Consolidated Financial Statements

September 30,

2004

2003

ASSETS

Current Assets

Cash and cash equivalents

$         304,387 

$              8,720 

Accounts receivable

2,275 

6,179 

306,662 

14,899 

Equipment (note 4)

2,936 

4,122 

$         309,598 

$            19,021 

LIABILITIES

Current Liabilities

Accounts payable and accrued liabilities

$        206,838 

$          191,475 

Due to related parties (note 5(c))

- 

180,733 

Loans from related parties (note 5(a))

267,848 

585,277 

474,686 

957,485 

SHAREHOLDERS’ EQUITY (DEFICIENCY)

Capital stock

Authorized

20,000,000 common shares of no par value

Issued 13,939,613 common shares (2003 – 9,489,939)

33,519,983 

27,873,683 

Contributed surplus (note 7)

2,429,100 

- 

Deficit accumulated during the development stage

(36,114,171)

(28,812,147)

(165,088)

(938,464)

$        309,598 

$            19,021 

For the year ended September 30

Period from December 1991 to September 30, 2004

2004

2003

2002

Revenues

$           846,207 

$                  - 

$                    - 

$                    - 

Cost of revenues

1,362,702 

- 

- 

- 

Gross profit (loss)

(516,495)

- 

- 

- 

Expenses

Accounting and legal

1,053,996 

108,992 

31,240 

20,488 

Amortization

608,963 

1,186 

1,677 

2,373 

Consulting fees

730,965 

163,148 

8,732 

38,151 

Directors fees

97,149 

- 

- 

- 

Interest and bank charges

618,881 

45,361 

61,221 

35,921 

Interest on long term debt

164,704 

- 

- 

- 

Management fees

396,117 

41,117 

30,000 

30,000 

Office and miscellaneous

961,605 

9,295 

17,439 

49,091 

Public relations

698,578 

86,204 

16,844 

57,918 

Regulatory and transfer agent fees

152,826 

10,962 

4,455 

5,199 

Repairs and maintenance

497,118 

- 

- 

- 

Salaries and wages

1,483,601 

- 

19,213 

17,373 

Telephone

312,833 

7,245 

5,583 

6,524 

Travel and promotion

1,571,035 

70,092 

8,348 

16,826 

Stock-based compensation (note 7(b))

2,429,100 

2,429,100 

- 

- 

11,777,471 

2,972,702 

204,752 

279,864 

Income (loss) before other items

(12,293,966)

(2,972,702)

(204,752)

(279,864)

Other items

Equity loss from investment

(102,449)

- 

- 

- 

Foreign exchange gain (loss)

(193,483)

(16,424)

17,874 

(204)

Gain on settlement or write-down of debt

237,100 

112,214 

- 

- 

Impairment of notes receivable

(1,367,945)

- 

- 

(77,555)

Interest income

339,772 

96 

68 

159 

Miscellaneous income

114,695 

- 

8,317 

- 

Write-down of investment

(89,626)

- 

- 

- 

Write-down of mineral properties

(4,857,651)

(4,425,208)

- 

- 

Recovery (write-off) of subsidiaries

(18,968,185)

- 

131,322 

37,751 

(24,887,772)

(4,329,322)

157,581 

(39,849)

Income (loss) from operations before income taxes and non-controlling interest

(37,181,738)

(7,302,024)

(47,171)

(319,713)

Non-controlling interest

1,067,567 

- 

- 

- 

Net income (loss) for the period

(36,114,171)

(7,302,024)

(47,171)

(319,713)

Retained earnings (deficit), beginning of year

- 

(28,812,147)

(28,764,976)

(28,445,263)

Retained earnings (deficit), end of year

$    (36,114,171)

$ (36,114,171)

$ (28,812,147)

$ (28,764,976)

Earnings per share

$            (0.60)

$              0.00 

$            (0.03)

Weighted average number of shares – Basic and diluted

12,246,150 

9,489,939 

9,489,939 

Number of

shares

Common

shares issued

and fully paid

Equity portion

of convertible

notes

Deficit

accumulated

during the

development

stage

Total

Balance December, 1991

- 

$                    - 

$                     - 

$                    - 

$                 -