FORM 20-F

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20540

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

                                       OR

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

For the fiscal year ended September 30, 1996.

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [No Fee Required]

For the transition period from             to
                               -----------    -----------
Commission file number
                      -----------------------------------

                           GOLDEN RULE RESOURCES LTD.
              ----------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                           GOLDEN RULE RESOURCES LTD.
                  ---------------------------------------------
                 (Translation of Registrant's name into English)

                                 ALBERTA, CANADA
                  ---------------------------------------------
                 (Jurisdiction of incorporation or organization)

            #1450 - 125 - 9th AVENUE, S.E., CALGARY, ALBERTA, T2G 0P6
--------------------------------------------------------------------------------
Securities registered or to be registered pursuant to Section 12(b) of the Act.
                                      None

Securities registered or to be registered pursuant to Section 12(g) of the Act.
                   Common shares without nominal or par value
                   -------------------------------------------
                                (Title of Class)

Securities for which there is a reporting  obligation  pursuant to Section 15(d)
of the Act.
                                      None

Indicate the number of  outstanding  shares of each of the  issuer's  classes of
capital  or  common  stock  as of  the  close  of the  period  covered  by  this
registration statement.

               24,300,581 common shares as at September 30, 1996.
               --------------------------------------------------


<PAGE>

                                        2


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

         Yes      XX       No
              ----------       ----------

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


         Item 17    XX       Item 18
                 ----------          ---------- 





<PAGE>

                                        3

PART 1
------

Item 1:  DESCRIPTION OF BUSINESS
         -----------------------

(a) General Development of Business
-----------------------------------

The Registrant
--------------

Golden Rule Resources Ltd. (the "Registrant") was incorporated under the laws of
the  Province of Alberta,  on October 12,  1979.  At  September  30,  1996,  the
Registrant had the following subsidiary companies:

<TABLE>
<CAPTION>


                             Percentage    Potential
Subsidiaries                 Ownership      Product         Location
------------                 ---------      -------         --------

<S>                            <C>        <C>               <C>                                
Golden Rule Resources Inc.     100%       Gold              Colorado
GR Capital Corporation         100%       Investments       Alberta
Manson Creek Resources Ltd.     35%       Gold              British Columbia and Venezuela
Northern Abitibi Mining Corp.   39%       Gold              Quebec
Hixon Gold Resources Inc.       46%       Gold/Diamonds     British Columbia and Alberta
Waddy Lake Resources Inc.      100%       Gold              Saskatchewan
Stade Exploration Inc.          29%       Oil and Gas       British Columbia and Alberta
Tyler Resources Inc.             8%       Diamonds/Gold     Northwest Territories/Saskatchewan
</TABLE>


The  Registrant,  directly  and  through  its  subsidiaries,  is  engaged in the
exploration  and development of precious metal  properties,  primarily in Canada
with some properties in the United States, Venezuela and Ghana, West Africa. The
Registrant has  significant  land holdings in the Byers Mineral Belt of northern
Saskatchewan, the Toodoggone gold camp, Quesnellia Terraine and Taseko Lake area
of British Columbia,  the Val d'Or and Abitibi  Greenstone Belts of Quebec,  and
the Voisey Bay Area of Labrador. The Registrant operates exploration programs on
its own account and on behalf of its joint venture  partners,  its subsidiaries,
affiliates and other clients on a contractual and consulting basis.

In addition,  the Registrant is engaged in oil and gas activities in Alberta and
British Columbia,  (Stade Exploration) and exploration for diamonds in Northwest
Territories (Tyler Resources).  These activities are not considered  material to
the Registrant.

The  Registrant's  exploration  activities  have been  primarily on  undeveloped
precious  metal  properties  in the  areas  outlined  above.  These  exploration
activities have identified gold bearing  deposits in each of the areas.  None of
the properties have been brought into production as of September 30, 1996 except
for the Komis  prospect  where the  Registrant on August 30, 1996  commenced the
processing of ore from the Komis prospect through the Jolu Mill. Operating costs
for the period  August 30, 1996 to September 30, 1996 for the Komis project have
been capitalized in producing  property costs as commericial  production had not
been achieved at September 30, 1996.


<PAGE>


                                        4

The Registrant's Subsidiaries
Wholly owned Subsidiaries
-----------------------------

Waddy Lake  Resources  Inc.  ("Waddy")  was  incorporated  under the laws of the
Province of Ontario on October 5, 1960.  On March 14, 1979,  Waddy was continued
under the provisions of the Canada Business Corporations Act.

On September 26, 1995, the shareholders of Waddy (with 15,509,072  common shares
issued and outstanding of which 8,410,946 (54%) were held by the Registrant) and
the  shareholders  of the Registrant  approved a Plan of Arrangement  subject to
final regulatory approval which was received October 12, 1995. Under the Plan of
Arrangement,  the Registrant acquired the 7,098,126 common shares of Waddy (46%)
held by the  minority  interests  through  a share  for  share  exchange.  Waddy
shareholders  received .53 common shares of the Registrant for each Waddy share.
As a result the Registrant  issued  3,762,007 common shares at a deemed price of
$5,860,631.  Accordingly,  as at September  30, 1995,  Waddy was  reflected as a
wholly-owned subsidiary with 8,410,946 shares held by G.R. Capital Corporation a
wholly-owned  subsidiary of the  Corporation  and 7,098,126 held directly by the
Registrant pursuant to the Plan of Arrangement.

The  Registrant  acquired  the  8,410,946  shares  held  prior  to the  Plan  of
Arrangement  for cash from 1987 to 1994 and also  disposed of some shares during
the period. The common shares of Waddy were listed on the Toronto Stock Exchange
until  completion of the acquisition of the minority  interest by the Registrant
at which time they were delisted.

During the year ended  September 30, 1994,  the  Registrant  and Waddy agreed to
enter into two private  placements.  The first  private  placement  consisted of
550,000  common shares at $0.80 per share for total  consideration  of $440,000.
The second private  placement  consisted of an 8%  convertible  debenture in the
amount of $4,000,000,  due February 24, 1996 with interest payable semi-annually
on June 30 and December 31,  secured by a floating  charge over all assets.  The
$4,000,000  debenture was convertible into 3,200,000 common shares of Waddy at a
price of $1.25 per share until February 24, 1996.  Both private  placements were
approved by the TSE and the  proceeds of each were used to fund the  underground
exploration  program on the Komis  project of Waddy and the  milling of the bulk
sampling from the underground program.

Golden Rule  Resources Inc. ("GR Inc.") was  incorporated  under the laws of the
State of Colorado on March 26, 1980.  All  activities  of the  Registrant in the
United  States  have been  conducted  through GR Inc.  Neither  GR Inc.  nor the
Registrant  currently  own  any  material  property  interests  or  conduct  any
significant activities within the United States.

GR Capital  Corporation  ("GR Capital") was  incorporated  under the laws of the
Province of Alberta on October 10,  1986.  During the year ended  September  30,
1987, the Registrant transferred to GR Capital its interest in various portfolio
investments  and its holdings,  as at the date of the transfer,  in Manson Creek
Resources Ltd. ("Manson") and Northern Abitibi Mining Corp. ("NAMC"). GR Capital
has made  subsequent  purchases  in the  market of  Manson,  NAMC and Hixon Gold
Resources Inc. ("Hixon").  The Registrant's  original 55% interest in Waddy Lake
Resources Inc. ("Waddy") was also held by GR Capital.


<PAGE>
                                        5

Publicly Held Subsidiaries
--------------------------

Manson Creek Resources Ltd.  ("Manson") was  incorporated  under the laws of the
Province of British  Columbia on March 4, 1983 as a wholly owned  subsidiary  of
the  Registrant and became  publicly-held  in 1983. At September 30, 1996 Manson
has 14,620,402 common shares issued and outstanding, of which 5,099,048 are held
by the  Registrant.  The common  shares of Manson are listed for  trading on the
Toronto Stock Exchange (TSE).

During the two years ended  September 30, 1995, the  Registrant  agreed to enter
into a private  placement  with Manson  which would be funded from the  proceeds
from the sale of a block of Manson  shares  held by the  Registrant  through the
facilities of the TSE. In December 1993, the Registrant sold 1,250,000 shares of
Manson at an  average  price of $0.63 per share for total net  consideration  of
$767,000  through the facilities of the TSE. On January 5, 1994,  Manson and the
Registrant  agreed to a private  placement of 1,250,000  units at $0.60 per unit
with each unit to consist of one common  share and a share  purchase  warrant to
purchase an additional  common share for $0.60 per share for five years from the
date  of  issue.  The  private  placement  was  approved  by  the  TSE  and  the
shareholders of Manson. (See "Financing of Publicly held subsidiaries").

During the year ended September 30, 1996, the Registrant  agreed to enter into a
private  placement with Manson which would be funded from proceeds from the sale
through  the  facilities  of the TSE of a block  of  Manson  shares  held by the
Registrant.  In November 1995, the Registrant sold 2,000,000 shares of Manson at
an average  price of $0.59 per share for total net  consideration  of $1,140,842
through the facilities of the TSE. On November 3, 1995 Manson and the Registrant
agreed to a private  placement of  2,000,000  units at $0.52 per unit at a total
cost of  $1,040,000  with each unit to consist  of one common  share and a share
purchase  warrant to purchase an additional  common share at $0.60 per share for
five years from the date of issued. The proceeds from the private placement will
be used by Manson to further  Manson's  exploration  projects.  The TSE accepted
notice of the private placement subject to shareholder  approval.  At the Annual
and Special Meeting of the shareholders of Manson held on February 29, 1996, the
shareholders  of Manson voted to amend the private  placement  from the original
terms as outlined above to a private  placement of 2,000,000  units at $0.52 per
unit,  with each unit to  consist  of one  common  share  and one  common  share
purchase warrant to purchase an additional common share at $1.50 per share for a
period of five years from the date of closing.  The private  placement closed on
March 6, 1996.

Northern Abitibi Mining Corp.  ("NAMC") was  incorporated  under the laws of the
Province  of Quebec on March 15,  1971.  On  September  22,  1981,  the name was
changed to include the French version,  Corporation  Miniere Nord Abitibi. As at
September 30, 1996 NAMC has 18,509,405 common shares issued and outstanding. The
Registrant  holds  7,197,425  shares  of  NAMC  which  it has  acquired  through
purchases  in the market and by way of private  placement  over the period  from
1985 to 1995. The private placements have been for cash,  settlement of debt for
costs  paid by the  Registrant  on  behalf  of NAMC  and for  property  interest
acquired by NAMC from the Registrant. Where the private placement was to acquire
a property interest, the final acquisition price negotiated between NAMC and the
Registrant   and   presented  to  their   respective   Board  of  Directors  for
consideration  and  approval  was based on property  information  package  which
included property valuations  prepared by third parties.  The private placements
whether for cash or in settlement of debts or acquisition of property  interests
have been  approved by the Alberta Stock  Exchange  (ASE) on which the shares of
NAMC are  listed and the price per share  based on market  prices at the time of
the submission of the proposed private placement to the ASE. On consolidation of
NAMC into the accounts of the Registrant, the property interests transferred, as
noted above, are recorded at the Registrant's original cost and any gain or loss
on the transfer is eliminated.  The common shares of NAMC are listed for trading
on the ASE.


<PAGE>

                                        6

During the year ended  September  30, 1994,  the  Registrant  and NAMC agreed to
enter into a private  placement  effective  August 26, 1994  whereby NAMC issued
484,321 common shares at $0.40 per share.  The purpose of the private  placement
was to settle debts of $193,728  owed by NAMC to the  Registrant  comprised of a
debenture in the amount of $150,000,  accrued  interest thereon in the amount of
$32,305 and other amounts totalling $11,423.  The private placement was approved
by the ASE.

During the year ended September 30, 1995, the Registrant  agreed to enter into a
private  placement  with NAMC which would be funded from the  proceeds  from the
sale of a block of NAMC shares held by the Registrant  through the facilities of
the ASE. In February 1995, the  Registrant  sold 5,000,000  shares of NAMC at an
average price of $0.22 per share for total net consideration of $999,968 through
the facilities of the ASE. On February 3, 1995, NAMC, the Registrant and Kinross
Gold  Corporation  ("Kinross"),  an  unrelated  company,  agreed  to  a  private
placement of 8,750,000  units at $0.20 per unit with each unit to consist of one
common share and  one-half of a share  purchase  warrant.  One full warrant will
entitle  the holder to  purchase an  additional  common  share for $0.50 for two
years.  The  Registrant  had agreed to subscribe for 5,000,000  units at a total
cost of $1,000,000 and Kinross had agreed to subscribe for 3,750,000  units at a
total cost of $750,000.  NAMC had intended to use the proceeds  from the private
placement to fund, pursuant to an agreement in principle, the acquisition of the
Quebec  mining  property  portfolio  under option from  Falconbridge  Limited by
Kinross.  As the parties  elected  not to proceed  with the  acquisition  of the
Quebec mining  property  portfolio,  Kinross did not  participate in the private
placement. The Registrant elected to proceed with its subscription for 5,000,000
units at $0.20 per unit. The private  placement  approved by the ASE.  closed on
May 4, 1995.  The  proceeds  from the private  placement  have been used for the
acquisition  of and  exploration  on the  Voisey's  Bay  properties  in Labrador
acquired subsequent to the private placement.

Hixon Gold  Resources  Inc.  ("Hixon")  was  incorporated  under the laws of the
Province  of Alberta on October  10, 1986 as a  wholly-owned  subsidiary  of the
Registrant.  Pursuant to a Prospectus dated November 18, 1988, Hixon distributed
to the public in British Columbia 600,000 units with each unit consisting of one
common  share and two Series "A"  Warrant  which have  subsequently  expired.  A
portion of the units (400,000) were issued on a "flow through basis" whereby for
Canadian  Income  Tax  purposes  Hixon  expended  the  proceeds  on  exploration
expenditures  and the  investor  received a deduction  for  Canadian  Income Tax
purposes equal to the amount of his investment.

As at  September  30,  1996,  Hixon has  10,485,057  common  shares  issued  and
outstanding.  The  Registrant  holds  5,016,868  shares  of  Hixon  which it has
acquired on  incorporation,  through purchases in the market and through private
placements  over the period from 1988 to 1996. The private  placements have been
for cash, settlement of debt for costs paid by the Registrant on behalf of Hixon
and for  property  interest  acquired  by Hixon from the  Registrant.  Where the
private  placement  was to acquire a property  interest,  the final  acquisition
price  negotiated  between  Hixon  and the  Registrant  and  presented  to their
respective  Board of  Directors  for  consideration  and approval was based on a
property  information  package which included  property  valuations  prepared by
third parties.  The private placement whether for cash or in settlement of debts
or acquisition of property  interests have been approved by the Vancouver  Stock
Exchange ("VSE") on which the shares of Hixon are listed and the price per share
based on market  prices at the time of the  submission  of the proposed  private
placement  to the VSE.  On  consolidation  of Hixon  into  the  accounts  of the
Registrant, the property interests transferred,  as noted above, are recorded at
the  Registrant's  original  cost  and  any  gain or  loss  on the  transfer  is
eliminated.

During the year ended  September 30, 1995, the Registrant gave notice to the VSE
to sell  through  the  facilities  of the VSE a block  of upto  2,000,000  Hixon
shares.  To September  30, 1995,  the  Registrant  sold a total of 143,500 Hixon
shares  through the facilities of the VSE at an average price of $0.25 per share
for total net  proceeds  of $35,670.  Subsequent  to  September  30,  1995,  the
Registrant has sold an additional  1,856,500 Hixon shares through the facilities
of the VSE at an  average  price of $0.37 per share  for total net  proceeds  of
$691,589.  Under the notice to sell up to 2,000,000 Hixon shares, the Registrant
sold a total of 2,000,000  Hixon  shares at an average  price of $0.36 per share
for total net proceeds of $727,259.



<PAGE>
                                        7



On September 19, 1996, the Registrant gave notice to the VSE to sell through the
facilities  of the VSE, a block of 200,000  Hixon shares which was  completed on
September 26, 1996 at an average price of $0.59 per share for total net proceeds
of  $117,210.  From  the  sale of the  total  of  2,200,000  Hixon  shares,  the
Registrant realized total net proceeds of $844,469 which the Registrant utilized
as follows:

     1)   On December 20,  1995,  Hixon and the  Registrant  agreed to a private
          placement  of  1,000,000  units at $0.21  per unit at a total  cost of
          $210,000  with each unit  consisting  of one common  share and a share
          purchase  warrant to purchase an additional  common share at $0.21 per
          share  during  the first  year from the date of issue and at $0.24 per
          share  during  the  second  year from the date of issue.  The  private
          placement  was  approved by the VSE on December 27, 1995 and closed on
          February 12, 1996.  On April 3, 1996,  the  Registrant  exercised  the
          share  purchase  warrants  for  1,000,000  shares  at a total  cost of
          $210,000.  The  total  proceeds  from  the  1,000,000  units  and  the
          1,000,000  warrants of $420,000 have been used for working capital and
          the  acquisition  and  exploration  of two  properties in Ghana,  West
          Africa.

     2)   On April  9,  1996,  Hixon  announced  a  private  placement  of up to
          1,000,000  units at $0.50 per unit,  with each unit  consisting of one
          common share and a share  purchase  warrant to purchase an  additional
          common share at $0.50 per share during the first year from the date of
          issue and at $0.58 per share  during the second  year from the date of
          issue.  From the private  placement of 1,000,000 units, the Registrant
          purchased  100,000  units at $0.50 per unit at a total cost of $50,000
          and the remaining 900,000 units were purchased by officers,  directors
          of Hixon  and other  unrelated  parties.  The  private  placement  was
          approved by the VSE on April 16, 1996 and closed on May 31,  1996.  On
          December 20, 1996,  the  Registrant  exercised the warrant for 100,000
          shares  at $0.50  per share  for a total  cost of  $50,000.  The total
          proceeds of $100,000 will be used for working  capital and exploration
          on the properties in Ghana, West Africa.

     3)   On September 13, 1996,  Hixon  announced a private  placement of up to
          1,000,000  units which was amended on September  24, 1996 to raise the
          number  of units to  1,250,000  units at $0.50 per unit with each unit
          consisting  of one  common  share  and a  share  purchase  warrant  to
          purchase  an  additional  common  share at $0.50 per share  during the
          first  year from the date of issue and at $0.58 per share  during  the
          second  year from the date of issue.  From the  private  placement  of
          1,250,000 units, the Registrant  purchased  247,000 units at $0.50 per
          unit for a total cost of $123,500 and the  remaining  1,003,000  units
          were  purchased  by officers,  directors of Hixon and other  unrelated
          parties.The  private  placement  was approved by the VSE on October 4,
          1996 and closed on November 25, 1996.  The proceeds have been used for
          working  capital and  exploration  on the  properties  on Ghana,  West
          Africa.

     4)   On  October  2,  1996,  Hixon and the  Registrant  agreed to a private
          placement  of  235,000  units  at $0.65  per  unit at a total  cost of
          $152,750  with each unit  consisting  of one common  share and a share
          purchase  warrant to purchase an additional  common share at $0.65 per
          share  during  the first  year from the date of issue and at $0.75 per
          share  during  the  second  year from the date of issue.  The  private
          placement  was  approved  by the VSE on  October 4, 1996 and closed on
          November 19, 1996. On December 20, 1996, the Registrant  exercised the
          share  purchase  warrant for  235,000  shares at $0.65 per share for a
          total cost of $152.750. The total proceeds of $305,500 will be used to
          provide  working  capital and to allow the acquisition and exploration
          of mineral properties.


<PAGE>
                                        8


On December 20, 1996, the Registrant  gave notice to the VSE to sell through the
facilities  of the VSE, a block of 500,000  Hixon shares which was  completed on
January 7, 1997 at an average price of $5.51 per share for total net proceeds of
$2,755,572.

On January  2,  1997,  Hixon and the  Registrant  agreed to a  proposed  private
placement of 500,000  units at $5.50 per unit for total  proceeds of  $2,755,000
with each unit  consisting of one common share and a share  purchase  warrant to
purchase an  additional  common  share at $5.50 per share  during the first year
from the date of issue and at $6.35 per share  during the  second  year from the
date from the date of issue.  The private  placement  was approved by the VSE on
January 28, 1997 and is subject to shareholder  approval which will be sought at
the Annual and Special Meeting of the Shareholders to be held on March 27, 1997.
The  proceeds  will be used for  exploration  of Hixon's  property  portfolio in
Ghana. The Registrant will fund the cost of the private  placement from the sale
through the facilities of the VSE of the block of 500,000 Hixon shares completed
on January 7, 1997 at an average price of $5.51 per share for total net proceeds
of $2,755,572.

In this  Registration  Statement,  unless the context indicates  otherwise,  the
"Registrant"  refers to Golden Rule  Resources  Ltd. and all direct and indirect
subsidiaries.  The consolidated  financial statements and financial  information
stated herein include the accounts of the Registrant and all direct and indirect
subsidiaries.

Financing of Publicly held Subsidiaries and Affiliates

To  assist  its  publicly  held   subsidiaries  and  affiliates   finance  their
exploration  activities  the Registrant has utilized the large portion of shares
that are freely tradeable under Canadian  securities  legislation which it holds
in  each  of  these  subsidiaries  and  affiliates.  Under  Canadian  securities
legislation,  the  Registrant  may  sell,  upon  proper  notice  to the  various
regulatory  authorities,  a portion of these freely tradeable shares through the
facilities of the stock exchange on which the subsidiary or affiliate is listed.
The Registrant  subsequently re-invests the proceeds from the sale of the freely
tradeable shares or a portion thereof in the subsidiary or affiliate by means of
a private  placement  under the applicable  regulations.  While it is not always
required,  the Regulators,  in several instances,  have required approval of the
private  placement by the  shareholders  of the  subsidiary  or  affiliate.  The
private  placement  usually  consists of units  comprised of a share and a share
purchase  warrant with the total number of units  usually equal to the number of
shares sold.  Both the shares and any shares received on exercise of the warrant
are subject to a one year hold period from the date of the private placement.

The major  advantage  both to the  Registrant and the subsidiary or affiliate of
the above described  process is the ability to react quickly to capital markets.
In those  instances  where a subsidiary  or affiliate  needs  additional  equity
financing and the market value of the subsidiary's  stock is  appreciating,  the
Registrant with its block of freely tradeable shares is able to react quickly to
the  capital  market.  With the sale of a block of  freely  tradeable  shares at
current  market  prices,  the  Registrant is able to provide  additional  equity
capital to the subsidiary or affiliate without the necessity of using any of its
own resources.  After completion of the private placement,  the Registrant holds
the same or  approximately  the same number of shares as it held before the sale
of the block of freely tradeable shares. The percentage  ownership in the issued
and  outstanding  shares of the  subsidiary or affiliate  remains the same as it
would  have been if the  subsidiary  had issued  the  shares  under the  private
placement to outside parties. In addition,  upon exercise of the warrant,  which
provides  additional equity financing to the subsidiary,  the Registrant is able
to increase its percentage  ownership in the subsidiary back to the level before
the sale of the freely tradeable block. The only material cost to the Registrant
is the commission incurred on the sale of the block of shares.

While the  subsidiary  or  affiliate  could  have sold into the open  market the
shares issued to the Registrant under the private placement,  it would have been
much more difficult for the subsidiary or affiliate to react as quickly to the


<PAGE>

                                        9

capital market.  For freely  tradeable  shares to be in the hands of the outside
investors the subsidiaries would have had to file a prospectus,  rights offering
or a statement of material  facts.  Such  documents  would have  required a much
longer  time period and  incurred  significant  legal and  offering  costs.  The
Registrant,  because  its  intent  is to hold the  shares of the  subsidiary  or
affiliate  for  investment  purposes,  is  prepared  to accept the one year hold
period  imposed  by the  regulatory  authorities  under  the  private  placement
regulations.  To find outside investors prepared to accept similar  restrictions
would be more  difficult and time consuming and  ultimately,  the subsidiary may
not be able to react in as timely a manner to the capital market.

The net result of the method  utilized by the  Registrant has the same effect on
the  capital  structure  of the  subsidiary  or  affiliate  and  the  percentage
ownership by the Registrant as a sale by the subsidiary or affiliate in the open
market. The subsidiary or affiliate, however, has acquired the additional equity
financing in a shorter time period and at a much reduced cost.

During the fiscal periods included in this Registration  Statement and up to the
date of this Registration Statement,  the Registrant has utilized this method to
provide financing to Manson,  Northern Abitibi,  Tyler and Stade. The details of
such financing are as follows:

      i)  Manson
          ------

          The Registrant sold in December 1993, 1,250,000 shares of Manson at an
          average  price of $0.63  per share  for  total  net  consideration  of
          $767,000  through the facilities of the Toronto Stock Exchange  (TSE).
          On  January 5, 1994,  Manson  and the  Registrant  agreed to a private
          placement of 1,250,000  units at $0.60 per unit for total  proceeds of
          $750,000  with each unit to consist  of one  common  share and a share
          purchase warrant to purchase an additional  common share for $0.60 per
          share for five years from the date of issue. The private placement was
          approved by the TSE subject to approval by the  shareholders of Manson
          which was granted on March 31, 1994 at the Annual  General  Meeting of
          the Shareholders. The private placement closed in May, 1994.

          The Registrant recorded in the fiscal year ending September 30, 1994 a
          gain on  consolidation  of $145,124 as a result of the  disposition of
          the 1,250,000 shares of Manson.

          On November  3, 1995,  Manson and the  Registrant  agreed to a private
          placement of 2,000,000  units at $0.52 per unit for total  proceeds of
          $1,040,000 with each unit to consist of one common share and one share
          purchase warrant to purchase an additional  common share for $0.60 per
          share for five years from the date of issue.  The TSE accepted  notice
          of the  private  placement  subject to  shareholder  approval.  At the
          Annual and  Special  Meeting  of the  shareholders  of Manson  held on
          February  29,  1996,  the  shareholders  of Manson  voted to amend the
          private  placement  from the  original  terms as  outlined  above to a
          private placement of 2,000,000 units at $0.52 per unit, with each unit
          to consist of one common share and one common share  purchase  warrant
          to purchase an additional common share at $1.50 per share for a period
          of five years from the date of closing.  The private  placement closed
          on March 6, 1996.

          In order to subscribe  for the  2,000,000  units,  the  Registrant  on
          November 13, 1995 sold  through the  facilities  of the TSE  2,000,000
          freely-tradeable  shares of Manson,  at an average  price of $0.59 per
          share  for total  net  consideration  of  $1,140,842.  The  Registrant
          recorded in the fiscal year ending  September 30, 1996 a total gain on
          consolidation  of  $226,002  as a  result  of the  disposition  of the
          2,000,000  shares  of  Manson  with  $125,160  reflected  as  gain  on
          reduction  of  the  Registrant's   interest  in  Manson  and  $100,842
          reflected as gain on disposition of the shares.


<PAGE>

                                       10


     ii)  Northern Abitibi (NAMC)
          -----------------------

          On February 3, 1995, NAMC, the Registrant and Kinross Gold Corporation
          (Kinross)  agreed to a private  placement of 8,750,000  units at $0.20
          per unit for total proceeds of $1,750,000 with each unit to consist of
          one common share and one-half of a share  purchase  warrant.  One full
          warrant entitles the holder to purchase an additional common share for
          $0.50 per share for two years from the date of issue.  The  Registrant
          agreed to  subscribe  for  5,000,000  units and Kinross for  3,750,000
          units at a cost of $1,000,000  and$750,000  respectively.  The private
          placement  had been  approved  by the ASE.  Subsequent  to February 3,
          1995,  Kinross  elected  not  to  proceed  with  its  subscription  of
          3,750,000 units.  Accordingly,  on closing of the private placement on
          May 4, 1995, only 5,000,000 units at $0.20 per unit were issued to the
          Registrant for total proceeds of $1,000,000.

          In order to subscribe  for its  5,000,000  units,  the  Registrant  on
          February 15, 1995 sold  through the  facilities  of the Alberta  Stock
          Exchange (ASE) 5,000,000 fully-tradeable shares of NAMC, at an average
          price of $0.22 per share for total net consideration of $999,968.  The
          Registrant has recorded in the fiscal year ending September 30, 1995 a
          loss on consolidation of $53,045 as a result of the disposition of the
          5,000,000 shares of NAMC.

    iii)  Hixon
          -----

          During the year ended  September 30, 1995, the Registrant  gave notice
          to the Vancouver  Stock Exchange to sell through the facilities of the
          VSE, a block of up to 2,000,000  Hixon  shares.  The  Registrant  sold
          through the  facilities  of the  Vancouver  Stock  Exchange a total of
          143,5000  shares  prior  to  September  30,  1995 and the  balance  of
          1,856,000  shares  between  October 1, 1995 and September 30, 1996. In
          addition, on September 19, 1996, the Registrant gave notice to the VSE
          to sell,  through the  facilities of the VSE, a block of 200,000 Hixon
          shares which was completed on September 26, 1997. Accordingly,  during
          the year ended  September  30, 1996,  the  Registrant  sold a total of
          2,056,000 Hixon shares through the facilities of the VSE.

          During the year ended September 30, 1995, the Registrant sold, through
          the  facilities of the VSE, the 143,500  shares of Hixon at an average
          price of $0.25 per share for total net  consideration  of $35,670  and
          recorded a gain or consolidation of $31,603.

          During the year ended  September 30, 1996, the Registrant sold through
          the facilities of the VSE,  1,856,500 Hixon shares at an average price
          of $0.37 per share for total net  proceeds  of  $691,589  and  200,000
          Hixon  shares  at an  average  price of $0.59  per share for total net
          proceeds of $117,210 for a total  disposition of 2,056,500  shares for
          total net proceeds of  $808,799.  The  Registrant,  in the fiscal year
          ended  September 30, 1996, has recorded a total gain on  consolidation
          of $462,953 as a result of the disposition of the 2,056,500  shares of
          Hixon  with  $239,600   reflected  as  a  gain  on  reduction  of  the
          Registrant's  interest in Hixon and  $223,293  reflected  as a gain on
          disposition of the shares.

          The  Registrant has utilized the proceeds of $844,469 from the sale of
          2,200,000  Hixon  shares  (143,120 in 1995 and  2,086,500  in 1996) as
          follows:


<PAGE>
                                       11

     1)   On December 20,  1995,  Hixon and the  Registrant  agreed to a private
          placement  of  1,000,000  units at $0.21  per unit at a total  cost of
          $210,000  with each unit  consisting  of one common  share and a share
          purchase  warrant to purchase an additional  common share at $0.21 per
          share  during  the first  year from the date of issue and at $0.24 per
          share  during  the  second  year from the date of issue.  The  private
          placement  was  approved by the VSE on December 27, 1995 and closed on
          February 12, 1996.  On April 3, 1996,  the  Registrant  exercised  the
          share  purchase  warrants  for  1,000,000  shares  at a total  cost of
          $210,000.


     2)   On April  9,  1996,  Hixon  announced  a  private  placement  of up to
          1,000,000  units at $0.50 per unit with  each unit  consisting  of one
          common share and a share  purchase  warrant to purchase an  additional
          common share at $0.50 per share during the first year from the date of
          issue and at $0.58 per share  during the second  year from the date of
          issue.  From the private  placement of 1,000,000 units, the Registrant
          purchased  100,000  units at $0.50 per unit at a total cost of $50,000
          and the remaining 900,000 units were purchased by officers,  directors
          of Hixon  and other  unrelated  parties.  The  private  placement  was
          approved by the VSE on April 16, 1996 and closed on May 31,  1996.  On
          December 20, 1996, the cost of $50,000.


     3)   On September 13, 1996,  Hixon  announced a private  placement of up to
          1,000,000  units which was amended on September  24, 1996 to raise the
          number  of units to  1,250,000  units at $0.40 per unit with each unit
          consisting  of one  common  share  and a  share  purchase  warrant  to
          purchase  an  additional  common  share at $0.50 per share  during the
          first  year from the date of issue and at $0.58 per share  during  the
          second  year from the date of issue.  From the  private  placement  of
          1,250,000 units, the Registrant  purchased  247,000 units at $0.50 per
          unit for a total cost of $123,500 and the  remaining  1,003,000  units
          were  purchased  by officers,  directors of Hixon and other  unrelated
          parties.  The private  placement was approved by the VSE on October 4,
          1996 and closed on November 25, 1996.

     4)   On  October  2,  1996,  Hixon and the  Registrant  agreed to a private
          placement  of  235,000  units  at $0.65  per  unit at a total  cost of
          $152,750  with each unit  consisting  of one common  share and a share
          purchase  warrant to purchase an additional  common share at $0.65 per
          share  during  the first  year from the date of issue and at $0.75 per
          share  during  the  second  year from the date of issue.  The  private
          placement  was  approved  by the VSE on  October 4, 1996 and closed on
          November 19, 1996. On December 20, 1996, the Registrant  exercised the
          share  purchase  warrant for  235,000  shares at $0.65 per share for a
          total cost of $152.750.

On December 20, 1996, the Registrant  gave notice to the VSE to sell through the
facilities  of the VSE, a block of 500,000  Hixon shares which was  completed on
January 7, 1997 at an average price of $5.51 per share for total net proceeds of
$2,755,572.  The Registrant will record in the fiscal year ending  September 30,
1997, a total gain on consolidation of $1,041,493 as a result of the disposition
of the 500,000 shares of Hixon with $1,040,921  reflected as a gain on reduction
of the Registrant's  interest in Hixon and $572 reflected as gain on disposition
of the shares.

On January  2,  1997,  Hixon and the  Registrant  agreed to a  proposed  private
placement of 500,000  units at $5.50 per unit for total  proceeds of  $2,755,000
with each unit  consisting of one common share and a share  purchase  warrant to
purchase an additional common share at $5.50 per share during the first year


<PAGE>


                                       12

from the date of issue and at $6.35 per share  during the  second  year from the
date from the date of issue.  The private  placement  was approved by the VSE on
January 28, 1997 and is subject to shareholder  approval which will be sought at
the Annual and Special Meeting of the Shareholders to be held on March 27, 1997.
The  proceeds  will be used for  exploration  of Hixon's  property  portfolio in
Ghana. The Registrant will fund the cost of the private  placement from the sale
through the facilities of the VSE of the block of 500,000 Hixon shares completed
on January 7, 1997 at an average price of $5.51 per share for total net proceeds
of $2,755,572.

Significant Transactions During Last Five Years
-----------------------------------------------

During  the last  five  years,  the  Registrant  has  engaged  in the  following
significant transactions:

In the year ended September 30, 1995, pursuant to a Plan of Arrangement approved
by the  shareholders  of both  the  Registrants  and  Waddy,  subject  to  final
regulatory  approval  which was  received on October 12,  1995,  the  Registrant
acquired  the  7,098,126  common  shares  of Waddy  (46%)  held by the  minority
interest  through a share for share exchange.  Waddy  shareholders  received .53
common shares of the Registrant for each Waddy share. As a result the Registrant
issued  3,762,007  common  shares at a deemed price of $1.51 per share for total
consideration  of $5,680,631.  Accordingly,  as at September 30, 1995,  Waddy is
recorded as a wholly-owned  subsidiary.  The effect of this transaction has been
to increase  share  capital by $5,586,292  (after  deducting  issue  expenses of
$94,339),  decrease minority  interest by $2,210,343 and to increase  production
property by $3,600,294.

The Registrant's  interests in its various mineral properties are held either by
the  Registrant  (directly or indirectly  through its  subsidiaries)  or through
joint  ventures  with  various  joint  venture  partners.  In either  case,  the
Registrant or its joint  venture  partners have staked the claims or acquired an
interest in claims  staked by others.  The  various  provincial  regulations  or
acquisition agreements require that varying amounts of exploration activities be
carried out on the properties to keep the claims in good standing.  In the event
that the Registrant fails to conduct sufficient  exploration  activities to keep
the claims in good standing,  the Registrant loses title to the property and its
interest and the related  costs are charged to the  statement of  operations  as
abandoned  properties.  Each year the Registrant evaluates its property holdings
to determine  what  exploration  work is required to maintain the claims in good
standing  and to  determine  which  claims  should be  allowed to lapse with the
resulting charge to operations.  To date the Registrant has not had any material
property interest that it has failed to keep in good standing.

During the five years ended  September 30, 1996,  neither the Registrant nor any
subsidiary of the Registrant has been involved in any  bankruptcy,  receivership
or similar  proceedings.  Except as described above,  neither the Registrant nor
any  subsidiary  has  completed  any  material   reclassification,   merger,  or
consolidation,  or acquired or disposed of any  material  amount of their assets
(except in the ordinary course of business),  or have made any material  changes
in their mode of conducting business.

Exchange Rates
--------------

In this Registration Statement,  unless otherwise specified,  all dollar amounts
are  expressed  in Canadian  dollars.  The high and low spot rates,  the average
rates  (average of the  exchange  rates on the last day of each month during the
period),  and the end of period  rates for  Canadian  dollars  expressed in U.S.
dollars from January 1, 1991 to Sept 30, 1996 as reported by the Bank of Canada,
were as follows:



<PAGE>
<TABLE>
<CAPTION>
                                       13

                  
              1996                                        Year Ended December 31
              (through          --------------------------------------------------------------------------
               Sept 30           1995               1994            1993              1992           1991
              --------          ------             ------          ------            ------         ------

<S>            <C>              <C>                <C>             <C>               <C>            <C>   
High           $.7358           $.7446             $.7591          $.8021            $.8512         $.8866
Low             .7180            .7078              .7129           .7481             .7777          .8645
Average         .7310            .7286              .7322           .7751             .8244          .8725
End of
Period          .7341            .7325              .7129           .7553             .7867          .8654
</TABLE>


Employees
---------

The Registrant currently employs six persons on a full-time basis and Waddy Lake
Resources Ltd.  currently has 53 persons on a full-time  basis which number will
decrease as operations are wound down on the Komis Mine. The number of employees
fluctuates  according to  adjustments  in the work force at various  properties.
None  of  the  Registrant's   employees  are  represented  by  a  labour  union.
Corporations  in which  certain of the  Registrant's  officers or directors  are
shareholders  have  provided  geological  and  exploration  services  and direct
administrative services at usual professional rates.

Item 2:  DESCRIPTION OF PROPERTY
         -----------------------

The Registrant,  directly and through its subsidiaries,  has interests or rights
to obtain interests in mineral  properties in the Provinces of British Columbia,
Alberta,  Saskatchewan,   Ontario  and  Quebec,  Labrador  and  the  North  West
Territories.  Interests are also held in State of Colorado,  Venezuela,  Mexico,
Ghana and Cote D'Ivoire. See "Description of Property". The Registrant also owns
an 8% interest in Tyler  Resources  Inc, a company that has interests in mineral
properties in the Province of Saskatchewan and in the diamond  properties in the
North West  Territories,  and a 29% interest in Stade Exploration Inc, a company
with Oil and Gas  property  interests  in Alberta  and British  Columbia,  which
interest was sold subsequent to September 30, 1996.

The Registrant conducts an ongoing  acquisition/exploration program for precious
metals properties, which to date have been primarily in western Canada. The main
thrust  of the  Registrant's  acquisition/exploration  activities  has  been  to
conduct  grassroots  exploration.  The results of these  activities has been the
identification  of a  number  of  properties  with  indications  of  significant
mineralization.

West African Properties
-----------------------

The Registrant and its subsidiary, Hixon Gold, have entered into a joint venture
agreement  with  respect to the  acquisition,  exploration  and  development  of
mineral  properties in Ghana, West Africa. The joint venture has acquired a 100%
interest in three properties in Ghana. The joint venture agreement provides that
Hixon will fund 100% of exploration costs to feasibility and that the Registrant
has the right to  reimburse  Hixon  for 200%  exploration  costs and to  arrange
production financing in exchange for a 50% interest in each property.  Hixon has
also  entered  into  an  option  agreement  with  Trillion  Resources  Ltd.,  an
unaffiliated  company,  to  earn a 40%  interest  in the  Alepe  property,  Cote
D'Ivoire.

Ghana
-----

Stenpad Prospect
----------------

The large 6,983  hectare  (17,144  acre)  Stenpad  property is located  near the
village of Ajakamanso in Western Ghana and is road accessible. Numerous Galamsey
workings are evident,  including the mining of alluvial  deposits along streams,
and pits and  trenching on gold bearing  quartz veins and saprolite  areas.  The
Stenpad  Prospecting  Licence was purchased  from Stenpad  Mining and Processing
Company Ltd.,


<PAGE>


                                       14

an  unaffiliated  company  in May of  1996.  Exploration  , which  included  the
following, began during the summer of 1996:

     o    530  soil,  stream  sediment  and  rock  samples  were  collected  and
          analyzed;
     o    Stream  sediment and sampling  confirmed  that several  drainages  are
          anomalous in gold;
     o    Pits and soil sampling confirmed the gold anomalies;
     o    Seven areas of outcrop were gridded and soil sampled;
     o    Gold-in-soil  anomalies were  identified and several samples of quartz
          vein material and pyrite  bearing  country rock had  significant  gold
          values;
     o    Hand trenching exposed quartz veins and  argillite/phyllite  wall rock
          carrying economic gold values in several areas of the property.
     o    A property  evaluation  report on the Stenpad  property  was  prepared
          which  concluded  that  an  integrated  geological,   geochemical  and
          geophysical   exploration   program  was  required  to  evaluate  both
          auriferous quartz vein systems and disseminated sulphide types of gold
          mineralization.  Results to date suggested that  bulk-mineable  widths
          and gold grades are present, with indications that gold mineralization
          has  continuity  over several  hundreds of metres of strike length and
          widths of up to 100 metres;

Subsequent  to September  30, 1996,  additional  exploration  work was conducted
which included:

     o    Initial  gold  assays  were  received  from  trenches in the Seidu and
          Agykra areas of the property which indicate high grade gold zones;
     o    Check assaying confirmed the high grade assays;
     o    Initial  results  suggested  a  shear  zone  controlled  gold  deposit
          extending for at least 1,950 metres in strike length;
     o    High grade gold assays were not restricted to the quartz, but continue
          into the wall rock;  o Line  cutting  and a  gold-in-soil  geochemical
          survey conducted on a nominal 800 m x 50 m sampling interval;
     o    The decision was made to expand the scope of the exploration program;
     o    Agykra #1 trench was extended to 100 metres in length, and assayed 8.8
          g/T gold;
     o    Seidu  #3,  a new  trench,  was dug  between  Seidu  #1 and  Seidu  #2
          trenches, and assayed 16.0 g/T over 96.3 metres.

Results  received  from  extended  Agykra #1 and first  96.3  metres of Seidu #3
trenches:

         TRENCH           LENGTH            ASSAY g/T (OPT)
         ------           ------            ---------------
         Agykra #1        100 m (328)       8.8 (0.257)
         (extended)
         Seidu #3         96.3 m (307)      16.0 (0.468)
         (partial)

     o    Trenching program expanded to 16 crews;
     o    Agykra #1 and Seidu #3 trenches expanded to 200 metres in length;
     o    Fourteen additional trenches started;
     o    Preliminary results from the gold-in-soil  geochemical survey suggests
          a large, highly anomalous area.

The  extension  of the  gold-in-soil  geochemical  survey  to the north and west
quadrants of the grid is in progress.  A very preliminary  interpretation of the
geochemical  results  received and plotted to date  indicates a very strong gold
anomaly in the area of the Agykra and Seidu  discoveries.  An irregular  area of
roughly 3,500 x 4,000 metres exhibits  gold-in-soil  values in excess of 10 g/T.
The expanded trenching  progaram is designed to test the gold  mineralization in
bedrock in this area.

Upon completion of the trenching program, an initial diamond drill campaign will
be designed to test the depth and extent of the gold  mineralization.  The drill
program will not start until April 1997, at the earliest.


<PAGE>
                                       15


Fredag Prospect
---------------

The Registrant  negotiated the purchase of the 8340 hectare (20,608 acre) Fredag
property located in the Asankrangwa  belt of Western Ghana,  about 6 km north of
the  Stenpad  property.  A  $200,000  reconnaissance  exploration  program  will
initially focus on conducting a property wide stream sediment  sampling program,
the  identification  and locating of old native  workings  and current  Galamsey
activity, soil geochemical sampling and geological mapping. The stream sediment,
sampling  and  soil  sampling  will  aid in  locating  the  trend  of  the  gold
mineralization.  The initial  exploration  program on the Fredag  concession  is
currently in progress.

Tinso Prospect
--------------

The 470 hectare (1162 acre) Tinso property is located in the Tarkwa area between
the Prestea mine  operated by JCI Ltd. and the Bogusa mine operated by Billiton.
Several  concrete lined shafts and adits are evidence of past gold production on
the property.  Apparently high grade gold in quartz veins was mined in the past,
and this ore was  transported by aerial tramway to the Brumasi Mines plant about
2.5 km to the west of the property.

The initial geological  evaluation  indicates that the Tinso property hosts gold
mineralization  primarily  in  structurally  controlled,  Birimian  quartz  vein
systems.  The production  that occurred on the property is pre World War One and
must have been of very high grade to justify the  expenditures  and scale of the
mining operation  indicated by the old workings and relics of machinery found on
the property.

A systematic, first phase soil sampling, geological mapping and sampling program
is  underway  and gold-  in-soil  analytical  results  are  expected in the near
future.  It will be  necessary to  rehabilitate  the old shafts in order to gain
access to the underground  workings in order to establish the type and extent of
the gold mineralization that was mined in the past.

Alepe, Cote D'Ivoire
--------------------

Hixon has entered into an option  agreement to earn a forty percent  interest in
the Alepe property. Under the terms and conditions of the acquisition agreement,
Hixon has paid $15,000,  has issued  100,000 common shares and has undertaken to
finance the initial $500,000 in exploration expenditures by December 31, 1998 to
be fully vested in its forty percent (40%) interest.  At which time the prospect
will be held  40% by  Hixon,  40% by  Trillion  Resources  Ltd.,  10% by  SODEMI
(Government) and 10% by a private Ivorian company.

The Alepe property is a large 80,000 hectare (197,600 acre)  exploration  permit
covering  a  highly  prospective  geology  in the  south-western  part  of  Cote
D'Ivoire.  Several  precious  metal,  base metal and diamond  showings have been
located by past prospecting. The geological data base is reasonable in that past
airborne  geophysical  surveys and mapping have established the regional geology
and metallogeny.

The  integration  of new remote  sensing  data as well as  geological  and field
information from the previous  programs has allowed for the delineation of three
target areas within the permit.  Two of the areas are to be evaluated  for their
gold potential by following up previously reported gold and base metal anomalies
in structurally  complex areas.  The third target is of a large circular feature
revealed by satellite remote sensing which is spatially  related to and could be
the source of documented  nearby placer diamond  finds.  Mapping and sampling of
these  target  zones  commenced  in February  1997 in order to provide the basic
information needed for systematic follow-up during the year.

Keroane, Guinea
---------------

Subsequent to September 30, 1996, Northern Abitibi Mining Corp. has entered into
a Letter  of  Intent  to  provide  $1,650,000  U.S.  in  property  payments  and
exploration   funding  by  July  1998  in  order  to  earn  a  50%  interest  in
International  Mining Company's  105,000 acre Keroane  property in Guinea,  West
Africa.  The property is  prospective  for alluvial  diamonds,  diamond  bearing
kimberlite  pipes and gold.  The existing  alluvial  diamond  operation is being
expanded.



<PAGE>

                                       16

The joint venture has purchased a commercial scale diamond processing plant that
is located in Sierra  Leone and the plant has been  disassembled  and trucked to
Conakry,  Guinea for  rehabilitation.  The plant will be used to bulk sample and
test mine  areas of the  Keroane  property  that have  been  prioritized  by the
exploration conducted by the Russians in the past.

An initial  geological  evaluation by Northern  Abitibi's  geological  staff has
identified several areas of interest on the property and an exploration  program
is being  designed to evaluate  the property  for both  alluvial and  kimberlite
hosted diamonds and for gold in bedrock.

Mexican Prospects
-----------------

The  Registrant  and  Tyler  Resources  Inc.  each  hold  a 50%  interest  in an
exploration  joint  venture  created to  acquire  and  evaluate  copper and gold
properties  in  Mexico.   Activity  to  date  has  been   concentrated   in  the
north-western Mexican States of Sonora, Sinaloa and Chihuahua.  Prospects target
copper and gold that would be amenable to low cost heap leaching mining methods.
The joint  venture has  acquired  three oxide  copper  properties  by option and
staking. About $895,000 has been spent on this joint venture to date. In 1997, a
major acceleration in the exploration  activities is anticipated as the projects
reach the diamond drill stage.

Bahuerachi Copper Oxide Project, Chihuahua, Mexico
--------------------------------------------------

Bahuerachi  prospect is a 3285 hectare claim located on the Reforma  mineralized
trend in southwestern Chihuahua,  near the Sinaloa border and is held 50% by the
Registrant   and   50%   by   Tyler   Resources   Inc.   It  is   about   40  km
north-north-easterly  from Choix,  Sinaloa.  A diamond  drill  contract has been
signed,  and a fifteen hole, 100 metre/hole drill campaign is scheduled to begin
on February 3, 1997.  The  exploration  program will test the large copper oxide
zone outlined by trenching and road cut sampling.

The area is well  mineralized  and the property  shows evidence of copper mining
and smelting by the Spaniards some 200 years ago. The Guggenheim  Company worked
underground  on the Main Zone skarn in the early 1900's.  They reported  surface
oxide grades of 3% copper with sulphides at some depths  grading 2% copper,  142
grams/ton  silver and 3 grams/ton  gold.  Asarco  drilled the property on a wide
pattern in 1970,  with a best  intersection in DDH-7 returning 39 metres grading
1.2% copper in skarn.  Their core recovery was very poor and the reported grades
may be lower than true grade. Surface sampling of the Main Zone skarn by a major
Canadian mining company in the 1980's reported 32 samples  averaging 2.2% copper
as oxide.

The joint  venture has channel  sampled all the drill  access  roads on the Main
Zone  for a  total  of 221  samples  representing  803  lineal  metres.  In this
sampling, 134 samples from the Main Zone skarn,  representing 486 lineal metres,
averaged 1.33% copper. In addition to the Main Zone, there are three other known
copper oxide showings on the property. Of these, only the Mina Mexicana, located
about 600 metres southeast of the Main Zone has been sampled.  At Mina Mexicana,
ten continuous chip samples  totalling 27.1 linear metres averaged 2.18% copper.
The objective of the next phase of the work is to develop a resource of at least
15 million  tons grading  about 1.3%  copper,  which can be mined using low cost
open-pit  methods,  followed by heap  leaching and SX-EW  processing  to produce
cathode  copper.  The diamond  drill  program is designed to evaluate the copper
oxide  resource  and to provide  the data  necessary  to complete an ore reserve
calculation.  Core  samples  will be used in column  leach tests which will more
firmly  establish the  leachibility  charateristics  of the oxide copper ore for
feasibility study purposes.

The further  exploration  potential  of the  property is  considered  good as in
addition  to  the  copper  oxide   mineralization   that  outcrops,   there  are
lead-zinc-silver  skarn  mineralizations  at surface and some evidence of copper
sulphide  mineralization  at depth  that  carries  interesting  gold and  silver
values.

Exotica Copper Oxide Project, Sonora, Mexico
--------------------------------------------

The Exotica  claim is located  near the Yaqui River about 6 km  northwest of the
hamlet of El Realito and about 160 km southeast of  Hermosillo,  and is held 50%
by the  Registrant  and 50% by  Tyler  Resources  Inc.  The  property  is a true
"exotic", or transported deposit,  consisting of copper  oxide-cemented  gravels
and rock debris in a modern  arroyo.  Sixteen  samples taken over a wide area of
the deposit by a major  Canadian  mining  company  averaged  1.25%  copper,  and
inspection of the surface  indicates  there may be several  million tons of this
material.  The cemented gravels are only barely lithified,  they lie on surface,
and would be very easy to mine and leach.


<PAGE>

                                       17

The deposit  presumably has its source in the Cuatro  Hermanos  porphyry  copper
deposit,  which lies immediately to the north of Exotica. In the last few weeks,
Magma Copper Company has been  conducting a drill program on the Cuatro Hermanos
property, which they have under option from Morgain Minerals Inc. Recent rumours
and stock market  activity  suggets that the drill program is a success and that
economic  grades of both copper and  molybdenum  have been  encountered  in this
drilling campaign.  Management is monitoring this drill program closely in order
to ascertain if this discovery impacts the potential of the Exotica property.

La Cardelena
------------

The La Cardelena  copper oxide  property was acquired by staking and is held 50%
by the  Registrant  and 50% by Tyler  Resources  Inc.  The 150 hectare  claim is
located in  south-central  Sonora.  An  east-west  zone of strong  oxide  copper
mineralization of 50 by 200 metres is exposed in a shallow old pit. Grab samples
of the oxide  mineralization  ranged up to 1.9% copper.  Further  exploration to
evaluate  the  property,   including  diamond  drillig,   awaits  completion  of
negotiations to acquire a ten hectare claim within this claim.

Venezuelan Prospects
--------------------

Exploration in Venezuela has been  concentrated  in Manson Creek which currently
holds an interest in three exploration projects in Venezuela.

Perruco Joint Venture
---------------------

Manson Creek has earned a forty percent interest in the Perruco Joint Venture by
funding the next  $330,000 of  exploration  under the joint  venture  agreement.
Manson  Creek's two joint venture  partners,  Athlone  Resources  Ltd. (40%) and
Ballatar  Exploration  Ltd. (20%) have completed the acquisition of a Venezuelan
company that has two  exploration  contracts with the Venezuelan  Corporation of
Guayana  (CVG).  The joint  venture has thus  acquired  the right to explore two
large prospects:

     i)   Perruco II - a 4,106 hectare CVG contract  triangular in shape located
          in the Chicanan area.

     ii)  Perruco V - a 4,000  hectare CVG contract  located to the south of the
          El Foco  claims  owned by  Homestake  and  about 19 km west of  Placer
          Dome's Las Cristinas deposit.

During the year ended September 30, 1996, Ballatar Exploration Ltd. quit claimed
its interest in the Perruco  properties  pro-rata to Manson Creek Resources Ltd.
and Athlone Resources Ltd. thereby increasing their interest to 50% each.

Black 3 Prospect
----------------

Manson Creek  Resources  Ltd. owns 100% of the shares of  Bolivariana De Mineria
C.A. ("Bolivariana"), which in turn owns 75% of the shares of Desarrollo Guaitoc
C.A.  ("Guaitoc").  Guaitoc  is the  holder  of the  Black 3  contract  with the
Corporation  Venezolana  de Guayana  ("CVG").  An agreement is in place  wherein
Bolivariana  can purchase the additional  interest in the property.  Bolivariana
would then own 100% of the shares of Desarrollo Guaitoc.

The Black 3 CVG contract  covers  1,000  hectares on the site of the old Guaitoc
gold mine, in the El Dorado area of Bolivar State, Venezuela, about 17 km NNW of
the town of El Dorado.

Manson Creek carried out an exploration  program including airborne  geophysics,
grid soil sampling and geological mapping between April and October,  1994. This
work located two clusters of gold-in-soil  anomalies occurring over areas 1.5 km
by 0.8 km in the  northwestern  part of the property and 1.0 km by 0.6 km in the
east-central part of the property.



<PAGE>

                                       18

Approximately $817,000 has been spent on property acquisition and exploration to
date,  including  the  issuance  of  250,000  shares  as  part  of the  property
acquisition.

Oroturba Prospect
-----------------

Manson Creek has entered  into an  agreement  to purchase a one hundred  percent
interest in the 500 hectare  Oroturba  concession  located in the El Dorado gold
camp.  About 75 Indians  (illegal miners) have recently moved on to the projects
and have blocked  access to the property.  Manson Creek has  suspended  contract
obligations until the Indian problem is resolved.

CANADA
------

Saskatchewan Properties
-----------------------

The Registrant has been active in the La Ronge  Greenstone  Belt of Saskatchewan
since the 1980's.  As at September 30, 1996, the  Registrant's  major  interests
that it owns both directly and through its  subsidiaries are the eight prospects
where gold  resources  have been  identified  located in the Byers Mineral Belt,
approximately sixty miles northeast of La Ronge, Saskatchewan. The Byers Mineral
Belt  represents  the major  area where  significant  gold  resources  have been
identified  in the La Ronge  Belt.  In this area gold  mineralization  primarily
occurs as disseminated free gold occurrences  within highly  fractured,  steeply
plunging shoots or lenses, hosted by intermediate volcanics and intrusive rocks.
The Registrant's interests within the Byers Mineral Belt are as follows:

         Held directly by the Registrant:
                                                           Registrants
         Prospect and Gold Occurrence                       Ownership
         ----------------------------                       ---------

         Tower Lake     -        Tower East                  100.00%
         Weedy Lake     -        Golden Heart                 41.80%
                        -        B-Zone                       41.80%
         Kaslo          -        Niko                        100.00%
         Oven Lake      -        Corner Lake                  45.00%
         Wedge Lake     -        Twin                         31.00%

         Held directly by Waddy Lake Resources Inc.:

                                                             Waddy Lake
         Prospect and Gold Occurrence                        Ownership
         ----------------------------                        ---------

         Waddy Lake     -        Komis                        100.00%
                        -        E-P                          100.00%


In  the  discussion  which  follows,   information  is  provided  on  the  those
significant  prospects  in  the  Byers  Mineral  Belt  noted  above.  All of the
prospects are in the exploration stage except the Komis prospect on which mining
operations  have  commenced.  During  the last two  years  little  activity  has
occurred on these prospects except for the Komis prospect.

Title to Saskatchewan Prospects
-------------------------------

The Registrant either directly or through its subsidiary Waddy is the registered
title holder of the Komis, Tower, Weedy, Kaslo and Wedge prospects.  Cameco, the
operator for the joint venture for the Oven prospect,  is the  registered  title
owner and holds  the  Registrant's  interest  in trust for the  Registrant.  The
interest in the  prospects  may consist of mineral  leases  referred to as "ML",
claim blocks referred to as "CSB" and mineral dispositions/claims referred to as
"S-". The prospects in all cases were originally staked by unaffiliated  parties
from which the Registrant purchased its interest.

At the date of acquisition by the Registrant,  title to the mineral dispositions
was  transferred to the Registrant and registered with  Saskatchewan  Energy and
Mines (SEM), a department of the Province of


<PAGE>

                                       19

Saskatchewan.  Where  these  prospects  include a mineral  lease  (ML),  a lease
agreement is entered into  between the  Registrant  as lessee and SEM as lessor.
The term of the lease is for ten years,  renewable  for an  additional  ten year
term on the  expiration  of each ten year term.  No annual  lease  payments  are
required.

SEM does require, however, the title holder of the mineral disposition,  whether
it be a mineral lease, claim block or mineral disposition,  to incur exploration
expenditures  thereon.  The holder must file evidence of these expenditures with
SEM which  determines how much of the actual  expenditures may be applied to the
assessment work required on the mineral  dispositions.  The assessment work from
each year of exploration activity is accumulated in an assessment credit account
with SEM.  Each year a certain  amount of  assessment  work is  required on each
prospect which is calculated at a rate ranging from $12.50 per hectare to $50.00
per  hectare.  If  the  holder  has a  build  up of  assessment  credits  in its
assessment  credit account with SEM, SEM reduces the credit by the amount of the
annual assessment required,  sends a notice to the holder indicating the date to
which the mineral  disposition  is held in good standing with SEM and the amount
of excess assessment credit in the account which may be applied to future years'
assessment requirements.

The ability to accumulate  assessment  credits in excess of annual  requirements
allows the holder in years of a major exploration  program to accumulate credits
which will permit the mineral  disposition  to be kept in good standing with SEM
for  a  number  of  years  without  the   necessity  of  incurring   exploration
expenditures on an annual basis.

The  Registrant  on a regular  basis  reviews  the  status  of the  Saskatchewan
prospects as well as prospects located in other  geographical areas to determine
what work is required (if any) to keep the  prospects in good standing and which
prospects  will be  allowed  to  lapse.  When  the  decision  is made to allow a
prospect to lapse,  the  Registrant  loses title to the  prospect  and all costs
related  thereto  are  charged  to the  statement  of  operations  as  abandoned
properties.

Crown Royalty
-------------

The Registrant will pay royalties to the Province of Saskatchewan on the sale of
gold  and the  minerals  extracted  from  ore  bodies  within  the  Province  of
Saskatchewan under the terms of Part II of The Crown Royalty Schedule, 1986 (the
"Schedule"), as amended by The Mineral Dispositions Amendment Regulations, 1990.
The Schedule  provides for a royalty equal to 12.5% of the "net profits  derived
from mining and processing operations",  as defined in the Schedule. To date the
Registrant has not paid any royalties pursuant to the Schedule.

Komis Prospect
--------------

The Komis  prospect is owned 100% by Waddy and is located  approximately  160 km
northeast of La Ronge,  Saskatchewan.  The Komis prospect  comprises two mineral
leases (ML 5080 and ML 5364) and one claim block (CSB 6548)  covering an area of
approximately  1630 hectares  (4028 acres).  Waddy has a ten year lease with SEM
for both ML 5080 and ML 5364 which may be renewed on their  anniversary dates of
February  7, 2000 and June 5, 2003  respectively  for a further  ten year  term.
Although  the mineral  leases  have no annual  lease  payments,  they do require
combined annual  assessment of $39,300.  The mineral leases are in good standing
with  SEM to  February  7,  1998  and  June 5,  1997  respectively  with  excess
assessment  expenditure credits of $1,324,941 which may be applied to the annual
assessment  requirements  for future years to  approximately  the year 2030. The
claim block CSB 6548 is held by Waddy and  requires  annual  assessment  work of
$12,950.  The claim block is in good  standing  with SEM to January 22, 1998 and
has excess assessment expenditure credits of $27,885 which may be applied to the
annual assessment  requirements for future years to approximately the year 1999.
Waddy acquired its interest in this prospect from an unaffiliated  party in 1960
pursuant to the exercise of an option to earn an interest in the  prospect.  The
Registrant has had an interest in Waddy since 1987,  increased its interest to a
controlling  interest in 1992 and to 100% effective  September 30, 1995 pursuant
to the Plan of Arrangement (see Waddy page 4)

Access to the property is by Highway 102, 175 km from La Ronge,  Saskatchewan to
the settlement of Brabant hence  northwest by an all season bush road for 17 km.
The property is also readily  accessible  by ski or float  equipped  charter air
craft  from La  Ronge.  Operations  can be  carried  out all  year  round at the
prospect.


<PAGE>

                                       20


The  mineral  leases  and the claim  block  making up the  Komis  prospect  were
originally staked in 1958. Exploration activity on the Komis discovery has taken
place  intermittently  since 1958 through several periods of activity  conducted
both by Waddy and by several  different  entities  who carried  out  exploration
programs with the intent of earning an interest in the Komis prospect.  With the
expiration of the options the prospect was returned to Waddy who has carried out
the  most  recent  exploration  programs.  Exploration  programs  have  included
geological mapping, soil geochemistry, trenching and diamond drilling at a total
cost to  Waddy  and  other  participants  of  approximately  $8,600,000  through
September 30, 1995. The  mineralization of the Komis property consists of coarse
"free" gold in  quartz-veins  and fine gold  associated  with elevated levels of
pyritization  and  silicification  in the  enclosing  andesite  wall  rock.  The
quartz-veins  are typically a few  centimetres  wide,  while the  mineralization
exhibits  true  widths  that range from 1.5 m (5') to 23 m (75').  The  broadest
zones  of  mineralization  occur  where  there  is a  greater  concentration  of
quartz-veins or quartz stock work, pyritization and visible gold.

The activity during the period 1990 to 1995 included the following:

1990         o   Reinterpretation of all pre-1990 drilling data followed by a 
                 4,105.80 metre (13,471 foot) diamond drill program.

1991-1992    o   Preparation of a feasibility study and preliminary mine plan
                 which recommended a pre-production underground program
                 designed to extract and process a 10,000 tonne bulk ore sample.

1993-1994    o   Pre-production  underground  program carried out between
                 November 1993 and April 1994.
             o   Test milling of the bulk sample at the Jolu Mill During
                 May 1994.
             o   Calculation of a new ore reserve.

1994-1995    o   7,000 metre (23,000 foot) surface diamond drill program 
                 designed to increase the ore reserves of the deposit by
                 extending ore zones to the west and down plunge.
             o   Preparation of a Komis feasibility study and further revised
                 ore reserves.

1995-1996    o  Proposition and submission of an environmental impact study to
                Saskatchewan Environment and Resources Management which was
                approved in January 1995 with subsequent granting of mine and 
                mill construction and operating permits.

Preliminary construction activities, prior to full permitting,  commenced at the
Komis mine site and Jolu mill in October, 1995 and included:

     o    Rehabilitation of the Jolu workcamp.
     o    Reopening of the Jolu mine portal as part of the  tailings  management
          facility.
     o    Construction of Komis mine water clarification ponds.
     o    Transport of the Komis workcamp to the minesite.
     o    Detailed  engineering and survey work for the 16 km upgraded road link
          from the mine to Highway 102.

Mine Operation
--------------

In February 1996, Golden Rule commenced construction of the Komis gold mine with
an estimated capital budget of $11.2 million. This was funded by a loan facility
from Rothchilds  Australia Limited for up to $5.0 million US and an equity issue
of  about  $9.6  million,  completed  in  April.  Pursuant  to  an  independent,
pre-production  feasibility  study,  mineable  reserves  were  determined  to be
280,000 tonnes,  grading 0.30 OPT (84,280 ounces gold).  These mineable reserves
became part of the initial  mining  plan with the proven and  probable  reserves
extending the mine life to over five years.



<PAGE>
                                       21

Pre-production  work focused on  developing  a  sufficient  number of stopes for
building the necessary ore inventory,  consisting of broken ore  underground and
surface  stockpiles,  to sustain an initial production rate of 440 TPD. A 60 man
residential  camp and related  support  facilities  were also  constructed.  The
primary crushing and grinding circuits,  gravity circuit,  cyanide leach circuit
and the mine tailing disposal site were  rehabilitated.  The gravity circuit was
changed to process a greater  amount of "free" gold common to the Komis ore. The
old Jolu  underground  mine was  de-watered  and  prepared  for  receiving  mill
tailings. The access road from the Komis mine site to Highway 102, approximately
seventeen kilometres,  was upgraded so it would be capable of handling ore truck
hauling.  Komis ore is trucked  from the Komis site to the Jolu mill, a distance
of approximately seventy-five kilometres.

A late Spring break-up and  unseasonably  bad weather delayed the scheduled mill
start-up  operations  for almost 60 days.  Ore haulage from the Komis mine site,
for  stockpiling  at the Jolu mill,  commenced in July 1996. The Jolu mill began
processing Komis ore on September 1, 1996.  Production through December 31, 1996
was  approximately  500 TPD  with an  average  grade  of 0.22  OPT  compared  to
feasibility  estimates of 440 TPD grading 0.30 OPT.  This short fall in the gold
grade was primarily due to excess internal ore dilution,  as the zone boundaries
were less predictable and more structurally complex than originally interpreted.
The  technical  staff made the  decision to change the mining plan from an equal
mix of low cost blasthole and shrinkage mining methods to exclusively  shrinkage
stoping.  This had a significant  negative  effect on actual  development  costs
versus the  feasibility  estimates.  The technical staff is analyzing the mining
results to date, gold grades, and operating and development costs.

The  precipitous  fall in gold prices,  from the $US 416 in February 1996 to $US
345 in January 1997, had a negative  economic impact on future mine  operations.
Although  Golden  Rule has hedged  68,000  ounces of gold  (approximately  sixty
percent of  feasibility  production  estimates),  the hedging  support level and
lower spot gold prices  available  for unhedged  production  have  significantly
altered the economics of the mining operations and reserve development.

In February, the Registrant curtailed development work on the Komis mine pending
an  analysis  of  1996  operation.  A  revised  ore  reserve  evaluation  and an
assessment of the cost of developing  these  reserves in view of the fall in the
gold price  significantly  altered the economics of mining operation and reserve
development.  As a result,  the  Registrant  will apply for a temporary  closure
permit for the Komis Mine.

The  Registrant  anticipates  that  underground  operation  will continue  until
approximately the end of March with milling operation continuing until June. The
Registrant  has received  expression of interest from  potential  purchasers and
will endeavour to find a purchaser for the mine as an operating concern.

Jolu Mine and Mill
------------------

In August 1992, Golden Rule Resources Ltd. acquired an 100% interest in the Jolu
mine and mill assets from an unaffiliated party for $845,948. The assets consist
of the  buildings,  machinery and  equipment  related to the Jolu Mill and eight
depleted mining leases Q-4438 to Q-4445  inclusive.  These mining leases require
total annual  assessment  work of $13,800 and are in good  standing  with SEM to
August 15,  1997.  An excess  expenditure  of $441,448  remains to the credit of
these leases and may be used towards future work  requirements to the year 2029.
The Jolu mine and mill are  located  60 km to the  south of the Komis  property.
Access  to the  Jolu  mill  is by  all-weather,  paved  road,  and  the  mill is
accessible by vehicle all year.

The Jolu Gold Joint  Venture  operated the 500 ton per day plant  located 140 km
north  of La  Ronge  from  October  1988 to  August  1991.  During  this  period
approximately  500,000 tons of ore were treated. The mill had operating times in
excess of 97%  throughout its operating  life.  The mill achieved  throughput as
high as 725 tons per day, and operated regularly at 625 to 650 tons per day. The
mill ceased its operations in 1991 when the ore from the Jolu mine was depleted.

The mill was built and commenced  operations in 1988, and consists of a crushing
plant  followed  by  grinding,  leaching  and  carbon-in  pulp  circuit for gold
recovery.  The mill  equipment  is  virtually  intact.  All  equipment  had been
mothballed to withstand winter conditions  without sustaining any damage and the
grinding mill had been emptied and raised off the trunnion bearings.



<PAGE>

                                       22

During the year ended September 30, 1994, the Registrant in order to process the
bulk  sample  through  the  Jolu  mill  rehabilitated  the  mill  at a  cost  of
approximately  $395,000.  To place  the Jolu  mill  into  full  production,  the
Registrant  incurred  additional  costs  of  $1,682,000  for  mill  engineering,
procurement and construction.

Weedy Lake Prospect
-------------------

The Weedy  Lake  prospect  consists  of mineral  lease ML 5332 which  covers 469
hectares  (1,160  acres) and is located  approximately  156 km  northeast  of La
Ronge, Saskatchewan.  The mineral lease with SEM was renewed on June 7, 1991 for
a ten year term and may be renewed on its anniversary date of June 7, 2001 for a
further ten year term.  Although ML 5332 has no annual lease  payments,  it does
require annual assessment of $23,450.  SEM has indicated that ML 5332 is in good
standing with SEM to June 7, 1997 and that an excess  expenditure  of $1,721,558
remains  to the  credit of this  lease  which may be used  towards  future  work
requirements  to the year 2072.  The  Registrant  acquired  its interest in this
prospect  from an  unaffiliated  party in 1979.  The Weedy Lake prospect is held
37.6% directly by the  Registrant.  Tyler  Resources,  Inc., the operator of the
prospect, has earned from the Registrant,  pursuant to an option agreement dated
October 1,  1986,  a 50.1%  interest  in the  prospect.  The  Registrant,  as at
September 30, 1996,  holds 2,380,592 common shares or 8.42% of the common shares
of Tyler issued and outstanding as at that date. There are no other affiliations
between the  Registrant  and either  Tyler or Cameco.  A portion  (20.5%) of the
Registrant's  37.6%  interest in the Weedy Lake  prospect is encumbered by a net
profit  interest  of  $350,000  payable  at the  rate of $10 per  ounce  of gold
produced and payable to Cameco.

A gravel road serving the Weedy Lake  prospect  terminates  approximately  20 km
west of the  property  on the west side of Waddy  Lake.  Access to the  property
during the winter  months is by winter road and during  summer by float plane to
Weedy Lake. Operations can be maintained year round on the Weedy prospect.

Although the Registrant has identified gold mineralization on this prospect,  no
reserves have been  identified.  The Registrant has  participated in exploration
activities on the Weedy Lake property since 1980. No  exploration  programs have
been  carried out during the period 1990 to September  30, 1995.  Prior to 1990,
the Registrant and its joint venturers  drilled a total of 88 holes (for a total
of 15,532 metres (50,959 feet)).

Tyler, as noted above,  operates the Weedy Lake prospect  pursuant to the option
agreement  dated  October 1, 1986.  Subsequent  to  September  30,  1995,  Tyler
proposed a two phase diamond drill  program to complete the  exploration  of the
identified  gold  mineralization  and to generate the  information  necessary to
determine  whether  economic  mineralization  reserves  necessary to consider an
underground  program are present.  The first phase of the drill program proposed
by Tyler totalled approximately $655,000.  Prior to commencement of this program
the interest  were held 25% by Tyler,  55% by the  Registrant  and 20% by Cameco
Corporation.  In accordance  with the earn-in  committment  of Tyler to earn the
additional  25.1%,  and thereby  increase  its interest to 50.1%,  Tyler,  as at
September  30,  1995  had  to  expend  an  additional  $400,000  in  exploration
expenditures.   Until  Tyler   completed  the  $400,000   earn-in   committment,
exploration  costs were shared 80% by Tyler and 20% by Cameco. As Cameco elected
not to  participate  in the first phase of the diamond drill  program,  Cameco's
share of costs  were  funded by Tyler and the  Registrant  with a  corresponding
dilution  of  Cameco's  interest.  The  first  phase of the  drill  program  was
completed  in  February  1996.  On  completion  of this  first  phase  Tyler has
completed its earn in  committment  and  accordingly  the interests were held as
follows:  Tyler 50%, the  Registrant 34% and Cameco 16%. Based on results of the
first phase of the drill program, Tyler has proposed a second phase estimated to
cost  $605,000  which was  undertaken  during  March and April  1996.  As Cameco
elected not to  participate  in the second phase of the diamond  drill  program,
Cameco's  share  of  costs  were  funded  by  Tyler  and the  Registrant  with a
corresponding diluton of Cameco's interest. The Registrant's share of costs from
both phases was  $504,000.  At September  30, 1996,  the Weedy Lake Prospect was
held 50.1% by Tyler Resources Inc., 37.6% by the Registrant and 12.3% by Cameco.

Other Saskatchewan Prospects
----------------------------

During the years prior to  September  30,  1994,  the  Registrant  and its joint
venture partners incurred  exploration  expenditures on the Tower Lake prospect,
the Komis prospect, the Oven Lake prospect and the Wedge Lake prospect such that


<PAGE>
                                       23

annual  exploration  expenditure has not been required by the Registrant for the
three years  ended  September  30, 1996 nor are any  required or planned for the
year ended  September 30, 1997.  Set out below is  information  related to these
four properties:

<TABLE>
<CAPTION>


                        Tower Lake                Kaslo                 Oven Lake               Wedge Lake
                         Prospect                Prospect                Prospect                Prospect
                         --------                --------                --------                --------

<S>                     <C>                    <C>                    <C>                       <C>  
Interest Held           100%                   100%                   45%                       31.4%
Total Area              486 hectares           534 hectares           4,063 hectares            407 hectares
                        (1,200 acres)          (1,380 acres)          (10,043 acres)            (1,006 acres)
Annual Assessment
Requirements            $12,125                $12,250                $101,573                  $5,058

Excess
Expenditures            $4,127,597             $1,311,024             $1,067,553                 NIL*


In Good Standing To     June 15, 1997 to       January 27, 1998       June 7, 1997               March 3, 1998
                        February 6, 1998
</TABLE>

*    The  Registrant has paid a cash  deficiency  deposit in lieu of exploration
     expenditure.

British Columbia Prospects
--------------------------

The Registrant  has been active in British  Columbia since 1980. As at September
30, 1993, the  Registrant's  major prospect is the Mets claims,  a 1,000 hectare
prospect in the Toodoggone copper-gold area.

Mets Prospect
-------------

The Mets prospect  consists of three claim blocks Mets 1, Mets 4, and Mets 5 and
one  mineral  lease  Mets  3  covering  1000  hectares   (2,471  acres)  located
approximately  170 km north of Smithers,  British  Columbia.  The mineral lease,
Mets 3, requires annual payments of $2,000 to the Energy, Minerals and Petroleum
Resources Branch of the Province of British Columbia. The claims Mets 1, 4 and 5
are in good  standing  with the  Province of British  Columbia to April 3, 1996,
August 4, 1998 and August 3, 1996 respectively.  No additional  expenditures are
required on these claims to keep them in good standing  prior to the dates noted
above.  The Registrant  and its 55%-owned  subsidiary,  Manson,  each owns a 50%
interest in the Mets  prospect.  The  Registrant  acquired  its interest in this
prospect  from  an  unaffiliated  party  in  1980  and  is  not  subject  to any
encumbrances.  Access  is by road  accessible  only  during  the  summer  and by
helicopter and operations can be carried out year round.

Exploration  work  on the  Mets  prospect  has  taken  place  since  1980 by the
Registrant and Manson (the  Operator).  Manson,  in 1985,  optioned the prospect
from the  Registrant and initiated an integrated  backhoe  trenching and diamond
drilling  program  on  previously  known gold  showings  which  resulted  in the
discovery of gold mineralization. No significant exploration has been undertaken
by the  Registrant  since 1989.  Although the  Registrant  has  identified  gold
mineralization  on this  prospect,  no  reserves  have been  identified.  As the
various  claims of the Mets  prospect  are in good  standing  to 1996 to 1998 no
exploration is planned for 1997.

Quebec and Ontario Prospects
----------------------------

Exploration  in Quebec and Ontario has been  concentrated  primarily in Northern
Abitibi which  currently  holds an interest in fifteen  exploration  projects in
Quebec and one in Ontario. These interests vary from 50% to 100%, and consist of
mining  claims  registered  in the  name  of the  Registrant  or its  subsidiary
Northern  Abitibi.  The mining  claims  require the  payment to the  Province of
Quebec  every two years of an renewal fee of $20 to $60 per claim  depending  on
the size of the claim in addition to the filing of assessment  work.  Sufficient
assessment  work  has  been  filed  with  the  Province  of  Quebec  to keep the
properties in good standing to 1996/1997. The last major exploration activity by
the Registrant (through Northern Abitibi) was in 1990.  Approximately $5,478,000
has been expended on these properties over the years with the Registrant's share
approximately $3,688,000.


<PAGE>
                                       24


Labrador Prospects
------------------

Exploration in Labrador has been concentrated  primarily in Northern Abitibi and
Manson.  During 1995,  Manson  through a joint  venture  required an initial 50%
interest in four  properties  in Labrador for total  consideration  $160,000 and
incurred  exploration costs of $12,000.  Northern Abitibi  subsequently  entered
into an option  agreement to acquire from Manson and its joint venture partner a
50% interest in the four  Labrador  properties  and acquired a 100%  interest in
four additional  properties in Labrador for total  consideration of $626,200 and
incurred total exploration  expenditures of $447,500 prior to September 30, 1995
and an additional $138,000 during fiscal 1996. These interests consist of mining
claims registered in the name of Northern Abitibi or Manson.  The claims require
the filing of  assessment  work with the  Province of  Newfoundland.  Sufficient
assessment  work  has been  incurred  and will be  filed  with the  Province  of
Newfoundland  prior to the anniversary  dates of May 1996 to August 1996 to keep
the claims in good standing to May 1997 to August 1997.

Northwest Territories
---------------------

Exploration  in the Northwest  Territories  has been  concentrated  primarily in
Manson which currently holds an interest in two exploration projects.  The major
prospect is Manson  interest in the Parker Lake Joint  Venture which is held 25%
by Manson,  50% by  Cumberland  Resources  Ltd.  (operator)  and 25% by Comaplex
Minerals  Corp.  The Parker Lake Joint  Venture owns almost  1,000,000  acres of
mineral  dispositions  in the eastern Arctic area of the Northwest  Territories.
Exploration to date has resulted in several key discoveries:

         A)       SULUK            Nickel-Copper-Cobalt Zone
         B)       SANDHILL         Copper-Zinc Zone
         C)       THIRSTY LAKE     Diamond Zone
         D)       UKOA             Diamond Zone

The  mineral  dispositions  held by the  joint  venture  cover the  Parker  Lake
greenstone  belt, a relatively  under- explored  volcanosedimentary  sequence of
rocks of Archean age. The  property is located 110  kilometres  southeast of the
hamlet  of Baker  Lake and 150  kilometres  northwest  of Rankin  Inlet,  in the
Keewatin  district of the Northwest  Territories.  Both of these communities are
serviced  year  round  by  scheduled  air  service  from  Yellowknife,  NWT  and
Churchill,  Manitoba.  The  property is accessed  by float  and/or ski  equipped
aircraft and helicopter from Rankin Inlet or Baker Lake.

Preliminary   exploration   has  been   underway   from  1986  to  the  present.
Comprehensive  reconnaissance  prospecting,  sampling,  mapping  and  MAG/VLF-EM
geophysical  programs aimed at investigating the regional  potential for hosting
gold and base metals deposits were completed.  As a result of these  exploration
programs,  the SANDHILL base metal massive sulphide  discovery was made in 1988.
This  discovery  is  located  about  five  kilometres  northeast  of  the  SULUK
discovery. At SANDHILL,  stratiform  mineralization and alteration occurs over a
70 m wide zone which can be traced along strike for about twelve  kilometres  in
felsic volcanics.  In 1992 a Dighem airborne geophysical survey was completed in
order to  identify  conductive  zones that may be  representative  of base metal
bearing sulphide  horizons.  Trenching,  sampling and geophysical  programs have
investigated  the  zinc-copper  zones  over a strike  length of 400 metres and a
width  of 20  metres.  The  economic  potential  is high,  as this is a  typical
volcanogenic  sulphide  environment,  with all of the classical alteration zones
and mineralization.

Following the discovery of spectacular  microdiamond  counts in the THIRSTY LAKE
area in 1994, the joint venture staked additional claims and prospecting permits
totalling 391,498 hectares (967,392 acres).  The microdiamonds  found are mostly
industrial grade with occasional translucent, slightly coloured stones. The high
grade SULUK base metal occurrence was discovered in the summer of 1995. In 1996,
the UKOA gold gold  occurence was  discovered  near the end of the field season.
Two  arsenophyrite-pyrite  bearing samples were collected from the site, located
thirteen kilometres southwest of the SULUK prospect.

While there is no  infrastructure  in the  immediate  area,  possible deep water
shipping  access  is  located  at Cross  Bay  about 40 km from the  discoveries.
Initial  transportation  studies indicate that base metal  concentrates could be
profitably  shipped via this route.  Exploration  will be conducted  from Rankin
Inlet in the initial stages.


<PAGE>
                                       25


During  April  to  September  1996,  Cumberland  Resources  Ltd.,  as  operator,
subjected  the Parker  Lake  property  to a  comprehensive  exploration  program
consisting of airborne and ground geophysics,  prospecting,  detailed geological
mapping  and  diamond  drilling.  In  addition  to the above  programs,  diamond
exploration  consisting of mapping,  prospecting and till sampling,  was carried
out over a 700 sq. km area.  These  programs were so designed as to evaluate the
massive   sulphide  and  gold   potential  of  a  significant   portion  of  the
Gibson-MacQuoid  Lake  greenstone  belt and in particular the SULUK Ni-Cu-Co and
the SANDHILL Zn-Cu-Ag prospects.  The second part of the program was designed to
follow-up  and explore  previously  discovered  diamondiferous  dykes and highly
anomalous  diamond  minerals in tills.  The SULUK  discovery  has been traced by
geological  mapping,  sampling  and a ground  geophsyical  survey  over a strike
length of 800 metres.  The deposit appears to dip to the north and appears to be
1-10 metres wide. A possible  subparallel zone has been indicated by geophysical
surveys about 200 metres (600 feet) to the north.

The 1996 exploration  program cost about $1,911,000 and to date Manson Creek has
funded  $915,000 in land  acquisition  costs and  exploration on the Parker Lake
project.

A phase one, $350,000  exploration  program for 1997 has been recommended by the
Operator;

1)   Continued PEM and/or gravity  survey over the western  portion of the SULUK
     gabbro.

2)   Detailed  geological  and  structural  mapping  of the  area of  UKOA  gold
     occurence.

3)   Magentometre and Horizontal Loop  Electromagnetic  Surveys in the immediate
     area of the UKOA gold occurence.

4)   Prospecting of all known  potentially gold hosting iron formation trends in
     the area of the Parker Lake property.

Pending  results of an ongoing gravity  modeling  exercise,  additional  diamond
drilling  should be reviewed  that would test the gravity  anomaly and the SULUK
gabbro at depths greater than 500 metres. Positive results from recommended work
in the area of the UKOA gold  occurences and other known iron  formation  trends
could  also  warrant  additional   drilling.  A  program  of  continued  diamond
exploration is contingent on positive  results of ongoing till sample  analysis,
which has yet to be completed.

United States
-------------

The Registrant does not have any prospects in the United States.

Item 3:  LEGAL PROCEEDINGS
         -----------------

As at September  30, 1996 there were no material  pending legal  proceedings  in
which the Registrant or its subsidiaries were involved.

Item 4  CONTROL OF THE REGISTRANT
        -------------------------

(a) Direct or Indirect Control by Another
-----------------------------------------

To the best of the  Registrant's  knowledge,  the  Registrant is not directly or
indirectly  owned or  controlled  by a single  person,  a group of persons or by
another  corporation  or by  any  foreign  government.  It is  the  view  of the
Registrant that the day to day business operations and affairs of the Registrant
are controlled by the Board of Directors of the Registrant.



<PAGE>

                                       26

(b) Ownership of Voting Securities
----------------------------------

As  at  February  10,  1997,  26,398,081  common  shares  (September  30,  1996,
24,300,581 common shares) of the Registrant were issued and outstanding. At such
date,  the persons or groups known to the Registrant to own more than 10% of the
Registrant's issued and outstanding shares and the number of common shares owned
by officers and directors of the Registrant as a group are as follows:

                     Identity of         Amount Owned          Percentage
Title of Class    Person or Group         of Record             of Class
--------------    ---------------         ---------             --------

Common Shares     Officers and          3,733,531 (1)          13.36% (2)
                  Directors as a
                  group

(1)  Shares  owned by  officers  and  directors  include  currently  exercisable
     options held by  directors  and  officers of the  Registrant  to acquire an
     aggregate of 1,543,600  common shares,  with 390,000 common shares at $2.05
     per share, 63,600 at $1.96, 30,000 at $3.33 per share, 260,000 at $3.01 per
     share and 800,000 at $11.17 per share.

(2)  The  percentage  of class is  calculated  based on the total of  27,941,681
     shares which include the 26,398,081 common shares issued and outstanding as
     at February 10, 1997 and the 1,543,600  currently  exercisable options held
     by the directors and officers of the Registrant.

(c)  Change of Control Arrangements
---  ------------------------------

There are no arrangements known to the Registrant,  the operations of which may,
at a date  subsequent to the date of this  Registration  Statement,  result in a
change of control of the Registrant.

Item 5  NATURE OF TRADING MARKET
        -----------------------

(a)  Market Information
---  ------------------

The  Registrant's  common  shares are traded on The  Toronto  Stock  Exchange in
Canada.  The  Registrant  has no other class of  securities  which are  publicly
traded.  To the knowledge of the  Registrant,  there is no  significant  trading
market for the Registrant's common shares in the United States.



















<PAGE>
                                       27

(b)  Trading Information
---  -------------------

The high and low sale prices for the common shares of the Registrant,  Waddy and
Manson on the Toronto Stock Exchange,  for Northern Abitibi on the Alberta Stock
Exchange and for Hixon on the VSE for each quarterly  period in the fiscal years
ending September 30, 1995 and September 30, 1996, are as follows.
These prices do not reflect any discounts or commissions.
<TABLE>
<CAPTION>

                                                         Sales Price(1)
                      ------------------------------------------------------------------------------------
                          Golden                                             Northern
                           Rule            Waddy             Manson           Abitibi           Hixon
                      -------------    --------------    --------------    -------------    --------------
Quarter Ended          Low     High     Low      High     Low      High     Low     High     Low      High
-------------         -----   -----    -----    -----    -----    -----    -----   -----    -----    -----

Fiscal 1995
-----------
<S>                   <C>     <C>      <C>      <C>      <C>      <C>      <C>      <C>     <C>      <C>  
December 31, 1994     $1.50   $2.55    $0.75    $1.28    $0.35    $0.72    $0.13   $0.31    $0.22    $0.30
March 31, 1995        $1.60   $2.20    $0.76    $1.19    $0.35    $0.79    $0.14   $0.35    $0.18    $0.27
June 30, 1995         $1.51   $2.10    $0.80    $1.15    $0.30    $0.61    $0.15   $0.42    $0.16    $0.30
September 30, 1995    $1.48   $2.08    $0.80    $1.00    $0.30    $0.82    $0.15   $0.35    $0.20    $0.31

Fiscal 1996
-----------
December 31, 1995     $1.05   $1.70     --       --      $0.40    $1.30    $0.10   $0.23    $0.23    $0.35
March 31, 1996        $1.53   $3.00     --       --      $1.10    $2.15    $0.15   $0.26    $0.26    $0.90
June 30, 1996         $2.11   $3.35     --       --      $0.57    $4.20    $0.20   $0.43    $0.39    $0.84
September 30, 1996    $1.96   $2.70     --       --      $0.50    $0.99    $0.18   $0.27    $0.31    $0.80
</TABLE>


(1)  Canadian  dollars.  For a history of exchange rates see Item 1: Description
     of Business

(c)  Information Regarding Holders
----------------------------------

As of September  30, 1996,  according  to records of the  Registrant's  transfer
agent,  the Registrant had 703 registered  holders of its common shares,  148 of
whom were residents of the United States. The total shareholdings of such United
States  resident  shareholders  as at September 30, 1996 were  1,744,360  common
shares,  representing  7.18% of the total issued and outstanding  capital of the
Registrant.  These do not include an  indeterminable  number of persons who hold
their  shares in  'street  name'  through  broker-dealers  or others  beneficial
holders.

Item 6  EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
        ------------------------------------------------------------------

(a)  Governmental Laws or Decrees
---------------------------------

There is no law or  governmental  decree or regulation in Canada that  restricts
the  export or import of  capital,  or  affects  the  remittance  of  dividends,
interest or other  payments  to a  non-resident  holder of common  shares of the
Registrant,  other than  withholding  tax  requirements  (see Item 7,  Taxation,
below).

(b)  Limitation on Voting Rights
--------------------------------

There is no  limitation  imposed  by  Canadian  law or by the  charter  or other
constituent  documents of the Registrant on the right of a non-resident  to hold
or  vote  common  shares  of the  Registrant,  other  than  as  provided  in the
Investment Canada Act (Canada) (the "Investment Act"). The following  discussion
summarizes the principal  features of the Investment Act for a non-resident  who
proposes to acquire common shares of the  Registrant.  It is general only, it is
not a substitute for independent  advice from an investor's own advisor,  and it
does not  anticipate  statutory or  regulatory  amendments.  No  amendments  are
pending or contemplated at this time.



<PAGE>

                                       28

The Investment Act generally prohibits implementation of a reviewable investment
by an individual, government or agency thereof, corporation,  partnership, trust
or joint  venture that is not a "Canadian" as defined in the  Investment  Act (a
"non-Canadian"), unless after review the minister responsible for the Investment
Act (the  "Minister")  is satisfied  that the  investment is likely to be of net
benefit to Canada.

An investment in common shares of the Registrant by a non-Canadian other than an
"American"  (as that  term is  defined  in the  Investment  Act and used in this
discussion)  when the  Registrant  was not  controlled by an American,  would be
reviewable  under the Investment Act if it was an investment to acquire  control
of the  Registrant  and the value of the assets of the Registrant was $5,000,000
or more,  or if an order  for  review  was made by the  federal  cabinet  on the
grounds that the investment  related to Canada's  cultural  heritage or national
identity.

An  investment  in  common  shares of the  Registrant  by an  American,  or by a
non-Canadian  when  the  Registrant  was  controlled  by an  American,  would be
reviewable  under the Investment Act if it was an investment to acquire  control
of the  Registrant  and the value of the assets of the  Registrant  was not less
than a specified amount which for 1994 is $150,000,000, and for subsequent years
is  $153,000,000  in terms of "constant  1992  dollars".  A  non-Canadian  would
acquire  control of the  Registrant for the purposes of the Investment Act if he
acquired a majority of the common shares of the  Registrant.  The acquisition of
less  than a  majority  but  one  third  or  more of the  common  shares  of the
Registrant  would be presumed to be an  acquisition of control of the Registrant
unless it could be established that, on the acquisition,  the Registrant was not
controlled in fact by the acquire through the ownership of common shares.

Certain transactions  relating to common share of the Registrant would be exempt
from the Investment Act, including:

(a)  acquisition  of common shares of the Registrant by a person in the ordinary
     course of that person's business as a trader or dealer in securities,

(b)  acquisition of control of the Registrant in connection with the realization
     of security granted for a loan or other financial  assistance and not for a
     purpose related to the provisions of the Investment Act, and

(c)  acquisition  of control  of the  Registrant  by reason of an  amalgamation,
     merger,  consolidation or corporate  reorganization  following the ultimate
     direct or indirect control in fact of the Registrant, through the ownership
     of common shares, remained unchanged.

Item 7  TAXATION
        --------

The  discussion  under this heading  summarizes the principal  Canadian  federal
income tax consequences of acquiring,  holding and disposing of common shares of
the Registrant for a shareholder of the Registrant who is not resident in Canada
and who is resident in the United States. It is based on the current  provisions
of the Income Tax Act (Canada)  (the "Tax Act") and the  regulations  thereunder
and on the Registrant's understanding of the current administrative practices of
Revenue Canada,  and takes into account all specific  proposals to amend the Tax
Act or  regulations  made by the  Minister of Finance of Canada  before the date
hereof.  It has been  assumed that there is no other  relevant  amendment of any
governing  law  although  no  assurance  can be  given  in  this  respect.  This
discussion is general only and is not a substitute for independent advice from a
shareholder's own tax advisor.

The provisions of the Tax Act are subject to income tax treaties to which Canada
is a party, including the Canada-United States Income Tax Convention (1980) (the
"Convention").



<PAGE>

                                       29

Dividends on Common Shares
--------------------------

Under the Tax Act, a  non-resident  of Canada is  generally  subject to Canadian
withholding tax at the rate of 25% on dividends paid or deemed to have been paid
to him by a corporation  resident in Canada.  The Convention  limits the rate to
15% if the  shareholder  is resident in the United  States and the dividends are
beneficially  owned by and paid to him, and to 10% if the  shareholder is also a
corporation that beneficially owns at least 10% of the voting stock of the payer
corporation.

However,  if the shareholder  carries on business in Canada through a "permanent
establishment"  situated in Canada or performs  independent personal services in
Canada from a "fixed base" in Canada,  and the  shareholding in respect of which
the  dividends  are  paid  is   effectively   connected   with  that   permanent
establishment or fixed base, those limitations do not apply.

The Convention  generally  exempts from Canadian  income tax dividends paid to a
religious, scientific, literary, educational or charitable organization or to an
organization exclusively administering a pension, retirement or employee benefit
fund or plan, if the organization is resident in the United States and is exempt
from income tax under the laws of the United States.

Dispositions of Common Shares
-----------------------------

The following  comments  apply only to a shareholder  whose common shares of the
Registrant  constitute  capital property to him for the purposes of the Tax Act.
Shares will generally  constitute capital property unless the holder is a trader
or dealer in  securities or is engaged in an adventure in the nature of trade in
respect of the shares.

A taxpayer's  capital gain or capital loss from a disposition  of a common share
of the  Registrant is the amount,  if any, by which his proceeds of  disposition
exceed (or are exceeded by,  respectively)  the  aggregate of his adjusted  cost
base of the share and reasonable expenses of disposition. Three-quarters of such
capital gain  (taxable  capital  gain) is included in income and taxed at normal
rates.  Three-quarters of such a capital loss in a year (allowable capital loss)
is deductible from taxable capital gains realized in the same year. An allowable
capital loss that is not  deductible in the year incurred may,  except on change
of control of a corporate  shareholder,  be carried  back three years or carried
forward to later years for  deduction  from net taxable  capital gains of any of
those years.

If a common share of the Registrant is disposed of to the Registrant  other than
in the open market in the manner in which shares would  normally be purchased by
the public,  the proceeds of  disposition  will be  considered as limited to the
paid-up capital of the share and the balance of the price paid will be deemed to
be a dividend and taxed in accordance  with the rules  governing the taxation of
dividends set out above.

Under the Tax Act,  a  non-resident  of Canada is  subject  to  Canadian  tax on
taxable  capital gains,  and may deduct  allowable  capital losses realized on a
disposition of "taxable Canadian property." Common shares of the Registrant will
constitute taxable Canadian property of a shareholder at a particular time if he
used the shares in carrying on business in Canada, or if at any time in the five
years  preceding the disposition 25% of the issued shares of any class or series
in the capital  stock of the  Registrant  belonged  to one or more  persons in a
group  comprising the  shareholder and persons with whom the shareholder did not
deal at arm's length, and in certain other circumstances.

The Convention  relieves United States residents from liability for Canadian tax
on capital gains derived on a disposition of shares unless

(a)  their value is derived principally from real property in Canada



<PAGE>
                                       30

(b)  the holder was  resident  in Canada for 120 months  during any period of 20
     consecutive  years preceding,  the disposition and the shares were owned by
     him when he ceased to be resident in Canada, or

(c)  they formed part of the business  property of a  "permanent  establishment"
     that the holder has or had in Canada  within  the 12 months  preceding  the
     disposition.


Item 8  SELECTED FINANCIAL DATA
        -----------------------

The selected  financial  data set forth in the  following  table is expressed in
Canadian  dollars.  For a history of the exchange rates for Canadian  dollars in
terms  of U.S.  Dollars  see  Item 1,  "Description  of  Business",  above.  The
financial  information set forth in the following table includes the accounts of
the  Registrant  and  subsidiaries  on  a  consolidated  basis.  This  financial
information  was prepared in accordance  with  accounting  principles  generally
accepted in Canada,  the application of which conforms in all material  respects
for the periods presented with accounting  principles  generally accepted in the
United  States,  except  to the  extent  noted  in Note  16 to the  Consolidated
Financial  Statements  appearing elsewhere in this Registration  Statement,  The
selected  financial data should be read in conjunction  with and is qualified by
such Consolidated Financial Statements and the Notes thereto.

<TABLE>
<CAPTION>

                                                              Year ended September 30
                                       ---------------------------------------------------------------
                                          1996          1995           1994          1993        1992
                                          ----          ----           ----          ----        ----

<S>                                     <C>            <C>            <C>          <C>           <C>     
Operating Summary ($000's)
   Revenue
      Interest and other               $   377         $  340         $  389        $  437         526
   Net income (loss)
      Canadian method                      (62)          (575)            16          (754)        (17)
      United States method              (2,043)        (1,020)          (957)         (265)       (262)

Financial Status ($000's)
   Total assets                         51,439         32,298         27,815        21,227      21,446
   Working capital                       2,322          2,085          4,025         2,260       2,964
   Long term liabilities                   265              -              -             -           -
   Minority interests                    6,806          4,694          5,309         4,663       4,187
Shareholders' equity ($000's)
      Canadian method                   36,248         25,647         20,635        14,466      15,124
      United States method              25,400         15,401         10,504         5,102       5,271

Net earnings (loss) per common share:
      Canadian method
         Basic                         (0)(cent)     (4)(cent)      (0)(cent)      (7)(cent)         -
         Fully diluted                 (0)(cent)     (4)(cent)      (0)(cent)      (7)(cent)         -
      United States method
         Basic                        (10)(cent)     (7)(cent)      (5)(cent)      (2)(cent)    (2)(cent)
         Fully diluted                (10)(cent)     (7)(cent)      (5)(cent)      (2)(cent)    (2)(cent)
</TABLE>

Item 9   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
         -----------------------------------------------------------------------

General
-------

The Registrant and its consolidated  subsidiaries are in the exploration  stage;
none has generated any material revenue from mining  operations.  On a recurring
basis,  revenues are derived from  interest  income,  which is dependent on cash
available and  prevailing  interest  rates,  and  exploration  overhead fees and
recoveries, which are dependent on the level of exploration expenditures managed
by  the  Registrant.   On  a  recurring  basis,  corporate  expenses  relate  to
administration and related overhead costs.



<PAGE>


                                       31

Other items,  which tend to have a more significant effect on reported earnings,
relate  to  the  Registrant's   activities  in  selling  mineral  prospects  and
investments,  when market conditions  warrant,  write-downs of mineral prospects
and investments based on geological and economic conditions, and gains or losses
arising on the  reduction  of the  Registrant's  interest  in  subsidiaries  and
affiliates  due to the issue of shares by the  subsidiaries  and  affiliates  to
interest outside the Registrant.

The  Registrant is subject to a number of factors which  separately and together
affect the  Registrant's  operations and  liquidity.  Obviously the discovery of
reserves would  significantly  affect  operations and  liquidity.  However,  the
ability to discover  reserves,  to develop them and to achieve  production  from
such  reserves is influenced  by the price of gold.  During  periods of low gold
prices,  the  Registrant's  ability to raise  Capital is  hampered as a low gold
price translates into low market prices for the  Registrant's  capital stock and
reduced  interest by investors to finance the  development of projects.  Without
the necessary  capital  existing  projects with  mineralization  cannot be fully
explored with the objective of delineating the mineralization to determine if an
economic  reserve  body  exists,  nor are the funds  available  to  conduct  new
exploration.  As the price of gold rises, there tends to be a corresponding rise
in the market price of the Registrant's  capital stock and increased interest by
investors to favour the  development of projects which  translates into improved
opportunities for the Registrant to raise the necessary capital.

The  economics of whether or not an existing  project with  mineralization  or a
newly  discovered one is developed and brought into  production is influenced by
the price of gold.  The  Registrant  has  identified  a number of projects  with
mineralization,  with sufficient  exploration  work and assessment work filed to
keep the projects in good standing for to the year 2000 and beyond. The price of
gold in previous years since their identification has not justified the costs to
develop these  projects  with  mineralization.  As the price of gold rises,  the
Registrant  reviews the projects to determine  which, if any, have the potential
to be  developed  and placed  into  production  which in turn would  enhance the
Registrant's operations and liquidity.



<PAGE>
                                                        32
Results of Operations

The  following  is a summary of  operating  results,  outlining  the  individual
corporate components of consolidated net income:
<TABLE>
<CAPTION>
                                                                                 ($000)
                                                      -----------------------------------------------------------
                                                         1996                    1995                    1994
                                                      -----------             -----------            ------------
<S>                                                    <C>                     <C>                    <C>   
REVENUES
  Golden Rule                                             277,323                 269,018                 342,501
  Manson Creek                                             80,624                  50,347                  45,892
  Northern Abitibi                                         10,690                  19,419                     621
  Hixon Gold                                                8,611                     845                     207
                                                      -----------             -----------             -----------
                                                          377,248                 339,629                 389,221
                                                      ===========             ===========             ===========
CORPORATE EXPENSES
  Golden Rule                                             879,508                 585,371                 485,805
  Manson Creek                                             65,923                  57,329                  41,620
  Northern Abitibi                                         33,381                  29,979                  24,472
  Hixon Gold                                               33,710                  24,999                  25,196
                                                      -----------             -----------             -----------
                                                        1,012,522                 697,678                 577,093
                                                      ===========             ===========             ===========

LOSS FROM OPERATIONS                                     (635,274)               (358,049)               (187,872)
                                                      -----------             -----------             -----------
OTHER
  Gain (Loss) on disposal of mineral
    properties and other assets
    - Golden Rule                                         683,519                  (1,940)                170,581
    - Manson Creek                                         67,010                  83,019                 287,516
                                                      -----------             -----------             -----------
                                                          750,529                  84,959                 458,097
                                                      ===========             ===========             ===========
ABANDONMENTS AND WRITE-DOWN OF MINERAL
PROPERTIES
    - Golden Rule                                            --                  (300,000)               (447,295)
    - Manson Creek                                        (71,971)               (457,637)               (332,987)
    - Northern Abitibi                                 (1,273,924)                   --                  (244,266)
    - Hixon Gold                                             --                      --                  (108,870)
                                                      -----------             -----------             -----------
                                                       (1,345,895)               (757,637)             (1,133,418)
                                                      ===========             ===========             ===========

LOSS BEFORE INCOME TAXES                               (1,230,640)             (1,030,727)               (863,193)


INCOME TAXES (RECOVERY)
  - Golden Rule                                           478,000                (257,536)               (122,200)
                                                      -----------             -----------             -----------

LOSS BEFORE THE UNDERNOTED                             (1,708,640)               (773,191)               (740,993)
                                                      -----------             -----------             -----------

GAIN (LOSS) ON REDUCTION OF INTEREST IN
  AFFILIATES AND SUBSIDIARIES
    (GOLDEN RULE)                                         807,386                 101,515                  39,220
                                                      -----------             -----------             -----------
EQUITY IN INCOME (LOSS) OF
  AFFILIATED COMPANIES
   Stade Exploration Inc.                                  36,769                (149,064)                 34,434

   Eastfield Resources Inc.                                  --                    24,729                  18,615
                                                      -----------             -----------             -----------
                                                           36,769                (124,335)                 53,049
                                                      ===========             ===========             ===========
MINORITY INTEREST IN LOSS
   OF SUBSIDIARIES                                        802,946                 221,491                 664,708
                                                      -----------             -----------             -----------
NET INCOME (LOSS)                                     $   (61,539)            $  (574,520)            $    15,984
                                                      ===========             ===========             ===========
</TABLE>

The variation in the equity in income  (loss) of affiliated  companies is due to
the write-down of a mineral property in Stade in 1995.


<PAGE>

                                       33

Fiscal year ended September 30, 1996 Compared to 1995
-----------------------------------------------------

The small increase in  consolidated  revenues in 1996 reflects a modest increase
in exploration overhead fees from increased activity, and higher interest income
from larger available cash balances.

On a consolidated  basis,  1996 corporate  expense increased by 46% to $983,228,
largely attributable to Komis mine construction and financing costs. As a result
of the above noted factors,  the Registrant  incurred a loss from  operations of
$635,274 as compared to a loss of $358,049 in the preceding year.

Consolidated  net loss of $61,539  reflects a decrease of $512,981 over the 1995
year.  Abandonment and  write-downs  increased by 588,258 over 1995 and deferred
income  tax  increased  by  $735,536  from a  recovery  of 257,536 in 1995 to an
expense of  $478,000  in 1996.  These  increases  were  offset by an increase of
$66,570 from gains on disposal of  investments,  an increase of $705,871 on book
gain recorded on the issue of shares by  subsidiaries an increase of $581,455 in
the minority  interest in subsidiary  company losses and an increase of $161,104
in equity in increase of income of  investors  from a loss of $124,335 to income
of $36,769.

Fiscal year ended September 30, 1995 Compared to 1994
-----------------------------------------------------

The  decline  in  1995  consolidated  revenues  reflects  a minor  reduction  in
exploration  overhead  fees  and a  decrease  in  interest  income  due to lower
available cash balances and lower interest rates.

On a consolidated  basis, 1995 corporate  expenses increased by 21% to $697,698,
largely attributable to increased  shareholder  communication,  public relations
activities and  regulatory  costs.  As a result of the above noted factors,  the
Registrant  incurred a loss from operations of $358,040 as compared to a loss of
$187,872 in the preceding year.

Consolidated net loss of $574,520 reflects an increase of $590,504 over the 1994
year.  Although  abandonments and write-downs were  approximately  $376,000 less
than in 1994,  and book gains  recorded on the issued of shares by  subsidiaries
increased by approximately  $62,000 these were offset by lower gains on disposal
of  investments  of  approximately  $373,000  and a  $443,000  reduction  in the
minority  interest in  subsidiary  company  losses and a $177,000  reduction  in
equity in income of affiliated companies.


Liquidity and Capital Resources
-------------------------------

a)   Operating Cash Flow
     -------------------

     Cash provided from operating  activities has not been a significant  source
     of or requirement  of liquidity.  With the start-up of the Komis mine after
     the 1996 year end, mining  operations are anticipated to have a significant
     influence on operating cash flow.

b)   Liquidity Provided from Financing Activities
     --------------------------------------------

     During 1996, the Registrant negotiated a loan facility of $US 4 million, or
     the gold  equivalent to be used to partially fund  pre-production  costs of
     the Komis mine,  of which $CDN  2,995,802  had been drawn on September  30,
     1996 and the  remainder  in  October  1996.  The  Registrant  received  net
     proceeds  of  $10,662,718  in 1996  from  the  issuance  of  common  shares
     including  $9,563,741  through  a public  offering  and  $1,098,977  on the
     exercise  of stock  options  and the  issue of shares  to  acquire  mineral
     properties.  The  issue of  shares  by  subsidiary  companies  to  minority
     shareholders provided $2,094,632 compared to $882,750 in 1995.


<PAGE>
                                       34

     During  1995,  $882,750  was  provided  through  the  issue  of  shares  by
     subsidiary companies,  compared to $224,587 in the prior year. Although the
     Company issued  3,762,007 shares to increase its ownership in Waddy Lake to
     100%, this was not a direct source of liquidity.

c)   Liquidity Provided from Investing Activities
     --------------------------------------------

     In 1996,  the  Registrant  received  proceeds of $844,822  from the sale of
     portfolio investments compared to $505,468 in 1995. In addition, $1,961,857
     was  received on the sale of the  Registrant's  shares of  subsidiaries  to
     facilitate  their financing,  compared to $1,035,638  received in 1995 from
     this  source.  Please  refer  to Part I,  Publicly  held  Subsidiaries  and
     Financing  of  Publicly  held  Subsidiaries  for a detailed  discussion  on
     proceeds from sale of Registrant's shares of Subsidiaries.

     In 1995,  $1,035,638 was provided from the sale of shares of  subsidiaries,
     to  facilitate   financings   and  $505,468  from  the  sale  of  portfolio
     investments. In addition, in 1995 Stade Exploration Inc. repaid advances of
     $688,197.

     In 1994, $791,542 was provided from the sale of shares of subsidiaries,  to
     facilitate financings,  and $509,539 from the sale of portfolio investments
     primarily held by Manson Creek.

d)   Liquidity Used in Investing Activities
     --------------------------------------

     Construction,  pre-production  and other costs for the Komis Mine  totalled
     $10,739,388,  compared to $1,417,923 in 1995.  Construction of the mine was
     substantially completed by September 30, 1996.

     Expenditures on exploration properties increased from $2,165,128 in 1995 to
     $3,339,366  in 1996.  The  significant  areas of  expenditure  in 1996 were
     $910,000 for Ghana, property acquisitions and exploration,  the acquisition
     of  exploration   properties  for  $430,000  and  $653,000  of  exploration
     expenditures in Saskatchewan,  and $520,000 for exploration in the Voisey's
     Bay area.

     In 1995, expenditures on the Komis deposit for the underground exploration,
     development  and test  mining  program,  additional  surface  drilling  and
     capital   improvements  to  the  Jolu  Mill  were  $1,417,823  compared  to
     $4,426,144 in 1994 and $395,095 in 1993.  Exploration property additions in
     1995 totalled  $2,165,128,  primarily incurred by Manson Creek and Northern
     Abitibi with respect to their  Labrador  properties.  In 1994,  exploration
     property additions were $1,349,346, primarily incurred by Manson Creek with
     respect to its Venezuel properties.

     In 1995,  the Company,  acquired  the  minority  interest in Waddy Lake for
     total  consideration  of $5,810,637 by the issue of 3,762,007 common shares
     at a deemed price of $1.51 per share for a total of $5,680,631 and incurred
     cash expenses related to the acquisition of $130,006.

     The Company, in 1995, made additional  investments in affiliated  companies
     totalling  $889,483  with the major  investment  related to the exercise of
     Stade Exploration Inc,  warrants for 2,523,190  additional shares at a cost
     of $706,493.

e)   Working Capital
     ---------------

     Working  capital  was  $2,322,062  at  September  30,  1996 as  compared to
     $2,084,658 and $4,024,935 at September 30, 1995 and 1994 respectively.  The
     small increase in working capital in the 1996 fiscal year reflects the


<PAGE>
                                       35

     increase in cash from equity financing and inventories  offset by increased
     accounts  payable and current  portion of long term debt.  The  decrease in
     working  capital in the 1995  fiscal  year is largely  attributable  to the
     increased exploration expenditures in 1995 over 1994.

     Between  the  wholly  owned  subsidiaries  and the  Registrant,  funds  are
     transferred as required  without  restriction.  In the case of the publicly
     held subsidiaries, however, any transfer of funds would have to comply with
     corporate law and the applicable securities  regulation.  The policy of the
     Registrant is that the subsidiaries  operate on their own and funds are not
     transferred  between the Registrant and  subsidiaries.  The Registrant does
     provide administration  services to the subsidiaries and acts as contractor
     on the subsidiaries  exploration projects. The related costs are charged to
     the  subsidiaries  and paid by them.  Any advances of funds  whether by the
     subsidiaries to the Registrant or by the Registrant to the subsidiaries are
     formally  documented with interest  charged at the prime rate plus 1% or by
     way of a private placement of a convertible debenture.

     Except for  Northern  Abitibi  Mining  Corp.'s  commitment  to provide  $US
     1,650,000  financing  to earn a 50% interest in the Keroane  property,  the
     Registrant has no material capital expenditure commitments.

     The Registrant,  depending upon the timing of the exploration  requirements
     and  opportunities,  may need to  raise  additional  capital.  Management's
     preference  is to realize  liquidity  through the sale of  non-core  assets
     rather than the issuance of additional equity.


Item 10  DIRECTORS AND OFFICERS OF THE REGISTRANT
         ----------------------------------------

The executive officers and directors of the Registrant are as follows:

                                                               Period as a
                                                          Director or Officer
Name                               Position               of the Registrant
----                               --------               -----------------

Glen H. Harper                     President              October 19, 1979
                                   and Director

Robert G. Ingram                   Director               September 24, 1981

G. A. James Devonshire             Director               March 30, 1990

Peter (C. W.) Cole                 Director               March 31, 1995

Robert J. Lemmon                   Treasurer              March 23, 1990

Barbara M. O'Neill                 Secretary              June 28, 1993(1)

(1)  Ms. O'Neill was appointed Assistant  Secretary/Treasurer  on March 23, 1990
     and held that position until June 28, 1993 when she was appointed Secretary
     of the Registrant.

All directors hold office until the next annual meeting of the  shareholders  of
the  Registrant  and until their  successors  have been  elected and  qualified.
Officers of the Registrant serve at the discretion of the Board of Directors.


<PAGE>


                                       36


There are no  arrangements  or  understandings  between any of the  directors or
officers  of the  Registrant  and any other  person  pursuant to which they were
selected  as a  director  or  officer  of the  Registrant.  There  are no family
arrangements  between any  director or officer of the  Registrant  and any other
director or officer of the Registrant.


Item 11  COMPENSATION OF DIRECTORS AND OFFICERS
         --------------------------------------

The Registrant has three  Executive  Officers and four directors (one of whom is
an Executive  Officer) whose  aggregate cash  compensation  in those  capacities
during the year ended September 30, 1996, was $55,400.

Corporations in which the  Registrant's  President,  former  Vice-President  and
Treasurer  are  shareholders  have  provided,   at  usual  professional   rates,
geological  and  exploration  services  of  $161,000  and direct  administrative
services of $95,000.

A Corporation in which one the Registrant's  director is a shareholder  provided
at usual professional rates consulting services of $35,000.

In addition,  these Executive Officers and directors  exercised  incentive stock
options  during the year ended  September 30, 1996 resulting in an aggregate net
value to the Executive  Officers and  Directors of  $1,487,999.  (Subsequent  to
September 30, 1996, these Executive Officers and directors  exercised  incentive
stock options resulting in an aggregate net value to the Executive  Officers and
directors of $5,262,042.  (Also see heading "Option to Purchase  Securities from
Registrant or  Subsidiaries").  During fiscal 1996, the three  directors who are
not  Executive  Officers  were paid a total of  $19,400 in their  capacity  as a
director.

As at September 30, 1996, the  Registrant  does not have any plans which require
the  Registrant to contribute  to or to provide  pension,  retirement or similar
benefits to directors and officers.

Item 12  OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
         --------------------------------------------------------------

1996 Share Option Plan
----------------------

At the Annual & Special  Meeting of the common  shareholders  of the  Registrant
(the  Shareholders)  held on  March  29,  1996,  the  Shareholders  approved  an
amendement  to the 1995 Share Option Plan  approved by the  Shareholders  at the
Annual and Special  Meeting held on March 31, 1995 (the "1995 Plan") to increase
the  number of  shares  reserved  for  issuance  thereunder  from  1,555,545  to
1,935,626.  The result of this  ammendment was  effectively to create a new plan
known as the 1996 Share Option Plan (the "1996 Plan"). The 1996 plan is the same
as the 1995 Plan  except  for the number of shares  reserved  for  issuance  and
replaces  the 1995  Plan.  The 1995  Plan  superceded  and  replaced  the  share
incentive plan of the Registrant  which was in place prior to the  establishment
of the 1995 Plan (the "Old Plan"). At the time of approval of the 1996 plan, the
Registrant had options  outstanding to purchase  1,045,667 common shares granted
under the Old Plan of the  Corporation,  470,000 common shares granted under the
1995 Plan of the Corporation, 257,050 common shares on conversion of the 485,000
common shares granted under the Old Plan of Waddy Lake Resources Inc.  ("Waddy")
prior to the  acquisition  of the minority  interest in Waddy and 464,700 common
shares on conversion of the 876,792 common shares granted under the 1995 Plan of
Waddy prior to the acquisition of the minority  interest of Waddy,  all of which
were not subject to further  shareholder  ratification.  No further stock otions
will be issued under the Old Plan or the 1995 Plan of the Corporation or will be
issued  under the Old Plan or 1995 Plan of Waddy,  however,  those  options will
remain  in  effect  until  exercised,   cancelled  or  otherwise  terminated  in
accordance with the respective terms of those plans. A total of 1,935,626 common


<PAGE>
                                       37

shares of the Corporation were  conditionally  reserved for issuance pursuant to
options to be granted under the 1996 plan.

At the date of approval of the 1996 Plan,  the number of common shares  reserved
for issuance  under  outstanding  options was  3,322,962  including  the 721,750
reserved for  outstanding  options under the Old Plan and the 1995 Plan of Waddy
and,  accordingly,  the maximum number of common shares reserved for issuancewas
5,258,588 representing 27.2% percent of the issued and outstanding common shares
of the Registrant then outstanding.

The 1996 Plan provides that the Board of Directors may, from time to time, grant
options  to acquire  all or part of the  shares  subject to the 1996 Plan to any
person  who  is an  employee  or  director  of  the  Registrant  or  any  of its
subsidiaries  or any other  person or  Registrant  engaged  to  provide  ongoing
management or consulting services for the Registrant or any of its subsidiaries.
The 1996 Plan prohibits the Registrant  from providing  financial  assistance to
any optionee in connection with the exercise of options.  the term of any option
granted   under  the  1996  Plan  will  be  five  years  except  under   special
circumstances when the Board may establish a shorter or longer term. In no event
will the term of any option  exceed ten years.  The 1996 Plan also  provides for
early  termination of outstanding  options in the event of death of the optionee
or if the optionee ceases to be a director or employee,  the subscription  price
for shares acquired  pursuant to options granted under the 1996 Plan will be the
wieghted  average of the trading price per share for the common shares traded on
the Toronto Stock Exchange on the last five days before the date of grant of the
option.

A majority of the common  shares that may be allocated for issued under the 1996
Plan may be issuable to insiders of the Corporation.

     In addition, the 1996 Plan provides that:

     a)   the number of common  shares  reserved  for  issuance  pursuant to all
          share compensation  arrangements  (including stock options) granted to
          insiders will not exceed 10% of the outstanding issue,

     b)   the number of common shares that may be issued to insiders pursuant to
          all share compensation arrangements (including stock options) within a
          one year period will not exceed 10% of the outstanding issue, and

     c)   the number of common  shares that may be reserved  for issuance to any
          one  insider  and such  insider's  associates  pursuant  to all  share
          compensation arrangements (including stock options) will not exceed 5%
          of the outstanding issue,

and in no event may the number of common shares reserved for issuance to any one
person pursuant to a stock option exceed 5% of the outstanding issue.

1995 Share Option Plan
----------------------

At the Annual and Special  Meeting of the common  shareholders of the Registrant
(the  Shareholders)  held on March  31,  1995,  the  Shareholders  approved  the
establishment of a 1995 Share Option Plan (the "1995 Plan") which superseded and
replaced the existing share  incentive plan of the Registrant  (the "Old Plan").
The Registrant at March 31, 1995 had outstanding  options to purchase  1,063,667
common  shares  granted  under the Old Plan  which  were not  subject to further
shareholder  ratification.  The  options  under  the Old Plan  were  granted  to
directors, officers, employees and a fiscal agent. No further stock options will
be issued under the Old Plan,  however those options will remain in effect until
exercised,  cancelled or otherwise terminated in accordance with the Old Plan. A
total of 1,555,545 common shares of the Registrant were conditionally reserved


<PAGE>
                                       38

for issue  pursuant to options to be granted under the 1995 Plan.  The number of
common shares reserved for issuance under outstanding options under the Old Plan
was  1,063,667  and the maximum  number of common  shares  reserved for issuance
under the 1995 Plan was  1,555,545  resulting in an  aggregate of 2,619,212  and
representing   16.8%  of  the  issued  and  outstanding  common  shares  of  the
Registrant.

The 1995 Plan  provided  that the Board of Directors may from time to time grant
options  to acquire  all or part of the  shares  subject to the 1995 Plan to any
person  who  is an  employee  or  director  of  the  Registrant  or  any  of its
subsidiaries  or any other  person or  corporation  engaged to  provide  ongoing
management  or  consulting   services  for  the   Registration  or  any  of  its
subsidiaries.  The 1995 Plan prohibited the Registrant from providing  financial
assistance to any optionee in connection with the exercise of options.  The term
of any option  granted  under the 1995 Plan was five years except under  special
circumstance  when the Board may establish a shorter or longer term. In no event
could the term of any option  exceed 10 years.  The 1995 Plan also  provided for
early  termination of outstanding  options in the event of death of the optionee
or if the optionee ceases to be a director or employee.  The subscription  price
for shares  acquired  pursuant to options  granted under the 1995 Plan had to be
the weighted average of the trading price per share for the common shares traded
on The Toronto Stock  Exchange on the last five days before the date of grant of
the option.

A majority of the common shares that could be allocated for issue under the 1995
Plan could be issuable to insiders of the Registrant.

     In addition, the 1995 Plan provided that

     (a)  the number of common  shares  reserved  for  issuance  pursuant to all
          share compensation  arrangements  (including stock options) granted to
          insiders could not exceed 10% of the outstanding issue,

     (b)  the number of common shares that could be issued to insiders  pursuant
          to all  share  compensation  arrangements  (including  stock  options)
          within a one year  period  could  not  exceed  10% of the  outstanding
          issue, and

     (c)  the number of common shares that could be reserved for issuance to any
          one  insider  and such  insider's  associates  pursuant  to all  share
          compensation  arrangements  (including stock options) could not exceed
          5% of the outstanding issue,

and in no event could the number of common  shares  reserved for issuance to any
one person pursuant to a stock option exceed 5% of the outstanding issue.

Old Plan
--------

The incentive stock option plan of the Registrant in existence prior to the 1995
Plan (the "Old Plan") was  designed to provide  incentives  to the  Registrant's
personnel including directors, officers, employees and persons who have provided
ongoing  services of value to the Registrant.  The Plan was  administered by the
Board of Directors of the Registrant,  who made  allocations to eligible persons
after considering  their present and potential  contributions and other relevant
factors.  The  directors  also granted  options to acquire  stock to other Board
members.  The options granted pursuant to the Plan did not exceed a term of five
years and were granted at an option price and on other terms which the directors
determined was necessary to achieve the goal of the Plan and in accordance  with
regulatory  policy.  The option  price could be at a discount  to market  price,
which discount would, in any event, exceed the following:


<PAGE>
                                       39

                  Market Price at Time       Maximum Discount
                       of Grant (1)             Therefrom
                  --------------------       ----------------
                    $1.00 or less                  20%
                    $1.01 to $5.00                 15%
                    $5.01 or more                  10%

(1)      As determined by the Toronto Stock Exchange.

The  number  of  shares  allocated  to the Plan was  determined  by the Board of
Directors  from  time to time.  The  aggregate  number of  shares  reserved  for
issuance  under the Plan,  (other  employee  stock  option  plans,  options  for
services  and  employee  stock  purchase  plans)  could  not  exceed  10% of the
Registrant's issued and outstanding shares. In addition, the aggregate number of
shares so reserved  for  issuance  to any one person  could not exceed 5% of the
issued and outstanding shares.

The common shares,  when fully paid for by a  participant,  were not included in
the  calculation  of common  shares  allocated  to or within the Plan.  Should a
participant cease to be eligible due to the loss of corporate office (being that
of an officer or director) or employment,  the option ceased for varying periods
not exceeding three months. Loss of eligibility for consultants was regulated by
specific  rules  imposed by the  directors  when the  option was  granted to the
appropriate consultant.

The Plan also  provided  that estates of deceased  participants  could  exercise
their options for a period not exceeding six months  following  death. The Board
of Directors  could from time to time make rules,  regulations and amendments to
the Plan.  Should any rule,  regulation or amendment  materially differ from the
provisions set forth in the Information  Circular  provided to the  Shareholders
with the Proxy  Solicitation it should obtain  regulatory or shareholder (as the
case may be) approval.

Waddy Lake Plans
----------------

At the Annual and Special Meeting of the Waddy Lake common  shareholders held on
March 31, 1995, the Waddy Lake shareholders approved the establishment of a 1995
Share Option Plan (the "1995 Plan of Waddy") which  superseded  and replaced the
existing  share  incentive  plan of Waddy  Lake (the "Old Plan of  Waddy").  The
terms,  conditions  and provisions of the 1995 Plan of Waddy and the Old Plan of
Waddy were similar to the 1995 Plan and the Old Plan of the Registrant described
above. On acquisition of the minority  interest of Waddy Lake by the Registrant,
any incentive stock options issued and outstanding  under the 1995 Plan of Waddy
and the Old Plan of Waddy were  converted  into  incentive  stock options of the
Registrant on the basis of the share exchange ratio used to acquire the minority
interest of Waddy Lake (ie. .53 share of the  Registrant for each share of Waddy
Lake). At the date of the acquisition of the minority  interest of Waddy Lake by
the Registrant  there were  incentive  stock options for 890,000 shares of Waddy
Lake issued and  outstanding  under the 1995 Plan of Waddy which were  converted
into incentive  stock options for 471,700 shares of the Registrant and incentive
stock options for 545,000 shares of Waddy Lake issued and outstanding  under the
Old Plan of Waddy which were converted into incentive  stock options for 288,850
shares of the  Registrant.  Subsequent  to September 30, 1995,  incentive  stock
options have been  exercised for 228,681  shares of the 471,700 shares under the
1995  Plan of  Waddy to leave  243,019  currently  issued  and  outstanding  and
incentive stock options exercised for 288,850 shares of the 288,850 shares under
the Old Plan of Waddy to leave none currently issued and outstanding.




<PAGE>

                                       40

As at September 30, 1996,  incentive stock options for 2,489,100 shares,  issued
pursuant to the terms of the incentive  stock option plans noted above,  were as
follows:

                                             Exercise
Type                         Number           Price
of Option                  of Shares         ($Cdn.)           Expiry Date
---------                  ---------         -------           -----------

A)  Golden Rule

i) Old Plan
   a) Options
    Directors               544,000           $2.05          January 27, 1997
    Employees               108,000           $2.05          January 27, 1997
    Employers                35,000           $2.20          January 18, 1997
                           --------

                            687,000
                            =======

ii) 1995 Plan
    Directors               470,000           $2.05          August 3, 2000
                           --------

iii) 1996 Plan
    Directors               260,000           $3.01          April 22, 1999
    Directors               260,000           $3.01          April 22, 2001
    Employers               258,000           $2.15          August 26, 2001
                           --------

                            778,000
                            =======

Total Golden Rule         1,935,000
                          =========


B)  Waddy Lake

i) Old Plan of Waddy
    Directors                53,000           $1.70          December 30, 1997
    Employees                39,750           $2.21          January 20, 1997
    Employees                13,250           $1.70          December 30, 1997
                           --------
                            106,000
                            =======
ii) 1995 Plan of Waddy
    Directors               190,800           $1.96          April 3, 2000
    Former Directors        216,600           $1.96          April 3, 2000
    Employees                40,700           $1.96          April 3, 2000
                           --------

                            448,100
                           ========

Total Waddy Lake            554,100
                           ========

GRAND TOTAL               2,489,100
                          =========




<PAGE>
                                       41

1997 Share Option Plan
----------------------

At the Annual and Special  Meeting of the common  shareholders of the Registrant
(the  Shareholders) to be held on March 27, 1997, the Shareholders will be asked
to  approve  an  amendment  to  the  1996  Share  Option  Plan  approved  by the
Shareholders at the Annual and Special Meeting held on March 29, 1996 (the "1996
Plan") by increasing the number of shares reserved for issuance  thereunder from
1,935,626 to 2,639,800.  The result of this  amendment  will be  effectively  to
create a new plan to be known as the 1997 Share  Option Plan (the "1997  Plan").
The 1997  plan  will be same as the 1996 Plan  except  for the  number of shares
reserved for issuance and will,  upon receipt of all regulatory and  shareholder
approvals,  including  the approval of the Toronto Stock  Exchange,  replace the
1996 Plan.  Shareholders  will also be asked to authorize  the directors to make
any  amendments  to the  1997  Plan  that may be  required  for the  purpose  of
obtaining  the approval of the Toronto  Stock  Exchange  thereto.  The 1996 Plan
superseded and replaced the share incentive plan of the Registrant  which was in
place prior to the establishment of the 1996 Plan. The Registrant  currently has
options  outstanding to purchase  1,437,000 common shares granted under the 1996
Plan of the  Registrant,  390,000  common  shares  granted  under the 1995 Plan,
243,019  common  shares  granted  under  the  1995  Plan of  Waddy  prior to the
acquisition of the minority  interest of Waddy,  all of which are not subject to
further shareholder ratification. Subject to the approval of the shareholders of
the 1997 Plan,  no further  stock  options will be issued under the 1996 Plan or
the 1995 Plan of the  Registrant or be issued under the 1995 Plan of Waddy,  but
those  options  will remain in effect  until  exercised,  cancelled or otherwise
terminated in accordance  with the  respective  terms of those plans. A total of
4,575,426  common shares of the Registrant  will be  conditionally  reserved for
issuance pursuant to options to be granted under the 1997 Plan.

The number of common shares reserved for issuance under  outstanding  options is
1,955,800  including  the  128,800  reserved  for the 1995  Plan of  Waddy  and,
accordingly,  the maximum number of common shares  reserved for issuance will be
4,575,426  representing  17.33%  percent of the issued  and  outstanding  common
shares of the Registrant as at the date of this filing.

The 1997 Plan will  provide  that the Board of  Directors  may from time to time
grant  options to acquire all or part of the shares  subject to the 1997 Plan to
any  person who is an  employee  or  director  of the  Registrant  or any of its
subsidiaries  or any other  person or  corporation  engaged to  provide  ongoing
management or consulting services for the Registrant or any of its subsidiaries.
The 1997 Plan prohibits the Registrant  from providing  financial  assistance to
any optionee in connection with the exercise of options.  The term of any option
granted   under  the  1997  Plan  will  be  five  years  except  under   special
circumstances when the Board may establish a shorter or longer term. In no event
will the term of any option  exceed 10 years.  The 1997 Plan also  provides  for
early  termination of outstanding  options in the event of death of the optionee
or if the optionee ceases to be a director or employee,  the subscription  price
for shares acquired  pursuant to options granted under the 1997 Plan will be the
weighted  average of the trading price per share for the common shares traded on
the Toronto Stock Exchange on the last five days before the date of grant of the
option.

A majority of the common  shares that may be allocated for issued under the 1997
Plan may be issuable to insiders of the Registrant.

If approved, the 1997 Plan will provide that:

     a)   the number of common  shares  reserved  for  issuance  pursuant to all
          share compensation  arrangements  (including stock options) granted to
          insiders will not exceed 10% of the outstanding issue,

     b)   the number of common shares that may be issued to insiders pursuant to
          all share compensation arrangements (including stock options) within a
          one year period will not exceed 10% of the outstanding issue, and



<PAGE>


                                       42

     c)   the number of common  shares that may be reserved  for issuance to any
          one  insider  and such  insider's  associates  pursuant  to all  share
          compensation arrangements (including stock options) will not exceed 5%
          of the  outstanding  issue  and in no event  may the  number of common
          shares  reserved  for  issuance to any one person  pursuant to a stock
          option exceed 5% of the outstanding issue.

Item 13  INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
         ----------------------------------------------

Except as described elsewhere herein,  there have been no material  transactions
during  the  last  three  fiscal  years  nor are  there  any  proposed  material
transactions  in which a director or officer of the  Registrant or any associate
of such persons had, or will have, a direct or indirect material interest.

PART II
-------

Item 14  DESCRIPTION OF SECURITIES TO BE REGISTERED
         ------------------------------------------

(a) Capital Stock to be Registered
----------------------------------

The authorized  share capital of the Registrant  consists of an unlimited number
of common shares without  nominal or par value,  the holder of which is entitled
to one vote in respect of each share held at all meetings of the shareholders of
the Registrant.

Each  holder  of the  common  shares is  entitled  to share  proportionately  in
dividends that may be paid and upon  liquidation of the  Registrant.  Holders of
the common  shares are not  entitled  to  preemptive  rights on the  issuance of
additional common shares, and there are no conversion rights, redemption rights,
or  sinking   fund   established.   All   shares   issued  are  fully  paid  and
non-assessable, and no shareholder is liable for further calls or assessment.

The Registrant does not have any preferred shares or other  preference  security
which is authorized or which may be issued.

(b) Debt Securities to be Registered
------------------------------------

Not applicable, inasmuch as there are no debt securities of the Registrant to be
registered.

(c) American Depository Receipts to be Registered
-------------------------------------------------

Not  applicable,  inasmuch as there are no American  Depository  Receipts of the
Registrant to be registered.


(d) Other Securities to be Registered
-------------------------------------

Not applicable,  inasmuch as there are no other  securities of the Registrant to
be registered.

PART III
--------

Item 15  DEFAULTS UPON SENIOR SECURITIES
         --------------------------------

         None

Item 16  CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES
         -----------------------------------------------------------------------


<PAGE>
                                       43

There have been no  modifications  to the constituent  instruments  defining the
rights of the holders of the Common shares.  The rights  evidenced by the Common
Shares  have not  been  materially  limited  or  qualified  by the  issuance  or
modification of any other class of securities or debt.

PART IV
-------

Item 17  FINANCIAL STATEMENTS
         --------------------

See the Consolidated  Financial Statements listed in Item 19 hereof and filed as
part of this Registration Statement.

These financial  statements were prepared in accordance with generally  accepted
accounting  principles  in Canada and are  expressed in Canadian  dollars.  Such
financial  statements  contain a discussion  of the material  variations  in the
accounting  principles,  practices  and methods used in preparing  the financial
statements from the principles,  practices and methods generally accepted in the
United States. For a history of exchange rates in effect for Canadian dollars as
against U.S. dollars, see Item 1 - "Description of Business", above.

Item 18  FINANCIAL STATEMENTS
         --------------------

(Inapplicable - see Item 17 "Financial Statements" above)

Item 19  FINANCIAL STATEMENTS AND EXHIBITS
         ---------------------------------

(a) Financial Statements
------------------------

Consolidated  balance sheets of the Registrant for the years ended September 30,
1996 and 1995, and Consolidated  Statement of Operations,  Shareholders'  Equity
and Changes in Financial Position for each of the years in the three year period
ended September 30, 1996.

(b) Exhibits
------------

 1.1   Consolidated Financial Statements for the year ended September 30, 1996


<PAGE>
                                       44

SIGNATURES
----------

Pursuant to the  requirements  of Section 12 of the  Securities  Exchange Act of
1934, the Registrant  certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.

DATED at Calgary, Alberta, this 26 day of March, 1997.


                                            GOLDEN RULE RESOURCES LTD.



                                            By:  /s/  ROBERT J. LEMMON
                                                --------------------------------
                                                Robert J. Lemmon, Treasurer

<PAGE>


                                                 Doane Raymond [GRAPHIC OMITTED]

Chartered Accountants
Canadian Member Firm of
Grant Thornton International










































                                                      Golden Rule Resources Ltd.
                                                          Consolidated Financial
                                                                      Statements
                                                              September 30, 1996



<PAGE>

Contents









                                                                    Page
                                                                    ----

Auditors' Report                                                       1

Consolidated Balance Sheets                                            2

Consolidated Statements of Operations                                  3

Consolidated Statements of Shareholders' Equity                        4

Consolidated Statements of Changes in Financial Position               5

Notes to the Consolidated Financial Statements                      6-24



Doane Raymond [GRAPHIC OMITTED]

<PAGE>



                                                 Doane Raymond [GRAPHIC OMITTED]

Chartered Accountants
Canadian Member Firm of
Grant Thornton International












Auditors' Report


To the Shareholders of
Golden Rule Resources Ltd.



We have audited the consolidated balance sheets of Golden Rule Resources Ltd. as
at September 30, 1996 and 1995 and the  consolidated  statements of  operations,
shareholders'  equity and changes in financial position for each of the years in
the three year period ended September 30, 1996.  These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion,  these consolidated  financial statements present fairly, in all
material  respects,  the  financial  position of the Company as at September 30,
1996 and 1995 and the results of its operations and the changes in its financial
position for each of the years in the three year period ended September 30, 1996
in accordance with generally accepted accounting principles.




Calgary, Alberta                                   /S/ Doane Raymond
December 3, 1996                                   -----------------------------
                                                   Chartered Accountants





Suite 1900, 500 - 4 Avenue S.W.
Calgary, Alberta
T2P 2V6
Tel: (403) 260-2500
Fax: (403) 260-2571                                                           1

<PAGE>
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------
Golden Rule Resources Ltd.
Consolidated Balance Sheets
September 30                                                1996                 1995
-----------------------------------------------------------------------------------------


                                     ASSETS
CURRENT
<S>                                                   <C>                  <C>           
  Cash                                                $    5,446,930       $    2,299,936
  Accounts receivable Note 12                                381,320              339,006
  Inventory Note 4                                         3,266,056                 -
                                                     ---------------       --------------

                                                           9,094,306            2,638,942
INVESTMENTS Note 5                                         1,922,049            2,136,133
PRODUCTION PROPERTY AND EQUIPMENT Note 6                  24,612,815           13,873,427
EXPLORATION PROPERTIES Note 7                             15,375,270           13,445,799
OTHER ASSETS Note 8                                          434,381              204,017
                                                      --------------       --------------
                                                      $   51,438,821       $   32,298,318
                                                      ==============       ==============


                                   LIABILITIES
CURRENT
  Accounts payable and accrued liabilities            $    4,041,289       $      554,284
  Current portion of long-term debt Note 9                 2,730,955                 -
                                                      --------------       --------------
                                                           6,772,244              554,284

LONG-TERM DEBT Note 9                                        264,847                 -
DEFERRED INCOME TAXES                                      1,347,400            1,403,400
MINORITY INTEREST                                          6,806,248            4,693,731
                                                      --------------       --------------
                                                          15,190,739            6,651,415
                                                      --------------       --------------


                              SHAREHOLDERS' EQUITY
CAPITAL STOCK Note 11                                     42,097,891           31,435,173
CONTRIBUTED SURPLUS                                          172,594              172,594
DEFICIT                                                   (6,022,403)          (5,960,864)
                                                      --------------       --------------
                                                          36,248,082           25,646,903
                                                      --------------       --------------
                                                      $   51,438,821       $   32,298,318
                                                      ===============      ===============
------------------------------------------------------------------------------------------


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


Approved on behalf of the Board


                               Director                              Director
-----------------------------            --------------------------

                              See accompanying notes to the financial statements.
------------------------------------------------------------------------------------------

Doane Raymond [GRAPHIC OMITTED]                                                2

</TABLE>
                                                                           

<PAGE>
<TABLE>
<CAPTION>


-------------------------------------------------------------------------------------------------------------
Golden Rule Resources Ltd.
Consolidated Statements of Operations
Years Ended September 30                                 1996                  1995                 1994
-------------------------------------------------------------------------------------------------------------

REVENUE                                          
<S>                                                  <C>                   <C>                   <C>         
  Interest                                           $    260,968          $    234,433          $    282,006
  Recovery of indirect costs and other                    116,280               105,196               107,215
                                                     ------------          ------------          ------------

                                                          377,248               339,629               389,221
                                                     ------------          ------------          ------------

EXPENSES
  General and administrative                              983,228               671,978               539,193
  Amortization and depreciation                            29,294                25,700                37,900
                                                     ------------          ------------          ------------

                                                        1,012,522               697,678               577,093
                                                     ------------          ------------          ------------

LOSS FROM OPERATIONS                                     (635,274)             (358,049)             (187,872)
                                                     ------------          ------------          ------------

OTHER
  Gain on disposal of investments                         750,529                84,959               458,097
  Abandonments and write-down of
    exploration properties                             (1,345,895)             (757,637)           (1,133,418)
                                                     ------------          ------------          ------------

                                                         (595,366)             (672,678)             (675,321)
                                                     ------------          ------------          ------------

LOSS BEFORE INCOME TAXES                               (1,230,640)           (1,030,727)             (863,193)

INCOME TAXES Note 13                                     (478,000)              257,536               122,200
                                                     ------------          ------------          ------------

LOSS BEFORE THE UNDERNOTED                             (1,708,640)             (773,191)             (740,993)

  Gain on reduction of interest in
    affiliates and subsidiaries                           807,386               101,515                39,220
  Equity in income (loss) of investees                     36,769              (124,335)               53,049
  Minority interests                                      802,946               221,491               664,708
                                                     ------------          ------------          ------------

NET (LOSS) EARNINGS                                  $    (61,539)         $   (574,520)         $     15,984
                                                     ============          ============          ============

(LOSS) EARNINGS PER SHARE                            $     (0.003)         $      (0.04)         $       0.00
                                                     ============          ============          ============

Weighted average number of shares outstanding          20,503,474            15,555,457            14,061,486
                                                     ============          ============          ============





               See accompanying notes to the financial statements.

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

Doane Raymond [GRAPHIC OMITTED]                                                                             3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


-----------------------------------------------------------------------------------------------------------------------
Golden Rule Resources Ltd.
Consolidated Statements of Shareholders' Equity
Years Ended September 30
-----------------------------------------------------------------------------------------------------------------------
                                                                                                           Retained
                                                       Common Shares                  Contributed          Earnings
                                                  Number            Amount              Surplus            (Deficit)
                                                  ------            ------              -------            ---------
                                                                   (Note 10)

<S>                                            <C>                <C>                 <C>                 <C>         
Balance, September 30, 1993                    11,543,477         $19,696,154         $   172,594         $(5,402,328)

Shares issued for cash:
  Exercise of stock options
  net of issue expenses of
  $2,080                                        1,028,647             659,178                --                  --

  Private placements net of
  issue expenses of $458,596                    2,800,000           5,270,904                --                  --

  Exercise of warrants net of
  issue expenses of $12,178                       183,333             222,645                --                  --

Net earnings                                         --                  --                  --                15,984
                                              -----------         -----------         -----------         -----------

Balance, September 30, 1994                    15,555,457          25,848,881             172,594          (5,386,344)

Shares issued for shares of
Waddy Lake Resources Inc. 
net of issue expenses of
$94,339 (Note 3)                                3,762,007           5,586,292                --                  --

Net loss                                             --                  --                  --              (574,520)
                                              -----------         -----------         -----------         -----------

Balance, September 30, 1995                    19,317,464          31,435,173             172,594          (5,960,864)

Shares issued for cash
  Pursuant to a public offering
  (net of expenses of issue
  of $559,459)                                  4,218,000           9,563,741                --                  --

  Exercise of stock options
  and warrants                                    565,117             668,977                --                  --

Shares issued for properties                      200,000             430,000                --                  --

Net loss                                             --                  --                  --               (61,539)
                                              -----------         -----------         -----------         -----------

Balance, September 30, 1996                    24,300,581         $42,097,891         $   172,594         $(6,022,403)
                                              ===========         ===========         ===========         ===========


               See accompanying notes to the financial statements.

----------------------------------------------------------------------------------------------------------------------
Doane Raymond [GRAPHIC OMITTED]                                                                                      4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------
Golden Rule Resources Ltd.
Consolidated Statements of Changes in Financial Position
Years Ended September 30                                 1996                1995             1994
--------------------------------------------------------------------------------------------------------

FINANCIAL RESOURCES WERE PROVIDED BY:

OPERATING ACTIVITIES
   <S>                                               <C>                <C>                  <C>   
  Cash from operations
    Net (loss) earnings                              $    (61,539)      $   (574,520)      $     15,984
    Items not involving cash Note 15                     (544,441)           205,907           (165,956)
                                                     ------------       ------------       ------------

                                                         (605,980)          (368,613)          (149,972)
  Net change in non-cash operating
    working capital Note 16                            (3,862,654)           702,782           (577,948)
                                                     ------------       ------------       ------------

                                                       (4,468,634)           334,169           (727,920)
                                                     ------------       ------------       ------------
FINANCING ACTIVITIES
  Issue of shares for cash                              9,794,718               --            6,152,727
  Issue of shares by subsidiaries to
    minority shareholders                               2,094,632            882,750            224,587
  Issue of shares to acquire minority
    interest in Waddy Lake                                   --            5,586,292               --
  Issue of shares for properties                          430,000               --                 --
  Long-term debt                                        2,995,802               --                 --
  Non-operating accounts payable                        4,041,289               --                 --
                                                     ------------       ------------       ------------

                                                       19,356,441          6,469,042          6,377,314
                                                     ------------       ------------       ------------
INVESTING ACTIVITIES
  Option payments and other recoveries                     64,000             15,000             24,000
  Proceeds on disposal of investments                   2,806,709          1,541,106          1,301,081
  Repayment of advances                                      --              688,197               --
                                                     ------------       ------------       ------------

                                                        2,870,709          2,244,303          1,325,081
                                                     ------------       ------------       ------------
FINANCIAL RESOURCES GENERATED FROM
 OPERATING, FINANCING AND INVESTING
 ACTIVITIES                                            17,758,516          9,047,514          6,974,475
                                                     ------------       ------------       ------------

FINANCIAL RESOURCES WERE USED IN:

INVESTING ACTIVITIES
  Acquisition of minority interest in
    Waddy Lake Note 3                                        --            5,810,637               --
  Exploration property additions                        3,339,366          2,165,128          1,349,346
  Production property and equipment additions          10,235,388          1,417,823          4,426,144
  Reclamation deposit                                     504,000               --                 --
  Investments and advances                                177,110            889,483             11,614
  Other asset additions                                   355,658              1,838               --
                                                     ------------       ------------       ------------

                                                       14,611,522         10,284,909          5,787,104
                                                     ------------       ------------       ------------

INCREASE (DECREASE) IN CASH                             3,146,994         (1,237,395)         1,187,371
CASH, beginning of year                                 2,299,936          3,537,331          2,349,960
                                                     ------------       ------------       ------------

CASH, end of year                                    $  5,446,930       $  2,299,936       $  3,537,331
                                                     ============       ============       ============


               See accompanying notes to the financial statements

---------------------------------------------------------------------------------------------------------
Doane Raymond   [GRAPHIC OMITTED]                                                                       5
</TABLE>

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

1.   NATURE OF OPERATIONS

     Golden  Rule   Resources  Ltd.  is  engaged  in  the  business  of  mineral
     exploration and development.  Since  inception,  the efforts of the Company
     have been  devoted  to the  acquisition,  exploration  and  development  of
     mineral  properties.  To date  the  Company  has not  received  significant
     revenue from mining  operations and is considered to be in the  development
     stage.

     Mineral properties,  including exploration and production  properties,  are
     recognized in these financial  statements in accordance with the accounting
     policies outlined in Note 2.  Accordingly,  their carrying values represent
     costs incurred to date, net of recoveries,  abandonments  and  write-downs,
     and do not necessarily reflect present or future values. The recoverability
     of  these  amounts  is  dependent   upon  the  existence  of   economically
     recoverable  mineral  reserves,  the  ability  of  the  Company  to  obtain
     necessary   financing  to  complete  their   development  and  upon  future
     profitable operations.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     These  consolidated  financial  statements have been prepared in accordance
     with generally accepted accounting  principles (GAAP) in Canada, and comply
     in all  material  respects  with  GAAP  in the  United  States,  except  as
     disclosed in Note 17.

     Principles of Consolidation

     The consolidated  financial statements include the accounts of the Company,
     and the following subsidiary companies:

                                                       1996          1995 
                                                       ----          ----

     Golden Rule Resources Inc.                         100%          100%
     GR Capital Corporation                             100%          100%
     Manson Creek Resources Ltd.                         35%           46%
     Northern Abitibi Mining Corp.                       39%           42%
     Hixon Gold Resources Inc.                           46%           63%
     Waddy Lake Resources Inc.                          100%          100%

     The accounts of  subsidiary  corporations  in which the Company  holds less
     than a  controlling  interest  but has the ability to exercise  options and
     warrants to achieve  control or which are  effectively  controlled  through
     common officers and directors are included in these consolidated  financial
     statements.

     Acquisition  of interests in subsidiary  corporations  are accounted for by
     the purchase  method.  The excess or deficiency of  consideration  paid for
     shares of the subsidiary  corporations over the book value of their assets,
     at the dates of  acquisition,  is  allocated to mineral  properties  and is
     subject to the accounting policy stated in Note 2.


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

Doane Raymond [GRAPHIC OMITTED]                                                6

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Inventories

     Production  inventories,  comprised  of ore and gold in  process,  and mine
     operating  supplies  are  valued  at the  lower  of  average  cost  and net
     realizable value.

     Mineral Properties and Equipment

     Costs capitalized

     All costs relating to the exploration and development of mineral properties
     are  capitalized  on  an  area  of  interest  basis.  Where  the  Company's
     exploration  commitments for an area of interest are performed under option
     agreements with a third party,  the proceeds from any option payments under
     such  agreements are applied to the area of interest to the extent of costs
     incurred.  The excess,  if any, is credited to operations.  When an area of
     interest  is  abandoned,  the  related  accumulated  costs are  charged  to
     operations.

     When an area of  interest  is  determined  to be  economically  viable  and
     pre-production  activities have commenced,  costs associated with that area
     of interest are  transferred to production  properties and all  development
     costs,  related  financing  costs,  and  initial  start-up  operations  are
     capitalized  until a  commercial  production  level is  deemed to have been
     reached.

     Annually,  a review is  undertaken  to evaluate the  carrying  value of the
     production properties. If it is determined that the net recoverable amount,
     on an  undiscounted  basis,  is  significantly  less than carrying value, a
     write-down to the net recoverable amount is made with a charge to earnings.

     The  amounts  shown for  exploration  properties  represent  costs,  net of
     recoveries,  abandonments  and  write-downs,  to  date  and do not  reflect
     present or future values.

     Depletion and depreciation

     Depletion of production property costs and depreciation of production plant
     and  equipment  costs,  net  of  salvage  value,  are  provided  for on the
     unit-of-production basis once commercial production is achieved.

     Equipment

     Equipment  is  recorded  at cost.  Depreciation  is provided on a declining
     balance basis at annual rates of 20% - 30%.

     Flow-Through Common Shares

     The Company credits the full amount of the proceeds of flow-through shares,
     (which transfer the deductibility of exploration expenses to the investor),
     including the premium paid for such tax deductions, to capital stock.


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

Doane Raymond [GRAPHIC OMITTED]                                                7

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Joint Interests

     Certain  of  the  Company's  exploration  and  development  activities  are
     conducted jointly with others.  These financial statements reflect only the
     Company's proportionate interest in such activities.

     Investments

     Investments  in  corporations  in which  the  Company  is able to  exercise
     significant  influence are accounted  for by the equity  method.  Portfolio
     investments  are carried at cost, less provision for declines in value that
     are considered to be other than temporary.

     Translation of Foreign Currencies

     Monetary  assets and  liabilities  denominated  in foreign  currencies  are
     translated  into  Canadian  dollars  at the  year-end  rates  of  exchange.
     Revenues and expenses are  translated at exchange  rates  prevailing on the
     dates on which  such items are  recognized  in  earnings.  Gains and losses
     arising  from the  restatement  of  foreign  currency  monetary  assets and
     liabilities  at each period end are included in earnings,  except for those
     gains and losses relating to long-term  debt.  Gains and losses relating to
     long-term debt are deferred and amortized on a straight-line basis over the
     remaining term of the debt.

     Hedging Transactions

     To manage its exposure to  fluctuations  in the market price of gold and to
     establish minimum prices for its future production, the Company enters into
     gold hedging  contracts.  Gains and losses on these  contracts  will not be
     recognized  in income  until  reflected  in sales  revenue when the related
     production is delivered.

     Cash

     Cash is  defined as cash and cash  equivalents  (including  term  deposits,
     government  securities  and  commercial  and  financial  paper)  having  an
     original maturity of three months or less.


3.   BUSINESS COMBINATION

     On September 26, 1995, the shareholders of the Company and the shareholders
     of Waddy Lake Resources Inc.  (Waddy Lake),  (a 54% held  subsidiary of the
     Company),  approved  a Plan of  Arrangement  subject  to  final  regulatory
     approval which was received October 12, 1995. Under the Plan of Arrangement
     the Company  acquired the  minority  interest in Waddy Lake through a share
     for share exchange.  Waddy Lake shareholders received 0.53 common shares of
     the Company  for each Waddy Lake share  resulting  in the  Company  issuing
     3,762,007  common  shares  at a deemed  price of $1.51  per share for total
     consideration  of  $5,680,631.  The purchase of the  remaining  interest in
     Waddy Lake was accounted for using the purchase  method of accounting.  Net
     assets acquired were as follows:

--------------------------------------------------------------------------------
Doane Raymond [GRAPHIC OMITTED]                                                8

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

3.   BUSINESS COMBINATION (Continued)

            Production property                             $   4,086,892
            Increase to fair market value                       3,600,294
                                                            -------------
                                                                7,687,186

            Mineral properties                                     66,289
            Working capital deficiency                           (113,638)
            Long-term debt                                     (1,829,200)
                                                            -------------
                                                            $   5,810,637
                                                            =============



            Consideration
              Issue of common shares                        $   5,680,631
              Cash - expenses related to acquisition              130,006
                                                            -------------
                                                            $   5,810,637
                                                            =============



     The effect on the  consolidated  financial  statements  with respect to the
     acquisition of the 45.73%  minority  interest in Waddy Lake was to increase
     share capital by $5,586,292  (after  deducting  issue expenses of $94,339),
     decrease  minority  interest  by  $2,210,343  and  to  increase  production
     property by $3,600,294.

     Had the acquisition  occurred at the beginning of the 1995 fiscal year, net
     loss for the year would have been $572,151 and loss per share $0.04.


4.   INVENTORY                                 1996               1995
                                           -------------       -----------

     Production inventories               $   3,029,360        $        -
     Materials and supplies                     236,696                 -
                                          -------------        -----------
                                          $   3,266,056        $        -
                                          =============        =========== 


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

[GRAPHIC OMITTED]                                                             9

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>



5.   INVESTMENTS                                                               1996                   1995
                                                                         ----------------        ---------------
                                                                            Carrying                Carrying
                                                                              Value                  Value
                                                                         ----------------        ---------------
      <S>                                                                <C>                     <C>    

      Portfolio investments (market value $1,127,616;
        1995 - $1,322,709)                                               $        622,893        $        873,746

      Equity investments:
        Stade Exploration Inc. (28.58%; 1995 - 28.58%)
          (market value $1,035,276; 1995 - $1,552,914)                          1,299,156               1,262,387
                                                                         ----------------        ----------------
                                                                         $      1,922,049        $      2,136,133
                                                                         ================        ================


6.   PRODUCTION PROPERTY AND
      EQUIPMENT                                         1996                   1995                    1994
                                                  ----------------       ----------------        ----------------

      Production property

        Balance, beginning of year                $     12,199,594       $      7,364,726        $      3,450,352
        Costs incurred                                   6,592,101              1,234,574               3,914,374
        Preproduction operating costs                    1,961,791                   -                       -
        Acquisition of minority interest
          in Waddy Lake Resources Inc.
          - fair market value increment                       -                 3,600,294                    -
                                                  ----------------       ----------------         ---------------
        Balance, end of year                            20,753,486             12,199,594               7,364,726
                                                  ----------------       ----------------         ---------------

      Production equipment

        Balance, beginning of year                       1,673,833              1,490,585                 978,815
        Costs incurred                                   1,681,496                183,248                 511,770
                                                  ----------------       ----------------        ----------------
        Balance, end of year                             3,355,329              1,673,833               1,490,585
                                                  ----------------       ----------------        ----------------
      Reclamation deposit                                  504,000                   -                       -
                                                  ----------------       ----------------        ----------------
                                                  $     24,612,815       $     13,873,427        $      8,855,311
                                                  ================       ================        ================
</TABLE>


     No provision  for  depletion and  depreciation  of production  property and
     equipment  has been  recorded as the property  has not attained  commercial
     production.

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

Doane Raymond [GRAPHIC OMITTED]                                               10

<PAGE>
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

6.   PRODUCTION PROPERTY AND EQUIPMENT (Continued)

     Future   reclamation  costs  are  estimated,   based  upon  current  costs,
     regulations  and  industry  practices,  to be  approximately  $504,000.  In
     accordance  with  provincial  regulations,  the Company has  established an
     irrevocable  letter of credit, in favor of the Province of Saskatchewan for
     this  amount.  The letter of credit is secured by a term  deposit  which is
     included in production property costs.

     Expected  recoveries on reclamation are estimated to exceed all such future
     estimated costs.

<TABLE>
<CAPTION>

7.    EXPLORATION PROPERTIES                          1996                  1995                 1994
                                                  --------------       --------------        --------------

     <S>                                           <C>                 <C>                    <C>  
      Mineral Claims

        Balance, beginning of year                $    2,761,938       $    1,941,910        $    1,486,515
          Costs incurred                                 784,423            1,003,012               870,183
          Abandonments and write-downs                  (652,611)            (182,984)             (414,788)
                                                  --------------       --------------        -------------- 
        Balance, end of year                           2,893,750            2,761,938             1,941,910
                                                  --------------       --------------        --------------

      Exploration and Development Expenditures

        Balance, beginning of year                    10,683,861           10,141,731             9,972,160
          Costs incurred                               2,554,943            1,131,783               912,201
          Abandonments and write-downs                  (693,284)            (574,653)             (718,630)
          Options and other recoveries                   (64,000)             (15,000)              (24,000)
                                                  --------------       --------------       ---------------
        Balance end of year                           12,481,520           10,683,861            10,141,731
                                                  --------------       --------------        --------------
                                                  $   15,375,270       $   13,445,799        $   12,083,641
                                                  ==============       ==============        ==============
</TABLE>

     Included in mineral properties are Venezuelan  properties,  with a carrying
     value  of  $1,295,000,  held  by the  Company's  subsidiary,  Manson  Creek
     Resources  Ltd.,  (Manson  Creek).  As a result of  political  and economic
     instability  in Venezuela  and the  uncertainty  surrounding  the future of
     mineral  concessions held by Manson Creek, the value of Venezuelan  mineral
     properties may differ  significantly from their carrying value.  Management
     believes that the ultimate  value could fall anywhere in the range of $1 to
     the current  carrying  value of  $1,295,000  depending  upon the outcome of
     events in  Venezuela.  The effect on earnings of the maximum  write-down to
     mineral  properties,  assuming that the Company's  interest in Manson Creek
     remains at 35%,  would be a reduction  of earnings  before  income taxes of
     $453,250.

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

Doane Raymond [GRAPHIC OMITTED]                                               11

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

8.   OTHER ASSETS                                    1996                1995
                                                   ---------          ----------

     Equipment                                     $ 405,951          $ 395,414
     Accumulated depreciation                       (324,371)          (295,077)
                                                   ---------          --------- 


                                                      81,580            100,337

      Long-term debt issue costs                     122,873               --
      Other                                          229,928            103,680
                                                   ---------          ---------
                                                   $ 434,381          $ 204,017
                                                   =========          =========

     Costs  associated  with  establishing  the credit facility (see Note 9) are
     deferred,  net of the deferred tax benefit, and are amortized over the term
     of the credit facility.


9.   LONG-TERM DEBT                                     1996           1995
                                                     ----------    -----------

$US Loan, repayable in 21 consecutive monthly
  payments commencing October, 1996, due
  December 31, 1998                                  $2,995,802    $        --

Less current portion                                  2,730,955             --
                                                      ---------    ----------- 

                                                     $  264,847    $        --
                                                     ==========    ===========  

     Pursuant to a Credit  Facility  Agreement dated April 21, 1996, the Company
     was  granted  a loan  facility  in the  amount  of US $5  million,  or gold
     equivalent, comprised of US $4 million to be utilized to partially fund the
     pre-production  capital  requirements  of  the  Komis  property,  and US $1
     million to be utilized to fund cost overruns, followed by general operating
     requirements.  The  Facility  is  secured  by a first  charge  on the Komis
     property and substantially all Canadian assets of the Company as well as an
     assignment of all hedging  contracts.  Security for the loan reverts to the
     Komis mine assets when mine operating performance  demonstrates that it has
     achieved the operating and cost standards  outlined in the mine development
     plan.  Further,  the Company will be required to deposit US $1 million,  or
     gold  equivalent,  in an account  effective  the date of  completion of the
     Komis  project,  and retain this  account  balance for the  duration of the
     loan.

     On loans  denominated  in US dollars,  the facility  bears  interest at the
     LIBOR  rate plus 3.5% per annum to the  completion  date of the Komis  mine
     development,  and LIBOR rate plus 2.75% per annum thereafter. The effective
     interest rate at September 30, 1996 was 8.9375%.

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

Doane Raymond   [GRAPHIC OMITTED]                                             12

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

9.   LONG-TERM DEBT (Continued)

     In the event that, at the Company's option, the loan is converted to a gold
     loan, the Facility will bear interest at the LIBOR rate, less the gold base
     rate at the commencement of the interest period, plus 3.5% per annum to the
     completion  date of the Komis mine  development;  and LIBOR rate,  less the
     gold base rate at the commencement of the interest  period,  plus 2.75% per
     annum thereafter.

     A commitment fee of 1% per annum  calculated on the undrawn  portion of the
     Facility is payable by the Company.  In addition the Company has  committed
     to  reimburse  the lender for all  withholding  taxes paid on the  lender's
     behalf which are equal to 15% of the interest payments.


10.  HEDGING

     The following represents the Company's hedging programs as at September 30,
     1996:

                                            1997           1998          1999
                                            ----           ----          ----
     Sale/Purchase of Options

     Call options sold (ounces)           23,700         36,300         8,400
     Canadian dollar price                  $586           $586          $586

     Put options purchased (ounces)       23,700         36,300         8,400
     Canadian dollar price                  $525           $525          $525

     In addition to the above,  the Company  has entered  into  Canadian  dollar
     forward  sale  contracts  to sell 9,600  ounces of gold,  for  delivery  on
     various dates to January, 1997, at an average price of $542 per ounce.

     The credit  facility  described  in note 9 requires the Company to maintain
     sufficient  gold hedges to cover the Komis  Mine's  operating  costs for an
     ongoing period of approximately three years.

11.  CAPITAL STOCK

     a) Authorized

          Unlimited number of common shares without nominal or par value

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

Doane Raymond [GRAPHIC OMITTED]                                               13

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

11.  CAPITAL STOCK (Continued)

     b) Outstanding Options and Warrants

          i)   Stock Options

               Under stock option plans, 10% of the outstanding common shares of
               the Company  are,  from time to time,  reserved  for  issuance to
               eligible  participants.   At  September  30,  1996,  options  for
               2,489,100 shares (1995 - 1,959,550  shares) were outstanding with
               exercise  prices  ranging from $1.70 per share to $3.01 per share
               (weighted  average  price being  $2.24 per share) and  expiration
               dates at various times to August 26, 2001.  The exercise price of
               options granted under the plans is equal to the fair value of the
               shares at the date of issuance.

          ii)  Warrants

               At September  30, 1996,  550,000  share  purchase  warrants  were
               outstanding  of which  350,000,  issued in  conjunction  with the
               credit  facility (Note 9) are exercisable at a price of $2.85 per
               share,  expiring  December  31, 1998 and;  200,000  relating to a
               property  acquisition  are  exercisable  at a price of $2.20  per
               share expiring September 20, 2001.

               During the year,  316,667  warrants  outstanding at September 30,
               1995, relating to a fiscal agency agreement,  were exercised at a
               price of $1.28 per share.


12.  RELATED PARTY TRANSACTIONS

     a)   Corporations  in which certain of the Company's  officers or directors
          are shareholders have provided services,  at usual professional rates,
          as outlined below.
<TABLE>
<CAPTION>

                                                     1996               1995                1994
                                                  -----------       ------------        ------------

          <S>                                      <C>               <C>                 <C>         
          Geological and exploration              $   161,000       $    163,000        $    214,000
          Direct administrative                       130,000             92,000              50,000
                                                  -----------       ------------        ------------
                                                  $   291,000       $    255,000        $    264,000
                                                  ===========       ============        ============
</TABLE>

     b)   Included in accounts  receivable  is $68,680 (1995 - $80,779) due from
          companies related by virtue of common management and/or directors.

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

Doane Ryamond [GRAPHIC OMITTED]                                               14

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

13.  INCOME TAXES

     a)   The  provision  for income tax  (expense)  recovery  differs  from the
          result  which  would be obtained by  applying  the  combined  Canadian
          Federal and Provincial income tax rate of approximately  44.6% (1995 -
          44.6%;  1994 - 44.6%) to loss  before  income  taxes.  The  difference
          results from the following:
<TABLE>
<CAPTION>
                                                    1996                1995                1994
                                                ------------       -------------       -------------

<S>                                             <C>                <C>                 <C>          
          Computed expected tax recovery        $    549,000       $    460,000        $     385,000

          Increase in taxes resulting
          from the following:
            Losses of subsidiaries for which
              no tax benefit is recorded            (682,000)           (35,000)            (165,000)
            Adjustments and other                   (345,000)          (167,464)             (97,800)
                                                ------------       ------------        -------------

          Income tax (expense) recovery         $   (478,000)      $    257,536        $     122,200
                                                ============       ============        =============
</TABLE>


     b)   The Company's subsidiaries have accumulated losses for Canadian income
          tax purposes of approximately  $2,843,000 and losses for United States
          income tax purposes of approximately $522,000, the related benefits of
          which have not been  recognized  in the financial  statements.  Unless
          sufficient  taxable  income is earned  by the  subsidiaries  in future
          years these  losses will expire at various  dates to the year 2003 and
          2011 for Canadian and United States purposes respectively.

     c)   The Company and its subsidiaries  have available the following amounts
          which  may be  deducted,  at the  annual  rates  indicated  below,  in
          determining taxable income of future years.
<TABLE>
<CAPTION>


                                                       1996               1995                1994             Rate
                                                 --------------     ---------------     ---------------        ----

<S>                                             <C>                 <C>                 <C>                    <C> 
          Canadian exploration expense          $    18,635,000     $    11,024,000     $     8,940,000        100%
          Canadian development expense                2,598,000           2,286,000           1,368,000         30%
          Canadian oil and gas property
           expense                                        6,000               6,000               7,000         10%
          Foreign exploration and
            development expense                       1,460,000             461,000             340,000         10%
          Undepreciated capital cost                  2,148,000             801,000             596,000     10-100%
          Share issue costs                           1,175,000             351,000             131,000         20%
                                                 --------------     ---------------     ---------------
                                                  
                                                 $   26,022,000     $    14,929,000     $    11,382,000
                                                 ==============     ===============     ===============
</TABLE>

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

Doane Raymond [GRAPHIC OMITTED]                                               15

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

14.   SEGMENTED INFORMATION

     a)   Identifiable assets by significant geographic segment are as follows:

                                             1996                1995
                                        -------------        -------------

              Canada                    $  48,249,349        $  30,181,754
              South America                 1,313,193            1,292,694
              United States                   498,263              425,516
              Mexico                          425,095              296,572
              Africa                          952,921              101,782
                                        -------------        -------------
                                        $  51,438,821        $  32,298,318
                                        =============        =============


     b)   Segmented loss before income taxes by significant  geographic  segment
          is as follows:
<TABLE>
<CAPTION>

                                                            1996                     1995                     1994
                                                        ------------             ------------             ------------
           <S>                                          <C>                      <C>                      <C>   
          Loss from operations
           Canada                                       $  (635,274)             $  (358,049)             $  (187,872)
           South America                                       --                       --                       --
           United States                                       --                       --                       --
                                                        -----------              -----------              -----------
                                                           (635,274)                (358,049)                (187,872)
                                                        -----------              -----------              -----------

         Gain on disposal of investment
          Canada                                        $   750,529              $    84,959              $   458,097
          South America                                        --                       --                       --
          United States                                        --                       --                       --
                                                        -----------              -----------              -----------
                                                            750,529                   84,959                  458,097
                                                        -----------              -----------

          Abandonments and write-down of
          exploration properties
           Canada                                        (1,273,924)                (267,916)              (1,133,418)
           South America                                    (71,971)                (457,637)                    --
           United States                                       --                    (32,084)                    --
                                                        -----------              -----------              -----------
                                                         (1,345,895)                (757,637)              (1,133,418)
                                                        -----------              -----------

         Loss before income taxes
          Canada                                         (1,158,669)                (541,006)                (863,193)
          South America                                     (71,971)                (457,637)                    --
          United States                                        --                    (32,084)                    --
                                                        -----------              -----------              -----------

                                                        $(1,230,640)             $(1,030,727)             $  (863,193)
                                                        ===========              ===========              ===========
</TABLE>

     Revenue is wholly  attributable  to Canadian  operations in 1996,  1995 and
     1994.

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

Doane Raymond [GRAPHIC OMITTED]                                               16

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

15.   NON-CASH OPERATING ITEMS                               1996                    1995                    1994
                                                         ------------            ------------            ------------

      <S>                                                <C>                    <C>                       <C>   
      Operating items not involving cash are:

      Minority interest                                  $  (802,946)            $  (221,491)            $  (664,708)
      Equity in (income) loss of investees                   (36,769)                124,335                 (53,049)
      Deferred income taxes                                  478,000                (293,800)               (122,200)
      Amortization and depreciation                           29,294                  25,700                  37,900
      Abandonments and write-downs                         1,345,895                 757,637               1,133,418
      Gain on disposal of investments                       (750,529)                (84,959)               (458,097)
      Gain on reduction of interest in
      affiliates and subsidiaries                           (807,386)               (101,515)                (39,220)
                                                         -----------             -----------             ----------- 
                                                         $  (544,441)            $   205,907             $  (165,956)
                                                         ===========             ===========             =========== 

16.   NET CHANGE IN NON-CASH OPERATING
        WORKING CAPITAL                     1996                1995                1994
                                       --------------       ------------        -------------

      Accounts receivable              $      (42,314)      $    322,002        $    (473,394)
      Accounts payable                       (554,284)           380,780             (104,554)
      Inventory                            (3,266,056)              -                    -
                                       --------------       ------------        -------------                                   


                                       $   (3,862,654)      $    702,782        $    (577,948)
                                       ==============       ============        ============= 
</TABLE>

17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES

     The Company follows Canadian generally accepted accounting principles
     ("GAAP") which are different in some respects from those  applicable in the
     United States and from practices prescribed by the United States Securities
     and Exchange Commissions, as described below:

     a)   Income (loss) from operations

          Under Canadian GAAP interest  income is included in the  determination
          of income (loss) from  operations.  Under US GAAP  interest  income is
          excluded from "income from  operations"  and is categorized as "other"
          in the consolidated statement of operations.

          In  addition,  under US GAAP the  following  items are included in the
          determination of income (loss) from operations:

          -    costs related to the acquisition,  exploration and development of
               mineral  properties which have not led to the identification of a
               commercially feasible property are expensed in the year incurred.

          -    carrying  costs related to the Jolu Mill are expensed in the year
               incurred.

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

Doane Raymond [GRAPHIC OMITTED]                                               17

<PAGE>


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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES 
     (Continued)

     b)   Acquisition of additional interest in subsidiaries

          The Company has determined that its current policy with respect to the
          acquisition of interest in subsidiary  companies and the allocation of
          costs  under  the  purchase  method  as set out in Note  2(a) does not
          differ materially from US GAAP as set out in A.P.B. 16.

     c)   Deferred exploration costs

          Under Canadian GAAP the costs relating to the acquisition, exploration
          and  development of mineral  properties are  capitalized on an area of
          interest basis and charged  against income through  unit-of-production
          depletion,  when  properties  are developed to the stage of commercial
          production.  Costs related to abandoned properties,  and costs related
          to properties  which the Company has  assessed,  based on the price of
          gold and general economic and market  conditions,  as not viable,  are
          charged to other expenses in the year in which such  determination  is
          made.

          Under  US GAAP  the  costs  relating  to the  exploration  of  mineral
          properties as defined above,  which have not led to the identification
          of a commercially feasible property, are expensed in the year incurred
          and are charged to income  (loss) from  operations.  As a result,  all
          costs associated with the exploration  properties  described in Note 7
          have been written off for US GAAP purposes.  The deferred  exploration
          costs under US GAAP as set out in the table below relate solely to the
          Komis deposit.

     d)   Jolu Mill carrying costs

          Under US GAAP the  carrying  costs  related  to the Jolu Mill would be
          expensed in the year  incurred,  while under Canadian GAAP these costs
          have been capitalized to the carrying value of the mill.

     e)   Long-term debt

          Foreign  currency  exchange  gains  and  losses  from  translation  of
          long-term  debt are deferred and amortized over the period to maturity
          under Canadian GAAP. United States accounting  principles require that
          such  amounts  be charged  to  earnings  in the year in which they are
          incurred.  The Company has determined  that the effect on earnings for
          the year ended September 30, 1996 is immaterial.

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

Doane Ryamond [GRAPHIC OMITTED]                                               18

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------


17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES
     (Continued)

     f)   Fair value of financial instruments

          U.S.  GAAP  requires  the  disclosure  of the fair value of  financial
          instruments as described below.  Such fair value estimates are made on
          the dates  indicated  based on  relevant  market  information  and the
          nature and terms of the financial instruments.  Although management is
          not aware of any factors which would affect the  estimated  fair value
          amount  significantly,  such  amounts  have not  been  comprehensively
          re-valued for purposes of these  financial  disclosures  subsequent to
          the  balance  sheet  dates  and  estimates  of  fair  value  at  dates
          subsequent  to  September  30, 1996 and 1995 may differ  significantly
          from the amounts presented.

          Fair  value  approximates  the  amounts  reflected  in  the  financial
          statements  for  cash  and  cash  equivalents,   accounts  receivable,
          accounts payable and long-term debt.

     g)   Segmented information

          Geographical  segmented  information  is  presented  in the  financial
          statements.  This information is not required in order to conform with
          U.S. GAAP.

     h)   Non-cash financing and investing activities

          Under Canadian GAAP,  activities  that do not affect cash are included
          in the  determination  of financing  and  investing  activities in the
          statement of changes in financial  position.  U.S.  GAAP  requires the
          exclusion of activities that do not affect cash from the determination
          of financing and investing  activities.  Under U.S. GAAP, the issue of
          shares for mineral properties amounting to $930,000 (1995 - $nil; 1994
          - $nil) would be excluded from the statement of cash.

          Under U.S. GAAP,  the purchase of the minority  interest in Waddy Lake
          in  1995  by way of  issuance  of  common  shares  in  the  amount  of
          $5,586,292 would not be a use and source of cash, respectively.

     i)   Gain on reduction of interest in subsidiaries and affiliates

          Under Canadian GAAP, an investor should include in income any dilution
          gains or losses  resulting from the issue of shares by a subsidiary or
          equity  investee.  It is the position of the  Securities  and Exchange
          Commission in the U.S. that gain recognition is not appropriate in the
          case of subsidiaries  and equity investees that are in the development
          stage.  The  subsidiaries  and  equity  investees  of Golden  Rule are
          engaged in the acquisition  and development of mineral  properties and
          are considered to be in the development stage,  therefore,  changes in
          the  Company's  proportionate  shares of the  subsidiaries  and equity
          investees  resulting  from the issuance of shares  should be accounted
          for as an equity  transaction  under U.S. rules. Any write-down from a
          permanent  impairment in value of the  investment in the  subsidiaries
          and equity investees would be charged firstly to shareholder's  equity
          in the amount of any previous related credits and then to earnings.

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

Doane Raymond [GRAPHIC OMITTED]                                               19

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES 
      (Continued)

     The following  dilution  gains and losses were incurred in the years noted.
     The  transactions  giving  rise to the gains and  losses are  described  in
     detail below:
<TABLE>
<CAPTION>


                                                  1996               1995               1994
                                              ------------       -----------        ------------
     Subsidiaries
<S>                                           <C>                <C>                <C>         
        Northern Abitibi Mining Corp.         $     (8,942)      $    46,848        $    (2,368)
        Hixon Gold Resources Inc.                  459,324            56,472             17,471
        Manson Creek Resources Ltd.                357,004             2,837             35,635
        Waddy Lake Resources Inc.                     -              (12,777)           (44,189)
                                              ------------       -----------        -----------
                                                   807,386            93,380              6,549
                                              ------------       -----------        -----------
     Equity investments
        Stade Exploration Inc.                        -                8,135             15,305
        Eastfield Resources Inc.                      -                 -                17,366
                                              ------------        ----------       ------------
                                                      -                8,135             32,671
                                              ------------        ----------       ------------
                                              $    807,386        $  101,515       $     39,220
                                              ============        ==========       ============
</TABLE>
 

     Northern Abitibi Mining Corp.

     In 1996, the Company recorded a loss of $8,942 when Northern Abitibi issued
     1,250,000 shares pursuant to a private placement for total consideration of
     $250,000 where the price per share was less than the average carrying value
     per share of the  Company's  interest in Northern  Abitibi.  The  Company's
     interest was reduced to 38.9% from 41.7%.

     In 1995,  the  Company  recorded a gain of $46,848  when  Northern  Abitibi
     issued  1,502,000  shares  pursuant  to an  agreement  to  acquire  mineral
     properties  for total  consideration  of $445,084 where the price per share
     exceeded the average carrying value per share of the Company's  interest in
     Northern Abitibi. The Company's interest was reduced to 41.7% from 45.7%.

     In 1994, the Company  recorded a total loss of $2,368 when Northern Abitibi
     issued  300,000  shares on the exercise of stock options and 150,000 shares
     pursuant  to  an  agreement  to  acquire   mineral   properties  for  total
     consideration  of  $105,533.  In each case the price per share  received by
     Northern  Abitibi was less than the average carrying value per share of the
     Company's interest in Northern Abitibi.  The Company's interest was reduced
     to 71.5% from 75.3%.

     Hixon Gold Resources Inc.

     In  1996,  the  Company  recorded  a gain of  $459,324  when  Hixon  issued
     2,220,000  shares  pursuant to four private  placements,  1,186,666  shares
     pursuant  to the  exercise  of  warrants,  112,000  shares  pursuant to the
     exercise of stock  options and 200,000  shares  pursuant to  agreements  to
     acquire  mineral  properties for total  consideration  of  $1,025,460.  The
     Company's interest in Hixon was reduced to 45.8% from 64.7%.

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

Doane Raymond [GRAPHIC OMITTED]                                               20

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES
     (Continued)

     Hixon Gold Resources Inc. (continued)

     In 1995,  the Company  recorded a gain of $56,472 when Hixon issued 666,666
     shares pursuant to a private placement for total  consideration of $98,128.
     The Company's interest in Hixon was reduced to 64.7% from 71.3%.

     In 1994,  the Company  recorded a gain of $17,471 when Hixon issued 198,000
     shares  pursuant  to the  exercise of stock  options for total  proceeds of
     $31,680. The Company's interest in Hixon was reduced to 71.3% from 73.5%.

     In the transactions  described for 1996, 1995 and 1994, the price per share
     received  by Hixon  exceeded  the average  carrying  value per share of the
     Company's interest in Hixon.

     Manson Creek Resources Ltd.

     In 1996,  the Company  recorded a gain of $357,004 when Manson Creek issued
     2,200,000  shares pursuant to two private  placements and 1,315,000  shares
     pursuant  to the  exercise  of stock  options  for total  consideration  of
     $2,295,649. The Company's interest was reduced to 34.9% from 46.0%.

     In 1995,  the Company  recorded a gain of $2,837 when Manson  Creek  issued
     338,000 shares pursuant to an agreement to acquire  mineral  properties for
     total  consideration  of $141,160.  The  Company's  interest was reduced to
     46.0% from 47.5%.

     In 1994,  the Company  recorded a gain of $35,635  when Manson Creek issued
     250,000 shares  pursuant to an agreement to acquire a mineral  property for
     total  consideration  of $200,000.  The  Company's  interest was reduced to
     47.5% from 48.6%.

     In the  transactions  described for 1996, 1995 and 1994 the price per share
     received by Manson  exceeded  the average  carrying  value per share of the
     Company's interest in Manson.

     Waddy Lake Resources Ltd.

     In 1995,  the  Company  incurred a loss of $12,777  when Waddy Lake  issued
     105,000  shares on the  exercise  of stock  options  for total  proceeds of
     $23,100.  In 1994,  the Company  incurred a loss of $44,189 when Waddy Lake
     issued  545,000  shares on the exercise of stock options for total proceeds
     of  $147,792.  In each case the price per share  received by Waddy Lake was
     less than the average carrying value per share of the Company's interest in
     Waddy Lake. In 1995, the Company's interest was reduced from 55% to 54%. In
     1994, the Company's  interest,  after  accounting for the acquisition of an
     additional 1.65% interest, was reduced from 57% to 55%.

     Equity investments

     The net  gain of  $8,135  in  1995  and  $32,671  in 1994  incurred  on the
     transactions  by Eastfield  and Stade  resulted  from the exercise of stock
     options or from private placements with outside interests.

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

Doane Raymond [GRAPHIC OMITTED]                                               21

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.   GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES
      (Continued)

     The effect of the above differences on the Company's  financial  statements
     are set out below:
<TABLE>
<CAPTION>

Consolidated Balance Sheet
--------------------------
                                                    1996                                         1995
                                   -------------------------------------         -----------------------------------

                                     Canadian                 U.S.                 Canadian                 U.S.
                                       GAAP                   GAAP                   GAAP                   GAAP
                                   ------------           ------------           ------------           ------------

<S>                                <C>                    <C>                    <C>                    <C>       
Exploration properties             $ 15,375,000           $       --             $ 13,445,799           $       --

Production property and
  equipment                          24,612,815             23,625,248             13,873,427             12,976,665

Deferred income taxes                 1,347,400                296,400              1,403,400                976,400

Minority interest                     6,806,248              2,342,422              4,693,731              1,024,082

Deficit                              (6,022,403)           (16,870,414)            (5,960,864)           (16,206,776)


Consolidated Statement of Operations                           1996                   1995                   1994
------------------------------------                       ------------           ------------           ------------


Loss from operations under Canadian GAAP                   $  (635,274)           $  (358,049)           $  (187,872)

Interest income                                               (260,968)              (234,433)              (282,006)
Exploration expenses                                        (3,260,674)            (2,578,375)            (1,929,915)
Carrying charges Jolu Mill                                    (115,135)              (113,153)              (116,895)
                                                           -----------            -----------            -----------
Loss from operations under U.S. GAAP                       $(4,272,051)           $(3,284,010)           $(2,516,688)
                                                           ===========            ===========            =========== 

</TABLE>



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

Doane Raymond [GRAPHIC OMITTED]                                               22

<PAGE>

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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES
      (Continued)
<TABLE>
<CAPTION>

Consolidated Statement of Operations                  1996                    1995                   1994
------------------------------------              ------------            ------------            -----------

<S>                                               <C>                     <C>                     <C>        
Net (loss) income under Canadian GAAP             $   (61,539)            $  (574,520)            $    15,984

Exploration expenses, expensed in
  year incurred                                    (3,260,674)             (2,578,375)             (1,929,915)
Abandonments, added back                            1,345,895                 757,637               1,133,418

Carrying charges Jolu Mill                           (115,135)               (113,153)               (116,895)
Change in gain on disposal of mineral
  properties and other assets                           6,262                 778,421                 156,621
Change in income taxes                                624,000                 (24,700)               (121,400)

Dilution gains adjustment                            (807,386)               (101,515)                (85,777)

Change in minority interest in loss of
  subsidiaries                                        225,856                 836,542                  (9,430)
                                                  -----------             -----------             -----------
Net loss under U.S. GAAP                          $(2,042,721)            $(1,019,663)            $  (957,394)
                                                  ===========             ===========             ===========

Primary loss per share (U.S. GAAP)                $     (0.10)            $     (0.07)            $     (0.07)
                                                  ===========             ===========             ===========
</TABLE>



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

Doane Raymond [GRAPHIC OMITTED]                                               23

<PAGE>


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

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------


17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES
     (Continued)

     In addition, U.S. GAAP requires the disclosure of the following:

     a)   Amounts paid for rent, interest and income taxes, the details of which
          are as follows:

                                      1996          1995            1994
                                  -----------    -----------    -----------

            Rent                  $    55,716    $    46,493    $     47,515
            Interest              $      -       $      -       $       -
            Income taxes          $    24,494    $    19,037    $     17,227


     b)   The United  States  Financial  Accounting  Standards  Board has issued
          Statement of Financial  Accounting  Standards No. 109, "Accounting for
          Income  Taxes"  (SFAS 109) which  became  effective  for fiscal  years
          beginning  after December 31, 1992.  SFAS 109 requires  recognition of
          deferred  tax  liabilities  and  assets  for the  expected  future tax
          consequences  of  events  that  have been  included  in the  financial
          statements or tax returns. Under this method, deferred tax liabilities
          and  assets  are  determined  based  on  the  difference  between  the
          financial  statement  and tax bases of assets  and  liabilities  using
          enacted tax rates in effect for the year in which the  differences are
          expected to reverse.

          The Company has  determined  that the  adoption of SFAS 109 would have
          had no effect on the reconciliation as at September 30, 1996.

          At September 30, 1996,  the companies  subsidiaries  have  accumulated
          losses for Canadian  income tax purposes of $2,843,000  and losses for
          United  States  income tax  purposes  of  $522,000  that may be offset
          against  future  taxable  income  through  the  years  2003  and  2011
          respectively.

          Under  Canadian  GAAP,  the  Company  has not  recognized  the related
          benefits of these loss carry-forwards in the financial statements.


          Under US GAAP,  the Company  has fully  reserved  the tax  benefits of
          these  operating  losses  because the likelihood of realization of the
          tax benefits cannot be determined. These carry-forwards are subject to
          review  by  Revenue  Canada,  Taxation  and  by the  Internal  Revenue
          Service.

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

Doane Raymond [GRAPHIC OMITTED]                                              24

<PAGE>


Pursuant to the  requirements  of Section 12 of the  Securities  Exchange Act of
1934, the Registrant  certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.

DATED at Calgary, Alberta, this 26day of March, 1997.


                                             GOLDEN RULE RESOURCES LTD.



                                             By: /S/  ROBERT J. LEMMON
                                                --------------------------------
                                                  Robert J. Lemmon, Treasurer

<PAGE>


                                    FORM 20-F

               REGISTRATION STATEMENT - GOLDEN RULE RESOURCES LTD.

                                  EXHIBIT INDEX

                                                                          PAGE

1.1      Consolidated Financial Statements for the year ended
         September 30, 1996 including the following:

         i)       Auditors' Report

         ii)      Consolidated Balance Sheet

         iii)     Consolidated Statement of Operation

         iv)      Consolidated Statement of Shareholders Equity

         v)       Consolidated Statement of Change in Financial Position

         vi)      Consolidated Notes to the Financial Statement


<PAGE>



                                   EXHIBIT 1.2



 1.2     Schedule

         i)       Auditors' Report                                          55

         ii)      Schedule I Marketable Securities                          56

         iii)     Schedule II Amounts Receivable for Related Parties        57

         iv)      Schedule V Property, Plant and Equipment                  59

         v)       Schedule VI Accumulated Depreciation - Property,
                  Plant and Equipment                                       61
[{"type": "20-F", "sequence": "1", "description": "FORM 20-F", "secsgml_size_bytes": 255120}]
{"company-data": {"conformed-name": "GOLDEN RULE RESOURCES LTD", "cik": "0000920543", "assigned-sic": "1000", "state-of-incorporation": "A0", "fiscal-year-end": "0930"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "000-23650", "film-number": "97573399"}, "business-address": {"street1": "800 5TH AVE SW", "street2": "STE 1000", "city": "CALGARY ALBERTA CANA", "state": "A0", "phone": "4032337898"}, "mail-address": {"street1": "800 5TH AVE SW", "street2": "GOLDEN RULE RESOURCES LTD", "city": "CALGARY", "state": "A0"}}
FORM 20-F

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20540

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

                                       OR

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

For the fiscal year ended September 30, 1996.

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [No Fee Required]

For the transition period from             to
                               -----------    -----------
Commission file number
                      -----------------------------------

                           GOLDEN RULE RESOURCES LTD.
              ----------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                           GOLDEN RULE RESOURCES LTD.
                  ---------------------------------------------
                 (Translation of Registrant's name into English)

                                 ALBERTA, CANADA
                  ---------------------------------------------
                 (Jurisdiction of incorporation or organization)

            #1450 - 125 - 9th AVENUE, S.E., CALGARY, ALBERTA, T2G 0P6
--------------------------------------------------------------------------------
Securities registered or to be registered pursuant to Section 12(b) of the Act.
                                      None

Securities registered or to be registered pursuant to Section 12(g) of the Act.
                   Common shares without nominal or par value
                   -------------------------------------------
                                (Title of Class)

Securities for which there is a reporting  obligation  pursuant to Section 15(d)
of the Act.
                                      None

Indicate the number of  outstanding  shares of each of the  issuer's  classes of
capital  or  common  stock  as of  the  close  of the  period  covered  by  this
registration statement.

               24,300,581 common shares as at September 30, 1996.
               --------------------------------------------------
2

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

         Yes      XX       No
              ----------       ----------

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

         Item 17    XX       Item 18
                 ----------          ----------
3

PART 1
------

Item 1:  DESCRIPTION OF BUSINESS
         -----------------------

(a) General Development of Business
-----------------------------------

The Registrant
--------------

Golden Rule Resources Ltd. (the "Registrant") was incorporated under the laws of
the  Province of Alberta,  on October 12,  1979.  At  September  30,  1996,  the
Registrant had the following subsidiary companies:
Percentage    Potential
Subsidiaries                 Ownership      Product         Location
------------                 ---------      -------         --------
Golden Rule Resources Inc.     100%       Gold              Colorado
GR Capital Corporation         100%       Investments       Alberta
Manson Creek Resources Ltd.     35%       Gold              British Columbia and Venezuela
Northern Abitibi Mining Corp.   39%       Gold              Quebec
Hixon Gold Resources Inc.       46%       Gold/Diamonds     British Columbia and Alberta
Waddy Lake Resources Inc.      100%       Gold              Saskatchewan
Stade Exploration Inc.          29%       Oil and Gas       British Columbia and Alberta
Tyler Resources Inc.             8%       Diamonds/Gold     Northwest Territories/Saskatchewan
The  Registrant,  directly  and  through  its  subsidiaries,  is  engaged in the
exploration  and development of precious metal  properties,  primarily in Canada
with some properties in the United States, Venezuela and Ghana, West Africa. The
Registrant has  significant  land holdings in the Byers Mineral Belt of northern
Saskatchewan, the Toodoggone gold camp, Quesnellia Terraine and Taseko Lake area
of British Columbia,  the Val d'Or and Abitibi  Greenstone Belts of Quebec,  and
the Voisey Bay Area of Labrador. The Registrant operates exploration programs on
its own account and on behalf of its joint venture  partners,  its subsidiaries,
affiliates and other clients on a contractual and consulting basis.

In addition,  the Registrant is engaged in oil and gas activities in Alberta and
British Columbia,  (Stade Exploration) and exploration for diamonds in Northwest
Territories (Tyler Resources).  These activities are not considered  material to
the Registrant.

The  Registrant's  exploration  activities  have been  primarily on  undeveloped
precious  metal  properties  in the  areas  outlined  above.  These  exploration
activities have identified gold bearing  deposits in each of the areas.  None of
the properties have been brought into production as of September 30, 1996 except
for the Komis  prospect  where the  Registrant on August 30, 1996  commenced the
processing of ore from the Komis prospect through the Jolu Mill. Operating costs
for the period  August 30, 1996 to September 30, 1996 for the Komis project have
been capitalized in producing  property costs as commericial  production had not
been achieved at September 30, 1996.
4

The Registrant's Subsidiaries
Wholly owned Subsidiaries
-----------------------------

Waddy Lake  Resources  Inc.  ("Waddy")  was  incorporated  under the laws of the
Province of Ontario on October 5, 1960.  On March 14, 1979,  Waddy was continued
under the provisions of the Canada Business Corporations Act.

On September 26, 1995, the shareholders of Waddy (with 15,509,072  common shares
issued and outstanding of which 8,410,946 (54%) were held by the Registrant) and
the  shareholders  of the Registrant  approved a Plan of Arrangement  subject to
final regulatory approval which was received October 12, 1995. Under the Plan of
Arrangement,  the Registrant acquired the 7,098,126 common shares of Waddy (46%)
held by the  minority  interests  through  a share  for  share  exchange.  Waddy
shareholders  received .53 common shares of the Registrant for each Waddy share.
As a result the Registrant  issued  3,762,007 common shares at a deemed price of
$5,860,631.  Accordingly,  as at September  30, 1995,  Waddy was  reflected as a
wholly-owned subsidiary with 8,410,946 shares held by G.R. Capital Corporation a
wholly-owned  subsidiary of the  Corporation  and 7,098,126 held directly by the
Registrant pursuant to the Plan of Arrangement.

The  Registrant  acquired  the  8,410,946  shares  held  prior  to the  Plan  of
Arrangement  for cash from 1987 to 1994 and also  disposed of some shares during
the period. The common shares of Waddy were listed on the Toronto Stock Exchange
until  completion of the acquisition of the minority  interest by the Registrant
at which time they were delisted.

During the year ended  September 30, 1994,  the  Registrant  and Waddy agreed to
enter into two private  placements.  The first  private  placement  consisted of
550,000  common shares at $0.80 per share for total  consideration  of $440,000.
The second private  placement  consisted of an 8%  convertible  debenture in the
amount of $4,000,000,  due February 24, 1996 with interest payable semi-annually
on June 30 and December 31,  secured by a floating  charge over all assets.  The
$4,000,000  debenture was convertible into 3,200,000 common shares of Waddy at a
price of $1.25 per share until February 24, 1996.  Both private  placements were
approved by the TSE and the  proceeds of each were used to fund the  underground
exploration  program on the Komis  project of Waddy and the  milling of the bulk
sampling from the underground program.

Golden Rule  Resources Inc. ("GR Inc.") was  incorporated  under the laws of the
State of Colorado on March 26, 1980.  All  activities  of the  Registrant in the
United  States  have been  conducted  through GR Inc.  Neither  GR Inc.  nor the
Registrant  currently  own  any  material  property  interests  or  conduct  any
significant activities within the United States.

GR Capital  Corporation  ("GR Capital") was  incorporated  under the laws of the
Province of Alberta on October 10,  1986.  During the year ended  September  30,
1987, the Registrant transferred to GR Capital its interest in various portfolio
investments  and its holdings,  as at the date of the transfer,  in Manson Creek
Resources Ltd. ("Manson") and Northern Abitibi Mining Corp. ("NAMC"). GR Capital
has made  subsequent  purchases  in the  market of  Manson,  NAMC and Hixon Gold
Resources Inc. ("Hixon").  The Registrant's  original 55% interest in Waddy Lake
Resources Inc. ("Waddy") was also held by GR Capital.
5

Publicly Held Subsidiaries
--------------------------

Manson Creek Resources Ltd.  ("Manson") was  incorporated  under the laws of the
Province of British  Columbia on March 4, 1983 as a wholly owned  subsidiary  of
the  Registrant and became  publicly-held  in 1983. At September 30, 1996 Manson
has 14,620,402 common shares issued and outstanding, of which 5,099,048 are held
by the  Registrant.  The common  shares of Manson are listed for  trading on the
Toronto Stock Exchange (TSE).

During the two years ended  September 30, 1995, the  Registrant  agreed to enter
into a private  placement  with Manson  which would be funded from the  proceeds
from the sale of a block of Manson  shares  held by the  Registrant  through the
facilities of the TSE. In December 1993, the Registrant sold 1,250,000 shares of
Manson at an  average  price of $0.63 per share for total net  consideration  of
$767,000  through the facilities of the TSE. On January 5, 1994,  Manson and the
Registrant  agreed to a private  placement of 1,250,000  units at $0.60 per unit
with each unit to consist of one common  share and a share  purchase  warrant to
purchase an additional  common share for $0.60 per share for five years from the
date  of  issue.  The  private  placement  was  approved  by  the  TSE  and  the
shareholders of Manson. (See "Financing of Publicly held subsidiaries").

During the year ended September 30, 1996, the Registrant  agreed to enter into a
private  placement with Manson which would be funded from proceeds from the sale
through  the  facilities  of the TSE of a block  of  Manson  shares  held by the
Registrant.  In November 1995, the Registrant sold 2,000,000 shares of Manson at
an average  price of $0.59 per share for total net  consideration  of $1,140,842
through the facilities of the TSE. On November 3, 1995 Manson and the Registrant
agreed to a private  placement of  2,000,000  units at $0.52 per unit at a total
cost of  $1,040,000  with each unit to consist  of one common  share and a share
purchase  warrant to purchase an additional  common share at $0.60 per share for
five years from the date of issued. The proceeds from the private placement will
be used by Manson to further  Manson's  exploration  projects.  The TSE accepted
notice of the private placement subject to shareholder  approval.  At the Annual
and Special Meeting of the shareholders of Manson held on February 29, 1996, the
shareholders  of Manson voted to amend the private  placement  from the original
terms as outlined above to a private  placement of 2,000,000  units at $0.52 per
unit,  with each unit to  consist  of one  common  share  and one  common  share
purchase warrant to purchase an additional common share at $1.50 per share for a
period of five years from the date of closing.  The private  placement closed on
March 6, 1996.

Northern Abitibi Mining Corp.  ("NAMC") was  incorporated  under the laws of the
Province  of Quebec on March 15,  1971.  On  September  22,  1981,  the name was
changed to include the French version,  Corporation  Miniere Nord Abitibi. As at
September 30, 1996 NAMC has 18,509,405 common shares issued and outstanding. The
Registrant  holds  7,197,425  shares  of  NAMC  which  it has  acquired  through
purchases  in the market and by way of private  placement  over the period  from
1985 to 1995. The private placements have been for cash,  settlement of debt for
costs  paid by the  Registrant  on  behalf  of NAMC  and for  property  interest
acquired by NAMC from the Registrant. Where the private placement was to acquire
a property interest, the final acquisition price negotiated between NAMC and the
Registrant   and   presented  to  their   respective   Board  of  Directors  for
consideration  and  approval  was based on property  information  package  which
included property valuations  prepared by third parties.  The private placements
whether for cash or in settlement of debts or acquisition of property  interests
have been  approved by the Alberta Stock  Exchange  (ASE) on which the shares of
NAMC are  listed and the price per share  based on market  prices at the time of
the submission of the proposed private placement to the ASE. On consolidation of
NAMC into the accounts of the Registrant, the property interests transferred, as
noted above, are recorded at the Registrant's original cost and any gain or loss
on the transfer is eliminated.  The common shares of NAMC are listed for trading
on the ASE.
6

During the year ended  September  30, 1994,  the  Registrant  and NAMC agreed to
enter into a private  placement  effective  August 26, 1994  whereby NAMC issued
484,321 common shares at $0.40 per share.  The purpose of the private  placement
was to settle debts of $193,728  owed by NAMC to the  Registrant  comprised of a
debenture in the amount of $150,000,  accrued  interest thereon in the amount of
$32,305 and other amounts totalling $11,423.  The private placement was approved
by the ASE.

During the year ended September 30, 1995, the Registrant  agreed to enter into a
private  placement  with NAMC which would be funded from the  proceeds  from the
sale of a block of NAMC shares held by the Registrant  through the facilities of
the ASE. In February 1995, the  Registrant  sold 5,000,000  shares of NAMC at an
average price of $0.22 per share for total net consideration of $999,968 through
the facilities of the ASE. On February 3, 1995, NAMC, the Registrant and Kinross
Gold  Corporation  ("Kinross"),  an  unrelated  company,  agreed  to  a  private
placement of 8,750,000  units at $0.20 per unit with each unit to consist of one
common share and  one-half of a share  purchase  warrant.  One full warrant will
entitle  the holder to  purchase an  additional  common  share for $0.50 for two
years.  The  Registrant  had agreed to subscribe for 5,000,000  units at a total
cost of $1,000,000 and Kinross had agreed to subscribe for 3,750,000  units at a
total cost of $750,000.  NAMC had intended to use the proceeds  from the private
placement to fund, pursuant to an agreement in principle, the acquisition of the
Quebec  mining  property  portfolio  under option from  Falconbridge  Limited by
Kinross.  As the parties  elected  not to proceed  with the  acquisition  of the
Quebec mining  property  portfolio,  Kinross did not  participate in the private
placement. The Registrant elected to proceed with its subscription for 5,000,000
units at $0.20 per unit. The private  placement  approved by the ASE.  closed on
May 4, 1995.  The  proceeds  from the private  placement  have been used for the
acquisition  of and  exploration  on the  Voisey's  Bay  properties  in Labrador
acquired subsequent to the private placement.

Hixon Gold  Resources  Inc.  ("Hixon")  was  incorporated  under the laws of the
Province  of Alberta on October  10, 1986 as a  wholly-owned  subsidiary  of the
Registrant.  Pursuant to a Prospectus dated November 18, 1988, Hixon distributed
to the public in British Columbia 600,000 units with each unit consisting of one
common  share and two Series "A"  Warrant  which have  subsequently  expired.  A
portion of the units (400,000) were issued on a "flow through basis" whereby for
Canadian  Income  Tax  purposes  Hixon  expended  the  proceeds  on  exploration
expenditures  and the  investor  received a deduction  for  Canadian  Income Tax
purposes equal to the amount of his investment.

As at  September  30,  1996,  Hixon has  10,485,057  common  shares  issued  and
outstanding.  The  Registrant  holds  5,016,868  shares  of  Hixon  which it has
acquired on  incorporation,  through purchases in the market and through private
placements  over the period from 1988 to 1996. The private  placements have been
for cash, settlement of debt for costs paid by the Registrant on behalf of Hixon
and for  property  interest  acquired  by Hixon from the  Registrant.  Where the
private  placement  was to acquire a property  interest,  the final  acquisition
price  negotiated  between  Hixon  and the  Registrant  and  presented  to their
respective  Board of  Directors  for  consideration  and approval was based on a
property  information  package which included  property  valuations  prepared by
third parties.  The private placement whether for cash or in settlement of debts
or acquisition of property  interests have been approved by the Vancouver  Stock
Exchange ("VSE") on which the shares of Hixon are listed and the price per share
based on market  prices at the time of the  submission  of the proposed  private
placement  to the VSE.  On  consolidation  of Hixon  into  the  accounts  of the
Registrant, the property interests transferred,  as noted above, are recorded at
the  Registrant's  original  cost  and  any  gain or  loss  on the  transfer  is
eliminated.

During the year ended  September 30, 1995, the Registrant gave notice to the VSE
to sell  through  the  facilities  of the VSE a block  of upto  2,000,000  Hixon
shares.  To September  30, 1995,  the  Registrant  sold a total of 143,500 Hixon
shares  through the facilities of the VSE at an average price of $0.25 per share
for total net  proceeds  of $35,670.  Subsequent  to  September  30,  1995,  the
Registrant has sold an additional  1,856,500 Hixon shares through the facilities
of the VSE at an  average  price of $0.37 per share  for total net  proceeds  of
$691,589.  Under the notice to sell up to 2,000,000 Hixon shares, the Registrant
sold a total of 2,000,000  Hixon  shares at an average  price of $0.36 per share
for total net proceeds of $727,259.
7

On September 19, 1996, the Registrant gave notice to the VSE to sell through the
facilities  of the VSE, a block of 200,000  Hixon shares which was  completed on
September 26, 1996 at an average price of $0.59 per share for total net proceeds
of  $117,210.  From  the  sale of the  total  of  2,200,000  Hixon  shares,  the
Registrant realized total net proceeds of $844,469 which the Registrant utilized
as follows:

     1)   On December 20,  1995,  Hixon and the  Registrant  agreed to a private
          placement  of  1,000,000  units at $0.21  per unit at a total  cost of
          $210,000  with each unit  consisting  of one common  share and a share
          purchase  warrant to purchase an additional  common share at $0.21 per
          share  during  the first  year from the date of issue and at $0.24 per
          share  during  the  second  year from the date of issue.  The  private
          placement  was  approved by the VSE on December 27, 1995 and closed on
          February 12, 1996.  On April 3, 1996,  the  Registrant  exercised  the
          share  purchase  warrants  for  1,000,000  shares  at a total  cost of
          $210,000.  The  total  proceeds  from  the  1,000,000  units  and  the
          1,000,000  warrants of $420,000 have been used for working capital and
          the  acquisition  and  exploration  of two  properties in Ghana,  West
          Africa.

     2)   On April  9,  1996,  Hixon  announced  a  private  placement  of up to
          1,000,000  units at $0.50 per unit,  with each unit  consisting of one
          common share and a share  purchase  warrant to purchase an  additional
          common share at $0.50 per share during the first year from the date of
          issue and at $0.58 per share  during the second  year from the date of
          issue.  From the private  placement of 1,000,000 units, the Registrant
          purchased  100,000  units at $0.50 per unit at a total cost of $50,000
          and the remaining 900,000 units were purchased by officers,  directors
          of Hixon  and other  unrelated  parties.  The  private  placement  was
          approved by the VSE on April 16, 1996 and closed on May 31,  1996.  On
          December 20, 1996,  the  Registrant  exercised the warrant for 100,000
          shares  at $0.50  per share  for a total  cost of  $50,000.  The total
          proceeds of $100,000 will be used for working  capital and exploration
          on the properties in Ghana, West Africa.

     3)   On September 13, 1996,  Hixon  announced a private  placement of up to
          1,000,000  units which was amended on September  24, 1996 to raise the
          number  of units to  1,250,000  units at $0.50 per unit with each unit
          consisting  of one  common  share  and a  share  purchase  warrant  to
          purchase  an  additional  common  share at $0.50 per share  during the
          first  year from the date of issue and at $0.58 per share  during  the
          second  year from the date of issue.  From the  private  placement  of
          1,250,000 units, the Registrant  purchased  247,000 units at $0.50 per
          unit for a total cost of $123,500 and the  remaining  1,003,000  units
          were  purchased  by officers,  directors of Hixon and other  unrelated
          parties.The  private  placement  was approved by the VSE on October 4,
          1996 and closed on November 25, 1996.  The proceeds have been used for
          working  capital and  exploration  on the  properties  on Ghana,  West
          Africa.

     4)   On  October  2,  1996,  Hixon and the  Registrant  agreed to a private
          placement  of  235,000  units  at $0.65  per  unit at a total  cost of
          $152,750  with each unit  consisting  of one common  share and a share
          purchase  warrant to purchase an additional  common share at $0.65 per
          share  during  the first  year from the date of issue and at $0.75 per
          share  during  the  second  year from the date of issue.  The  private
          placement  was  approved  by the VSE on  October 4, 1996 and closed on
          November 19, 1996. On December 20, 1996, the Registrant  exercised the
          share  purchase  warrant for  235,000  shares at $0.65 per share for a
          total cost of $152.750. The total proceeds of $305,500 will be used to
          provide  working  capital and to allow the acquisition and exploration
          of mineral properties.
8

On December 20, 1996, the Registrant  gave notice to the VSE to sell through the
facilities  of the VSE, a block of 500,000  Hixon shares which was  completed on
January 7, 1997 at an average price of $5.51 per share for total net proceeds of
$2,755,572.

On January  2,  1997,  Hixon and the  Registrant  agreed to a  proposed  private
placement of 500,000  units at $5.50 per unit for total  proceeds of  $2,755,000
with each unit  consisting of one common share and a share  purchase  warrant to
purchase an  additional  common  share at $5.50 per share  during the first year
from the date of issue and at $6.35 per share  during the  second  year from the
date from the date of issue.  The private  placement  was approved by the VSE on
January 28, 1997 and is subject to shareholder  approval which will be sought at
the Annual and Special Meeting of the Shareholders to be held on March 27, 1997.
The  proceeds  will be used for  exploration  of Hixon's  property  portfolio in
Ghana. The Registrant will fund the cost of the private  placement from the sale
through the facilities of the VSE of the block of 500,000 Hixon shares completed
on January 7, 1997 at an average price of $5.51 per share for total net proceeds
of $2,755,572.

In this  Registration  Statement,  unless the context indicates  otherwise,  the
"Registrant"  refers to Golden Rule  Resources  Ltd. and all direct and indirect
subsidiaries.  The consolidated  financial statements and financial  information
stated herein include the accounts of the Registrant and all direct and indirect
subsidiaries.

Financing of Publicly held Subsidiaries and Affiliates

To  assist  its  publicly  held   subsidiaries  and  affiliates   finance  their
exploration  activities  the Registrant has utilized the large portion of shares
that are freely tradeable under Canadian  securities  legislation which it holds
in  each  of  these  subsidiaries  and  affiliates.  Under  Canadian  securities
legislation,  the  Registrant  may  sell,  upon  proper  notice  to the  various
regulatory  authorities,  a portion of these freely tradeable shares through the
facilities of the stock exchange on which the subsidiary or affiliate is listed.
The Registrant  subsequently re-invests the proceeds from the sale of the freely
tradeable shares or a portion thereof in the subsidiary or affiliate by means of
a private  placement  under the applicable  regulations.  While it is not always
required,  the Regulators,  in several instances,  have required approval of the
private  placement by the  shareholders  of the  subsidiary  or  affiliate.  The
private  placement  usually  consists of units  comprised of a share and a share
purchase  warrant with the total number of units  usually equal to the number of
shares sold.  Both the shares and any shares received on exercise of the warrant
are subject to a one year hold period from the date of the private placement.

The major  advantage  both to the  Registrant and the subsidiary or affiliate of
the above described  process is the ability to react quickly to capital markets.
In those  instances  where a subsidiary  or affiliate  needs  additional  equity
financing and the market value of the subsidiary's  stock is  appreciating,  the
Registrant with its block of freely tradeable shares is able to react quickly to
the  capital  market.  With the sale of a block of  freely  tradeable  shares at
current  market  prices,  the  Registrant is able to provide  additional  equity
capital to the subsidiary or affiliate without the necessity of using any of its
own resources.  After completion of the private placement,  the Registrant holds
the same or  approximately  the same number of shares as it held before the sale
of the block of freely tradeable shares. The percentage  ownership in the issued
and  outstanding  shares of the  subsidiary or affiliate  remains the same as it
would  have been if the  subsidiary  had issued  the  shares  under the  private
placement to outside parties. In addition,  upon exercise of the warrant,  which
provides  additional equity financing to the subsidiary,  the Registrant is able
to increase its percentage  ownership in the subsidiary back to the level before
the sale of the freely tradeable block. The only material cost to the Registrant
is the commission incurred on the sale of the block of shares.

While the  subsidiary  or  affiliate  could  have sold into the open  market the
shares issued to the Registrant under the private placement,  it would have been
much more difficult for the subsidiary or affiliate to react as quickly to the
9

capital market.  For freely  tradeable  shares to be in the hands of the outside
investors the subsidiaries would have had to file a prospectus,  rights offering
or a statement of material  facts.  Such  documents  would have  required a much
longer  time period and  incurred  significant  legal and  offering  costs.  The
Registrant,  because  its  intent  is to hold the  shares of the  subsidiary  or
affiliate  for  investment  purposes,  is  prepared  to accept the one year hold
period  imposed  by the  regulatory  authorities  under  the  private  placement
regulations.  To find outside investors prepared to accept similar  restrictions
would be more  difficult and time consuming and  ultimately,  the subsidiary may
not be able to react in as timely a manner to the capital market.

The net result of the method  utilized by the  Registrant has the same effect on
the  capital  structure  of the  subsidiary  or  affiliate  and  the  percentage
ownership by the Registrant as a sale by the subsidiary or affiliate in the open
market. The subsidiary or affiliate, however, has acquired the additional equity
financing in a shorter time period and at a much reduced cost.

During the fiscal periods included in this Registration  Statement and up to the
date of this Registration Statement,  the Registrant has utilized this method to
provide financing to Manson,  Northern Abitibi,  Tyler and Stade. The details of
such financing are as follows:

      i)  Manson
          ------

          The Registrant sold in December 1993, 1,250,000 shares of Manson at an
          average  price of $0.63  per share  for  total  net  consideration  of
          $767,000  through the facilities of the Toronto Stock Exchange  (TSE).
          On  January 5, 1994,  Manson  and the  Registrant  agreed to a private
          placement of 1,250,000  units at $0.60 per unit for total  proceeds of
          $750,000  with each unit to consist  of one  common  share and a share
          purchase warrant to purchase an additional  common share for $0.60 per
          share for five years from the date of issue. The private placement was
          approved by the TSE subject to approval by the  shareholders of Manson
          which was granted on March 31, 1994 at the Annual  General  Meeting of
          the Shareholders. The private placement closed in May, 1994.

          The Registrant recorded in the fiscal year ending September 30, 1994 a
          gain on  consolidation  of $145,124 as a result of the  disposition of
          the 1,250,000 shares of Manson.

          On November  3, 1995,  Manson and the  Registrant  agreed to a private
          placement of 2,000,000  units at $0.52 per unit for total  proceeds of
          $1,040,000 with each unit to consist of one common share and one share
          purchase warrant to purchase an additional  common share for $0.60 per
          share for five years from the date of issue.  The TSE accepted  notice
          of the  private  placement  subject to  shareholder  approval.  At the
          Annual and  Special  Meeting  of the  shareholders  of Manson  held on
          February  29,  1996,  the  shareholders  of Manson  voted to amend the
          private  placement  from the  original  terms as  outlined  above to a
          private placement of 2,000,000 units at $0.52 per unit, with each unit
          to consist of one common share and one common share  purchase  warrant
          to purchase an additional common share at $1.50 per share for a period
          of five years from the date of closing.  The private  placement closed
          on March 6, 1996.

          In order to subscribe  for the  2,000,000  units,  the  Registrant  on
          November 13, 1995 sold  through the  facilities  of the TSE  2,000,000
          freely-tradeable  shares of Manson,  at an average  price of $0.59 per
          share  for total  net  consideration  of  $1,140,842.  The  Registrant
          recorded in the fiscal year ending  September 30, 1996 a total gain on
          consolidation  of  $226,002  as a  result  of the  disposition  of the
          2,000,000  shares  of  Manson  with  $125,160  reflected  as  gain  on
          reduction  of  the  Registrant's   interest  in  Manson  and  $100,842
          reflected as gain on disposition of the shares.
10

     ii)  Northern Abitibi (NAMC)
          -----------------------

          On February 3, 1995, NAMC, the Registrant and Kinross Gold Corporation
          (Kinross)  agreed to a private  placement of 8,750,000  units at $0.20
          per unit for total proceeds of $1,750,000 with each unit to consist of
          one common share and one-half of a share  purchase  warrant.  One full
          warrant entitles the holder to purchase an additional common share for
          $0.50 per share for two years from the date of issue.  The  Registrant
          agreed to  subscribe  for  5,000,000  units and Kinross for  3,750,000
          units at a cost of $1,000,000  and$750,000  respectively.  The private
          placement  had been  approved  by the ASE.  Subsequent  to February 3,
          1995,  Kinross  elected  not  to  proceed  with  its  subscription  of
          3,750,000 units.  Accordingly,  on closing of the private placement on
          May 4, 1995, only 5,000,000 units at $0.20 per unit were issued to the
          Registrant for total proceeds of $1,000,000.

          In order to subscribe  for its  5,000,000  units,  the  Registrant  on
          February 15, 1995 sold  through the  facilities  of the Alberta  Stock
          Exchange (ASE) 5,000,000 fully-tradeable shares of NAMC, at an average
          price of $0.22 per share for total net consideration of $999,968.  The
          Registrant has recorded in the fiscal year ending September 30, 1995 a
          loss on consolidation of $53,045 as a result of the disposition of the
          5,000,000 shares of NAMC.

    iii)  Hixon
          -----

          During the year ended  September 30, 1995, the Registrant  gave notice
          to the Vancouver  Stock Exchange to sell through the facilities of the
          VSE, a block of up to 2,000,000  Hixon  shares.  The  Registrant  sold
          through the  facilities  of the  Vancouver  Stock  Exchange a total of
          143,5000  shares  prior  to  September  30,  1995 and the  balance  of
          1,856,000  shares  between  October 1, 1995 and September 30, 1996. In
          addition, on September 19, 1996, the Registrant gave notice to the VSE
          to sell,  through the  facilities of the VSE, a block of 200,000 Hixon
          shares which was completed on September 26, 1997. Accordingly,  during
          the year ended  September  30, 1996,  the  Registrant  sold a total of
          2,056,000 Hixon shares through the facilities of the VSE.

          During the year ended September 30, 1995, the Registrant sold, through
          the  facilities of the VSE, the 143,500  shares of Hixon at an average
          price of $0.25 per share for total net  consideration  of $35,670  and
          recorded a gain or consolidation of $31,603.

          During the year ended  September 30, 1996, the Registrant sold through
          the facilities of the VSE,  1,856,500 Hixon shares at an average price
          of $0.37 per share for total net  proceeds  of  $691,589  and  200,000
          Hixon  shares  at an  average  price of $0.59  per share for total net
          proceeds of $117,210 for a total  disposition of 2,056,500  shares for
          total net proceeds of  $808,799.  The  Registrant,  in the fiscal year
          ended  September 30, 1996, has recorded a total gain on  consolidation
          of $462,953 as a result of the disposition of the 2,056,500  shares of
          Hixon  with  $239,600   reflected  as  a  gain  on  reduction  of  the
          Registrant's  interest in Hixon and  $223,293  reflected  as a gain on
          disposition of the shares.

          The  Registrant has utilized the proceeds of $844,469 from the sale of
          2,200,000  Hixon  shares  (143,120 in 1995 and  2,086,500  in 1996) as
          follows:
11

     1)   On December 20,  1995,  Hixon and the  Registrant  agreed to a private
          placement  of  1,000,000  units at $0.21  per unit at a total  cost of
          $210,000  with each unit  consisting  of one common  share and a share
          purchase  warrant to purchase an additional  common share at $0.21 per
          share  during  the first  year from the date of issue and at $0.24 per
          share  during  the  second  year from the date of issue.  The  private
          placement  was  approved by the VSE on December 27, 1995 and closed on
          February 12, 1996.  On April 3, 1996,  the  Registrant  exercised  the
          share  purchase  warrants  for  1,000,000  shares  at a total  cost of
          $210,000.

     2)   On April  9,  1996,  Hixon  announced  a  private  placement  of up to
          1,000,000  units at $0.50 per unit with  each unit  consisting  of one
          common share and a share  purchase  warrant to purchase an  additional
          common share at $0.50 per share during the first year from the date of
          issue and at $0.58 per share  during the second  year from the date of
          issue.  From the private  placement of 1,000,000 units, the Registrant
          purchased  100,000  units at $0.50 per unit at a total cost of $50,000
          and the remaining 900,000 units were purchased by officers,  directors
          of Hixon  and other  unrelated  parties.  The  private  placement  was
          approved by the VSE on April 16, 1996 and closed on May 31,  1996.  On
          December 20, 1996, the cost of $50,000.

     3)   On September 13, 1996,  Hixon  announced a private  placement of up to
          1,000,000  units which was amended on September  24, 1996 to raise the
          number  of units to  1,250,000  units at $0.40 per unit with each unit
          consisting  of one  common  share  and a  share  purchase  warrant  to
          purchase  an  additional  common  share at $0.50 per share  during the
          first  year from the date of issue and at $0.58 per share  during  the
          second  year from the date of issue.  From the  private  placement  of
          1,250,000 units, the Registrant  purchased  247,000 units at $0.50 per
          unit for a total cost of $123,500 and the  remaining  1,003,000  units
          were  purchased  by officers,  directors of Hixon and other  unrelated
          parties.  The private  placement was approved by the VSE on October 4,
          1996 and closed on November 25, 1996.

     4)   On  October  2,  1996,  Hixon and the  Registrant  agreed to a private
          placement  of  235,000  units  at $0.65  per  unit at a total  cost of
          $152,750  with each unit  consisting  of one common  share and a share
          purchase  warrant to purchase an additional  common share at $0.65 per
          share  during  the first  year from the date of issue and at $0.75 per
          share  during  the  second  year from the date of issue.  The  private
          placement  was  approved  by the VSE on  October 4, 1996 and closed on
          November 19, 1996. On December 20, 1996, the Registrant  exercised the
          share  purchase  warrant for  235,000  shares at $0.65 per share for a
          total cost of $152.750.

On December 20, 1996, the Registrant  gave notice to the VSE to sell through the
facilities  of the VSE, a block of 500,000  Hixon shares which was  completed on
January 7, 1997 at an average price of $5.51 per share for total net proceeds of
$2,755,572.  The Registrant will record in the fiscal year ending  September 30,
1997, a total gain on consolidation of $1,041,493 as a result of the disposition
of the 500,000 shares of Hixon with $1,040,921  reflected as a gain on reduction
of the Registrant's  interest in Hixon and $572 reflected as gain on disposition
of the shares.

On January  2,  1997,  Hixon and the  Registrant  agreed to a  proposed  private
placement of 500,000  units at $5.50 per unit for total  proceeds of  $2,755,000
with each unit  consisting of one common share and a share  purchase  warrant to
purchase an additional common share at $5.50 per share during the first year
12

from the date of issue and at $6.35 per share  during the  second  year from the
date from the date of issue.  The private  placement  was approved by the VSE on
January 28, 1997 and is subject to shareholder  approval which will be sought at
the Annual and Special Meeting of the Shareholders to be held on March 27, 1997.
The  proceeds  will be used for  exploration  of Hixon's  property  portfolio in
Ghana. The Registrant will fund the cost of the private  placement from the sale
through the facilities of the VSE of the block of 500,000 Hixon shares completed
on January 7, 1997 at an average price of $5.51 per share for total net proceeds
of $2,755,572.

Significant Transactions During Last Five Years
-----------------------------------------------

During  the last  five  years,  the  Registrant  has  engaged  in the  following
significant transactions:

In the year ended September 30, 1995, pursuant to a Plan of Arrangement approved
by the  shareholders  of both  the  Registrants  and  Waddy,  subject  to  final
regulatory  approval  which was  received on October 12,  1995,  the  Registrant
acquired  the  7,098,126  common  shares  of Waddy  (46%)  held by the  minority
interest  through a share for share exchange.  Waddy  shareholders  received .53
common shares of the Registrant for each Waddy share. As a result the Registrant
issued  3,762,007  common  shares at a deemed price of $1.51 per share for total
consideration  of $5,680,631.  Accordingly,  as at September 30, 1995,  Waddy is
recorded as a wholly-owned  subsidiary.  The effect of this transaction has been
to increase  share  capital by $5,586,292  (after  deducting  issue  expenses of
$94,339),  decrease minority  interest by $2,210,343 and to increase  production
property by $3,600,294.

The Registrant's  interests in its various mineral properties are held either by
the  Registrant  (directly or indirectly  through its  subsidiaries)  or through
joint  ventures  with  various  joint  venture  partners.  In either  case,  the
Registrant or its joint  venture  partners have staked the claims or acquired an
interest in claims  staked by others.  The  various  provincial  regulations  or
acquisition agreements require that varying amounts of exploration activities be
carried out on the properties to keep the claims in good standing.  In the event
that the Registrant fails to conduct sufficient  exploration  activities to keep
the claims in good standing,  the Registrant loses title to the property and its
interest and the related  costs are charged to the  statement of  operations  as
abandoned  properties.  Each year the Registrant evaluates its property holdings
to determine  what  exploration  work is required to maintain the claims in good
standing  and to  determine  which  claims  should be  allowed to lapse with the
resulting charge to operations.  To date the Registrant has not had any material
property interest that it has failed to keep in good standing.

During the five years ended  September 30, 1996,  neither the Registrant nor any
subsidiary of the Registrant has been involved in any  bankruptcy,  receivership
or similar  proceedings.  Except as described above,  neither the Registrant nor
any  subsidiary  has  completed  any  material   reclassification,   merger,  or
consolidation,  or acquired or disposed of any  material  amount of their assets
(except in the ordinary course of business),  or have made any material  changes
in their mode of conducting business.

Exchange Rates
--------------

In this Registration Statement,  unless otherwise specified,  all dollar amounts
are  expressed  in Canadian  dollars.  The high and low spot rates,  the average
rates  (average of the  exchange  rates on the last day of each month during the
period),  and the end of period  rates for  Canadian  dollars  expressed in U.S.
dollars from January 1, 1991 to Sept 30, 1996 as reported by the Bank of Canada,
were as follows:
13

                  
              1996                                        Year Ended December 31
              (through          --------------------------------------------------------------------------
               Sept 30           1995               1994            1993              1992           1991
              --------          ------             ------          ------            ------         ------
High           $.7358           $.7446             $.7591          $.8021            $.8512         $.8866
Low             .7180            .7078              .7129           .7481             .7777          .8645
Average         .7310            .7286              .7322           .7751             .8244          .8725
End of
Period          .7341            .7325              .7129           .7553             .7867          .8654
Employees
---------

The Registrant currently employs six persons on a full-time basis and Waddy Lake
Resources Ltd.  currently has 53 persons on a full-time  basis which number will
decrease as operations are wound down on the Komis Mine. The number of employees
fluctuates  according to  adjustments  in the work force at various  properties.
None  of  the  Registrant's   employees  are  represented  by  a  labour  union.
Corporations  in which  certain of the  Registrant's  officers or directors  are
shareholders  have  provided  geological  and  exploration  services  and direct
administrative services at usual professional rates.

Item 2:  DESCRIPTION OF PROPERTY
         -----------------------

The Registrant,  directly and through its subsidiaries,  has interests or rights
to obtain interests in mineral  properties in the Provinces of British Columbia,
Alberta,  Saskatchewan,   Ontario  and  Quebec,  Labrador  and  the  North  West
Territories.  Interests are also held in State of Colorado,  Venezuela,  Mexico,
Ghana and Cote D'Ivoire. See "Description of Property". The Registrant also owns
an 8% interest in Tyler  Resources  Inc, a company that has interests in mineral
properties in the Province of Saskatchewan and in the diamond  properties in the
North West  Territories,  and a 29% interest in Stade Exploration Inc, a company
with Oil and Gas  property  interests  in Alberta  and British  Columbia,  which
interest was sold subsequent to September 30, 1996.

The Registrant conducts an ongoing  acquisition/exploration program for precious
metals properties, which to date have been primarily in western Canada. The main
thrust  of the  Registrant's  acquisition/exploration  activities  has  been  to
conduct  grassroots  exploration.  The results of these  activities has been the
identification  of a  number  of  properties  with  indications  of  significant
mineralization.

West African Properties
-----------------------

The Registrant and its subsidiary, Hixon Gold, have entered into a joint venture
agreement  with  respect to the  acquisition,  exploration  and  development  of
mineral  properties in Ghana, West Africa. The joint venture has acquired a 100%
interest in three properties in Ghana. The joint venture agreement provides that
Hixon will fund 100% of exploration costs to feasibility and that the Registrant
has the right to  reimburse  Hixon  for 200%  exploration  costs and to  arrange
production financing in exchange for a 50% interest in each property.  Hixon has
also  entered  into  an  option  agreement  with  Trillion  Resources  Ltd.,  an
unaffiliated  company,  to  earn a 40%  interest  in the  Alepe  property,  Cote
D'Ivoire.

Ghana
-----

Stenpad Prospect
----------------

The large 6,983  hectare  (17,144  acre)  Stenpad  property is located  near the
village of Ajakamanso in Western Ghana and is road accessible. Numerous Galamsey
workings are evident,  including the mining of alluvial  deposits along streams,
and pits and  trenching on gold bearing  quartz veins and saprolite  areas.  The
Stenpad  Prospecting  Licence was purchased  from Stenpad  Mining and Processing
Company Ltd.,
14

an  unaffiliated  company  in May of  1996.  Exploration  , which  included  the
following, began during the summer of 1996:

     o    530  soil,  stream  sediment  and  rock  samples  were  collected  and
          analyzed;
     o    Stream  sediment and sampling  confirmed  that several  drainages  are
          anomalous in gold;
     o    Pits and soil sampling confirmed the gold anomalies;
     o    Seven areas of outcrop were gridded and soil sampled;
     o    Gold-in-soil  anomalies were  identified and several samples of quartz
          vein material and pyrite  bearing  country rock had  significant  gold
          values;
     o    Hand trenching exposed quartz veins and  argillite/phyllite  wall rock
          carrying economic gold values in several areas of the property.
     o    A property  evaluation  report on the Stenpad  property  was  prepared
          which  concluded  that  an  integrated  geological,   geochemical  and
          geophysical   exploration   program  was  required  to  evaluate  both
          auriferous quartz vein systems and disseminated sulphide types of gold
          mineralization.  Results to date suggested that  bulk-mineable  widths
          and gold grades are present, with indications that gold mineralization
          has  continuity  over several  hundreds of metres of strike length and
          widths of up to 100 metres;

Subsequent  to September  30, 1996,  additional  exploration  work was conducted
which included:

     o    Initial  gold  assays  were  received  from  trenches in the Seidu and
          Agykra areas of the property which indicate high grade gold zones;
     o    Check assaying confirmed the high grade assays;
     o    Initial  results  suggested  a  shear  zone  controlled  gold  deposit
          extending for at least 1,950 metres in strike length;
     o    High grade gold assays were not restricted to the quartz, but continue
          into the wall rock;  o Line  cutting  and a  gold-in-soil  geochemical
          survey conducted on a nominal 800 m x 50 m sampling interval;
     o    The decision was made to expand the scope of the exploration program;
     o    Agykra #1 trench was extended to 100 metres in length, and assayed 8.8
          g/T gold;
     o    Seidu  #3,  a new  trench,  was dug  between  Seidu  #1 and  Seidu  #2
          trenches, and assayed 16.0 g/T over 96.3 metres.

Results  received  from  extended  Agykra #1 and first  96.3  metres of Seidu #3
trenches:

         TRENCH           LENGTH            ASSAY g/T (OPT)
         ------           ------            ---------------
         Agykra #1        100 m (328)       8.8 (0.257)
         (extended)
         Seidu #3         96.3 m (307)      16.0 (0.468)
         (partial)

     o    Trenching program expanded to 16 crews;
     o    Agykra #1 and Seidu #3 trenches expanded to 200 metres in length;
     o    Fourteen additional trenches started;
     o    Preliminary results from the gold-in-soil  geochemical survey suggests
          a large, highly anomalous area.

The  extension  of the  gold-in-soil  geochemical  survey  to the north and west
quadrants of the grid is in progress.  A very preliminary  interpretation of the
geochemical  results  received and plotted to date  indicates a very strong gold
anomaly in the area of the Agykra and Seidu  discoveries.  An irregular  area of
roughly 3,500 x 4,000 metres exhibits  gold-in-soil  values in excess of 10 g/T.
The expanded trenching  progaram is designed to test the gold  mineralization in
bedrock in this area.

Upon completion of the trenching program, an initial diamond drill campaign will
be designed to test the depth and extent of the gold  mineralization.  The drill
program will not start until April 1997, at the earliest.
15

Fredag Prospect
---------------

The Registrant  negotiated the purchase of the 8340 hectare (20,608 acre) Fredag
property located in the Asankrangwa  belt of Western Ghana,  about 6 km north of
the  Stenpad  property.  A  $200,000  reconnaissance  exploration  program  will
initially focus on conducting a property wide stream sediment  sampling program,
the  identification  and locating of old native  workings  and current  Galamsey
activity, soil geochemical sampling and geological mapping. The stream sediment,
sampling  and  soil  sampling  will  aid in  locating  the  trend  of  the  gold
mineralization.  The initial  exploration  program on the Fredag  concession  is
currently in progress.

Tinso Prospect
--------------

The 470 hectare (1162 acre) Tinso property is located in the Tarkwa area between
the Prestea mine  operated by JCI Ltd. and the Bogusa mine operated by Billiton.
Several  concrete lined shafts and adits are evidence of past gold production on
the property.  Apparently high grade gold in quartz veins was mined in the past,
and this ore was  transported by aerial tramway to the Brumasi Mines plant about
2.5 km to the west of the property.

The initial geological  evaluation  indicates that the Tinso property hosts gold
mineralization  primarily  in  structurally  controlled,  Birimian  quartz  vein
systems.  The production  that occurred on the property is pre World War One and
must have been of very high grade to justify the  expenditures  and scale of the
mining operation  indicated by the old workings and relics of machinery found on
the property.

A systematic, first phase soil sampling, geological mapping and sampling program
is  underway  and gold-  in-soil  analytical  results  are  expected in the near
future.  It will be  necessary to  rehabilitate  the old shafts in order to gain
access to the underground  workings in order to establish the type and extent of
the gold mineralization that was mined in the past.

Alepe, Cote D'Ivoire
--------------------

Hixon has entered into an option  agreement to earn a forty percent  interest in
the Alepe property. Under the terms and conditions of the acquisition agreement,
Hixon has paid $15,000,  has issued  100,000 common shares and has undertaken to
finance the initial $500,000 in exploration expenditures by December 31, 1998 to
be fully vested in its forty percent (40%) interest.  At which time the prospect
will be held  40% by  Hixon,  40% by  Trillion  Resources  Ltd.,  10% by  SODEMI
(Government) and 10% by a private Ivorian company.

The Alepe property is a large 80,000 hectare (197,600 acre)  exploration  permit
covering  a  highly  prospective  geology  in the  south-western  part  of  Cote
D'Ivoire.  Several  precious  metal,  base metal and diamond  showings have been
located by past prospecting. The geological data base is reasonable in that past
airborne  geophysical  surveys and mapping have established the regional geology
and metallogeny.

The  integration  of new remote  sensing  data as well as  geological  and field
information from the previous  programs has allowed for the delineation of three
target areas within the permit.  Two of the areas are to be evaluated  for their
gold potential by following up previously reported gold and base metal anomalies
in structurally  complex areas.  The third target is of a large circular feature
revealed by satellite remote sensing which is spatially  related to and could be
the source of documented  nearby placer diamond  finds.  Mapping and sampling of
these  target  zones  commenced  in February  1997 in order to provide the basic
information needed for systematic follow-up during the year.

Keroane, Guinea
---------------

Subsequent to September 30, 1996, Northern Abitibi Mining Corp. has entered into
a Letter  of  Intent  to  provide  $1,650,000  U.S.  in  property  payments  and
exploration   funding  by  July  1998  in  order  to  earn  a  50%  interest  in
International  Mining Company's  105,000 acre Keroane  property in Guinea,  West
Africa.  The property is  prospective  for alluvial  diamonds,  diamond  bearing
kimberlite  pipes and gold.  The existing  alluvial  diamond  operation is being
expanded.
16

The joint venture has purchased a commercial scale diamond processing plant that
is located in Sierra  Leone and the plant has been  disassembled  and trucked to
Conakry,  Guinea for  rehabilitation.  The plant will be used to bulk sample and
test mine  areas of the  Keroane  property  that have  been  prioritized  by the
exploration conducted by the Russians in the past.

An initial  geological  evaluation by Northern  Abitibi's  geological  staff has
identified several areas of interest on the property and an exploration  program
is being  designed to evaluate  the property  for both  alluvial and  kimberlite
hosted diamonds and for gold in bedrock.

Mexican Prospects
-----------------

The  Registrant  and  Tyler  Resources  Inc.  each  hold  a 50%  interest  in an
exploration  joint  venture  created to  acquire  and  evaluate  copper and gold
properties  in  Mexico.   Activity  to  date  has  been   concentrated   in  the
north-western Mexican States of Sonora, Sinaloa and Chihuahua.  Prospects target
copper and gold that would be amenable to low cost heap leaching mining methods.
The joint  venture has  acquired  three oxide  copper  properties  by option and
staking. About $895,000 has been spent on this joint venture to date. In 1997, a
major acceleration in the exploration  activities is anticipated as the projects
reach the diamond drill stage.

Bahuerachi Copper Oxide Project, Chihuahua, Mexico
--------------------------------------------------

Bahuerachi  prospect is a 3285 hectare claim located on the Reforma  mineralized
trend in southwestern Chihuahua,  near the Sinaloa border and is held 50% by the
Registrant   and   50%   by   Tyler   Resources   Inc.   It  is   about   40  km
north-north-easterly  from Choix,  Sinaloa.  A diamond  drill  contract has been
signed,  and a fifteen hole, 100 metre/hole drill campaign is scheduled to begin
on February 3, 1997.  The  exploration  program will test the large copper oxide
zone outlined by trenching and road cut sampling.

The area is well  mineralized  and the property  shows evidence of copper mining
and smelting by the Spaniards some 200 years ago. The Guggenheim  Company worked
underground  on the Main Zone skarn in the early 1900's.  They reported  surface
oxide grades of 3% copper with sulphides at some depths  grading 2% copper,  142
grams/ton  silver and 3 grams/ton  gold.  Asarco  drilled the property on a wide
pattern in 1970,  with a best  intersection in DDH-7 returning 39 metres grading
1.2% copper in skarn.  Their core recovery was very poor and the reported grades
may be lower than true grade. Surface sampling of the Main Zone skarn by a major
Canadian mining company in the 1980's reported 32 samples  averaging 2.2% copper
as oxide.

The joint  venture has channel  sampled all the drill  access  roads on the Main
Zone  for a  total  of 221  samples  representing  803  lineal  metres.  In this
sampling, 134 samples from the Main Zone skarn,  representing 486 lineal metres,
averaged 1.33% copper. In addition to the Main Zone, there are three other known
copper oxide showings on the property. Of these, only the Mina Mexicana, located
about 600 metres southeast of the Main Zone has been sampled.  At Mina Mexicana,
ten continuous chip samples  totalling 27.1 linear metres averaged 2.18% copper.
The objective of the next phase of the work is to develop a resource of at least
15 million  tons grading  about 1.3%  copper,  which can be mined using low cost
open-pit  methods,  followed by heap  leaching and SX-EW  processing  to produce
cathode  copper.  The diamond  drill  program is designed to evaluate the copper
oxide  resource  and to provide  the data  necessary  to complete an ore reserve
calculation.  Core  samples  will be used in column  leach tests which will more
firmly  establish the  leachibility  charateristics  of the oxide copper ore for
feasibility study purposes.

The further  exploration  potential  of the  property is  considered  good as in
addition  to  the  copper  oxide   mineralization   that  outcrops,   there  are
lead-zinc-silver  skarn  mineralizations  at surface and some evidence of copper
sulphide  mineralization  at depth  that  carries  interesting  gold and  silver
values.

Exotica Copper Oxide Project, Sonora, Mexico
--------------------------------------------

The Exotica  claim is located  near the Yaqui River about 6 km  northwest of the
hamlet of El Realito and about 160 km southeast of  Hermosillo,  and is held 50%
by the  Registrant  and 50% by  Tyler  Resources  Inc.  The  property  is a true
"exotic", or transported deposit,  consisting of copper  oxide-cemented  gravels
and rock debris in a modern  arroyo.  Sixteen  samples taken over a wide area of
the deposit by a major  Canadian  mining  company  averaged  1.25%  copper,  and
inspection of the surface  indicates  there may be several  million tons of this
material.  The cemented gravels are only barely lithified,  they lie on surface,
and would be very easy to mine and leach.
17

The deposit  presumably has its source in the Cuatro  Hermanos  porphyry  copper
deposit,  which lies immediately to the north of Exotica. In the last few weeks,
Magma Copper Company has been  conducting a drill program on the Cuatro Hermanos
property, which they have under option from Morgain Minerals Inc. Recent rumours
and stock market  activity  suggets that the drill program is a success and that
economic  grades of both copper and  molybdenum  have been  encountered  in this
drilling campaign.  Management is monitoring this drill program closely in order
to ascertain if this discovery impacts the potential of the Exotica property.

La Cardelena
------------

The La Cardelena  copper oxide  property was acquired by staking and is held 50%
by the  Registrant  and 50% by Tyler  Resources  Inc.  The 150 hectare  claim is
located in  south-central  Sonora.  An  east-west  zone of strong  oxide  copper
mineralization of 50 by 200 metres is exposed in a shallow old pit. Grab samples
of the oxide  mineralization  ranged up to 1.9% copper.  Further  exploration to
evaluate  the  property,   including  diamond  drillig,   awaits  completion  of
negotiations to acquire a ten hectare claim within this claim.

Venezuelan Prospects
--------------------

Exploration in Venezuela has been  concentrated  in Manson Creek which currently
holds an interest in three exploration projects in Venezuela.

Perruco Joint Venture
---------------------

Manson Creek has earned a forty percent interest in the Perruco Joint Venture by
funding the next  $330,000 of  exploration  under the joint  venture  agreement.
Manson  Creek's two joint venture  partners,  Athlone  Resources  Ltd. (40%) and
Ballatar  Exploration  Ltd. (20%) have completed the acquisition of a Venezuelan
company that has two  exploration  contracts with the Venezuelan  Corporation of
Guayana  (CVG).  The joint  venture has thus  acquired  the right to explore two
large prospects:

     i)   Perruco II - a 4,106 hectare CVG contract  triangular in shape located
          in the Chicanan area.

     ii)  Perruco V - a 4,000  hectare CVG contract  located to the south of the
          El Foco  claims  owned by  Homestake  and  about 19 km west of  Placer
          Dome's Las Cristinas deposit.

During the year ended September 30, 1996, Ballatar Exploration Ltd. quit claimed
its interest in the Perruco  properties  pro-rata to Manson Creek Resources Ltd.
and Athlone Resources Ltd. thereby increasing their interest to 50% each.

Black 3 Prospect
----------------

Manson Creek  Resources  Ltd. owns 100% of the shares of  Bolivariana De Mineria
C.A. ("Bolivariana"), which in turn owns 75% of the shares of Desarrollo Guaitoc
C.A.  ("Guaitoc").  Guaitoc  is the  holder  of the  Black 3  contract  with the
Corporation  Venezolana  de Guayana  ("CVG").  An agreement is in place  wherein
Bolivariana  can purchase the additional  interest in the property.  Bolivariana
would then own 100% of the shares of Desarrollo Guaitoc.

The Black 3 CVG contract  covers  1,000  hectares on the site of the old Guaitoc
gold mine, in the El Dorado area of Bolivar State, Venezuela, about 17 km NNW of
the town of El Dorado.

Manson Creek carried out an exploration  program including airborne  geophysics,
grid soil sampling and geological mapping between April and October,  1994. This
work located two clusters of gold-in-soil  anomalies occurring over areas 1.5 km
by 0.8 km in the  northwestern  part of the property and 1.0 km by 0.6 km in the
east-central part of the property.
18

Approximately $817,000 has been spent on property acquisition and exploration to
date,  including  the  issuance  of  250,000  shares  as  part  of the  property
acquisition.

Oroturba Prospect
-----------------

Manson Creek has entered  into an  agreement  to purchase a one hundred  percent
interest in the 500 hectare  Oroturba  concession  located in the El Dorado gold
camp.  About 75 Indians  (illegal miners) have recently moved on to the projects
and have blocked  access to the property.  Manson Creek has  suspended  contract
obligations until the Indian problem is resolved.

CANADA
------

Saskatchewan Properties
-----------------------

The Registrant has been active in the La Ronge  Greenstone  Belt of Saskatchewan
since the 1980's.  As at September 30, 1996, the  Registrant's  major  interests
that it owns both directly and through its  subsidiaries are the eight prospects
where gold  resources  have been  identified  located in the Byers Mineral Belt,
approximately sixty miles northeast of La Ronge, Saskatchewan. The Byers Mineral
Belt  represents  the major  area where  significant  gold  resources  have been
identified  in the La Ronge  Belt.  In this area gold  mineralization  primarily
occurs as disseminated free gold occurrences  within highly  fractured,  steeply
plunging shoots or lenses, hosted by intermediate volcanics and intrusive rocks.
The Registrant's interests within the Byers Mineral Belt are as follows:

         Held directly by the Registrant:
                                                           Registrants
         Prospect and Gold Occurrence                       Ownership
         ----------------------------                       ---------

         Tower Lake     -        Tower East                  100.00%
         Weedy Lake     -        Golden Heart                 41.80%
                        -        B-Zone                       41.80%
         Kaslo          -        Niko                        100.00%
         Oven Lake      -        Corner Lake                  45.00%
         Wedge Lake     -        Twin                         31.00%

         Held directly by Waddy Lake Resources Inc.:

                                                             Waddy Lake
         Prospect and Gold Occurrence                        Ownership
         ----------------------------                        ---------

         Waddy Lake     -        Komis                        100.00%
                        -        E-P                          100.00%

In  the  discussion  which  follows,   information  is  provided  on  the  those
significant  prospects  in  the  Byers  Mineral  Belt  noted  above.  All of the
prospects are in the exploration stage except the Komis prospect on which mining
operations  have  commenced.  During  the last two  years  little  activity  has
occurred on these prospects except for the Komis prospect.

Title to Saskatchewan Prospects
-------------------------------

The Registrant either directly or through its subsidiary Waddy is the registered
title holder of the Komis, Tower, Weedy, Kaslo and Wedge prospects.  Cameco, the
operator for the joint venture for the Oven prospect,  is the  registered  title
owner and holds  the  Registrant's  interest  in trust for the  Registrant.  The
interest in the  prospects  may consist of mineral  leases  referred to as "ML",
claim blocks referred to as "CSB" and mineral dispositions/claims referred to as
"S-". The prospects in all cases were originally staked by unaffiliated  parties
from which the Registrant purchased its interest.

At the date of acquisition by the Registrant,  title to the mineral dispositions
was  transferred to the Registrant and registered with  Saskatchewan  Energy and
Mines (SEM), a department of the Province of
19

Saskatchewan.  Where  these  prospects  include a mineral  lease  (ML),  a lease
agreement is entered into  between the  Registrant  as lessee and SEM as lessor.
The term of the lease is for ten years,  renewable  for an  additional  ten year
term on the  expiration  of each ten year term.  No annual  lease  payments  are
required.

SEM does require, however, the title holder of the mineral disposition,  whether
it be a mineral lease, claim block or mineral disposition,  to incur exploration
expenditures  thereon.  The holder must file evidence of these expenditures with
SEM which  determines how much of the actual  expenditures may be applied to the
assessment work required on the mineral  dispositions.  The assessment work from
each year of exploration activity is accumulated in an assessment credit account
with SEM.  Each year a certain  amount of  assessment  work is  required on each
prospect which is calculated at a rate ranging from $12.50 per hectare to $50.00
per  hectare.  If  the  holder  has a  build  up of  assessment  credits  in its
assessment  credit account with SEM, SEM reduces the credit by the amount of the
annual assessment required,  sends a notice to the holder indicating the date to
which the mineral  disposition  is held in good standing with SEM and the amount
of excess assessment credit in the account which may be applied to future years'
assessment requirements.

The ability to accumulate  assessment  credits in excess of annual  requirements
allows the holder in years of a major exploration  program to accumulate credits
which will permit the mineral  disposition  to be kept in good standing with SEM
for  a  number  of  years  without  the   necessity  of  incurring   exploration
expenditures on an annual basis.

The  Registrant  on a regular  basis  reviews  the  status  of the  Saskatchewan
prospects as well as prospects located in other  geographical areas to determine
what work is required (if any) to keep the  prospects in good standing and which
prospects  will be  allowed  to  lapse.  When  the  decision  is made to allow a
prospect to lapse,  the  Registrant  loses title to the  prospect  and all costs
related  thereto  are  charged  to the  statement  of  operations  as  abandoned
properties.

Crown Royalty
-------------

The Registrant will pay royalties to the Province of Saskatchewan on the sale of
gold  and the  minerals  extracted  from  ore  bodies  within  the  Province  of
Saskatchewan under the terms of Part II of The Crown Royalty Schedule, 1986 (the
"Schedule"), as amended by The Mineral Dispositions Amendment Regulations, 1990.
The Schedule  provides for a royalty equal to 12.5% of the "net profits  derived
from mining and processing operations",  as defined in the Schedule. To date the
Registrant has not paid any royalties pursuant to the Schedule.

Komis Prospect
--------------

The Komis  prospect is owned 100% by Waddy and is located  approximately  160 km
northeast of La Ronge,  Saskatchewan.  The Komis prospect  comprises two mineral
leases (ML 5080 and ML 5364) and one claim block (CSB 6548)  covering an area of
approximately  1630 hectares  (4028 acres).  Waddy has a ten year lease with SEM
for both ML 5080 and ML 5364 which may be renewed on their  anniversary dates of
February  7, 2000 and June 5, 2003  respectively  for a further  ten year  term.
Although  the mineral  leases  have no annual  lease  payments,  they do require
combined annual  assessment of $39,300.  The mineral leases are in good standing
with  SEM to  February  7,  1998  and  June 5,  1997  respectively  with  excess
assessment  expenditure credits of $1,324,941 which may be applied to the annual
assessment  requirements  for future years to  approximately  the year 2030. The
claim block CSB 6548 is held by Waddy and  requires  annual  assessment  work of
$12,950.  The claim block is in good  standing  with SEM to January 22, 1998 and
has excess assessment expenditure credits of $27,885 which may be applied to the
annual assessment  requirements for future years to approximately the year 1999.
Waddy acquired its interest in this prospect from an unaffiliated  party in 1960
pursuant to the exercise of an option to earn an interest in the  prospect.  The
Registrant has had an interest in Waddy since 1987,  increased its interest to a
controlling  interest in 1992 and to 100% effective  September 30, 1995 pursuant
to the Plan of Arrangement (see Waddy page 4)

Access to the property is by Highway 102, 175 km from La Ronge,  Saskatchewan to
the settlement of Brabant hence  northwest by an all season bush road for 17 km.
The property is also readily  accessible  by ski or float  equipped  charter air
craft  from La  Ronge.  Operations  can be  carried  out all  year  round at the
prospect.
20

The  mineral  leases  and the claim  block  making up the  Komis  prospect  were
originally staked in 1958. Exploration activity on the Komis discovery has taken
place  intermittently  since 1958 through several periods of activity  conducted
both by Waddy and by several  different  entities  who carried  out  exploration
programs with the intent of earning an interest in the Komis prospect.  With the
expiration of the options the prospect was returned to Waddy who has carried out
the  most  recent  exploration  programs.  Exploration  programs  have  included
geological mapping, soil geochemistry, trenching and diamond drilling at a total
cost to  Waddy  and  other  participants  of  approximately  $8,600,000  through
September 30, 1995. The  mineralization of the Komis property consists of coarse
"free" gold in  quartz-veins  and fine gold  associated  with elevated levels of
pyritization  and  silicification  in the  enclosing  andesite  wall  rock.  The
quartz-veins  are typically a few  centimetres  wide,  while the  mineralization
exhibits  true  widths  that range from 1.5 m (5') to 23 m (75').  The  broadest
zones  of  mineralization  occur  where  there  is a  greater  concentration  of
quartz-veins or quartz stock work, pyritization and visible gold.

The activity during the period 1990 to 1995 included the following:

1990         o   Reinterpretation of all pre-1990 drilling data followed by a 
                 4,105.80 metre (13,471 foot) diamond drill program.

1991-1992    o   Preparation of a feasibility study and preliminary mine plan
                 which recommended a pre-production underground program
                 designed to extract and process a 10,000 tonne bulk ore sample.

1993-1994    o   Pre-production  underground  program carried out between
                 November 1993 and April 1994.
             o   Test milling of the bulk sample at the Jolu Mill During
                 May 1994.
             o   Calculation of a new ore reserve.

1994-1995    o   7,000 metre (23,000 foot) surface diamond drill program 
                 designed to increase the ore reserves of the deposit by
                 extending ore zones to the west and down plunge.
             o   Preparation of a Komis feasibility study and further revised
                 ore reserves.

1995-1996    o  Proposition and submission of an environmental impact study to
                Saskatchewan Environment and Resources Management which was
                approved in January 1995 with subsequent granting of mine and 
                mill construction and operating permits.

Preliminary construction activities, prior to full permitting,  commenced at the
Komis mine site and Jolu mill in October, 1995 and included:

     o    Rehabilitation of the Jolu workcamp.
     o    Reopening of the Jolu mine portal as part of the  tailings  management
          facility.
     o    Construction of Komis mine water clarification ponds.
     o    Transport of the Komis workcamp to the minesite.
     o    Detailed  engineering and survey work for the 16 km upgraded road link
          from the mine to Highway 102.

Mine Operation
--------------

In February 1996, Golden Rule commenced construction of the Komis gold mine with
an estimated capital budget of $11.2 million. This was funded by a loan facility
from Rothchilds  Australia Limited for up to $5.0 million US and an equity issue
of  about  $9.6  million,  completed  in  April.  Pursuant  to  an  independent,
pre-production  feasibility  study,  mineable  reserves  were  determined  to be
280,000 tonnes,  grading 0.30 OPT (84,280 ounces gold).  These mineable reserves
became part of the initial  mining  plan with the proven and  probable  reserves
extending the mine life to over five years.
21

Pre-production  work focused on  developing  a  sufficient  number of stopes for
building the necessary ore inventory,  consisting of broken ore  underground and
surface  stockpiles,  to sustain an initial production rate of 440 TPD. A 60 man
residential  camp and related  support  facilities  were also  constructed.  The
primary crushing and grinding circuits,  gravity circuit,  cyanide leach circuit
and the mine tailing disposal site were  rehabilitated.  The gravity circuit was
changed to process a greater  amount of "free" gold common to the Komis ore. The
old Jolu  underground  mine was  de-watered  and  prepared  for  receiving  mill
tailings. The access road from the Komis mine site to Highway 102, approximately
seventeen kilometres,  was upgraded so it would be capable of handling ore truck
hauling.  Komis ore is trucked  from the Komis site to the Jolu mill, a distance
of approximately seventy-five kilometres.

A late Spring break-up and  unseasonably  bad weather delayed the scheduled mill
start-up  operations  for almost 60 days.  Ore haulage from the Komis mine site,
for  stockpiling  at the Jolu mill,  commenced in July 1996. The Jolu mill began
processing Komis ore on September 1, 1996.  Production through December 31, 1996
was  approximately  500 TPD  with an  average  grade  of 0.22  OPT  compared  to
feasibility  estimates of 440 TPD grading 0.30 OPT.  This short fall in the gold
grade was primarily due to excess internal ore dilution,  as the zone boundaries
were less predictable and more structurally complex than originally interpreted.
The  technical  staff made the  decision to change the mining plan from an equal
mix of low cost blasthole and shrinkage mining methods to exclusively  shrinkage
stoping.  This had a significant  negative  effect on actual  development  costs
versus the  feasibility  estimates.  The technical staff is analyzing the mining
results to date, gold grades, and operating and development costs.

The  precipitous  fall in gold prices,  from the $US 416 in February 1996 to $US
345 in January 1997, had a negative  economic impact on future mine  operations.
Although  Golden  Rule has hedged  68,000  ounces of gold  (approximately  sixty
percent of  feasibility  production  estimates),  the hedging  support level and
lower spot gold prices  available  for unhedged  production  have  significantly
altered the economics of the mining operations and reserve development.

In February, the Registrant curtailed development work on the Komis mine pending
an  analysis  of  1996  operation.  A  revised  ore  reserve  evaluation  and an
assessment of the cost of developing  these  reserves in view of the fall in the
gold price  significantly  altered the economics of mining operation and reserve
development.  As a result,  the  Registrant  will apply for a temporary  closure
permit for the Komis Mine.

The  Registrant  anticipates  that  underground  operation  will continue  until
approximately the end of March with milling operation continuing until June. The
Registrant  has received  expression of interest from  potential  purchasers and
will endeavour to find a purchaser for the mine as an operating concern.

Jolu Mine and Mill
------------------

In August 1992, Golden Rule Resources Ltd. acquired an 100% interest in the Jolu
mine and mill assets from an unaffiliated party for $845,948. The assets consist
of the  buildings,  machinery and  equipment  related to the Jolu Mill and eight
depleted mining leases Q-4438 to Q-4445  inclusive.  These mining leases require
total annual  assessment  work of $13,800 and are in good  standing  with SEM to
August 15,  1997.  An excess  expenditure  of $441,448  remains to the credit of
these leases and may be used towards future work  requirements to the year 2029.
The Jolu mine and mill are  located  60 km to the  south of the Komis  property.
Access  to the  Jolu  mill  is by  all-weather,  paved  road,  and  the  mill is
accessible by vehicle all year.

The Jolu Gold Joint  Venture  operated the 500 ton per day plant  located 140 km
north  of La  Ronge  from  October  1988 to  August  1991.  During  this  period
approximately  500,000 tons of ore were treated. The mill had operating times in
excess of 97%  throughout its operating  life.  The mill achieved  throughput as
high as 725 tons per day, and operated regularly at 625 to 650 tons per day. The
mill ceased its operations in 1991 when the ore from the Jolu mine was depleted.

The mill was built and commenced  operations in 1988, and consists of a crushing
plant  followed  by  grinding,  leaching  and  carbon-in  pulp  circuit for gold
recovery.  The mill  equipment  is  virtually  intact.  All  equipment  had been
mothballed to withstand winter conditions  without sustaining any damage and the
grinding mill had been emptied and raised off the trunnion bearings.
22

During the year ended September 30, 1994, the Registrant in order to process the
bulk  sample  through  the  Jolu  mill  rehabilitated  the  mill  at a  cost  of
approximately  $395,000.  To place  the Jolu  mill  into  full  production,  the
Registrant  incurred  additional  costs  of  $1,682,000  for  mill  engineering,
procurement and construction.

Weedy Lake Prospect
-------------------

The Weedy  Lake  prospect  consists  of mineral  lease ML 5332 which  covers 469
hectares  (1,160  acres) and is located  approximately  156 km  northeast  of La
Ronge, Saskatchewan.  The mineral lease with SEM was renewed on June 7, 1991 for
a ten year term and may be renewed on its anniversary date of June 7, 2001 for a
further ten year term.  Although ML 5332 has no annual lease  payments,  it does
require annual assessment of $23,450.  SEM has indicated that ML 5332 is in good
standing with SEM to June 7, 1997 and that an excess  expenditure  of $1,721,558
remains  to the  credit of this  lease  which may be used  towards  future  work
requirements  to the year 2072.  The  Registrant  acquired  its interest in this
prospect  from an  unaffiliated  party in 1979.  The Weedy Lake prospect is held
37.6% directly by the  Registrant.  Tyler  Resources,  Inc., the operator of the
prospect, has earned from the Registrant,  pursuant to an option agreement dated
October 1,  1986,  a 50.1%  interest  in the  prospect.  The  Registrant,  as at
September 30, 1996,  holds 2,380,592 common shares or 8.42% of the common shares
of Tyler issued and outstanding as at that date. There are no other affiliations
between the  Registrant  and either  Tyler or Cameco.  A portion  (20.5%) of the
Registrant's  37.6%  interest in the Weedy Lake  prospect is encumbered by a net
profit  interest  of  $350,000  payable  at the  rate of $10 per  ounce  of gold
produced and payable to Cameco.

A gravel road serving the Weedy Lake  prospect  terminates  approximately  20 km
west of the  property  on the west side of Waddy  Lake.  Access to the  property
during the winter  months is by winter road and during  summer by float plane to
Weedy Lake. Operations can be maintained year round on the Weedy prospect.

Although the Registrant has identified gold mineralization on this prospect,  no
reserves have been  identified.  The Registrant has  participated in exploration
activities on the Weedy Lake property since 1980. No  exploration  programs have
been  carried out during the period 1990 to September  30, 1995.  Prior to 1990,
the Registrant and its joint venturers  drilled a total of 88 holes (for a total
of 15,532 metres (50,959 feet)).

Tyler, as noted above,  operates the Weedy Lake prospect  pursuant to the option
agreement  dated  October 1, 1986.  Subsequent  to  September  30,  1995,  Tyler
proposed a two phase diamond drill  program to complete the  exploration  of the
identified  gold  mineralization  and to generate the  information  necessary to
determine  whether  economic  mineralization  reserves  necessary to consider an
underground  program are present.  The first phase of the drill program proposed
by Tyler totalled approximately $655,000.  Prior to commencement of this program
the interest  were held 25% by Tyler,  55% by the  Registrant  and 20% by Cameco
Corporation.  In accordance  with the earn-in  committment  of Tyler to earn the
additional  25.1%,  and thereby  increase  its interest to 50.1%,  Tyler,  as at
September  30,  1995  had  to  expend  an  additional  $400,000  in  exploration
expenditures.   Until  Tyler   completed  the  $400,000   earn-in   committment,
exploration  costs were shared 80% by Tyler and 20% by Cameco. As Cameco elected
not to  participate  in the first phase of the diamond drill  program,  Cameco's
share of costs  were  funded by Tyler and the  Registrant  with a  corresponding
dilution  of  Cameco's  interest.  The  first  phase of the  drill  program  was
completed  in  February  1996.  On  completion  of this  first  phase  Tyler has
completed its earn in  committment  and  accordingly  the interests were held as
follows:  Tyler 50%, the  Registrant 34% and Cameco 16%. Based on results of the
first phase of the drill program, Tyler has proposed a second phase estimated to
cost  $605,000  which was  undertaken  during  March and April  1996.  As Cameco
elected not to  participate  in the second phase of the diamond  drill  program,
Cameco's  share  of  costs  were  funded  by  Tyler  and the  Registrant  with a
corresponding diluton of Cameco's interest. The Registrant's share of costs from
both phases was  $504,000.  At September  30, 1996,  the Weedy Lake Prospect was
held 50.1% by Tyler Resources Inc., 37.6% by the Registrant and 12.3% by Cameco.

Other Saskatchewan Prospects
----------------------------

During the years prior to  September  30,  1994,  the  Registrant  and its joint
venture partners incurred  exploration  expenditures on the Tower Lake prospect,
the Komis prospect, the Oven Lake prospect and the Wedge Lake prospect such that
23

annual  exploration  expenditure has not been required by the Registrant for the
three years  ended  September  30, 1996 nor are any  required or planned for the
year ended  September 30, 1997.  Set out below is  information  related to these
four properties:
Tower Lake                Kaslo                 Oven Lake               Wedge Lake
                         Prospect                Prospect                Prospect                Prospect
                         --------                --------                --------                --------
Interest Held           100%                   100%                   45%                       31.4%
Total Area              486 hectares           534 hectares           4,063 hectares            407 hectares
                        (1,200 acres)          (1,380 acres)          (10,043 acres)            (1,006 acres)
Annual Assessment
Requirements            $12,125                $12,250                $101,573                  $5,058

Excess
Expenditures            $4,127,597             $1,311,024             $1,067,553                 NIL*

In Good Standing To     June 15, 1997 to       January 27, 1998       June 7, 1997               March 3, 1998
                        February 6, 1998
*    The  Registrant has paid a cash  deficiency  deposit in lieu of exploration
     expenditure.

British Columbia Prospects
--------------------------

The Registrant  has been active in British  Columbia since 1980. As at September
30, 1993, the  Registrant's  major prospect is the Mets claims,  a 1,000 hectare
prospect in the Toodoggone copper-gold area.

Mets Prospect
-------------

The Mets prospect  consists of three claim blocks Mets 1, Mets 4, and Mets 5 and
one  mineral  lease  Mets  3  covering  1000  hectares   (2,471  acres)  located
approximately  170 km north of Smithers,  British  Columbia.  The mineral lease,
Mets 3, requires annual payments of $2,000 to the Energy, Minerals and Petroleum
Resources Branch of the Province of British Columbia. The claims Mets 1, 4 and 5
are in good  standing  with the  Province of British  Columbia to April 3, 1996,
August 4, 1998 and August 3, 1996 respectively.  No additional  expenditures are
required on these claims to keep them in good standing  prior to the dates noted
above.  The Registrant  and its 55%-owned  subsidiary,  Manson,  each owns a 50%
interest in the Mets  prospect.  The  Registrant  acquired  its interest in this
prospect  from  an  unaffiliated  party  in  1980  and  is  not  subject  to any
encumbrances.  Access  is by road  accessible  only  during  the  summer  and by
helicopter and operations can be carried out year round.

Exploration  work  on the  Mets  prospect  has  taken  place  since  1980 by the
Registrant and Manson (the  Operator).  Manson,  in 1985,  optioned the prospect
from the  Registrant and initiated an integrated  backhoe  trenching and diamond
drilling  program  on  previously  known gold  showings  which  resulted  in the
discovery of gold mineralization. No significant exploration has been undertaken
by the  Registrant  since 1989.  Although the  Registrant  has  identified  gold
mineralization  on this  prospect,  no  reserves  have been  identified.  As the
various  claims of the Mets  prospect  are in good  standing  to 1996 to 1998 no
exploration is planned for 1997.

Quebec and Ontario Prospects
----------------------------

Exploration  in Quebec and Ontario has been  concentrated  primarily in Northern
Abitibi which  currently  holds an interest in fifteen  exploration  projects in
Quebec and one in Ontario. These interests vary from 50% to 100%, and consist of
mining  claims  registered  in the  name  of the  Registrant  or its  subsidiary
Northern  Abitibi.  The mining  claims  require the  payment to the  Province of
Quebec  every two years of an renewal fee of $20 to $60 per claim  depending  on
the size of the claim in addition to the filing of assessment  work.  Sufficient
assessment  work  has  been  filed  with  the  Province  of  Quebec  to keep the
properties in good standing to 1996/1997. The last major exploration activity by
the Registrant (through Northern Abitibi) was in 1990.  Approximately $5,478,000
has been expended on these properties over the years with the Registrant's share
approximately $3,688,000.
24

Labrador Prospects
------------------

Exploration in Labrador has been concentrated  primarily in Northern Abitibi and
Manson.  During 1995,  Manson  through a joint  venture  required an initial 50%
interest in four  properties  in Labrador for total  consideration  $160,000 and
incurred  exploration costs of $12,000.  Northern Abitibi  subsequently  entered
into an option  agreement to acquire from Manson and its joint venture partner a
50% interest in the four  Labrador  properties  and acquired a 100%  interest in
four additional  properties in Labrador for total  consideration of $626,200 and
incurred total exploration  expenditures of $447,500 prior to September 30, 1995
and an additional $138,000 during fiscal 1996. These interests consist of mining
claims registered in the name of Northern Abitibi or Manson.  The claims require
the filing of  assessment  work with the  Province of  Newfoundland.  Sufficient
assessment  work  has been  incurred  and will be  filed  with the  Province  of
Newfoundland  prior to the anniversary  dates of May 1996 to August 1996 to keep
the claims in good standing to May 1997 to August 1997.

Northwest Territories
---------------------

Exploration  in the Northwest  Territories  has been  concentrated  primarily in
Manson which currently holds an interest in two exploration projects.  The major
prospect is Manson  interest in the Parker Lake Joint  Venture which is held 25%
by Manson,  50% by  Cumberland  Resources  Ltd.  (operator)  and 25% by Comaplex
Minerals  Corp.  The Parker Lake Joint  Venture owns almost  1,000,000  acres of
mineral  dispositions  in the eastern Arctic area of the Northwest  Territories.
Exploration to date has resulted in several key discoveries:

         A)       SULUK            Nickel-Copper-Cobalt Zone
         B)       SANDHILL         Copper-Zinc Zone
         C)       THIRSTY LAKE     Diamond Zone
         D)       UKOA             Diamond Zone

The  mineral  dispositions  held by the  joint  venture  cover the  Parker  Lake
greenstone  belt, a relatively  under- explored  volcanosedimentary  sequence of
rocks of Archean age. The  property is located 110  kilometres  southeast of the
hamlet  of Baker  Lake and 150  kilometres  northwest  of Rankin  Inlet,  in the
Keewatin  district of the Northwest  Territories.  Both of these communities are
serviced  year  round  by  scheduled  air  service  from  Yellowknife,  NWT  and
Churchill,  Manitoba.  The  property is accessed  by float  and/or ski  equipped
aircraft and helicopter from Rankin Inlet or Baker Lake.

Preliminary   exploration   has  been   underway   from  1986  to  the  present.
Comprehensive  reconnaissance  prospecting,  sampling,  mapping  and  MAG/VLF-EM
geophysical  programs aimed at investigating the regional  potential for hosting
gold and base metals deposits were completed.  As a result of these  exploration
programs,  the SANDHILL base metal massive sulphide  discovery was made in 1988.
This  discovery  is  located  about  five  kilometres  northeast  of  the  SULUK
discovery. At SANDHILL,  stratiform  mineralization and alteration occurs over a
70 m wide zone which can be traced along strike for about twelve  kilometres  in
felsic volcanics.  In 1992 a Dighem airborne geophysical survey was completed in
order to  identify  conductive  zones that may be  representative  of base metal
bearing sulphide  horizons.  Trenching,  sampling and geophysical  programs have
investigated  the  zinc-copper  zones  over a strike  length of 400 metres and a
width  of 20  metres.  The  economic  potential  is high,  as this is a  typical
volcanogenic  sulphide  environment,  with all of the classical alteration zones
and mineralization.

Following the discovery of spectacular  microdiamond  counts in the THIRSTY LAKE
area in 1994, the joint venture staked additional claims and prospecting permits
totalling 391,498 hectares (967,392 acres).  The microdiamonds  found are mostly
industrial grade with occasional translucent, slightly coloured stones. The high
grade SULUK base metal occurrence was discovered in the summer of 1995. In 1996,
the UKOA gold gold  occurence was  discovered  near the end of the field season.
Two  arsenophyrite-pyrite  bearing samples were collected from the site, located
thirteen kilometres southwest of the SULUK prospect.

While there is no  infrastructure  in the  immediate  area,  possible deep water
shipping  access  is  located  at Cross  Bay  about 40 km from the  discoveries.
Initial  transportation  studies indicate that base metal  concentrates could be
profitably  shipped via this route.  Exploration  will be conducted  from Rankin
Inlet in the initial stages.
25

During  April  to  September  1996,  Cumberland  Resources  Ltd.,  as  operator,
subjected  the Parker  Lake  property  to a  comprehensive  exploration  program
consisting of airborne and ground geophysics,  prospecting,  detailed geological
mapping  and  diamond  drilling.  In  addition  to the above  programs,  diamond
exploration  consisting of mapping,  prospecting and till sampling,  was carried
out over a 700 sq. km area.  These  programs were so designed as to evaluate the
massive   sulphide  and  gold   potential  of  a  significant   portion  of  the
Gibson-MacQuoid  Lake  greenstone  belt and in particular the SULUK Ni-Cu-Co and
the SANDHILL Zn-Cu-Ag prospects.  The second part of the program was designed to
follow-up  and explore  previously  discovered  diamondiferous  dykes and highly
anomalous  diamond  minerals in tills.  The SULUK  discovery  has been traced by
geological  mapping,  sampling  and a ground  geophsyical  survey  over a strike
length of 800 metres.  The deposit appears to dip to the north and appears to be
1-10 metres wide. A possible  subparallel zone has been indicated by geophysical
surveys about 200 metres (600 feet) to the north.

The 1996 exploration  program cost about $1,911,000 and to date Manson Creek has
funded  $915,000 in land  acquisition  costs and  exploration on the Parker Lake
project.

A phase one, $350,000  exploration  program for 1997 has been recommended by the
Operator;

1)   Continued PEM and/or gravity  survey over the western  portion of the SULUK
     gabbro.

2)   Detailed  geological  and  structural  mapping  of the  area of  UKOA  gold
     occurence.

3)   Magentometre and Horizontal Loop  Electromagnetic  Surveys in the immediate
     area of the UKOA gold occurence.

4)   Prospecting of all known  potentially gold hosting iron formation trends in
     the area of the Parker Lake property.

Pending  results of an ongoing gravity  modeling  exercise,  additional  diamond
drilling  should be reviewed  that would test the gravity  anomaly and the SULUK
gabbro at depths greater than 500 metres. Positive results from recommended work
in the area of the UKOA gold  occurences and other known iron  formation  trends
could  also  warrant  additional   drilling.  A  program  of  continued  diamond
exploration is contingent on positive  results of ongoing till sample  analysis,
which has yet to be completed.

United States
-------------

The Registrant does not have any prospects in the United States.

Item 3:  LEGAL PROCEEDINGS
         -----------------

As at September  30, 1996 there were no material  pending legal  proceedings  in
which the Registrant or its subsidiaries were involved.

Item 4  CONTROL OF THE REGISTRANT
        -------------------------

(a) Direct or Indirect Control by Another
-----------------------------------------

To the best of the  Registrant's  knowledge,  the  Registrant is not directly or
indirectly  owned or  controlled  by a single  person,  a group of persons or by
another  corporation  or by  any  foreign  government.  It is  the  view  of the
Registrant that the day to day business operations and affairs of the Registrant
are controlled by the Board of Directors of the Registrant.
26

(b) Ownership of Voting Securities
----------------------------------

As  at  February  10,  1997,  26,398,081  common  shares  (September  30,  1996,
24,300,581 common shares) of the Registrant were issued and outstanding. At such
date,  the persons or groups known to the Registrant to own more than 10% of the
Registrant's issued and outstanding shares and the number of common shares owned
by officers and directors of the Registrant as a group are as follows:

                     Identity of         Amount Owned          Percentage
Title of Class    Person or Group         of Record             of Class
--------------    ---------------         ---------             --------

Common Shares     Officers and          3,733,531 (1)          13.36% (2)
                  Directors as a
                  group

(1)  Shares  owned by  officers  and  directors  include  currently  exercisable
     options held by  directors  and  officers of the  Registrant  to acquire an
     aggregate of 1,543,600  common shares,  with 390,000 common shares at $2.05
     per share, 63,600 at $1.96, 30,000 at $3.33 per share, 260,000 at $3.01 per
     share and 800,000 at $11.17 per share.

(2)  The  percentage  of class is  calculated  based on the total of  27,941,681
     shares which include the 26,398,081 common shares issued and outstanding as
     at February 10, 1997 and the 1,543,600  currently  exercisable options held
     by the directors and officers of the Registrant.

(c)  Change of Control Arrangements
---  ------------------------------

There are no arrangements known to the Registrant,  the operations of which may,
at a date  subsequent to the date of this  Registration  Statement,  result in a
change of control of the Registrant.

Item 5  NATURE OF TRADING MARKET
        -----------------------

(a)  Market Information
---  ------------------

The  Registrant's  common  shares are traded on The  Toronto  Stock  Exchange in
Canada.  The  Registrant  has no other class of  securities  which are  publicly
traded.  To the knowledge of the  Registrant,  there is no  significant  trading
market for the Registrant's common shares in the United States.
27

(b)  Trading Information
---  -------------------

The high and low sale prices for the common shares of the Registrant,  Waddy and
Manson on the Toronto Stock Exchange,  for Northern Abitibi on the Alberta Stock
Exchange and for Hixon on the VSE for each quarterly  period in the fiscal years
ending September 30, 1995 and September 30, 1996, are as follows.
These prices do not reflect any discounts or commissions.
Sales Price(1)
                      ------------------------------------------------------------------------------------
                          Golden                                             Northern
                           Rule            Waddy             Manson           Abitibi           Hixon
                      -------------    --------------    --------------    -------------    --------------
Quarter Ended          Low     High     Low      High     Low      High     Low     High     Low      High
-------------         -----   -----    -----    -----    -----    -----    -----   -----    -----    -----

Fiscal 1995
-----------
December 31, 1994     $1.50   $2.55    $0.75    $1.28    $0.35    $0.72    $0.13   $0.31    $0.22    $0.30
March 31, 1995        $1.60   $2.20    $0.76    $1.19    $0.35    $0.79    $0.14   $0.35    $0.18    $0.27
June 30, 1995         $1.51   $2.10    $0.80    $1.15    $0.30    $0.61    $0.15   $0.42    $0.16    $0.30
September 30, 1995    $1.48   $2.08    $0.80    $1.00    $0.30    $0.82    $0.15   $0.35    $0.20    $0.31

Fiscal 1996
-----------
December 31, 1995     $1.05   $1.70     --       --      $0.40    $1.30    $0.10   $0.23    $0.23    $0.35
March 31, 1996        $1.53   $3.00     --       --      $1.10    $2.15    $0.15   $0.26    $0.26    $0.90
June 30, 1996         $2.11   $3.35     --       --      $0.57    $4.20    $0.20   $0.43    $0.39    $0.84
September 30, 1996    $1.96   $2.70     --       --      $0.50    $0.99    $0.18   $0.27    $0.31    $0.80
(1)  Canadian  dollars.  For a history of exchange rates see Item 1: Description
     of Business

(c)  Information Regarding Holders
----------------------------------

As of September  30, 1996,  according  to records of the  Registrant's  transfer
agent,  the Registrant had 703 registered  holders of its common shares,  148 of
whom were residents of the United States. The total shareholdings of such United
States  resident  shareholders  as at September 30, 1996 were  1,744,360  common
shares,  representing  7.18% of the total issued and outstanding  capital of the
Registrant.  These do not include an  indeterminable  number of persons who hold
their  shares in  'street  name'  through  broker-dealers  or others  beneficial
holders.

Item 6  EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
        ------------------------------------------------------------------

(a)  Governmental Laws or Decrees
---------------------------------

There is no law or  governmental  decree or regulation in Canada that  restricts
the  export or import of  capital,  or  affects  the  remittance  of  dividends,
interest or other  payments  to a  non-resident  holder of common  shares of the
Registrant,  other than  withholding  tax  requirements  (see Item 7,  Taxation,
below).

(b)  Limitation on Voting Rights
--------------------------------

There is no  limitation  imposed  by  Canadian  law or by the  charter  or other
constituent  documents of the Registrant on the right of a non-resident  to hold
or  vote  common  shares  of the  Registrant,  other  than  as  provided  in the
Investment Canada Act (Canada) (the "Investment Act"). The following  discussion
summarizes the principal  features of the Investment Act for a non-resident  who
proposes to acquire common shares of the  Registrant.  It is general only, it is
not a substitute for independent  advice from an investor's own advisor,  and it
does not  anticipate  statutory or  regulatory  amendments.  No  amendments  are
pending or contemplated at this time.
28

The Investment Act generally prohibits implementation of a reviewable investment
by an individual, government or agency thereof, corporation,  partnership, trust
or joint  venture that is not a "Canadian" as defined in the  Investment  Act (a
"non-Canadian"), unless after review the minister responsible for the Investment
Act (the  "Minister")  is satisfied  that the  investment is likely to be of net
benefit to Canada.

An investment in common shares of the Registrant by a non-Canadian other than an
"American"  (as that  term is  defined  in the  Investment  Act and used in this
discussion)  when the  Registrant  was not  controlled by an American,  would be
reviewable  under the Investment Act if it was an investment to acquire  control
of the  Registrant  and the value of the assets of the Registrant was $5,000,000
or more,  or if an order  for  review  was made by the  federal  cabinet  on the
grounds that the investment  related to Canada's  cultural  heritage or national
identity.

An  investment  in  common  shares of the  Registrant  by an  American,  or by a
non-Canadian  when  the  Registrant  was  controlled  by an  American,  would be
reviewable  under the Investment Act if it was an investment to acquire  control
of the  Registrant  and the value of the assets of the  Registrant  was not less
than a specified amount which for 1994 is $150,000,000, and for subsequent years
is  $153,000,000  in terms of "constant  1992  dollars".  A  non-Canadian  would
acquire  control of the  Registrant for the purposes of the Investment Act if he
acquired a majority of the common shares of the  Registrant.  The acquisition of
less  than a  majority  but  one  third  or  more of the  common  shares  of the
Registrant  would be presumed to be an  acquisition of control of the Registrant
unless it could be established that, on the acquisition,  the Registrant was not
controlled in fact by the acquire through the ownership of common shares.

Certain transactions  relating to common share of the Registrant would be exempt
from the Investment Act, including:

(a)  acquisition  of common shares of the Registrant by a person in the ordinary
     course of that person's business as a trader or dealer in securities,

(b)  acquisition of control of the Registrant in connection with the realization
     of security granted for a loan or other financial  assistance and not for a
     purpose related to the provisions of the Investment Act, and

(c)  acquisition  of control  of the  Registrant  by reason of an  amalgamation,
     merger,  consolidation or corporate  reorganization  following the ultimate
     direct or indirect control in fact of the Registrant, through the ownership
     of common shares, remained unchanged.

Item 7  TAXATION
        --------

The  discussion  under this heading  summarizes the principal  Canadian  federal
income tax consequences of acquiring,  holding and disposing of common shares of
the Registrant for a shareholder of the Registrant who is not resident in Canada
and who is resident in the United States. It is based on the current  provisions
of the Income Tax Act (Canada)  (the "Tax Act") and the  regulations  thereunder
and on the Registrant's understanding of the current administrative practices of
Revenue Canada,  and takes into account all specific  proposals to amend the Tax
Act or  regulations  made by the  Minister of Finance of Canada  before the date
hereof.  It has been  assumed that there is no other  relevant  amendment of any
governing  law  although  no  assurance  can be  given  in  this  respect.  This
discussion is general only and is not a substitute for independent advice from a
shareholder's own tax advisor.

The provisions of the Tax Act are subject to income tax treaties to which Canada
is a party, including the Canada-United States Income Tax Convention (1980) (the
"Convention").
29

Dividends on Common Shares
--------------------------

Under the Tax Act, a  non-resident  of Canada is  generally  subject to Canadian
withholding tax at the rate of 25% on dividends paid or deemed to have been paid
to him by a corporation  resident in Canada.  The Convention  limits the rate to
15% if the  shareholder  is resident in the United  States and the dividends are
beneficially  owned by and paid to him, and to 10% if the  shareholder is also a
corporation that beneficially owns at least 10% of the voting stock of the payer
corporation.

However,  if the shareholder  carries on business in Canada through a "permanent
establishment"  situated in Canada or performs  independent personal services in
Canada from a "fixed base" in Canada,  and the  shareholding in respect of which
the  dividends  are  paid  is   effectively   connected   with  that   permanent
establishment or fixed base, those limitations do not apply.

The Convention  generally  exempts from Canadian  income tax dividends paid to a
religious, scientific, literary, educational or charitable organization or to an
organization exclusively administering a pension, retirement or employee benefit
fund or plan, if the organization is resident in the United States and is exempt
from income tax under the laws of the United States.

Dispositions of Common Shares
-----------------------------

The following  comments  apply only to a shareholder  whose common shares of the
Registrant  constitute  capital property to him for the purposes of the Tax Act.
Shares will generally  constitute capital property unless the holder is a trader
or dealer in  securities or is engaged in an adventure in the nature of trade in
respect of the shares.

A taxpayer's  capital gain or capital loss from a disposition  of a common share
of the  Registrant is the amount,  if any, by which his proceeds of  disposition
exceed (or are exceeded by,  respectively)  the  aggregate of his adjusted  cost
base of the share and reasonable expenses of disposition. Three-quarters of such
capital gain  (taxable  capital  gain) is included in income and taxed at normal
rates.  Three-quarters of such a capital loss in a year (allowable capital loss)
is deductible from taxable capital gains realized in the same year. An allowable
capital loss that is not  deductible in the year incurred may,  except on change
of control of a corporate  shareholder,  be carried  back three years or carried
forward to later years for  deduction  from net taxable  capital gains of any of
those years.

If a common share of the Registrant is disposed of to the Registrant  other than
in the open market in the manner in which shares would  normally be purchased by
the public,  the proceeds of  disposition  will be  considered as limited to the
paid-up capital of the share and the balance of the price paid will be deemed to
be a dividend and taxed in accordance  with the rules  governing the taxation of
dividends set out above.

Under the Tax Act,  a  non-resident  of Canada is  subject  to  Canadian  tax on
taxable  capital gains,  and may deduct  allowable  capital losses realized on a
disposition of "taxable Canadian property." Common shares of the Registrant will
constitute taxable Canadian property of a shareholder at a particular time if he
used the shares in carrying on business in Canada, or if at any time in the five
years  preceding the disposition 25% of the issued shares of any class or series
in the capital  stock of the  Registrant  belonged  to one or more  persons in a
group  comprising the  shareholder and persons with whom the shareholder did not
deal at arm's length, and in certain other circumstances.

The Convention  relieves United States residents from liability for Canadian tax
on capital gains derived on a disposition of shares unless

(a)  their value is derived principally from real property in Canada
30

(b)  the holder was  resident  in Canada for 120 months  during any period of 20
     consecutive  years preceding,  the disposition and the shares were owned by
     him when he ceased to be resident in Canada, or

(c)  they formed part of the business  property of a  "permanent  establishment"
     that the holder has or had in Canada  within  the 12 months  preceding  the
     disposition.

Item 8  SELECTED FINANCIAL DATA
        -----------------------

The selected  financial  data set forth in the  following  table is expressed in
Canadian  dollars.  For a history of the exchange rates for Canadian  dollars in
terms  of U.S.  Dollars  see  Item 1,  "Description  of  Business",  above.  The
financial  information set forth in the following table includes the accounts of
the  Registrant  and  subsidiaries  on  a  consolidated  basis.  This  financial
information  was prepared in accordance  with  accounting  principles  generally
accepted in Canada,  the application of which conforms in all material  respects
for the periods presented with accounting  principles  generally accepted in the
United  States,  except  to the  extent  noted  in Note  16 to the  Consolidated
Financial  Statements  appearing elsewhere in this Registration  Statement,  The
selected  financial data should be read in conjunction  with and is qualified by
such Consolidated Financial Statements and the Notes thereto.
Year ended September 30
                                       ---------------------------------------------------------------
                                          1996          1995           1994          1993        1992
                                          ----          ----           ----          ----        ----
Operating Summary ($000's)
   Revenue
      Interest and other               $   377         $  340         $  389        $  437         526
   Net income (loss)
      Canadian method                      (62)          (575)            16          (754)        (17)
      United States method              (2,043)        (1,020)          (957)         (265)       (262)

Financial Status ($000's)
   Total assets                         51,439         32,298         27,815        21,227      21,446
   Working capital                       2,322          2,085          4,025         2,260       2,964
   Long term liabilities                   265              -              -             -           -
   Minority interests                    6,806          4,694          5,309         4,663       4,187
Shareholders' equity ($000's)
      Canadian method                   36,248         25,647         20,635        14,466      15,124
      United States method              25,400         15,401         10,504         5,102       5,271

Net earnings (loss) per common share:
      Canadian method
         Basic                         (0)(cent)     (4)(cent)      (0)(cent)      (7)(cent)         -
         Fully diluted                 (0)(cent)     (4)(cent)      (0)(cent)      (7)(cent)         -
      United States method
         Basic                        (10)(cent)     (7)(cent)      (5)(cent)      (2)(cent)    (2)(cent)
         Fully diluted                (10)(cent)     (7)(cent)      (5)(cent)      (2)(cent)    (2)(cent)
Item 9   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
         -----------------------------------------------------------------------

General
-------

The Registrant and its consolidated  subsidiaries are in the exploration  stage;
none has generated any material revenue from mining  operations.  On a recurring
basis,  revenues are derived from  interest  income,  which is dependent on cash
available and  prevailing  interest  rates,  and  exploration  overhead fees and
recoveries, which are dependent on the level of exploration expenditures managed
by  the  Registrant.   On  a  recurring  basis,  corporate  expenses  relate  to
administration and related overhead costs.
31

Other items,  which tend to have a more significant effect on reported earnings,
relate  to  the  Registrant's   activities  in  selling  mineral  prospects  and
investments,  when market conditions  warrant,  write-downs of mineral prospects
and investments based on geological and economic conditions, and gains or losses
arising on the  reduction  of the  Registrant's  interest  in  subsidiaries  and
affiliates  due to the issue of shares by the  subsidiaries  and  affiliates  to
interest outside the Registrant.

The  Registrant is subject to a number of factors which  separately and together
affect the  Registrant's  operations and  liquidity.  Obviously the discovery of
reserves would  significantly  affect  operations and  liquidity.  However,  the
ability to discover  reserves,  to develop them and to achieve  production  from
such  reserves is influenced  by the price of gold.  During  periods of low gold
prices,  the  Registrant's  ability to raise  Capital is  hampered as a low gold
price translates into low market prices for the  Registrant's  capital stock and
reduced  interest by investors to finance the  development of projects.  Without
the necessary  capital  existing  projects with  mineralization  cannot be fully
explored with the objective of delineating the mineralization to determine if an
economic  reserve  body  exists,  nor are the funds  available  to  conduct  new
exploration.  As the price of gold rises, there tends to be a corresponding rise
in the market price of the Registrant's  capital stock and increased interest by
investors to favour the  development of projects which  translates into improved
opportunities for the Registrant to raise the necessary capital.

The  economics of whether or not an existing  project with  mineralization  or a
newly  discovered one is developed and brought into  production is influenced by
the price of gold.  The  Registrant  has  identified  a number of projects  with
mineralization,  with sufficient  exploration  work and assessment work filed to
keep the projects in good standing for to the year 2000 and beyond. The price of
gold in previous years since their identification has not justified the costs to
develop these  projects  with  mineralization.  As the price of gold rises,  the
Registrant  reviews the projects to determine  which, if any, have the potential
to be  developed  and placed  into  production  which in turn would  enhance the
Registrant's operations and liquidity.
32
Results of Operations

The  following  is a summary of  operating  results,  outlining  the  individual
corporate components of consolidated net income:
($000)
                                                      -----------------------------------------------------------
                                                         1996                    1995                    1994
                                                      -----------             -----------            ------------
REVENUES
  Golden Rule                                             277,323                 269,018                 342,501
  Manson Creek                                             80,624                  50,347                  45,892
  Northern Abitibi                                         10,690                  19,419                     621
  Hixon Gold                                                8,611                     845                     207
                                                      -----------             -----------             -----------
                                                          377,248                 339,629                 389,221
                                                      ===========             ===========             ===========
CORPORATE EXPENSES
  Golden Rule                                             879,508                 585,371                 485,805
  Manson Creek                                             65,923                  57,329                  41,620
  Northern Abitibi                                         33,381                  29,979                  24,472
  Hixon Gold                                               33,710                  24,999                  25,196
                                                      -----------             -----------             -----------
                                                        1,012,522                 697,678                 577,093
                                                      ===========             ===========             ===========

LOSS FROM OPERATIONS                                     (635,274)               (358,049)               (187,872)
                                                      -----------             -----------             -----------
OTHER
  Gain (Loss) on disposal of mineral
    properties and other assets
    - Golden Rule                                         683,519                  (1,940)                170,581
    - Manson Creek                                         67,010                  83,019                 287,516
                                                      -----------             -----------             -----------
                                                          750,529                  84,959                 458,097
                                                      ===========             ===========             ===========
ABANDONMENTS AND WRITE-DOWN OF MINERAL
PROPERTIES
    - Golden Rule                                            --                  (300,000)               (447,295)
    - Manson Creek                                        (71,971)               (457,637)               (332,987)
    - Northern Abitibi                                 (1,273,924)                   --                  (244,266)
    - Hixon Gold                                             --                      --                  (108,870)
                                                      -----------             -----------             -----------
                                                       (1,345,895)               (757,637)             (1,133,418)
                                                      ===========             ===========             ===========

LOSS BEFORE INCOME TAXES                               (1,230,640)             (1,030,727)               (863,193)

INCOME TAXES (RECOVERY)
  - Golden Rule                                           478,000                (257,536)               (122,200)
                                                      -----------             -----------             -----------

LOSS BEFORE THE UNDERNOTED                             (1,708,640)               (773,191)               (740,993)
                                                      -----------             -----------             -----------

GAIN (LOSS) ON REDUCTION OF INTEREST IN
  AFFILIATES AND SUBSIDIARIES
    (GOLDEN RULE)                                         807,386                 101,515                  39,220
                                                      -----------             -----------             -----------
EQUITY IN INCOME (LOSS) OF
  AFFILIATED COMPANIES
   Stade Exploration Inc.                                  36,769                (149,064)                 34,434

   Eastfield Resources Inc.                                  --                    24,729                  18,615
                                                      -----------             -----------             -----------
                                                           36,769                (124,335)                 53,049
                                                      ===========             ===========             ===========
MINORITY INTEREST IN LOSS
   OF SUBSIDIARIES                                        802,946                 221,491                 664,708
                                                      -----------             -----------             -----------
NET INCOME (LOSS)                                     $   (61,539)            $  (574,520)            $    15,984
                                                      ===========             ===========             ===========
The variation in the equity in income  (loss) of affiliated  companies is due to
the write-down of a mineral property in Stade in 1995.
33

Fiscal year ended September 30, 1996 Compared to 1995
-----------------------------------------------------

The small increase in  consolidated  revenues in 1996 reflects a modest increase
in exploration overhead fees from increased activity, and higher interest income
from larger available cash balances.

On a consolidated  basis,  1996 corporate  expense increased by 46% to $983,228,
largely attributable to Komis mine construction and financing costs. As a result
of the above noted factors,  the Registrant  incurred a loss from  operations of
$635,274 as compared to a loss of $358,049 in the preceding year.

Consolidated  net loss of $61,539  reflects a decrease of $512,981 over the 1995
year.  Abandonment and  write-downs  increased by 588,258 over 1995 and deferred
income  tax  increased  by  $735,536  from a  recovery  of 257,536 in 1995 to an
expense of  $478,000  in 1996.  These  increases  were  offset by an increase of
$66,570 from gains on disposal of  investments,  an increase of $705,871 on book
gain recorded on the issue of shares by  subsidiaries an increase of $581,455 in
the minority  interest in subsidiary  company losses and an increase of $161,104
in equity in increase of income of  investors  from a loss of $124,335 to income
of $36,769.

Fiscal year ended September 30, 1995 Compared to 1994
-----------------------------------------------------

The  decline  in  1995  consolidated  revenues  reflects  a minor  reduction  in
exploration  overhead  fees  and a  decrease  in  interest  income  due to lower
available cash balances and lower interest rates.

On a consolidated  basis, 1995 corporate  expenses increased by 21% to $697,698,
largely attributable to increased  shareholder  communication,  public relations
activities and  regulatory  costs.  As a result of the above noted factors,  the
Registrant  incurred a loss from operations of $358,040 as compared to a loss of
$187,872 in the preceding year.

Consolidated net loss of $574,520 reflects an increase of $590,504 over the 1994
year.  Although  abandonments and write-downs were  approximately  $376,000 less
than in 1994,  and book gains  recorded on the issued of shares by  subsidiaries
increased by approximately  $62,000 these were offset by lower gains on disposal
of  investments  of  approximately  $373,000  and a  $443,000  reduction  in the
minority  interest in  subsidiary  company  losses and a $177,000  reduction  in
equity in income of affiliated companies.

Liquidity and Capital Resources
-------------------------------

a)   Operating Cash Flow
     -------------------

     Cash provided from operating  activities has not been a significant  source
     of or requirement  of liquidity.  With the start-up of the Komis mine after
     the 1996 year end, mining  operations are anticipated to have a significant
     influence on operating cash flow.

b)   Liquidity Provided from Financing Activities
     --------------------------------------------

     During 1996, the Registrant negotiated a loan facility of $US 4 million, or
     the gold  equivalent to be used to partially fund  pre-production  costs of
     the Komis mine,  of which $CDN  2,995,802  had been drawn on September  30,
     1996 and the  remainder  in  October  1996.  The  Registrant  received  net
     proceeds  of  $10,662,718  in 1996  from  the  issuance  of  common  shares
     including  $9,563,741  through  a public  offering  and  $1,098,977  on the
     exercise  of stock  options  and the  issue of shares  to  acquire  mineral
     properties.  The  issue of  shares  by  subsidiary  companies  to  minority
     shareholders provided $2,094,632 compared to $882,750 in 1995.
34

     During  1995,  $882,750  was  provided  through  the  issue  of  shares  by
     subsidiary companies,  compared to $224,587 in the prior year. Although the
     Company issued  3,762,007 shares to increase its ownership in Waddy Lake to
     100%, this was not a direct source of liquidity.

c)   Liquidity Provided from Investing Activities
     --------------------------------------------

     In 1996,  the  Registrant  received  proceeds of $844,822  from the sale of
     portfolio investments compared to $505,468 in 1995. In addition, $1,961,857
     was  received on the sale of the  Registrant's  shares of  subsidiaries  to
     facilitate  their financing,  compared to $1,035,638  received in 1995 from
     this  source.  Please  refer  to Part I,  Publicly  held  Subsidiaries  and
     Financing  of  Publicly  held  Subsidiaries  for a detailed  discussion  on
     proceeds from sale of Registrant's shares of Subsidiaries.

     In 1995,  $1,035,638 was provided from the sale of shares of  subsidiaries,
     to  facilitate   financings   and  $505,468  from  the  sale  of  portfolio
     investments. In addition, in 1995 Stade Exploration Inc. repaid advances of
     $688,197.

     In 1994, $791,542 was provided from the sale of shares of subsidiaries,  to
     facilitate financings,  and $509,539 from the sale of portfolio investments
     primarily held by Manson Creek.

d)   Liquidity Used in Investing Activities
     --------------------------------------

     Construction,  pre-production  and other costs for the Komis Mine  totalled
     $10,739,388,  compared to $1,417,923 in 1995.  Construction of the mine was
     substantially completed by September 30, 1996.

     Expenditures on exploration properties increased from $2,165,128 in 1995 to
     $3,339,366  in 1996.  The  significant  areas of  expenditure  in 1996 were
     $910,000 for Ghana, property acquisitions and exploration,  the acquisition
     of  exploration   properties  for  $430,000  and  $653,000  of  exploration
     expenditures in Saskatchewan,  and $520,000 for exploration in the Voisey's
     Bay area.

     In 1995, expenditures on the Komis deposit for the underground exploration,
     development  and test  mining  program,  additional  surface  drilling  and
     capital   improvements  to  the  Jolu  Mill  were  $1,417,823  compared  to
     $4,426,144 in 1994 and $395,095 in 1993.  Exploration property additions in
     1995 totalled  $2,165,128,  primarily incurred by Manson Creek and Northern
     Abitibi with respect to their  Labrador  properties.  In 1994,  exploration
     property additions were $1,349,346, primarily incurred by Manson Creek with
     respect to its Venezuel properties.

     In 1995,  the Company,  acquired  the  minority  interest in Waddy Lake for
     total  consideration  of $5,810,637 by the issue of 3,762,007 common shares
     at a deemed price of $1.51 per share for a total of $5,680,631 and incurred
     cash expenses related to the acquisition of $130,006.

     The Company, in 1995, made additional  investments in affiliated  companies
     totalling  $889,483  with the major  investment  related to the exercise of
     Stade Exploration Inc,  warrants for 2,523,190  additional shares at a cost
     of $706,493.

e)   Working Capital
     ---------------

     Working  capital  was  $2,322,062  at  September  30,  1996 as  compared to
     $2,084,658 and $4,024,935 at September 30, 1995 and 1994 respectively.  The
     small increase in working capital in the 1996 fiscal year reflects the
35

     increase in cash from equity financing and inventories  offset by increased
     accounts  payable and current  portion of long term debt.  The  decrease in
     working  capital in the 1995  fiscal  year is largely  attributable  to the
     increased exploration expenditures in 1995 over 1994.

     Between  the  wholly  owned  subsidiaries  and the  Registrant,  funds  are
     transferred as required  without  restriction.  In the case of the publicly
     held subsidiaries, however, any transfer of funds would have to comply with
     corporate law and the applicable securities  regulation.  The policy of the
     Registrant is that the subsidiaries  operate on their own and funds are not
     transferred  between the Registrant and  subsidiaries.  The Registrant does
     provide administration  services to the subsidiaries and acts as contractor
     on the subsidiaries  exploration projects. The related costs are charged to
     the  subsidiaries  and paid by them.  Any advances of funds  whether by the
     subsidiaries to the Registrant or by the Registrant to the subsidiaries are
     formally  documented with interest  charged at the prime rate plus 1% or by
     way of a private placement of a convertible debenture.

     Except for  Northern  Abitibi  Mining  Corp.'s  commitment  to provide  $US
     1,650,000  financing  to earn a 50% interest in the Keroane  property,  the
     Registrant has no material capital expenditure commitments.

     The Registrant,  depending upon the timing of the exploration  requirements
     and  opportunities,  may need to  raise  additional  capital.  Management's
     preference  is to realize  liquidity  through the sale of  non-core  assets
     rather than the issuance of additional equity.

Item 10  DIRECTORS AND OFFICERS OF THE REGISTRANT
         ----------------------------------------

The executive officers and directors of the Registrant are as follows:

                                                               Period as a
                                                          Director or Officer
Name                               Position               of the Registrant
----                               --------               -----------------

Glen H. Harper                     President              October 19, 1979
                                   and Director

Robert G. Ingram                   Director               September 24, 1981

G. A. James Devonshire             Director               March 30, 1990

Peter (C. W.) Cole                 Director               March 31, 1995

Robert J. Lemmon                   Treasurer              March 23, 1990

Barbara M. O'Neill                 Secretary              June 28, 1993(1)

(1)  Ms. O'Neill was appointed Assistant  Secretary/Treasurer  on March 23, 1990
     and held that position until June 28, 1993 when she was appointed Secretary
     of the Registrant.

All directors hold office until the next annual meeting of the  shareholders  of
the  Registrant  and until their  successors  have been  elected and  qualified.
Officers of the Registrant serve at the discretion of the Board of Directors.
36

There are no  arrangements  or  understandings  between any of the  directors or
officers  of the  Registrant  and any other  person  pursuant to which they were
selected  as a  director  or  officer  of the  Registrant.  There  are no family
arrangements  between any  director or officer of the  Registrant  and any other
director or officer of the Registrant.

Item 11  COMPENSATION OF DIRECTORS AND OFFICERS
         --------------------------------------

The Registrant has three  Executive  Officers and four directors (one of whom is
an Executive  Officer) whose  aggregate cash  compensation  in those  capacities
during the year ended September 30, 1996, was $55,400.

Corporations in which the  Registrant's  President,  former  Vice-President  and
Treasurer  are  shareholders  have  provided,   at  usual  professional   rates,
geological  and  exploration  services  of  $161,000  and direct  administrative
services of $95,000.

A Corporation in which one the Registrant's  director is a shareholder  provided
at usual professional rates consulting services of $35,000.

In addition,  these Executive Officers and directors  exercised  incentive stock
options  during the year ended  September 30, 1996 resulting in an aggregate net
value to the Executive  Officers and  Directors of  $1,487,999.  (Subsequent  to
September 30, 1996, these Executive Officers and directors  exercised  incentive
stock options resulting in an aggregate net value to the Executive  Officers and
directors of $5,262,042.  (Also see heading "Option to Purchase  Securities from
Registrant or  Subsidiaries").  During fiscal 1996, the three  directors who are
not  Executive  Officers  were paid a total of  $19,400 in their  capacity  as a
director.

As at September 30, 1996, the  Registrant  does not have any plans which require
the  Registrant to contribute  to or to provide  pension,  retirement or similar
benefits to directors and officers.

Item 12  OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
         --------------------------------------------------------------

1996 Share Option Plan
----------------------

At the Annual & Special  Meeting of the common  shareholders  of the  Registrant
(the  Shareholders)  held on  March  29,  1996,  the  Shareholders  approved  an
amendement  to the 1995 Share Option Plan  approved by the  Shareholders  at the
Annual and Special  Meeting held on March 31, 1995 (the "1995 Plan") to increase
the  number of  shares  reserved  for  issuance  thereunder  from  1,555,545  to
1,935,626.  The result of this  ammendment was  effectively to create a new plan
known as the 1996 Share Option Plan (the "1996 Plan"). The 1996 plan is the same
as the 1995 Plan  except  for the number of shares  reserved  for  issuance  and
replaces  the 1995  Plan.  The 1995  Plan  superceded  and  replaced  the  share
incentive plan of the Registrant  which was in place prior to the  establishment
of the 1995 Plan (the "Old Plan"). At the time of approval of the 1996 plan, the
Registrant had options  outstanding to purchase  1,045,667 common shares granted
under the Old Plan of the  Corporation,  470,000 common shares granted under the
1995 Plan of the Corporation, 257,050 common shares on conversion of the 485,000
common shares granted under the Old Plan of Waddy Lake Resources Inc.  ("Waddy")
prior to the  acquisition  of the minority  interest in Waddy and 464,700 common
shares on conversion of the 876,792 common shares granted under the 1995 Plan of
Waddy prior to the acquisition of the minority  interest of Waddy,  all of which
were not subject to further  shareholder  ratification.  No further stock otions
will be issued under the Old Plan or the 1995 Plan of the Corporation or will be
issued  under the Old Plan or 1995 Plan of Waddy,  however,  those  options will
remain  in  effect  until  exercised,   cancelled  or  otherwise  terminated  in
accordance with the respective terms of those plans. A total of 1,935,626 common
37

shares of the Corporation were  conditionally  reserved for issuance pursuant to
options to be granted under the 1996 plan.

At the date of approval of the 1996 Plan,  the number of common shares  reserved
for issuance  under  outstanding  options was  3,322,962  including  the 721,750
reserved for  outstanding  options under the Old Plan and the 1995 Plan of Waddy
and,  accordingly,  the maximum number of common shares reserved for issuancewas
5,258,588 representing 27.2% percent of the issued and outstanding common shares
of the Registrant then outstanding.

The 1996 Plan provides that the Board of Directors may, from time to time, grant
options  to acquire  all or part of the  shares  subject to the 1996 Plan to any
person  who  is an  employee  or  director  of  the  Registrant  or  any  of its
subsidiaries  or any other  person or  Registrant  engaged  to  provide  ongoing
management or consulting services for the Registrant or any of its subsidiaries.
The 1996 Plan prohibits the Registrant  from providing  financial  assistance to
any optionee in connection with the exercise of options.  the term of any option
granted   under  the  1996  Plan  will  be  five  years  except  under   special
circumstances when the Board may establish a shorter or longer term. In no event
will the term of any option  exceed ten years.  The 1996 Plan also  provides for
early  termination of outstanding  options in the event of death of the optionee
or if the optionee ceases to be a director or employee,  the subscription  price
for shares acquired  pursuant to options granted under the 1996 Plan will be the
wieghted  average of the trading price per share for the common shares traded on
the Toronto Stock Exchange on the last five days before the date of grant of the
option.

A majority of the common  shares that may be allocated for issued under the 1996
Plan may be issuable to insiders of the Corporation.

     In addition, the 1996 Plan provides that:

     a)   the number of common  shares  reserved  for  issuance  pursuant to all
          share compensation  arrangements  (including stock options) granted to
          insiders will not exceed 10% of the outstanding issue,

     b)   the number of common shares that may be issued to insiders pursuant to
          all share compensation arrangements (including stock options) within a
          one year period will not exceed 10% of the outstanding issue, and

     c)   the number of common  shares that may be reserved  for issuance to any
          one  insider  and such  insider's  associates  pursuant  to all  share
          compensation arrangements (including stock options) will not exceed 5%
          of the outstanding issue,

and in no event may the number of common shares reserved for issuance to any one
person pursuant to a stock option exceed 5% of the outstanding issue.

1995 Share Option Plan
----------------------

At the Annual and Special  Meeting of the common  shareholders of the Registrant
(the  Shareholders)  held on March  31,  1995,  the  Shareholders  approved  the
establishment of a 1995 Share Option Plan (the "1995 Plan") which superseded and
replaced the existing share  incentive plan of the Registrant  (the "Old Plan").
The Registrant at March 31, 1995 had outstanding  options to purchase  1,063,667
common  shares  granted  under the Old Plan  which  were not  subject to further
shareholder  ratification.  The  options  under  the Old Plan  were  granted  to
directors, officers, employees and a fiscal agent. No further stock options will
be issued under the Old Plan,  however those options will remain in effect until
exercised,  cancelled or otherwise terminated in accordance with the Old Plan. A
total of 1,555,545 common shares of the Registrant were conditionally reserved
38

for issue  pursuant to options to be granted under the 1995 Plan.  The number of
common shares reserved for issuance under outstanding options under the Old Plan
was  1,063,667  and the maximum  number of common  shares  reserved for issuance
under the 1995 Plan was  1,555,545  resulting in an  aggregate of 2,619,212  and
representing   16.8%  of  the  issued  and  outstanding  common  shares  of  the
Registrant.

The 1995 Plan  provided  that the Board of Directors may from time to time grant
options  to acquire  all or part of the  shares  subject to the 1995 Plan to any
person  who  is an  employee  or  director  of  the  Registrant  or  any  of its
subsidiaries  or any other  person or  corporation  engaged to  provide  ongoing
management  or  consulting   services  for  the   Registration  or  any  of  its
subsidiaries.  The 1995 Plan prohibited the Registrant from providing  financial
assistance to any optionee in connection with the exercise of options.  The term
of any option  granted  under the 1995 Plan was five years except under  special
circumstance  when the Board may establish a shorter or longer term. In no event
could the term of any option  exceed 10 years.  The 1995 Plan also  provided for
early  termination of outstanding  options in the event of death of the optionee
or if the optionee ceases to be a director or employee.  The subscription  price
for shares  acquired  pursuant to options  granted under the 1995 Plan had to be
the weighted average of the trading price per share for the common shares traded
on The Toronto Stock  Exchange on the last five days before the date of grant of
the option.

A majority of the common shares that could be allocated for issue under the 1995
Plan could be issuable to insiders of the Registrant.

     In addition, the 1995 Plan provided that

     (a)  the number of common  shares  reserved  for  issuance  pursuant to all
          share compensation  arrangements  (including stock options) granted to
          insiders could not exceed 10% of the outstanding issue,

     (b)  the number of common shares that could be issued to insiders  pursuant
          to all  share  compensation  arrangements  (including  stock  options)
          within a one year  period  could  not  exceed  10% of the  outstanding
          issue, and

     (c)  the number of common shares that could be reserved for issuance to any
          one  insider  and such  insider's  associates  pursuant  to all  share
          compensation  arrangements  (including stock options) could not exceed
          5% of the outstanding issue,

and in no event could the number of common  shares  reserved for issuance to any
one person pursuant to a stock option exceed 5% of the outstanding issue.

Old Plan
--------

The incentive stock option plan of the Registrant in existence prior to the 1995
Plan (the "Old Plan") was  designed to provide  incentives  to the  Registrant's
personnel including directors, officers, employees and persons who have provided
ongoing  services of value to the Registrant.  The Plan was  administered by the
Board of Directors of the Registrant,  who made  allocations to eligible persons
after considering  their present and potential  contributions and other relevant
factors.  The  directors  also granted  options to acquire  stock to other Board
members.  The options granted pursuant to the Plan did not exceed a term of five
years and were granted at an option price and on other terms which the directors
determined was necessary to achieve the goal of the Plan and in accordance  with
regulatory  policy.  The option  price could be at a discount  to market  price,
which discount would, in any event, exceed the following:
39

                  Market Price at Time       Maximum Discount
                       of Grant (1)             Therefrom
                  --------------------       ----------------
                    $1.00 or less                  20%
                    $1.01 to $5.00                 15%
                    $5.01 or more                  10%

(1)      As determined by the Toronto Stock Exchange.

The  number  of  shares  allocated  to the Plan was  determined  by the Board of
Directors  from  time to time.  The  aggregate  number of  shares  reserved  for
issuance  under the Plan,  (other  employee  stock  option  plans,  options  for
services  and  employee  stock  purchase  plans)  could  not  exceed  10% of the
Registrant's issued and outstanding shares. In addition, the aggregate number of
shares so reserved  for  issuance  to any one person  could not exceed 5% of the
issued and outstanding shares.

The common shares,  when fully paid for by a  participant,  were not included in
the  calculation  of common  shares  allocated  to or within the Plan.  Should a
participant cease to be eligible due to the loss of corporate office (being that
of an officer or director) or employment,  the option ceased for varying periods
not exceeding three months. Loss of eligibility for consultants was regulated by
specific  rules  imposed by the  directors  when the  option was  granted to the
appropriate consultant.

The Plan also  provided  that estates of deceased  participants  could  exercise
their options for a period not exceeding six months  following  death. The Board
of Directors  could from time to time make rules,  regulations and amendments to
the Plan.  Should any rule,  regulation or amendment  materially differ from the
provisions set forth in the Information  Circular  provided to the  Shareholders
with the Proxy  Solicitation it should obtain  regulatory or shareholder (as the
case may be) approval.

Waddy Lake Plans
----------------

At the Annual and Special Meeting of the Waddy Lake common  shareholders held on
March 31, 1995, the Waddy Lake shareholders approved the establishment of a 1995
Share Option Plan (the "1995 Plan of Waddy") which  superseded  and replaced the
existing  share  incentive  plan of Waddy  Lake (the "Old Plan of  Waddy").  The
terms,  conditions  and provisions of the 1995 Plan of Waddy and the Old Plan of
Waddy were similar to the 1995 Plan and the Old Plan of the Registrant described
above. On acquisition of the minority  interest of Waddy Lake by the Registrant,
any incentive stock options issued and outstanding  under the 1995 Plan of Waddy
and the Old Plan of Waddy were  converted  into  incentive  stock options of the
Registrant on the basis of the share exchange ratio used to acquire the minority
interest of Waddy Lake (ie. .53 share of the  Registrant for each share of Waddy
Lake). At the date of the acquisition of the minority  interest of Waddy Lake by
the Registrant  there were  incentive  stock options for 890,000 shares of Waddy
Lake issued and  outstanding  under the 1995 Plan of Waddy which were  converted
into incentive  stock options for 471,700 shares of the Registrant and incentive
stock options for 545,000 shares of Waddy Lake issued and outstanding  under the
Old Plan of Waddy which were converted into incentive  stock options for 288,850
shares of the  Registrant.  Subsequent  to September 30, 1995,  incentive  stock
options have been  exercised for 228,681  shares of the 471,700 shares under the
1995  Plan of  Waddy to leave  243,019  currently  issued  and  outstanding  and
incentive stock options exercised for 288,850 shares of the 288,850 shares under
the Old Plan of Waddy to leave none currently issued and outstanding.
40

As at September 30, 1996,  incentive stock options for 2,489,100 shares,  issued
pursuant to the terms of the incentive  stock option plans noted above,  were as
follows:

                                             Exercise
Type                         Number           Price
of Option                  of Shares         ($Cdn.)           Expiry Date
---------                  ---------         -------           -----------

A)  Golden Rule

i) Old Plan
   a) Options
    Directors               544,000           $2.05          January 27, 1997
    Employees               108,000           $2.05          January 27, 1997
    Employers                35,000           $2.20          January 18, 1997
                           --------

                            687,000
                            =======

ii) 1995 Plan
    Directors               470,000           $2.05          August 3, 2000
                           --------

iii) 1996 Plan
    Directors               260,000           $3.01          April 22, 1999
    Directors               260,000           $3.01          April 22, 2001
    Employers               258,000           $2.15          August 26, 2001
                           --------

                            778,000
                            =======

Total Golden Rule         1,935,000
                          =========

B)  Waddy Lake

i) Old Plan of Waddy
    Directors                53,000           $1.70          December 30, 1997
    Employees                39,750           $2.21          January 20, 1997
    Employees                13,250           $1.70          December 30, 1997
                           --------
                            106,000
                            =======
ii) 1995 Plan of Waddy
    Directors               190,800           $1.96          April 3, 2000
    Former Directors        216,600           $1.96          April 3, 2000
    Employees                40,700           $1.96          April 3, 2000
                           --------

                            448,100
                           ========

Total Waddy Lake            554,100
                           ========

GRAND TOTAL               2,489,100
                          =========
41

1997 Share Option Plan
----------------------

At the Annual and Special  Meeting of the common  shareholders of the Registrant
(the  Shareholders) to be held on March 27, 1997, the Shareholders will be asked
to  approve  an  amendment  to  the  1996  Share  Option  Plan  approved  by the
Shareholders at the Annual and Special Meeting held on March 29, 1996 (the "1996
Plan") by increasing the number of shares reserved for issuance  thereunder from
1,935,626 to 2,639,800.  The result of this  amendment  will be  effectively  to
create a new plan to be known as the 1997 Share  Option Plan (the "1997  Plan").
The 1997  plan  will be same as the 1996 Plan  except  for the  number of shares
reserved for issuance and will,  upon receipt of all regulatory and  shareholder
approvals,  including  the approval of the Toronto Stock  Exchange,  replace the
1996 Plan.  Shareholders  will also be asked to authorize  the directors to make
any  amendments  to the  1997  Plan  that may be  required  for the  purpose  of
obtaining  the approval of the Toronto  Stock  Exchange  thereto.  The 1996 Plan
superseded and replaced the share incentive plan of the Registrant  which was in
place prior to the establishment of the 1996 Plan. The Registrant  currently has
options  outstanding to purchase  1,437,000 common shares granted under the 1996
Plan of the  Registrant,  390,000  common  shares  granted  under the 1995 Plan,
243,019  common  shares  granted  under  the  1995  Plan of  Waddy  prior to the
acquisition of the minority  interest of Waddy,  all of which are not subject to
further shareholder ratification. Subject to the approval of the shareholders of
the 1997 Plan,  no further  stock  options will be issued under the 1996 Plan or
the 1995 Plan of the  Registrant or be issued under the 1995 Plan of Waddy,  but
those  options  will remain in effect  until  exercised,  cancelled or otherwise
terminated in accordance  with the  respective  terms of those plans. A total of
4,575,426  common shares of the Registrant  will be  conditionally  reserved for
issuance pursuant to options to be granted under the 1997 Plan.

The number of common shares reserved for issuance under  outstanding  options is
1,955,800  including  the  128,800  reserved  for the 1995  Plan of  Waddy  and,
accordingly,  the maximum number of common shares  reserved for issuance will be
4,575,426  representing  17.33%  percent of the issued  and  outstanding  common
shares of the Registrant as at the date of this filing.

The 1997 Plan will  provide  that the Board of  Directors  may from time to time
grant  options to acquire all or part of the shares  subject to the 1997 Plan to
any  person who is an  employee  or  director  of the  Registrant  or any of its
subsidiaries  or any other  person or  corporation  engaged to  provide  ongoing
management or consulting services for the Registrant or any of its subsidiaries.
The 1997 Plan prohibits the Registrant  from providing  financial  assistance to
any optionee in connection with the exercise of options.  The term of any option
granted   under  the  1997  Plan  will  be  five  years  except  under   special
circumstances when the Board may establish a shorter or longer term. In no event
will the term of any option  exceed 10 years.  The 1997 Plan also  provides  for
early  termination of outstanding  options in the event of death of the optionee
or if the optionee ceases to be a director or employee,  the subscription  price
for shares acquired  pursuant to options granted under the 1997 Plan will be the
weighted  average of the trading price per share for the common shares traded on
the Toronto Stock Exchange on the last five days before the date of grant of the
option.

A majority of the common  shares that may be allocated for issued under the 1997
Plan may be issuable to insiders of the Registrant.

If approved, the 1997 Plan will provide that:

     a)   the number of common  shares  reserved  for  issuance  pursuant to all
          share compensation  arrangements  (including stock options) granted to
          insiders will not exceed 10% of the outstanding issue,

     b)   the number of common shares that may be issued to insiders pursuant to
          all share compensation arrangements (including stock options) within a
          one year period will not exceed 10% of the outstanding issue, and
42

     c)   the number of common  shares that may be reserved  for issuance to any
          one  insider  and such  insider's  associates  pursuant  to all  share
          compensation arrangements (including stock options) will not exceed 5%
          of the  outstanding  issue  and in no event  may the  number of common
          shares  reserved  for  issuance to any one person  pursuant to a stock
          option exceed 5% of the outstanding issue.

Item 13  INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
         ----------------------------------------------

Except as described elsewhere herein,  there have been no material  transactions
during  the  last  three  fiscal  years  nor are  there  any  proposed  material
transactions  in which a director or officer of the  Registrant or any associate
of such persons had, or will have, a direct or indirect material interest.

PART II
-------

Item 14  DESCRIPTION OF SECURITIES TO BE REGISTERED
         ------------------------------------------

(a) Capital Stock to be Registered
----------------------------------

The authorized  share capital of the Registrant  consists of an unlimited number
of common shares without  nominal or par value,  the holder of which is entitled
to one vote in respect of each share held at all meetings of the shareholders of
the Registrant.

Each  holder  of the  common  shares is  entitled  to share  proportionately  in
dividends that may be paid and upon  liquidation of the  Registrant.  Holders of
the common  shares are not  entitled  to  preemptive  rights on the  issuance of
additional common shares, and there are no conversion rights, redemption rights,
or  sinking   fund   established.   All   shares   issued  are  fully  paid  and
non-assessable, and no shareholder is liable for further calls or assessment.

The Registrant does not have any preferred shares or other  preference  security
which is authorized or which may be issued.

(b) Debt Securities to be Registered
------------------------------------

Not applicable, inasmuch as there are no debt securities of the Registrant to be
registered.

(c) American Depository Receipts to be Registered
-------------------------------------------------

Not  applicable,  inasmuch as there are no American  Depository  Receipts of the
Registrant to be registered.

(d) Other Securities to be Registered
-------------------------------------

Not applicable,  inasmuch as there are no other  securities of the Registrant to
be registered.

PART III
--------

Item 15  DEFAULTS UPON SENIOR SECURITIES
         --------------------------------

         None

Item 16  CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES
         -----------------------------------------------------------------------
43

There have been no  modifications  to the constituent  instruments  defining the
rights of the holders of the Common shares.  The rights  evidenced by the Common
Shares  have not  been  materially  limited  or  qualified  by the  issuance  or
modification of any other class of securities or debt.

PART IV
-------

Item 17  FINANCIAL STATEMENTS
         --------------------

See the Consolidated  Financial Statements listed in Item 19 hereof and filed as
part of this Registration Statement.

These financial  statements were prepared in accordance with generally  accepted
accounting  principles  in Canada and are  expressed in Canadian  dollars.  Such
financial  statements  contain a discussion  of the material  variations  in the
accounting  principles,  practices  and methods used in preparing  the financial
statements from the principles,  practices and methods generally accepted in the
United States. For a history of exchange rates in effect for Canadian dollars as
against U.S. dollars, see Item 1 - "Description of Business", above.

Item 18  FINANCIAL STATEMENTS
         --------------------

(Inapplicable - see Item 17 "Financial Statements" above)

Item 19  FINANCIAL STATEMENTS AND EXHIBITS
         ---------------------------------

(a) Financial Statements
------------------------

Consolidated  balance sheets of the Registrant for the years ended September 30,
1996 and 1995, and Consolidated  Statement of Operations,  Shareholders'  Equity
and Changes in Financial Position for each of the years in the three year period
ended September 30, 1996.

(b) Exhibits
------------

 1.1   Consolidated Financial Statements for the year ended September 30, 1996
44

SIGNATURES
----------

Pursuant to the  requirements  of Section 12 of the  Securities  Exchange Act of
1934, the Registrant  certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.

DATED at Calgary, Alberta, this 26 day of March, 1997.

                                            GOLDEN RULE RESOURCES LTD.

                                            By:  /s/  ROBERT J. LEMMON
                                                --------------------------------
                                                Robert J. Lemmon, Treasurer
Doane Raymond [GRAPHIC OMITTED]

Chartered Accountants
Canadian Member Firm of
Grant Thornton International

                                                      Golden Rule Resources Ltd.
                                                          Consolidated Financial
                                                                      Statements
                                                              September 30, 1996
Contents

                                                                    Page
                                                                    ----

Auditors' Report                                                       1

Consolidated Balance Sheets                                            2

Consolidated Statements of Operations                                  3

Consolidated Statements of Shareholders' Equity                        4

Consolidated Statements of Changes in Financial Position               5

Notes to the Consolidated Financial Statements                      6-24

Doane Raymond [GRAPHIC OMITTED]
Doane Raymond [GRAPHIC OMITTED]

Chartered Accountants
Canadian Member Firm of
Grant Thornton International

Auditors' Report

To the Shareholders of
Golden Rule Resources Ltd.

We have audited the consolidated balance sheets of Golden Rule Resources Ltd. as
at September 30, 1996 and 1995 and the  consolidated  statements of  operations,
shareholders'  equity and changes in financial position for each of the years in
the three year period ended September 30, 1996.  These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion,  these consolidated  financial statements present fairly, in all
material  respects,  the  financial  position of the Company as at September 30,
1996 and 1995 and the results of its operations and the changes in its financial
position for each of the years in the three year period ended September 30, 1996
in accordance with generally accepted accounting principles.

Calgary, Alberta                                   /S/ Doane Raymond
December 3, 1996                                   -----------------------------
                                                   Chartered Accountants

Suite 1900, 500 - 4 Avenue S.W.
Calgary, Alberta
T2P 2V6
Tel: (403) 260-2500
Fax: (403) 260-2571                                                           1
-----------------------------------------------------------------------------------------
Golden Rule Resources Ltd.
Consolidated Balance Sheets
September 30                                                1996                 1995
-----------------------------------------------------------------------------------------

                                     ASSETS
CURRENT
Cash                                                $    5,446,930       $    2,299,936
  Accounts receivable Note 12                                381,320              339,006
  Inventory Note 4                                         3,266,056                 -
                                                     ---------------       --------------

                                                           9,094,306            2,638,942
INVESTMENTS Note 5                                         1,922,049            2,136,133
PRODUCTION PROPERTY AND EQUIPMENT Note 6                  24,612,815           13,873,427
EXPLORATION PROPERTIES Note 7                             15,375,270           13,445,799
OTHER ASSETS Note 8                                          434,381              204,017
                                                      --------------       --------------
                                                      $   51,438,821       $   32,298,318
                                                      ==============       ==============

                                   LIABILITIES
CURRENT
  Accounts payable and accrued liabilities            $    4,041,289       $      554,284
  Current portion of long-term debt Note 9                 2,730,955                 -
                                                      --------------       --------------
                                                           6,772,244              554,284

LONG-TERM DEBT Note 9                                        264,847                 -
DEFERRED INCOME TAXES                                      1,347,400            1,403,400
MINORITY INTEREST                                          6,806,248            4,693,731
                                                      --------------       --------------
                                                          15,190,739            6,651,415
                                                      --------------       --------------

                              SHAREHOLDERS' EQUITY
CAPITAL STOCK Note 11                                     42,097,891           31,435,173
CONTRIBUTED SURPLUS                                          172,594              172,594
DEFICIT                                                   (6,022,403)          (5,960,864)
                                                      --------------       --------------
                                                          36,248,082           25,646,903
                                                      --------------       --------------
                                                      $   51,438,821       $   32,298,318
                                                      ===============      ===============
------------------------------------------------------------------------------------------

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

Approved on behalf of the Board

                               Director                              Director
-----------------------------            --------------------------

                              See accompanying notes to the financial statements.
------------------------------------------------------------------------------------------

Doane Raymond [GRAPHIC OMITTED]                                                2
-------------------------------------------------------------------------------------------------------------
Golden Rule Resources Ltd.
Consolidated Statements of Operations
Years Ended September 30                                 1996                  1995                 1994
-------------------------------------------------------------------------------------------------------------

REVENUE
Interest                                           $    260,968          $    234,433          $    282,006
  Recovery of indirect costs and other                    116,280               105,196               107,215
                                                     ------------          ------------          ------------

                                                          377,248               339,629               389,221
                                                     ------------          ------------          ------------

EXPENSES
  General and administrative                              983,228               671,978               539,193
  Amortization and depreciation                            29,294                25,700                37,900
                                                     ------------          ------------          ------------

                                                        1,012,522               697,678               577,093
                                                     ------------          ------------          ------------

LOSS FROM OPERATIONS                                     (635,274)             (358,049)             (187,872)
                                                     ------------          ------------          ------------

OTHER
  Gain on disposal of investments                         750,529                84,959               458,097
  Abandonments and write-down of
    exploration properties                             (1,345,895)             (757,637)           (1,133,418)
                                                     ------------          ------------          ------------

                                                         (595,366)             (672,678)             (675,321)
                                                     ------------          ------------          ------------

LOSS BEFORE INCOME TAXES                               (1,230,640)           (1,030,727)             (863,193)

INCOME TAXES Note 13                                     (478,000)              257,536               122,200
                                                     ------------          ------------          ------------

LOSS BEFORE THE UNDERNOTED                             (1,708,640)             (773,191)             (740,993)

  Gain on reduction of interest in
    affiliates and subsidiaries                           807,386               101,515                39,220
  Equity in income (loss) of investees                     36,769              (124,335)               53,049
  Minority interests                                      802,946               221,491               664,708
                                                     ------------          ------------          ------------

NET (LOSS) EARNINGS                                  $    (61,539)         $   (574,520)         $     15,984
                                                     ============          ============          ============

(LOSS) EARNINGS PER SHARE                            $     (0.003)         $      (0.04)         $       0.00
                                                     ============          ============          ============

Weighted average number of shares outstanding          20,503,474            15,555,457            14,061,486
                                                     ============          ============          ============

               See accompanying notes to the financial statements.

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

Doane Raymond [GRAPHIC OMITTED]                                                                             3
-----------------------------------------------------------------------------------------------------------------------
Golden Rule Resources Ltd.
Consolidated Statements of Shareholders' Equity
Years Ended September 30
-----------------------------------------------------------------------------------------------------------------------
                                                                                                           Retained
                                                       Common Shares                  Contributed          Earnings
                                                  Number            Amount              Surplus            (Deficit)
                                                  ------            ------              -------            ---------
                                                                   (Note 10)
Balance, September 30, 1993                    11,543,477         $19,696,154         $   172,594         $(5,402,328)

Shares issued for cash:
  Exercise of stock options
  net of issue expenses of
  $2,080                                        1,028,647             659,178                --                  --

  Private placements net of
  issue expenses of $458,596                    2,800,000           5,270,904                --                  --

  Exercise of warrants net of
  issue expenses of $12,178                       183,333             222,645                --                  --

Net earnings                                         --                  --                  --                15,984
                                              -----------         -----------         -----------         -----------

Balance, September 30, 1994                    15,555,457          25,848,881             172,594          (5,386,344)

Shares issued for shares of
Waddy Lake Resources Inc. 
net of issue expenses of
$94,339 (Note 3)                                3,762,007           5,586,292                --                  --

Net loss                                             --                  --                  --              (574,520)
                                              -----------         -----------         -----------         -----------

Balance, September 30, 1995                    19,317,464          31,435,173             172,594          (5,960,864)

Shares issued for cash
  Pursuant to a public offering
  (net of expenses of issue
  of $559,459)                                  4,218,000           9,563,741                --                  --

  Exercise of stock options
  and warrants                                    565,117             668,977                --                  --

Shares issued for properties                      200,000             430,000                --                  --

Net loss                                             --                  --                  --               (61,539)
                                              -----------         -----------         -----------         -----------

Balance, September 30, 1996                    24,300,581         $42,097,891         $   172,594         $(6,022,403)
                                              ===========         ===========         ===========         ===========

               See accompanying notes to the financial statements.

----------------------------------------------------------------------------------------------------------------------
Doane Raymond [GRAPHIC OMITTED]                                                                                      4
--------------------------------------------------------------------------------------------------------
Golden Rule Resources Ltd.
Consolidated Statements of Changes in Financial Position
Years Ended September 30                                 1996                1995             1994
--------------------------------------------------------------------------------------------------------

FINANCIAL RESOURCES WERE PROVIDED BY:

OPERATING ACTIVITIES
Cash from operations
    Net (loss) earnings                              $    (61,539)      $   (574,520)      $     15,984
    Items not involving cash Note 15                     (544,441)           205,907           (165,956)
                                                     ------------       ------------       ------------

                                                         (605,980)          (368,613)          (149,972)
  Net change in non-cash operating
    working capital Note 16                            (3,862,654)           702,782           (577,948)
                                                     ------------       ------------       ------------

                                                       (4,468,634)           334,169           (727,920)
                                                     ------------       ------------       ------------
FINANCING ACTIVITIES
  Issue of shares for cash                              9,794,718               --            6,152,727
  Issue of shares by subsidiaries to
    minority shareholders                               2,094,632            882,750            224,587
  Issue of shares to acquire minority
    interest in Waddy Lake                                   --            5,586,292               --
  Issue of shares for properties                          430,000               --                 --
  Long-term debt                                        2,995,802               --                 --
  Non-operating accounts payable                        4,041,289               --                 --
                                                     ------------       ------------       ------------

                                                       19,356,441          6,469,042          6,377,314
                                                     ------------       ------------       ------------
INVESTING ACTIVITIES
  Option payments and other recoveries                     64,000             15,000             24,000
  Proceeds on disposal of investments                   2,806,709          1,541,106          1,301,081
  Repayment of advances                                      --              688,197               --
                                                     ------------       ------------       ------------

                                                        2,870,709          2,244,303          1,325,081
                                                     ------------       ------------       ------------
FINANCIAL RESOURCES GENERATED FROM
 OPERATING, FINANCING AND INVESTING
 ACTIVITIES                                            17,758,516          9,047,514          6,974,475
                                                     ------------       ------------       ------------

FINANCIAL RESOURCES WERE USED IN:

INVESTING ACTIVITIES
  Acquisition of minority interest in
    Waddy Lake Note 3                                        --            5,810,637               --
  Exploration property additions                        3,339,366          2,165,128          1,349,346
  Production property and equipment additions          10,235,388          1,417,823          4,426,144
  Reclamation deposit                                     504,000               --                 --
  Investments and advances                                177,110            889,483             11,614
  Other asset additions                                   355,658              1,838               --
                                                     ------------       ------------       ------------

                                                       14,611,522         10,284,909          5,787,104
                                                     ------------       ------------       ------------

INCREASE (DECREASE) IN CASH                             3,146,994         (1,237,395)         1,187,371
CASH, beginning of year                                 2,299,936          3,537,331          2,349,960
                                                     ------------       ------------       ------------

CASH, end of year                                    $  5,446,930       $  2,299,936       $  3,537,331
                                                     ============       ============       ============

               See accompanying notes to the financial statements

---------------------------------------------------------------------------------------------------------
Doane Raymond   [GRAPHIC OMITTED]                                                                       5
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

1.   NATURE OF OPERATIONS

     Golden  Rule   Resources  Ltd.  is  engaged  in  the  business  of  mineral
     exploration and development.  Since  inception,  the efforts of the Company
     have been  devoted  to the  acquisition,  exploration  and  development  of
     mineral  properties.  To date  the  Company  has not  received  significant
     revenue from mining  operations and is considered to be in the  development
     stage.

     Mineral properties,  including exploration and production  properties,  are
     recognized in these financial  statements in accordance with the accounting
     policies outlined in Note 2.  Accordingly,  their carrying values represent
     costs incurred to date, net of recoveries,  abandonments  and  write-downs,
     and do not necessarily reflect present or future values. The recoverability
     of  these  amounts  is  dependent   upon  the  existence  of   economically
     recoverable  mineral  reserves,  the  ability  of  the  Company  to  obtain
     necessary   financing  to  complete  their   development  and  upon  future
     profitable operations.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     These  consolidated  financial  statements have been prepared in accordance
     with generally accepted accounting  principles (GAAP) in Canada, and comply
     in all  material  respects  with  GAAP  in the  United  States,  except  as
     disclosed in Note 17.

     Principles of Consolidation

     The consolidated  financial statements include the accounts of the Company,
     and the following subsidiary companies:

                                                       1996          1995 
                                                       ----          ----

     Golden Rule Resources Inc.                         100%          100%
     GR Capital Corporation                             100%          100%
     Manson Creek Resources Ltd.                         35%           46%
     Northern Abitibi Mining Corp.                       39%           42%
     Hixon Gold Resources Inc.                           46%           63%
     Waddy Lake Resources Inc.                          100%          100%

     The accounts of  subsidiary  corporations  in which the Company  holds less
     than a  controlling  interest  but has the ability to exercise  options and
     warrants to achieve  control or which are  effectively  controlled  through
     common officers and directors are included in these consolidated  financial
     statements.

     Acquisition  of interests in subsidiary  corporations  are accounted for by
     the purchase  method.  The excess or deficiency of  consideration  paid for
     shares of the subsidiary  corporations over the book value of their assets,
     at the dates of  acquisition,  is  allocated to mineral  properties  and is
     subject to the accounting policy stated in Note 2.

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

Doane Raymond [GRAPHIC OMITTED]                                                6
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Inventories

     Production  inventories,  comprised  of ore and gold in  process,  and mine
     operating  supplies  are  valued  at the  lower  of  average  cost  and net
     realizable value.

     Mineral Properties and Equipment

     Costs capitalized

     All costs relating to the exploration and development of mineral properties
     are  capitalized  on  an  area  of  interest  basis.  Where  the  Company's
     exploration  commitments for an area of interest are performed under option
     agreements with a third party,  the proceeds from any option payments under
     such  agreements are applied to the area of interest to the extent of costs
     incurred.  The excess,  if any, is credited to operations.  When an area of
     interest  is  abandoned,  the  related  accumulated  costs are  charged  to
     operations.

     When an area of  interest  is  determined  to be  economically  viable  and
     pre-production  activities have commenced,  costs associated with that area
     of interest are  transferred to production  properties and all  development
     costs,  related  financing  costs,  and  initial  start-up  operations  are
     capitalized  until a  commercial  production  level is  deemed to have been
     reached.

     Annually,  a review is  undertaken  to evaluate the  carrying  value of the
     production properties. If it is determined that the net recoverable amount,
     on an  undiscounted  basis,  is  significantly  less than carrying value, a
     write-down to the net recoverable amount is made with a charge to earnings.

     The  amounts  shown for  exploration  properties  represent  costs,  net of
     recoveries,  abandonments  and  write-downs,  to  date  and do not  reflect
     present or future values.

     Depletion and depreciation

     Depletion of production property costs and depreciation of production plant
     and  equipment  costs,  net  of  salvage  value,  are  provided  for on the
     unit-of-production basis once commercial production is achieved.

     Equipment

     Equipment  is  recorded  at cost.  Depreciation  is provided on a declining
     balance basis at annual rates of 20% - 30%.

     Flow-Through Common Shares

     The Company credits the full amount of the proceeds of flow-through shares,
     (which transfer the deductibility of exploration expenses to the investor),
     including the premium paid for such tax deductions, to capital stock.

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

Doane Raymond [GRAPHIC OMITTED]                                                7
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Joint Interests

     Certain  of  the  Company's  exploration  and  development  activities  are
     conducted jointly with others.  These financial statements reflect only the
     Company's proportionate interest in such activities.

     Investments

     Investments  in  corporations  in which  the  Company  is able to  exercise
     significant  influence are accounted  for by the equity  method.  Portfolio
     investments  are carried at cost, less provision for declines in value that
     are considered to be other than temporary.

     Translation of Foreign Currencies

     Monetary  assets and  liabilities  denominated  in foreign  currencies  are
     translated  into  Canadian  dollars  at the  year-end  rates  of  exchange.
     Revenues and expenses are  translated at exchange  rates  prevailing on the
     dates on which  such items are  recognized  in  earnings.  Gains and losses
     arising  from the  restatement  of  foreign  currency  monetary  assets and
     liabilities  at each period end are included in earnings,  except for those
     gains and losses relating to long-term  debt.  Gains and losses relating to
     long-term debt are deferred and amortized on a straight-line basis over the
     remaining term of the debt.

     Hedging Transactions

     To manage its exposure to  fluctuations  in the market price of gold and to
     establish minimum prices for its future production, the Company enters into
     gold hedging  contracts.  Gains and losses on these  contracts  will not be
     recognized  in income  until  reflected  in sales  revenue when the related
     production is delivered.

     Cash

     Cash is  defined as cash and cash  equivalents  (including  term  deposits,
     government  securities  and  commercial  and  financial  paper)  having  an
     original maturity of three months or less.

3.   BUSINESS COMBINATION

     On September 26, 1995, the shareholders of the Company and the shareholders
     of Waddy Lake Resources Inc.  (Waddy Lake),  (a 54% held  subsidiary of the
     Company),  approved  a Plan of  Arrangement  subject  to  final  regulatory
     approval which was received October 12, 1995. Under the Plan of Arrangement
     the Company  acquired the  minority  interest in Waddy Lake through a share
     for share exchange.  Waddy Lake shareholders received 0.53 common shares of
     the Company  for each Waddy Lake share  resulting  in the  Company  issuing
     3,762,007  common  shares  at a deemed  price of $1.51  per share for total
     consideration  of  $5,680,631.  The purchase of the  remaining  interest in
     Waddy Lake was accounted for using the purchase  method of accounting.  Net
     assets acquired were as follows:

--------------------------------------------------------------------------------
Doane Raymond [GRAPHIC OMITTED]                                                8
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

3.   BUSINESS COMBINATION (Continued)

            Production property                             $   4,086,892
            Increase to fair market value                       3,600,294
                                                            -------------
                                                                7,687,186

            Mineral properties                                     66,289
            Working capital deficiency                           (113,638)
            Long-term debt                                     (1,829,200)
                                                            -------------
                                                            $   5,810,637
                                                            =============

            Consideration
              Issue of common shares                        $   5,680,631
              Cash - expenses related to acquisition              130,006
                                                            -------------
                                                            $   5,810,637
                                                            =============

     The effect on the  consolidated  financial  statements  with respect to the
     acquisition of the 45.73%  minority  interest in Waddy Lake was to increase
     share capital by $5,586,292  (after  deducting  issue expenses of $94,339),
     decrease  minority  interest  by  $2,210,343  and  to  increase  production
     property by $3,600,294.

     Had the acquisition  occurred at the beginning of the 1995 fiscal year, net
     loss for the year would have been $572,151 and loss per share $0.04.

4.   INVENTORY                                 1996               1995
                                           -------------       -----------

     Production inventories               $   3,029,360        $        -
     Materials and supplies                     236,696                 -
                                          -------------        -----------
                                          $   3,266,056        $        -
                                          =============        =========== 

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

[GRAPHIC OMITTED]                                                             9
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------
5.   INVESTMENTS                                                               1996                   1995
                                                                         ----------------        ---------------
                                                                            Carrying                Carrying
                                                                              Value                  Value
                                                                         ----------------        ---------------
Portfolio investments (market value $1,127,616;
        1995 - $1,322,709)                                               $        622,893        $        873,746

      Equity investments:
        Stade Exploration Inc. (28.58%; 1995 - 28.58%)
          (market value $1,035,276; 1995 - $1,552,914)                          1,299,156               1,262,387
                                                                         ----------------        ----------------
                                                                         $      1,922,049        $      2,136,133
                                                                         ================        ================

6.   PRODUCTION PROPERTY AND
      EQUIPMENT                                         1996                   1995                    1994
                                                  ----------------       ----------------        ----------------

      Production property

        Balance, beginning of year                $     12,199,594       $      7,364,726        $      3,450,352
        Costs incurred                                   6,592,101              1,234,574               3,914,374
        Preproduction operating costs                    1,961,791                   -                       -
        Acquisition of minority interest
          in Waddy Lake Resources Inc.
          - fair market value increment                       -                 3,600,294                    -
                                                  ----------------       ----------------         ---------------
        Balance, end of year                            20,753,486             12,199,594               7,364,726
                                                  ----------------       ----------------         ---------------

      Production equipment

        Balance, beginning of year                       1,673,833              1,490,585                 978,815
        Costs incurred                                   1,681,496                183,248                 511,770
                                                  ----------------       ----------------        ----------------
        Balance, end of year                             3,355,329              1,673,833               1,490,585
                                                  ----------------       ----------------        ----------------
      Reclamation deposit                                  504,000                   -                       -
                                                  ----------------       ----------------        ----------------
                                                  $     24,612,815       $     13,873,427        $      8,855,311
                                                  ================       ================        ================
No provision  for  depletion and  depreciation  of production  property and
     equipment  has been  recorded as the property  has not attained  commercial
     production.

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

Doane Raymond [GRAPHIC OMITTED]                                               10
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

6.   PRODUCTION PROPERTY AND EQUIPMENT (Continued)

     Future   reclamation  costs  are  estimated,   based  upon  current  costs,
     regulations  and  industry  practices,  to be  approximately  $504,000.  In
     accordance  with  provincial  regulations,  the Company has  established an
     irrevocable  letter of credit, in favor of the Province of Saskatchewan for
     this  amount.  The letter of credit is secured by a term  deposit  which is
     included in production property costs.

     Expected  recoveries on reclamation are estimated to exceed all such future
     estimated costs.
7.    EXPLORATION PROPERTIES                          1996                  1995                 1994
                                                  --------------       --------------        --------------
Mineral Claims

        Balance, beginning of year                $    2,761,938       $    1,941,910        $    1,486,515
          Costs incurred                                 784,423            1,003,012               870,183
          Abandonments and write-downs                  (652,611)            (182,984)             (414,788)
                                                  --------------       --------------        -------------- 
        Balance, end of year                           2,893,750            2,761,938             1,941,910
                                                  --------------       --------------        --------------

      Exploration and Development Expenditures

        Balance, beginning of year                    10,683,861           10,141,731             9,972,160
          Costs incurred                               2,554,943            1,131,783               912,201
          Abandonments and write-downs                  (693,284)            (574,653)             (718,630)
          Options and other recoveries                   (64,000)             (15,000)              (24,000)
                                                  --------------       --------------       ---------------
        Balance end of year                           12,481,520           10,683,861            10,141,731
                                                  --------------       --------------        --------------
                                                  $   15,375,270       $   13,445,799        $   12,083,641
                                                  ==============       ==============        ==============
Included in mineral properties are Venezuelan  properties,  with a carrying
     value  of  $1,295,000,  held  by the  Company's  subsidiary,  Manson  Creek
     Resources  Ltd.,  (Manson  Creek).  As a result of  political  and economic
     instability  in Venezuela  and the  uncertainty  surrounding  the future of
     mineral  concessions held by Manson Creek, the value of Venezuelan  mineral
     properties may differ  significantly from their carrying value.  Management
     believes that the ultimate  value could fall anywhere in the range of $1 to
     the current  carrying  value of  $1,295,000  depending  upon the outcome of
     events in  Venezuela.  The effect on earnings of the maximum  write-down to
     mineral  properties,  assuming that the Company's  interest in Manson Creek
     remains at 35%,  would be a reduction  of earnings  before  income taxes of
     $453,250.

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

Doane Raymond [GRAPHIC OMITTED]                                               11
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

8.   OTHER ASSETS                                    1996                1995
                                                   ---------          ----------

     Equipment                                     $ 405,951          $ 395,414
     Accumulated depreciation                       (324,371)          (295,077)
                                                   ---------          --------- 

                                                      81,580            100,337

      Long-term debt issue costs                     122,873               --
      Other                                          229,928            103,680
                                                   ---------          ---------
                                                   $ 434,381          $ 204,017
                                                   =========          =========

     Costs  associated  with  establishing  the credit facility (see Note 9) are
     deferred,  net of the deferred tax benefit, and are amortized over the term
     of the credit facility.

9.   LONG-TERM DEBT                                     1996           1995
                                                     ----------    -----------

$US Loan, repayable in 21 consecutive monthly
  payments commencing October, 1996, due
  December 31, 1998                                  $2,995,802    $        --

Less current portion                                  2,730,955             --
                                                      ---------    ----------- 

                                                     $  264,847    $        --
                                                     ==========    ===========  

     Pursuant to a Credit  Facility  Agreement dated April 21, 1996, the Company
     was  granted  a loan  facility  in the  amount  of US $5  million,  or gold
     equivalent, comprised of US $4 million to be utilized to partially fund the
     pre-production  capital  requirements  of  the  Komis  property,  and US $1
     million to be utilized to fund cost overruns, followed by general operating
     requirements.  The  Facility  is  secured  by a first  charge  on the Komis
     property and substantially all Canadian assets of the Company as well as an
     assignment of all hedging  contracts.  Security for the loan reverts to the
     Komis mine assets when mine operating performance  demonstrates that it has
     achieved the operating and cost standards  outlined in the mine development
     plan.  Further,  the Company will be required to deposit US $1 million,  or
     gold  equivalent,  in an account  effective  the date of  completion of the
     Komis  project,  and retain this  account  balance for the  duration of the
     loan.

     On loans  denominated  in US dollars,  the facility  bears  interest at the
     LIBOR  rate plus 3.5% per annum to the  completion  date of the Komis  mine
     development,  and LIBOR rate plus 2.75% per annum thereafter. The effective
     interest rate at September 30, 1996 was 8.9375%.

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

Doane Raymond   [GRAPHIC OMITTED]                                             12
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

9.   LONG-TERM DEBT (Continued)

     In the event that, at the Company's option, the loan is converted to a gold
     loan, the Facility will bear interest at the LIBOR rate, less the gold base
     rate at the commencement of the interest period, plus 3.5% per annum to the
     completion  date of the Komis mine  development;  and LIBOR rate,  less the
     gold base rate at the commencement of the interest  period,  plus 2.75% per
     annum thereafter.

     A commitment fee of 1% per annum  calculated on the undrawn  portion of the
     Facility is payable by the Company.  In addition the Company has  committed
     to  reimburse  the lender for all  withholding  taxes paid on the  lender's
     behalf which are equal to 15% of the interest payments.

10.  HEDGING

     The following represents the Company's hedging programs as at September 30,
     1996:

                                            1997           1998          1999
                                            ----           ----          ----
     Sale/Purchase of Options

     Call options sold (ounces)           23,700         36,300         8,400
     Canadian dollar price                  $586           $586          $586

     Put options purchased (ounces)       23,700         36,300         8,400
     Canadian dollar price                  $525           $525          $525

     In addition to the above,  the Company  has entered  into  Canadian  dollar
     forward  sale  contracts  to sell 9,600  ounces of gold,  for  delivery  on
     various dates to January, 1997, at an average price of $542 per ounce.

     The credit  facility  described  in note 9 requires the Company to maintain
     sufficient  gold hedges to cover the Komis  Mine's  operating  costs for an
     ongoing period of approximately three years.

11.  CAPITAL STOCK

     a) Authorized

          Unlimited number of common shares without nominal or par value

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

Doane Raymond [GRAPHIC OMITTED]                                               13
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

11.  CAPITAL STOCK (Continued)

     b) Outstanding Options and Warrants

          i)   Stock Options

               Under stock option plans, 10% of the outstanding common shares of
               the Company  are,  from time to time,  reserved  for  issuance to
               eligible  participants.   At  September  30,  1996,  options  for
               2,489,100 shares (1995 - 1,959,550  shares) were outstanding with
               exercise  prices  ranging from $1.70 per share to $3.01 per share
               (weighted  average  price being  $2.24 per share) and  expiration
               dates at various times to August 26, 2001.  The exercise price of
               options granted under the plans is equal to the fair value of the
               shares at the date of issuance.

          ii)  Warrants

               At September  30, 1996,  550,000  share  purchase  warrants  were
               outstanding  of which  350,000,  issued in  conjunction  with the
               credit  facility (Note 9) are exercisable at a price of $2.85 per
               share,  expiring  December  31, 1998 and;  200,000  relating to a
               property  acquisition  are  exercisable  at a price of $2.20  per
               share expiring September 20, 2001.

               During the year,  316,667  warrants  outstanding at September 30,
               1995, relating to a fiscal agency agreement,  were exercised at a
               price of $1.28 per share.

12.  RELATED PARTY TRANSACTIONS

     a)   Corporations  in which certain of the Company's  officers or directors
          are shareholders have provided services,  at usual professional rates,
          as outlined below.
1996               1995                1994
                                                  -----------       ------------        ------------
Geological and exploration              $   161,000       $    163,000        $    214,000
          Direct administrative                       130,000             92,000              50,000
                                                  -----------       ------------        ------------
                                                  $   291,000       $    255,000        $    264,000
                                                  ===========       ============        ============
b)   Included in accounts  receivable  is $68,680 (1995 - $80,779) due from
          companies related by virtue of common management and/or directors.

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

Doane Ryamond [GRAPHIC OMITTED]                                               14
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

13.  INCOME TAXES

     a)   The  provision  for income tax  (expense)  recovery  differs  from the
          result  which  would be obtained by  applying  the  combined  Canadian
          Federal and Provincial income tax rate of approximately  44.6% (1995 -
          44.6%;  1994 - 44.6%) to loss  before  income  taxes.  The  difference
          results from the following:
1996                1995                1994
                                                ------------       -------------       -------------
Computed expected tax recovery        $    549,000       $    460,000        $     385,000

          Increase in taxes resulting
          from the following:
            Losses of subsidiaries for which
              no tax benefit is recorded            (682,000)           (35,000)            (165,000)
            Adjustments and other                   (345,000)          (167,464)             (97,800)
                                                ------------       ------------        -------------

          Income tax (expense) recovery         $   (478,000)      $    257,536        $     122,200
                                                ============       ============        =============
b)   The Company's subsidiaries have accumulated losses for Canadian income
          tax purposes of approximately  $2,843,000 and losses for United States
          income tax purposes of approximately $522,000, the related benefits of
          which have not been  recognized  in the financial  statements.  Unless
          sufficient  taxable  income is earned  by the  subsidiaries  in future
          years these  losses will expire at various  dates to the year 2003 and
          2011 for Canadian and United States purposes respectively.

     c)   The Company and its subsidiaries  have available the following amounts
          which  may be  deducted,  at the  annual  rates  indicated  below,  in
          determining taxable income of future years.
1996               1995                1994             Rate
                                                 --------------     ---------------     ---------------        ----
Canadian exploration expense          $    18,635,000     $    11,024,000     $     8,940,000        100%
          Canadian development expense                2,598,000           2,286,000           1,368,000         30%
          Canadian oil and gas property
           expense                                        6,000               6,000               7,000         10%
          Foreign exploration and
            development expense                       1,460,000             461,000             340,000         10%
          Undepreciated capital cost                  2,148,000             801,000             596,000     10-100%
          Share issue costs                           1,175,000             351,000             131,000         20%
                                                 --------------     ---------------     ---------------
                                                  
                                                 $   26,022,000     $    14,929,000     $    11,382,000
                                                 ==============     ===============     ===============
--------------------------------------------------------------------------------

Doane Raymond [GRAPHIC OMITTED]                                               15
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

14.   SEGMENTED INFORMATION

     a)   Identifiable assets by significant geographic segment are as follows:

                                             1996                1995
                                        -------------        -------------

              Canada                    $  48,249,349        $  30,181,754
              South America                 1,313,193            1,292,694
              United States                   498,263              425,516
              Mexico                          425,095              296,572
              Africa                          952,921              101,782
                                        -------------        -------------
                                        $  51,438,821        $  32,298,318
                                        =============        =============

     b)   Segmented loss before income taxes by significant  geographic  segment
          is as follows:
1996                     1995                     1994
                                                        ------------             ------------             ------------
Loss from operations
           Canada                                       $  (635,274)             $  (358,049)             $  (187,872)
           South America                                       --                       --                       --
           United States                                       --                       --                       --
                                                        -----------              -----------              -----------
                                                           (635,274)                (358,049)                (187,872)
                                                        -----------              -----------              -----------

         Gain on disposal of investment
          Canada                                        $   750,529              $    84,959              $   458,097
          South America                                        --                       --                       --
          United States                                        --                       --                       --
                                                        -----------              -----------              -----------
                                                            750,529                   84,959                  458,097
                                                        -----------              -----------

          Abandonments and write-down of
          exploration properties
           Canada                                        (1,273,924)                (267,916)              (1,133,418)
           South America                                    (71,971)                (457,637)                    --
           United States                                       --                    (32,084)                    --
                                                        -----------              -----------              -----------
                                                         (1,345,895)                (757,637)              (1,133,418)
                                                        -----------              -----------

         Loss before income taxes
          Canada                                         (1,158,669)                (541,006)                (863,193)
          South America                                     (71,971)                (457,637)                    --
          United States                                        --                    (32,084)                    --
                                                        -----------              -----------              -----------

                                                        $(1,230,640)             $(1,030,727)             $  (863,193)
                                                        ===========              ===========              ===========
Revenue is wholly  attributable  to Canadian  operations in 1996,  1995 and
     1994.

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

Doane Raymond [GRAPHIC OMITTED]                                               16
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------
15.   NON-CASH OPERATING ITEMS                               1996                    1995                    1994
                                                         ------------            ------------            ------------
Operating items not involving cash are:

      Minority interest                                  $  (802,946)            $  (221,491)            $  (664,708)
      Equity in (income) loss of investees                   (36,769)                124,335                 (53,049)
      Deferred income taxes                                  478,000                (293,800)               (122,200)
      Amortization and depreciation                           29,294                  25,700                  37,900
      Abandonments and write-downs                         1,345,895                 757,637               1,133,418
      Gain on disposal of investments                       (750,529)                (84,959)               (458,097)
      Gain on reduction of interest in
      affiliates and subsidiaries                           (807,386)               (101,515)                (39,220)
                                                         -----------             -----------             ----------- 
                                                         $  (544,441)            $   205,907             $  (165,956)
                                                         ===========             ===========             =========== 

16.   NET CHANGE IN NON-CASH OPERATING
        WORKING CAPITAL                     1996                1995                1994
                                       --------------       ------------        -------------

      Accounts receivable              $      (42,314)      $    322,002        $    (473,394)
      Accounts payable                       (554,284)           380,780             (104,554)
      Inventory                            (3,266,056)              -                    -
                                       --------------       ------------        -------------                                   

                                       $   (3,862,654)      $    702,782        $    (577,948)
                                       ==============       ============        =============
17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES

     The Company follows Canadian generally accepted accounting principles
     ("GAAP") which are different in some respects from those  applicable in the
     United States and from practices prescribed by the United States Securities
     and Exchange Commissions, as described below:

     a)   Income (loss) from operations

          Under Canadian GAAP interest  income is included in the  determination
          of income (loss) from  operations.  Under US GAAP  interest  income is
          excluded from "income from  operations"  and is categorized as "other"
          in the consolidated statement of operations.

          In  addition,  under US GAAP the  following  items are included in the
          determination of income (loss) from operations:

          -    costs related to the acquisition,  exploration and development of
               mineral  properties which have not led to the identification of a
               commercially feasible property are expensed in the year incurred.

          -    carrying  costs related to the Jolu Mill are expensed in the year
               incurred.

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

Doane Raymond [GRAPHIC OMITTED]                                               17
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES 
     (Continued)

     b)   Acquisition of additional interest in subsidiaries

          The Company has determined that its current policy with respect to the
          acquisition of interest in subsidiary  companies and the allocation of
          costs  under  the  purchase  method  as set out in Note  2(a) does not
          differ materially from US GAAP as set out in A.P.B. 16.

     c)   Deferred exploration costs

          Under Canadian GAAP the costs relating to the acquisition, exploration
          and  development of mineral  properties are  capitalized on an area of
          interest basis and charged  against income through  unit-of-production
          depletion,  when  properties  are developed to the stage of commercial
          production.  Costs related to abandoned properties,  and costs related
          to properties  which the Company has  assessed,  based on the price of
          gold and general economic and market  conditions,  as not viable,  are
          charged to other expenses in the year in which such  determination  is
          made.

          Under  US GAAP  the  costs  relating  to the  exploration  of  mineral
          properties as defined above,  which have not led to the identification
          of a commercially feasible property, are expensed in the year incurred
          and are charged to income  (loss) from  operations.  As a result,  all
          costs associated with the exploration  properties  described in Note 7
          have been written off for US GAAP purposes.  The deferred  exploration
          costs under US GAAP as set out in the table below relate solely to the
          Komis deposit.

     d)   Jolu Mill carrying costs

          Under US GAAP the  carrying  costs  related  to the Jolu Mill would be
          expensed in the year  incurred,  while under Canadian GAAP these costs
          have been capitalized to the carrying value of the mill.

     e)   Long-term debt

          Foreign  currency  exchange  gains  and  losses  from  translation  of
          long-term  debt are deferred and amortized over the period to maturity
          under Canadian GAAP. United States accounting  principles require that
          such  amounts  be charged  to  earnings  in the year in which they are
          incurred.  The Company has determined  that the effect on earnings for
          the year ended September 30, 1996 is immaterial.

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

Doane Ryamond [GRAPHIC OMITTED]                                               18
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES
     (Continued)

     f)   Fair value of financial instruments

          U.S.  GAAP  requires  the  disclosure  of the fair value of  financial
          instruments as described below.  Such fair value estimates are made on
          the dates  indicated  based on  relevant  market  information  and the
          nature and terms of the financial instruments.  Although management is
          not aware of any factors which would affect the  estimated  fair value
          amount  significantly,  such  amounts  have not  been  comprehensively
          re-valued for purposes of these  financial  disclosures  subsequent to
          the  balance  sheet  dates  and  estimates  of  fair  value  at  dates
          subsequent  to  September  30, 1996 and 1995 may differ  significantly
          from the amounts presented.

          Fair  value  approximates  the  amounts  reflected  in  the  financial
          statements  for  cash  and  cash  equivalents,   accounts  receivable,
          accounts payable and long-term debt.

     g)   Segmented information

          Geographical  segmented  information  is  presented  in the  financial
          statements.  This information is not required in order to conform with
          U.S. GAAP.

     h)   Non-cash financing and investing activities

          Under Canadian GAAP,  activities  that do not affect cash are included
          in the  determination  of financing  and  investing  activities in the
          statement of changes in financial  position.  U.S.  GAAP  requires the
          exclusion of activities that do not affect cash from the determination
          of financing and investing  activities.  Under U.S. GAAP, the issue of
          shares for mineral properties amounting to $930,000 (1995 - $nil; 1994
          - $nil) would be excluded from the statement of cash.

          Under U.S. GAAP,  the purchase of the minority  interest in Waddy Lake
          in  1995  by way of  issuance  of  common  shares  in  the  amount  of
          $5,586,292 would not be a use and source of cash, respectively.

     i)   Gain on reduction of interest in subsidiaries and affiliates

          Under Canadian GAAP, an investor should include in income any dilution
          gains or losses  resulting from the issue of shares by a subsidiary or
          equity  investee.  It is the position of the  Securities  and Exchange
          Commission in the U.S. that gain recognition is not appropriate in the
          case of subsidiaries  and equity investees that are in the development
          stage.  The  subsidiaries  and  equity  investees  of Golden  Rule are
          engaged in the acquisition  and development of mineral  properties and
          are considered to be in the development stage,  therefore,  changes in
          the  Company's  proportionate  shares of the  subsidiaries  and equity
          investees  resulting  from the issuance of shares  should be accounted
          for as an equity  transaction  under U.S. rules. Any write-down from a
          permanent  impairment in value of the  investment in the  subsidiaries
          and equity investees would be charged firstly to shareholder's  equity
          in the amount of any previous related credits and then to earnings.

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

Doane Raymond [GRAPHIC OMITTED]                                               19
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES 
      (Continued)

     The following  dilution  gains and losses were incurred in the years noted.
     The  transactions  giving  rise to the gains and  losses are  described  in
     detail below:
1996               1995               1994
                                              ------------       -----------        ------------
     Subsidiaries
Northern Abitibi Mining Corp.         $     (8,942)      $    46,848        $    (2,368)
        Hixon Gold Resources Inc.                  459,324            56,472             17,471
        Manson Creek Resources Ltd.                357,004             2,837             35,635
        Waddy Lake Resources Inc.                     -              (12,777)           (44,189)
                                              ------------       -----------        -----------
                                                   807,386            93,380              6,549
                                              ------------       -----------        -----------
     Equity investments
        Stade Exploration Inc.                        -                8,135             15,305
        Eastfield Resources Inc.                      -                 -                17,366
                                              ------------        ----------       ------------
                                                      -                8,135             32,671
                                              ------------        ----------       ------------
                                              $    807,386        $  101,515       $     39,220
                                              ============        ==========       ============
Northern Abitibi Mining Corp.

     In 1996, the Company recorded a loss of $8,942 when Northern Abitibi issued
     1,250,000 shares pursuant to a private placement for total consideration of
     $250,000 where the price per share was less than the average carrying value
     per share of the  Company's  interest in Northern  Abitibi.  The  Company's
     interest was reduced to 38.9% from 41.7%.

     In 1995,  the  Company  recorded a gain of $46,848  when  Northern  Abitibi
     issued  1,502,000  shares  pursuant  to an  agreement  to  acquire  mineral
     properties  for total  consideration  of $445,084 where the price per share
     exceeded the average carrying value per share of the Company's  interest in
     Northern Abitibi. The Company's interest was reduced to 41.7% from 45.7%.

     In 1994, the Company  recorded a total loss of $2,368 when Northern Abitibi
     issued  300,000  shares on the exercise of stock options and 150,000 shares
     pursuant  to  an  agreement  to  acquire   mineral   properties  for  total
     consideration  of  $105,533.  In each case the price per share  received by
     Northern  Abitibi was less than the average carrying value per share of the
     Company's interest in Northern Abitibi.  The Company's interest was reduced
     to 71.5% from 75.3%.

     Hixon Gold Resources Inc.

     In  1996,  the  Company  recorded  a gain of  $459,324  when  Hixon  issued
     2,220,000  shares  pursuant to four private  placements,  1,186,666  shares
     pursuant  to the  exercise  of  warrants,  112,000  shares  pursuant to the
     exercise of stock  options and 200,000  shares  pursuant to  agreements  to
     acquire  mineral  properties for total  consideration  of  $1,025,460.  The
     Company's interest in Hixon was reduced to 45.8% from 64.7%.

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

Doane Raymond [GRAPHIC OMITTED]                                               20
-------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES
     (Continued)

     Hixon Gold Resources Inc. (continued)

     In 1995,  the Company  recorded a gain of $56,472 when Hixon issued 666,666
     shares pursuant to a private placement for total  consideration of $98,128.
     The Company's interest in Hixon was reduced to 64.7% from 71.3%.

     In 1994,  the Company  recorded a gain of $17,471 when Hixon issued 198,000
     shares  pursuant  to the  exercise of stock  options for total  proceeds of
     $31,680. The Company's interest in Hixon was reduced to 71.3% from 73.5%.

     In the transactions  described for 1996, 1995 and 1994, the price per share
     received  by Hixon  exceeded  the average  carrying  value per share of the
     Company's interest in Hixon.

     Manson Creek Resources Ltd.

     In 1996,  the Company  recorded a gain of $357,004 when Manson Creek issued
     2,200,000  shares pursuant to two private  placements and 1,315,000  shares
     pursuant  to the  exercise  of stock  options  for total  consideration  of
     $2,295,649. The Company's interest was reduced to 34.9% from 46.0%.

     In 1995,  the Company  recorded a gain of $2,837 when Manson  Creek  issued
     338,000 shares pursuant to an agreement to acquire  mineral  properties for
     total  consideration  of $141,160.  The  Company's  interest was reduced to
     46.0% from 47.5%.

     In 1994,  the Company  recorded a gain of $35,635  when Manson Creek issued
     250,000 shares  pursuant to an agreement to acquire a mineral  property for
     total  consideration  of $200,000.  The  Company's  interest was reduced to
     47.5% from 48.6%.

     In the  transactions  described for 1996, 1995 and 1994 the price per share
     received by Manson  exceeded  the average  carrying  value per share of the
     Company's interest in Manson.

     Waddy Lake Resources Ltd.

     In 1995,  the  Company  incurred a loss of $12,777  when Waddy Lake  issued
     105,000  shares on the  exercise  of stock  options  for total  proceeds of
     $23,100.  In 1994,  the Company  incurred a loss of $44,189 when Waddy Lake
     issued  545,000  shares on the exercise of stock options for total proceeds
     of  $147,792.  In each case the price per share  received by Waddy Lake was
     less than the average carrying value per share of the Company's interest in
     Waddy Lake. In 1995, the Company's interest was reduced from 55% to 54%. In
     1994, the Company's  interest,  after  accounting for the acquisition of an
     additional 1.65% interest, was reduced from 57% to 55%.

     Equity investments

     The net  gain of  $8,135  in  1995  and  $32,671  in 1994  incurred  on the
     transactions  by Eastfield  and Stade  resulted  from the exercise of stock
     options or from private placements with outside interests.

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

Doane Raymond [GRAPHIC OMITTED]                                               21
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.   GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES
      (Continued)

     The effect of the above differences on the Company's  financial  statements
     are set out below:
Consolidated Balance Sheet
--------------------------
                                                    1996                                         1995
                                   -------------------------------------         -----------------------------------

                                     Canadian                 U.S.                 Canadian                 U.S.
                                       GAAP                   GAAP                   GAAP                   GAAP
                                   ------------           ------------           ------------           ------------
Exploration properties             $ 15,375,000           $       --             $ 13,445,799           $       --

Production property and
  equipment                          24,612,815             23,625,248             13,873,427             12,976,665

Deferred income taxes                 1,347,400                296,400              1,403,400                976,400

Minority interest                     6,806,248              2,342,422              4,693,731              1,024,082

Deficit                              (6,022,403)           (16,870,414)            (5,960,864)           (16,206,776)

Consolidated Statement of Operations                           1996                   1995                   1994
------------------------------------                       ------------           ------------           ------------

Loss from operations under Canadian GAAP                   $  (635,274)           $  (358,049)           $  (187,872)

Interest income                                               (260,968)              (234,433)              (282,006)
Exploration expenses                                        (3,260,674)            (2,578,375)            (1,929,915)
Carrying charges Jolu Mill                                    (115,135)              (113,153)              (116,895)
                                                           -----------            -----------            -----------
Loss from operations under U.S. GAAP                       $(4,272,051)           $(3,284,010)           $(2,516,688)
                                                           ===========            ===========            ===========
--------------------------------------------------------------------------------

Doane Raymond [GRAPHIC OMITTED]                                               22
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES
      (Continued)
Consolidated Statement of Operations                  1996                    1995                   1994
------------------------------------              ------------            ------------            -----------
Net (loss) income under Canadian GAAP             $   (61,539)            $  (574,520)            $    15,984

Exploration expenses, expensed in
  year incurred                                    (3,260,674)             (2,578,375)             (1,929,915)
Abandonments, added back                            1,345,895                 757,637               1,133,418

Carrying charges Jolu Mill                           (115,135)               (113,153)               (116,895)
Change in gain on disposal of mineral
  properties and other assets                           6,262                 778,421                 156,621
Change in income taxes                                624,000                 (24,700)               (121,400)

Dilution gains adjustment                            (807,386)               (101,515)                (85,777)

Change in minority interest in loss of
  subsidiaries                                        225,856                 836,542                  (9,430)
                                                  -----------             -----------             -----------
Net loss under U.S. GAAP                          $(2,042,721)            $(1,019,663)            $  (957,394)
                                                  ===========             ===========             ===========

Primary loss per share (U.S. GAAP)                $     (0.10)            $     (0.07)            $     (0.07)
                                                  ===========             ===========             ===========
--------------------------------------------------------------------------------

Doane Raymond [GRAPHIC OMITTED]                                               23
--------------------------------------------------------------------------------

Golden Rule Resources Ltd.
Notes to the Consolidated Financial Statements
September 30, 1996 and 1995
--------------------------------------------------------------------------------

17.  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA AND UNITED STATES
     (Continued)

     In addition, U.S. GAAP requires the disclosure of the following:

     a)   Amounts paid for rent, interest and income taxes, the details of which
          are as follows:

                                      1996          1995            1994
                                  -----------    -----------    -----------

            Rent                  $    55,716    $    46,493    $     47,515
            Interest              $      -       $      -       $       -
            Income taxes          $    24,494    $    19,037    $     17,227

     b)   The United  States  Financial  Accounting  Standards  Board has issued
          Statement of Financial  Accounting  Standards No. 109, "Accounting for
          Income  Taxes"  (SFAS 109) which  became  effective  for fiscal  years
          beginning  after December 31, 1992.  SFAS 109 requires  recognition of
          deferred  tax  liabilities  and  assets  for the  expected  future tax
          consequences  of  events  that  have been  included  in the  financial
          statements or tax returns. Under this method, deferred tax liabilities
          and  assets  are  determined  based  on  the  difference  between  the
          financial  statement  and tax bases of assets  and  liabilities  using
          enacted tax rates in effect for the year in which the  differences are
          expected to reverse.

          The Company has  determined  that the  adoption of SFAS 109 would have
          had no effect on the reconciliation as at September 30, 1996.

          At September 30, 1996,  the companies  subsidiaries  have  accumulated
          losses for Canadian  income tax purposes of $2,843,000  and losses for
          United  States  income tax  purposes  of  $522,000  that may be offset
          against  future  taxable  income  through  the  years  2003  and  2011
          respectively.

          Under  Canadian  GAAP,  the  Company  has not  recognized  the related
          benefits of these loss carry-forwards in the financial statements.

          Under US GAAP,  the Company  has fully  reserved  the tax  benefits of
          these  operating  losses  because the likelihood of realization of the
          tax benefits cannot be determined. These carry-forwards are subject to
          review  by  Revenue  Canada,  Taxation  and  by the  Internal  Revenue
          Service.

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

Doane Raymond [GRAPHIC OMITTED]                                              24
Pursuant to the  requirements  of Section 12 of the  Securities  Exchange Act of
1934, the Registrant  certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.

DATED at Calgary, Alberta, this 26day of March, 1997.

                                             GOLDEN RULE RESOURCES LTD.

                                             By: /S/  ROBERT J. LEMMON
                                                --------------------------------
                                                  Robert J. Lemmon, Treasurer
FORM 20-F

               REGISTRATION STATEMENT - GOLDEN RULE RESOURCES LTD.

                                  EXHIBIT INDEX

                                                                          PAGE

1.1      Consolidated Financial Statements for the year ended
         September 30, 1996 including the following:

         i)       Auditors' Report

         ii)      Consolidated Balance Sheet

         iii)     Consolidated Statement of Operation

         iv)      Consolidated Statement of Shareholders Equity

         v)       Consolidated Statement of Change in Financial Position

         vi)      Consolidated Notes to the Financial Statement
EXHIBIT 1.2

 1.2     Schedule

         i)       Auditors' Report                                          55

         ii)      Schedule I Marketable Securities                          56

         iii)     Schedule II Amounts Receivable for Related Parties        57

         iv)      Schedule V Property, Plant and Equipment                  59

         v)       Schedule VI Accumulated Depreciation - Property,
                  Plant and Equipment                                       61