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Management Discussion and Analysis
Year ended December 31, 2002

Financial Analysis

This Management Discussion and Analysis (MD&A) for the year ended December 31, 2002 should be read in conjunction with the audited financial statements for the twelve-month period ended December 30, 2002. The MD&A is an assessment of the financial affairs of the Company for the most recent fiscal period. All figures are in $US.

Since its incorporation the Company has endeavored to secure valuable mineral properties that in due course could be explored, developed and brought into production to provide the Company with positive cash flow. To that end, the Company has expended its funds exploring and developing mineral properties each year since incorporation. As a result, the Company has incurred losses during each of its fiscal years since incorporation. Losses are typical of development-stage exploration and mining companies and are expected to continue until positive cash flow is achieved.

The Company knows of no trends, demands, commitments, events or uncertainties outside of the normal course of business that may result in the Company’s liquidity either materially increasing or decreasing at the present time or in the foreseeable future. Material increases or decreases in the Company’s liquidity are substantially determined by the success or failure of the Company’s exploration programs and overall market conditions for smaller resource companies. The Company is not aware of any seasonality in the business that have a material effect upon its financial condition, results of operations or cash flows other than those normally encountered by public reporting smaller resource companies. The Company is not aware of any changes in it’s the results of its operations that are other than those normally encountered in its ongoing business.

Liquidity and Capital Resources

The Company had positive working capital of $621,000 at December 31, 2002 as compared to $366,000 at December 31, 2001. Current assets rose 38% to $652,000 and current liabilities dropped 71% to $31,000 during the fiscal year 2002. The Company’s principal sources of funds in 2002 included the sale of marketable securities derived from a shares-for-cash payment from our partner on the Bellavista project in Costa Rica and the raising of capital from two private placements resulting in proceeds of $433,000.

Results of Operations

The Company experienced a loss of $7,477,000 ($0.17 per share) for the 12-month period ending December 31, 2002 as compared to a loss of $3,660,000 ($0.09 per share) for the 12-month period ended December 31, 2001. The Company incurred cash expenditures totalling $493,000 on general, administrative, and other costs in the fiscal year 2002 as compared to $280,000 in the fiscal year 2001. The use of capital during the period was mainly directed towards the company’s operating expenses and the resumption of work on the New Polaris and Benzdorp projects.

Management elected to take write downs of $5,486,286 on the New Polaris property and $1,717,000 on the Sara Kreek property to reflect the impairment of these project values due to the lack of recent development activity, the depressed gold price and capital markets for gold shares, and the reduced values of comparable projects in the junior resource sector. The Company also incurred a $182,000 expense for stock-based compensation attributable to the adoption of new accounting principles for stock-based compensation plans effective January 1, 2002.


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