"><b><font size="2" face="sans-serif">Number
      Of</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="59%" nowrap align="left">&nbsp;</td>
    <td width="26%" nowrap align="right"><b><font size="2" face="sans-serif">Shares</font></b>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Amount</font></b>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="59%" nowrap align="left"><b><font size="2" face="sans-serif">Balance,
      December 31, 2003</font></b>&nbsp;</td>
    <td width="26%" nowrap align="right"><font size="2" face="sans-serif">12,901,766</font>&nbsp;</td>
    <td width="3%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">30,398,361</font>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="59%" nowrap align="left"><font size="2" face="sans-serif">Issued
      for cash</font>&nbsp;</td>
    <td width="26%" nowrap align="left">&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="59%" nowrap align="right">
      <p align="left"><font size="2" face="sans-serif">Exercise of stock options</font>&nbsp;</p>
    </td>
    <td width="26%" nowrap align="right"><font size="2" face="sans-serif">840,000</font>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">2,550,000</font>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="59%" nowrap align="left"><font size="2" face="sans-serif">Issued
      for mineral claim interests</font>&nbsp;</td>
    <td width="26%" nowrap align="right"><font size="2" face="sans-serif">200,000</font>&nbsp;</td>
    <td width="3%" nowrap align="left">&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">60,000</font>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4">
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="59%" nowrap align="left"><b><font size="2" face="sans-serif">Balance,
      December 31, 2004 and March 31, 2005</font></b>&nbsp;</td>
    <td width="26%" nowrap align="right"><font size="2" face="sans-serif">13,941,766</font>&nbsp;</td>
    <td width="3%" nowrap align="left"><font size="2" face="sans-serif">$</font>&nbsp;</td>
    <td width="10%" nowrap align="right"><font size="2" face="sans-serif">33,008,361</font>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4">
      <hr noshade size="2">
    </td>
  </tr>
</table>
<br>
<ul>
  <li><font size="2" face="sans-serif">Year 2004</font></li>
</ul>
<p style="text-indent: 45pt" align="left"><br>
<font size="2" face="sans-serif">During the year the Company issued 690,000
shares upon the exercise of stock options at $3.00 per share. Cash</font> <font size="2" face="sans-serif">proceeds
of $2,070,000 were received by the Company.</font></p>
<p style="text-indent: 45pt"><br>
<font size="2" face="sans-serif">During the year the Company issued 100,000
shares upon the exercise of stock options at $3.05 per share. Cash</font> <font size="2" face="sans-serif">proceeds
of $305,000 were received by the Company.</font></p>
<p align="center"><font size="2" face="serif">25</font></p>
<hr noshade align="center" width="100%" size="2">
<a name="page_16"></a>
<p align="center">&nbsp;
<table>
  <tr>
    <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
      <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
      <b><font size="2" face="sans-serif">NOTES TO INTERIM FINANCIAL STATEMENTS</font></b><br>
      <b><font size="2" face="sans-serif">MARCH 31, 2005</font></b><br>
      <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
    </td>
  </tr>
</table>
<div align="justify">
  <table border="0" cellspacing="0" cellpadding="0">
    <tr>
      <td nowrap valign="top"><b><font size="2" face="sans-serif">7.</font></b>&nbsp;&nbsp;&nbsp;
        &nbsp;</td>
      <td width="100%"><b><font size="2" face="sans-serif">SHARE CAPITAL
        [CONT'D]</font></b></td>
    </tr>
    <tr>
      <td colspan="2">&nbsp;</td>
    </tr>
  </table>
</div>
&nbsp;
<ul>
  <li><font size="2" face="sans-serif">Year 2004 (Con't)</font></li>
</ul>
<div align="justify">
  <font size="2" face="sans-serif">During the year the Company issued 50,000
  shares upon the exercise of stock options at $3.50 per share. Cash proceeds of
  $175,000 were received by the Company.</font>
  <p><font size="2" face="sans-serif">During the last quarter ending December
  31, 2004, 200,000 shares were issued at a price of $0.30 per share for the
  2004 option payments in accordance with the Afton mineral claim option
  agreement.</font></p>
  &nbsp;
  <p><font size="2" face="sans-serif">c] Stock Options</font></p>
  <p><font size="2" face="sans-serif">The Company had 925,000 stock options
  outstanding as at March 31, 2005. The 2003 stock option plan allows the
  Company to grant up to a total of 1,000,000 stock options. All future stock
  options granted must be under the new stock option plan. The term of the stock
  options granted are fixed by the board of directors and are not to exceed ten
  years. The exercise prices of the stock options are determined by the board of
  directors but shall not be less than the closing price of the Company's common
  shares on the day preceding the day on which the directors grant the stock
  option, less any discount permitted by the TSX. The stock options vest
  immediately on the date of grant unless otherwise required by the exchange,
  however, a four month hold period applies to all shares issued under each
  stock option, commencing on the date of grant.</font></p>
  <p><font size="2" face="sans-serif">Other terms and conditions are as follows:
  all stock options are non-transferable; no more than a 5% of the issued shares
  may be granted to any one individual in any 12 month period; disinterested
  shareholder approval must be obtained for [i] any reduction in the exercise
  price of an outstanding option, if the holder is an insider, [ii] any grant of
  stock options to insiders, within a 12 month period, exceeding 5% of the
  Company's issued shares; and stock options will be reclassified in the event
  of any consolidation, subdivision, conversion or exchange of the Company's
  common shares.</font></p>
  <div align="justify">
    <table border="0" cellspacing="1" cellpadding="0">
      <tr valign="bottom">
        <td width="41%" nowrap align="left">&nbsp;</td>
        <td width="30%" nowrap align="left">&nbsp;</td>
        <td width="14%" nowrap align="right"><b><font size="2" face="sans-serif">Weighted</font></b>&nbsp;</td>
        <td width="12%" nowrap align="right"><b><font size="2" face="sans-serif">Weighted</font></b>&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left">&nbsp;</td>
        <td width="30%" nowrap align="left">&nbsp;</td>
        <td width="14%" nowrap align="right"><b><font size="2" face="sans-serif">Average</font></b>&nbsp;</td>
        <td width="12%" nowrap align="right"><b><font size="2" face="sans-serif">Average</font></b>&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left">&nbsp;</td>
        <td width="30%" nowrap align="right"><b><font size="2" face="sans-serif">Options</font></b>&nbsp;</td>
        <td width="14%" nowrap align="right"><b><font size="2" face="sans-serif">Exercise</font></b>&nbsp;</td>
        <td width="12%" nowrap align="right"><b><font size="2" face="sans-serif">Remaining</font></b>&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left">&nbsp;</td>
        <td width="30%" nowrap align="right"><b><font size="2" face="sans-serif">Outstanding</font></b>&nbsp;</td>
        <td width="14%" nowrap align="right"><b><font size="2" face="sans-serif">Price</font></b>&nbsp;</td>
        <td width="12%" nowrap align="right"><b><font size="2" face="sans-serif">Life
          [Years]</font></b>&nbsp;</td>
      </tr>
      <tr>
        <td colspan="4">
          <hr noshade size="1">
        </td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left"><b><font size="2" face="sans-serif">Balance,
          December 31, 2003</font></b>&nbsp;</td>
        <td width="30%" nowrap align="right"><font size="2" face="sans-serif">840,000</font>&nbsp;</td>
        <td width="14%" nowrap align="right"><font size="2" face="sans-serif">$3.03</font>&nbsp;</td>
        <td width="12%" nowrap align="right"><font size="2" face="sans-serif">0.90</font>&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left"><font size="2" face="sans-serif">Granted</font>&nbsp;</td>
        <td width="30%" nowrap align="right"><font size="2" face="sans-serif">100,000</font>&nbsp;</td>
        <td width="14%" nowrap align="right"><font size="2" face="sans-serif">$6.50</font>&nbsp;</td>
        <td width="12%" nowrap align="left">&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left"><font size="2" face="sans-serif">Granted</font>&nbsp;</td>
        <td width="30%" nowrap align="right"><font size="2" face="sans-serif">600,000</font>&nbsp;</td>
        <td width="14%" nowrap align="right"><font size="2" face="sans-serif">$4.60</font>&nbsp;</td>
        <td width="12%" nowrap align="left">&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left"><font size="2" face="sans-serif">Exercised</font>&nbsp;</td>
        <td width="30%" nowrap align="right"><font size="2" face="sans-serif">(690,000)</font>&nbsp;</td>
        <td width="14%" nowrap align="right"><font size="2" face="sans-serif">$3.00</font>&nbsp;</td>
        <td width="12%" nowrap align="left">&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left"><font size="2" face="sans-serif">Exercised</font>&nbsp;</td>
        <td width="30%" nowrap align="right"><font size="2" face="sans-serif">(100,000)</font>&nbsp;</td>
        <td width="14%" nowrap align="right"><font size="2" face="sans-serif">$3.05</font>&nbsp;</td>
        <td width="12%" nowrap align="left">&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left"><font size="2" face="sans-serif">Exercised</font>&nbsp;</td>
        <td width="30%" nowrap align="right"><font size="2" face="sans-serif">(50,000)</font>&nbsp;</td>
        <td width="14%" nowrap align="right"><font size="2" face="sans-serif">$3.50</font>&nbsp;</td>
        <td width="12%" nowrap align="left">&nbsp;</td>
      </tr>
      <tr>
        <td colspan="4">
          <hr noshade size="1">
        </td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left"><b><font size="2" face="sans-serif">Balance,
          December 31, 2004</font></b>&nbsp;</td>
        <td width="30%" nowrap align="right"><font size="2" face="sans-serif">700,000</font>&nbsp;</td>
        <td width="14%" nowrap align="right"><font size="2" face="sans-serif">$4.87</font>&nbsp;</td>
        <td width="12%" nowrap align="right"><font size="2" face="sans-serif">4.25</font>&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left"><font size="2" face="sans-serif">Granted</font>&nbsp;</td>
        <td width="30%" nowrap align="right"><font size="2" face="sans-serif">50,000</font>&nbsp;</td>
        <td width="14%" nowrap align="right"><font size="2" face="sans-serif">$6.81</font>&nbsp;</td>
        <td width="12%" nowrap align="left">&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left"><font size="2" face="sans-serif">Granted</font>&nbsp;</td>
        <td width="30%" nowrap align="right"><font size="2" face="sans-serif">175,000</font>&nbsp;</td>
        <td width="14%" nowrap align="right"><font size="2" face="sans-serif">$7.00</font>&nbsp;</td>
        <td width="12%" nowrap align="left">&nbsp;</td>
      </tr>
      <tr>
        <td colspan="4">
          <hr noshade size="1">
        </td>
      </tr>
      <tr valign="bottom">
        <td width="41%" nowrap align="left"><b><font size="2" face="sans-serif">Balance
          March 31, 2005</font></b>&nbsp;</td>
        <td width="30%" nowrap align="right"><font size="2" face="sans-serif">925,000</font>&nbsp;</td>
        <td width="14%" nowrap align="right"><font size="2" face="sans-serif">$5.37</font>&nbsp;</td>
        <td width="12%" nowrap align="right"><font size="2" face="sans-serif">4.25</font>&nbsp;</td>
      </tr>
      <tr>
        <td colspan="4">
          <hr noshade size="2">
        </td>
      </tr>
    </table>
  </div>
  <br>
  <div align="justify">
    <table border="0" cellspacing="1" cellpadding="0">
      <tr valign="bottom">
        <td width="53%" nowrap align="left"><font size="2" face="sans-serif">The
          expiry dates of the options are:</font>&nbsp;</td>
        <td width="19%" nowrap align="left">&nbsp;</td>
        <td width="18%" nowrap align="left">&nbsp;</td>
        <td width="8%" nowrap align="left">&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="53%" nowrap align="left"><font size="2" face="sans-serif">April
          13, 2009</font>&nbsp;</td>
        <td width="19%" nowrap align="right"><font size="2" face="sans-serif">100,000</font>&nbsp;</td>
        <td width="18%" nowrap align="left"><font size="2" face="sans-serif">options
          @</font>&nbsp;</td>
        <td width="8%" nowrap align="left"><font size="2" face="sans-serif">$6.50</font>&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="53%" nowrap align="left"><font size="2" face="sans-serif">October
          12, 2009</font>&nbsp;</td>
        <td width="19%" nowrap align="right"><font size="2" face="sans-serif">600,000</font>&nbsp;</td>
        <td width="18%" nowrap align="left"><font size="2" face="sans-serif">options
          @</font>&nbsp;</td>
        <td width="8%" nowrap align="left"><font size="2" face="sans-serif">$4.60</font>&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="53%" nowrap align="left"><font size="2" face="sans-serif">March
          10, 2010</font>&nbsp;</td>
        <td width="19%" nowrap align="right"><font size="2" face="sans-serif">50,000</font>&nbsp;</td>
        <td width="18%" nowrap align="left"><font size="2" face="sans-serif">options
          @</font>&nbsp;</td>
        <td width="8%" nowrap align="left"><font size="2" face="sans-serif">$6.81</font>&nbsp;</td>
      </tr>
      <tr valign="bottom">
        <td width="53%" nowrap align="left"><font size="2" face="sans-serif">March
          22, 2010</font>&nbsp;</td>
        <td width="19%" nowrap align="right"><font size="2" face="sans-serif">175,000</font>&nbsp;</td>
        <td width="18%" nowrap align="left"><font size="2" face="sans-serif">options
          @</font>&nbsp;</td>
        <td width="8%" nowrap align="left"><font size="2" face="sans-serif">$7.00</font>&nbsp;</td>
      </tr>
    </table>
  </div>
  <br>
  <p align="center"><font size="2" face="serif">26</font></p>
  <hr noshade align="center" width="100%" size="2">
  <a name="page_17"></a>
  <p align="center">&nbsp;
  <table>
    <tr>
      <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
        <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
        <b><font size="2" face="sans-serif">NOTES TO INTERIM FINANCIAL
        STATEMENTS</font></b><br>
        <b><font size="2" face="sans-serif">MARCH 31, 2005</font></b><br>
        <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
      </td>
    </tr>
  </table>
  <div align="justify">
    <table>
      <tr>
        <td nowrap><b><font size="2" face="sans-serif">7. SHARE CAPITAL [CONT'D]</font></b>
          <p><font size="2" face="sans-serif">c] Stock Options [Cont'd]</font><br>
          </p>
        </td>
      </tr>
    </table>
  </div>
  <p><font size="2" face="sans-serif">During the quarter ended March 31, 2005,
  the Company granted incentive stock options to certain directors of the
  Company to purchase 50,000 common shares at an exercise price of $6.81 per
  share and 175,000 common shares at an exercise price of $7.00 per share. The
  50,000 options are exercisable on or before March 10, 2010 and the 175,000
  options are exercisable on or before March 22, 2010. The fair value of these
  options is $493,915 with the Company expensing the assigned value. The values
  were arrived at by using the Black-Scholes option pricing model with the
  following weighted-average assumptions: risk-free rates of 3.00 - 3.29%;
  volatility factor of the expected market price of the Company's common stock
  at 45%; option lives of 2.5 years; and no expected dividends.</font></p>
  <p><font size="2" face="sans-serif">On October 12, 2004, the Company granted
  the new President and chief executive officer the option to purchase 600,000
  common shares at an exercise price of $4.60 per share in accordance with the
  Company's Stock Option Plan. The options are exercisable on or before October
  12, 2009. The fair value of these options was $823,440 with the Company
  expensing this assigned value. The value was arrived at by using the Black-Scholes
  option pricing model with the following weighted-average assumptions:
  risk-free rate of 3.44%; volatility factor of the expected market price of the
  Company's common stock at 43%; option lives of 2.5 years; and no expected
  dividends.</font></p>
  <p><font size="2" face="sans-serif">On April 13, 2004, the Company granted the
  Vice President of Exploration and Development the option to purchase 100,000
  common shares at an exercise price of $6.50 per share in accordance with the
  Company's Stock Option Plan. The options vest as to 50,000 on January 1, 2005
  and 50,000 on January 1, 2006, and were amended to expire on April 13, 2009,
  subject to regulatory consent. The fair value of the vested options is $78,700
  with the Company expensing this assigned value. The value was arrived at by
  using the Black-Scholes option pricing model with the following
  weighted-average assumptions; risk-free rate of 3.44%; volatility factor of
  the expected market price of the Company's common stock at 43%; option lives
  of 2.5 years; and no expected dividends.</font></p>
  <table border="0" cellspacing="1" cellpadding="0">
    <tr valign="bottom">
      <td width="4%" nowrap align="left"><font size="2" face="sans-serif">d]</font>&nbsp;</td>
      <td width="52%" nowrap align="left"><font size="2" face="sans-serif">Compensation
        Options</font>&nbsp;</td>
      <td width="18%" nowrap align="left">&nbsp;</td>
      <td width="17%" nowrap align="left">&nbsp;</td>
      <td width="7%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="5">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="52%" nowrap align="left"><font size="2" face="sans-serif">The
        expiry dates of the options are:</font>&nbsp;</td>
      <td width="18%" nowrap align="left">&nbsp;</td>
      <td width="17%" nowrap align="left">&nbsp;</td>
      <td width="7%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="52%" nowrap align="left"><font size="2" face="sans-serif">November
        6, 2005</font>&nbsp;</td>
      <td width="18%" nowrap align="right"><font size="2" face="sans-serif">345,000</font>&nbsp;</td>
      <td width="17%" nowrap align="left"><font size="2" face="sans-serif">options
        @</font>&nbsp;</td>
      <td width="7%" nowrap align="left"><font size="2" face="sans-serif">$7.50</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="52%" nowrap align="left"><font size="2" face="sans-serif">October
        13, 2006</font>&nbsp;</td>
      <td width="18%" nowrap align="right"><font size="2" face="sans-serif">50,000</font>&nbsp;</td>
      <td width="17%" nowrap align="left"><font size="2" face="sans-serif">options
        @</font>&nbsp;</td>
      <td width="7%" nowrap align="left"><font size="2" face="sans-serif">$4.60</font>&nbsp;</td>
    </tr>
  </table>
  <br>
  <p><font size="2" face="sans-serif">On October 13, 2004, the Company granted
  Orion Securities Inc. a compensation stock option for services rendered with
  respect to recruiting the new President and chief executive officer for the
  Company. The Company granted an option to purchase 50,000 common shares at an
  exercise price of $4.60 per share expiring on October 13, 2006. The fair value
  of these options was $44,750 with the Company expensing this assigned value.
  The value was arrived at by using the Black-Scholes option pricing model with
  the following weighted-average assumptions: risk-free rate of 3.21%;
  volatility factor of the expected market price of the Company's common stock
  of 36%; option lives of 1.5 years; and no expected dividends.</font></p>
  <table border="0" cellspacing="1" cellpadding="0">
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><b><font size="2" face="sans-serif">8.
        RELATED PARTY TRANSACTIONS</font></b>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Three</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
        14)</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Months</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Year</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
        31,</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
        31</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left">&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">2005</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">2004</font></b>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="5">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="5">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">For
        wages and consulting services charged by the President/Director of the</font>&nbsp;</td>
      <td width="8%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="67%" nowrap align="left"><font size="2" face="sans-serif">Company.</font>&nbsp;</td>
      <td width="8%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">62,500</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">46,460</font>&nbsp;</td>
    </tr>
  </table>
  <br>
  <p align="center"><font size="2" face="serif">27</font></p>
  <hr noshade align="center" width="100%" size="2">
  <a name="page_18"></a><a name="page_19"></a>
  <table border="0" cellspacing="1" cellpadding="0">
    <tr valign="bottom">
      <td align="center" width="100%" colspan="6"><b><font size="2" face="sans-serif">DRC
        RESOURCES CORPORATION</font></b></td>
    </tr>
    <tr valign="bottom">
      <td align="center" width="100%" colspan="6"><b><font size="2" face="sans-serif">[An
        Exploration Stage Company]</font></b></td>
    </tr>
    <tr valign="bottom">
      <td align="center" width="100%" colspan="6"><b><font size="2" face="sans-serif">NOTES
        TO INTERIM FINANCIAL STATEMENTS</font></b></td>
    </tr>
    <tr valign="bottom">
      <td align="center" width="100%" colspan="6"><b><font size="2" face="sans-serif">MARCH
        31, 2005</font></b></td>
    </tr>
    <tr valign="bottom">
      <td align="center" width="100%" colspan="6"><b><font size="2" face="sans-serif">(Unaudited
        - See Notice to Reader)</font></b></td>
    </tr>
    <tr>
      <td colspan="6">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left"><b><font size="2" face="sans-serif">8.</font></b>&nbsp;</td>
      <td width="69%" nowrap align="left"><b><font size="2" face="sans-serif">RELATED
        PARTY TRANSACTIONS [CONT'D]</font></b>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Three</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
        14)</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Months</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Year</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
        31,</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
        31</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">2005</font></b>&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">2004</font></b>&nbsp;</td>
    </tr>
    <tr>
      <td></td>
      <td colspan="5">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="6">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">For
        consulting, administration and exploration costs charged by a Director
        of the</font>&nbsp;</td>
      <td width="4%" nowrap align="left">&nbsp;</td>
      <td width="10%" nowrap align="left">&nbsp;</td>
      <td width="3%" nowrap align="left">&nbsp;</td>
      <td width="9%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">Company.</font>&nbsp;</td>
      <td width="4%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">50,000</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">153,000</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="6">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">For
        shares issued in payment on &quot;Afton&quot; mineral claim option
        agreeement to a</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">director
        of the Company. 100,000 shares were issued during 2004 [cumulative</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">total
        is 900,000 shares to date].</font>&nbsp;</td>
      <td width="4%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right">
        <p align="right">-</p>
      </td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">30,000</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="6">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">For
        wages and consulting services charged by a related person of a Director.</font>&nbsp;</td>
      <td width="4%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">24,000</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">72,600</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="6">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">For
        geological consulting services on mineral claim interests charged by an</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">Officer
        of the Company.</font>&nbsp;</td>
      <td width="4%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">37,500</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">101,060</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="6">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">For
        secretarial and administrative services charged by a Director of the</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">Company.</font>&nbsp;</td>
      <td width="4%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">24,156</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">64,446</font>&nbsp;</td>
    </tr>
    <tr>
      <td colspan="6">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left"><b><font size="2" face="sans-serif">9.</font></b>&nbsp;</td>
      <td width="69%" nowrap align="left"><b><font size="2" face="sans-serif">SUPPLEMENTARY
        CASH FLOW INFORMATION</font></b>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="6">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">The
        Company conducted non-cash investing and financing activities as
        follows:</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Three</font></b>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">(Note
        14)</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Months</font></b>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Year</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Ended</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">Mar.
        31,</font></b>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">Dec.
        31</font></b>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right"><b><font size="2" face="sans-serif">2005</font></b>&nbsp;</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><b><font size="2" face="sans-serif">2004</font></b>&nbsp;</td>
    </tr>
    <tr>
      <td></td>
      <td colspan="5">
        <hr noshade size="1">
      </td>
    </tr>
    <tr>
      <td colspan="6">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">Value
        assigned to options granted</font>&nbsp;</td>
      <td width="4%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">572,615</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">868,190</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">Common
        shares issued for mineral claim interests</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">60,000</font>&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left"><font size="2" face="sans-serif">Vehicle
        acquired via capital lease</font>&nbsp;</td>
      <td width="4%" nowrap align="right">&nbsp;</td>
      <td width="10%" nowrap align="right">-</td>
      <td width="3%" nowrap align="right">&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">68,013</font>&nbsp;</td>
    </tr>
    <tr>
      <td></td>
      <td colspan="5">
        <hr noshade size="1">
      </td>
    </tr>
    <tr valign="bottom">
      <td width="1%" nowrap align="left">&nbsp;</td>
      <td width="69%" nowrap align="left">&nbsp;</td>
      <td width="4%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="10%" nowrap align="right"><font size="2" face="sans-serif">572,615</font>&nbsp;</td>
      <td width="3%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="9%" nowrap align="right"><font size="2" face="sans-serif">996,203</font>&nbsp;</td>
    </tr>
    <tr>
      <td></td>
      <td colspan="5">
        <hr noshade size="2">
      </td>
    </tr>
  </table>
  <br>
  <p><b><font size="2" face="sans-serif">10. FINANCIAL INSTRUMENTS</font></b></p>
  <p><font size="2" face="sans-serif">The Company's financial instruments
  consist of cash, term deposits, corporate notes, amounts receivable, accounts
  payable and capital lease payable. Unless otherwise noted, it is management's
  opinion that the Company is not exposed to significant interest, currency, or
  credit risks arising from these financial instruments. The fair values of
  cash, term deposits, corporate notes, amounts receivable and accounts payable
  approximate their carrying values due to the relatively short period to
  maturity of these instruments.</font></p>
  <p><b><font size="2" face="sans-serif">11. COMMITMENTS AND CONTINGENT
  LIABILITIES</font></b></p>
  <p><font size="2" face="sans-serif">The Company awarded a contract totalling
  $10,811,066 for underground development work on the &quot;Afton&quot; Mineral
  Property in October 2004. The work is expected to be completed by November 15,
  2005.</font></p>
  <p align="center"><font size="2" face="serif">28</font></p>
  <hr noshade align="center" width="100%" size="2">
  <a name="page_20"></a>
  <table>
    <tr>
      <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
        <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
        <b><font size="2" face="sans-serif">NOTES TO INTERIM FINANCIAL
        STATEMENTS</font></b><br>
        <b><font size="2" face="sans-serif">MARCH 31, 2005</font></b><br>
        <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
      </td>
    </tr>
  </table>
  <p><b><font size="2" face="sans-serif">11. COMMITMENTS AND CONTINGENT
  LIABILITIES [CONT'D]</font></b></p>
  <p><font size="2" face="sans-serif">The Company entered into an executive
  services contract with the new President on October 12, 2004 to provide
  services as chief executive officer of the Company at a base salary of
  $250,000 per annum to be reviewed in June 2005. In addition, an annual
  performance bonus will be paid of up to 40% of the base salary upon the
  achievement of certain individual and corporate targets. In the event of
  termination of employment, without cause, or, in the event of a change of
  control by merger or purchase of the Company, a severance payment equal to
  three times the annual compensation will be paid.</font></p>
  <p><font size="2" face="sans-serif">The Company entered into an executive
  services contract with its former President on April 23, 2003 to provide
  services as chief executive officer of the Company for a five year term on a
  per diem fee basis at $500 per day during 2003. The per diem fee is subject to
  review on an annual basis at the discretion of the board of directors. When a
  new President and Chief Executive Officer was appointed on October 18, 2004,
  this contract was amended to provide for services as chair of the Board of
  Directors. In the event of termination of employment without cause, a lump sum
  severance payment equal to one month base retainer fee [$16,667] times the
  number of years in which he held the position of President [25 years] will be
  paid.</font></p>
  <p><font size="2" face="sans-serif">Under the terms of the option agreement to
  acquire the &quot;Afton&quot; Mineral Property, the Company is required to
  issue an additional 200,000 shares in 2005 and to perform a work commitment of
  $6,500,000 over nine years. To March 31, 2005, $10,545,502 has been expended.</font></p>
  <p><font size="2" face="sans-serif">The Company is committed to an operating
  lease for office premise rentals in the aggregate of $81,440. The future
  minimum lease payments as at March31, 2005 are as follows:</font></p>
  <table border="0" cellspacing="1" cellpadding="0">
    <tr valign="bottom">
      <td width="35%" nowrap align="left"><font size="2" face="sans-serif">2005</font>&nbsp;</td>
      <td width="15%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="29%" nowrap align="right"><font size="2" face="sans-serif">15,965</font>&nbsp;</td>
      <td width="18%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="35%" nowrap align="left"><font size="2" face="sans-serif">2006</font>&nbsp;</td>
      <td width="15%" nowrap align="right">&nbsp;</td>
      <td width="29%" nowrap align="right"><font size="2" face="sans-serif">24,735</font>&nbsp;</td>
      <td width="18%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="35%" nowrap align="left"><font size="2" face="sans-serif">2007</font>&nbsp;</td>
      <td width="15%" nowrap align="right">&nbsp;</td>
      <td width="29%" nowrap align="right"><font size="2" face="sans-serif">26,190</font>&nbsp;</td>
      <td width="18%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="35%" nowrap align="left"><font size="2" face="sans-serif">2008</font>&nbsp;</td>
      <td width="15%" nowrap align="right">&nbsp;</td>
      <td width="29%" nowrap align="right"><font size="2" face="sans-serif">14,550</font>&nbsp;</td>
      <td width="18%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr>
      <td></td>
      <td colspan="2" align="right">
        <hr noshade size="1">
      </td>
      <td></td>
    </tr>
    <tr valign="bottom">
      <td width="35%" nowrap align="left">&nbsp;</td>
      <td width="15%" nowrap align="right"><font size="2" face="sans-serif">$</font>&nbsp;</td>
      <td width="29%" nowrap align="right"><font size="2" face="sans-serif">81,440</font>&nbsp;</td>
      <td width="18%" nowrap align="left">&nbsp;</td>
    </tr>
    <tr>
      <td></td>
      <td colspan="2">
        <hr noshade size="2">
      </td>
      <td></td>
    </tr>
    <tr>
      <td colspan="4">&nbsp;</td>
    </tr>
    <tr valign="bottom">
      <td width="97%" nowrap colspan="4" align="left"><font size="2" face="sans-serif">As
        at March 31, 2005, 1,320,000 common shares are reserved for issuance for
        stock options and</font> <font size="2" face="sans-serif">compensation
        options.</font>&nbsp;
        <p><font size="2" face="sans-serif">[See Notes 7[c] and 7[d]]</font>&nbsp;&nbsp;</p>
      </td>
    </tr>
  </table>
  <br>
  <table>
    <tr>
      <td nowrap><b><font size="2" face="sans-serif">12. ENVIRONMENTAL RISKS</font></b><br>
      </td>
    </tr>
  </table>
  <p><font size="2" face="sans-serif">Existing and possible future environmental
  legislation, regulations and action could give rise to additional expense,
  including those for future removal and site restoration costs, capital
  expenditures, restrictions and delays in the activities of the Company, the
  extent of which cannot be predicted. Regulatory requirements and environmental
  standards are subject to constant evaluation and may be significantly
  increased, which could materially and adversely affect the business of the
  Company or its ability to develop its mineral claim interests on an economic
  basis. Before production can commence on any property, the Company must obtain
  regulatory and environmental approvals. There is no assurance that such
  approvals will be obtained on a timely basis or at all. The cost of compliance
  with changes in government regulations has the potential to reduce the
  profitability of operations or preclude entirely the economic development of
  mineral claim interests.</font></p>
  <p><font size="2" face="sans-serif">Environmental expenditures that relate to
  ongoing environmental and reclamation programs are charged against operations
  as incurred or capitalized and amortized depending on their future economic
  benefits. Estimated future removal and site restoration costs, when the
  ultimate liability is reasonably determinable, are charged against operations
  over the estimated remaining life of the related business operation, net of
  expected recoveries.</font></p>
  <p align="center"><font size="2" face="serif">29</font></p>
  <hr noshade align="center" width="100%" size="2">
  <a name="page_22"></a>
  <table>
    <tr>
      <td nowrap><b><font size="2" face="sans-serif">DRC RESOURCES CORPORATION</font></b><br>
        <b><font size="2" face="sans-serif">[An Exploration Stage Company]</font></b><br>
        <b><font size="2" face="sans-serif">NOTES TO INTERIM FINANCIAL
        STATEMENTS</font></b><br>
        <b><font size="2" face="sans-serif">MARCH 31, 2005</font></b><br>
        <b><font size="2" face="sans-serif">(Unaudited - See Notice to Reader)</font></b><br>
      </td>
    </tr>
  </table>
  <p><b><font size="2" face="sans-serif">13. SUBSEQUENT EVENTS</font></b></p>
  <p><font size="2" face="sans-serif">The Company completed a non-brokered
  private placement in April 2005 by issuing 400,000 flow-through shares at
  $7.50 per share for gross cash proceeds of $3,000,000. The Company will issue
  29,000 common shares as a finders' fee at a market value of $6.20 per share
  that is equal to 6% of the gross cash proceeds received.</font></p>
  <p><font size="2" face="sans-serif">The Company granted 250,000 stock options
  on April 14, 2005 at an exercise price of $6.60 per share, exercisable on or
  before April 14, 2010.</font></p>
  <p><font size="2" face="sans-serif">The Company granted 25,000 stock options
  on April 14, 2005 at an exercise price of $6.40 per share, exercisable on or
  before April 14, 2010.</font></p>
  <p><font size="2" face="sans-serif">The Company granted 50,000 stock options
  on April 26, 2005 at an exercise price of $6.60 per share, exercisable on or
  before April 26, 2005.</font></p>
  <p><b><font size="2" face="sans-serif">14. COMPARATIVE FIGURES</font></b></p>
  <p><font size="2" face="sans-serif">The amounts disclosed in these interim
  financial statements as at December 31, 2004 were subject to an audit
  engagement. These interim financial statements include the accounts of the
  Company and its U.S. wholly-owned subsidiary, Dynamic Resources Corporation,
  Inc. All significant inter-company transactions and balances were eliminated
  on consolidation in 2004. Effective January 1, 2005, the operations of the
  wholly-owned subsidiary were wound up.</font></p>
  <p align="center"><font size="2" face="serif">30</font></p>
  <hr noshade align="center" width="100%" size="2">
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