ITEM 1: PRELIMINARY NOTES

Incorporation of Financial Statements

Specifically incorporated by reference and forming part of this annual information form (the "AIF") are the audited financial statements for The Company (the "Company") for the years ended December 31, 2000, 2001 and 2002, together with the Management Discussion and Analysis accompanying such financial statements.
All financial information in this AIF is prepared in accordance with accounting principles generally accepted in Canada ("Canadian GAAP").

Date of Information

All information in this AIF is as of April 24, 2003 unless otherwise indicated.

Forward-Looking Statements

This AIF contains certain forward-looking statements and information relating to the Company that are based on the beliefs of its management as well as assumptions made by and currently available from consultants to the Company. When used in this document, the words "anticipate", "believe", "estimate", and "expect" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. This AIF contains forward-looking statements relating to, among others, compliance with environmental standards, the sufficiency of current working capital, the estimated cost and availability of funding for the continued exploration and development of the Company's mineral exploration properties. The Management Discussion and Analysis (the "MDA") within this AIF, which is incorporated by summarizing the MDAs from the above-mentioned financial statements, also contains forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievement of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking statements.

Currency and Exchange Rates

All monetary amounts in this AIF are expressed in Canadian dollars unless otherwise indicated. The Company's accounts are maintained in Canadian dollars.

ITEM 2: CORPORATE STRUCTURE

Name and Incorporation

The Company was originally incorporated under the name Multinational Resources Inc. pursuant to the Company Act (British Columbia) on February 28, 1980. On June 4, 1986, the Company changed its name to New Guinea Gold Corporation and the Issuer's share capital was consolidated on a 5 old shares for 1 new share basis. The Company's post-consolidation authorized capital was set at 100,000,000 common shares. Also effective June 4, 1996, the Company continued into the Yukon Territory. The office and principal address of the Company is Suite 429 - 470 Granville Street, Vancouver, British Columbia V6C 1V5. The Company's registered and records offices are located at 200 - 204 Lambert Street, Whitehorse, Yukon, Y1A 3T2.

Inter-corporate Relationships

100% acquisition of the the Company's wholly owned subsidiary, Macmin (PNG) Ltd. ("Macmin PNG") was accepted for filing and approved by the TSX Venture Exchange on March 14, 2003. The Company's major shareholder (65%), Macmin Silver Limited's ("Macmin") Managing Director, Robert D. McNeil, is also Chairman, President, CEO and Director of the Company). Mr. Peter McNeil, Director of the Company, is also a Director of Macmin. As a result, the Company and Macmin are non-arms length to one another.

ITEM 3: GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History (December 31, 2000)

The Company is engaged in the business of the acquisition, exploration and development of mineral properties in Papua New Guinea, with the primary aim of developing them to a stage at which they may be exploited profitably. For much of the period from January 1, 2000 to June 2002, the Company's exploration program was dormant, its projects on "care and maintenance" status due to the lack of interest in financings for mineral, specifically gold and silver, exploration.

The Company was party, between 1995 and 2002, to joint venture agreements with Australian listed company Macmin, to earn equity in projects in Papua New Guinea (PNG). Approximately $4.4 million was raised by Canaccord Capital Corporation in mid-1996, which allowed exploration programs to commence on most projects. An Exchange Offering Prospectus was receipted in late-December 1996, and the Vancouver office opened in January 1997. Under a Private Placement Agreement dated 7 May 1996 NGG (then Multinational Resources Inc.) subscribed for 2,700,000 ordinary (common) shares in Macmin Silver Ltd. (then Macmin NL) at an aggregate price of CDN$800,000. During 1996 and 1997 the Company spent approximately $3.0M on the exploration of the PNG projects and defined several areas of significant mineralization.

With further financing becoming difficult in the latter half of 1997, the Board negotiated changes in the joint venture agreements, dropping its interest in all but two of the PNG projects, retaining a 25% equity in the Normanby and Feni Islands Projects.
Two additional financings were completed to January 1998, the first with Macmin which raised $500,000 and the second with Goldcorp ("Goldcorp"), which raised a further $1,500,000. As a result of that financing, after conversion of special warrants, Goldcorp held 42% equity in the company and Macmin held 23%.

While work programs were carried out with varying degrees of success (refer to Technical Summary Reports herein), the Company was experiencing a downturn in both the price of gold and the financial community's ability to raise funds through further equity issues. The market perceived the Company's minority ownership (25%) in the Feni and Normanby projects as a disadvantage in attracting more investment and/or joint venture partners. Goldcorp, already holding a 42% interest in the Company was not interested in advancing further funds to the Company, which was essentially relying on the sale of its shares in Macmin and loans from Macmin to fund its administrative and overhead costs.

In February 28, 2002, Macmin acquired 7,000,000 common shares of the Company from Goldcorp in exchange for 2,500,000 ordinary shares of Macmin. The Macmin shares were subject to escrow periods of 4 months for 1,250,000 shares and 12 months for 1,250,000 shares respectively. This increased Macmin's holding of the Company to 58.06%.
In late 2002, because of an increasing market interest in gold, Macmin decided to use NGG as the public vehicle to raise funds and re-activate exploration and development of its Papua New Guinea Projects. In June 2002, the Company announced it had reached an agreement to acquire Macmin's wholly owned subsidiary, Macmin (PNG) Limited ("Macmin PNG"), which held title to seven exploration licences and one mining lease in PNG. The projects are all advanced gold, or gold/copper projects, three of which are at the feasibility stage. The intent was to reposition Macmin's major gold assets into a separate entity while focusing its own interests on the silver market. A formal Agreement was reached on June 12, 2002 and the terms of the acquisition are as follows:

• NGG to convert debt of $307,017, by the completion of the deal, to shares. Total shares issued were 3,070,175 at a deemed price of $0.10 per share. Regulatory approval was received for the debt settlement in June 2003.
• NGG to issue to Macmin shares equivalent to approximately 10% of its issued capital after the debt conversion. Total shares issued are 2,250,000.
• In the event that production at any mine that is subsequently developed exceeds 50,000 ozs of gold per annum NGG will issue further shares equivalent to 9% of NGG's issued capital at that time.
• NGG will reimburse to Macmin all costs of the transaction, including any PNG stamp duty.
  
• The Agreement was subject to due diligence and both regulatory and shareholder approval.

Also in June 2002, the Company announced a Private Placement of $110,000 from Macmin consideration for which was the issuance of 862,745 shares of the Company at a deemed value of $0.1275 per share. Each share has a non-transferable warrant attached to purchase an additional 862,745 shares for a period of one year at an exercise price of $0.20.

On August 15, 2002 the Company announced it had reached an Agreement with Nanotek Inc. ("Nanotek"), a TSX-V listed company, subsequently re-named Minterra Resources Inc. ("Minterra") wherein Minterra would acquire up to a fifty percent interest in Macmin PNG by incurring CDN $10 million in aggregate expenditures on the Macmin PNG properties, the first $500,000 to be provided to the Company on or before September 15, 2002. While Minterra exerted its best efforts to raise the financing, they were unsuccessful and on October 28, 2002, the Company formally notified Minterra that it was in default of their Agreement but gave Minterra a seven day window of opportunity to advance the initial $500,000 prior to the Company considering offers from other unrelated parties. On January 8, 2003, as there were no forthcoming tangible signs of Minterra being able to meets its financial obligations under the Agreement, the Company formally advised Minterra that the company considered the Agreement to be terminated and that the Company would be negotiating with other interested parties.

On December 9, 2002, the Company announced a Special Meeting of the Shareholders to be held on January 31, 2003 to obtain shareholder approval and ratification of the June 12, 2002 Agreement between the Company and Macmin PNG to acquire 100% of Macmin PNG and consequently the seven gold, gold/copper projects it held. A majority of the disinterested shareholders ratified the Agreement at the January 31, 2003 Special Meeting.

On February 24, 2003 the Company announced it had reached an Agreement with Paccom Ventures Inc. ("Paccom") wherein the Company would option to Paccom a 75% undivided interest in the Feni Gold Project located in New Ireland Province, 160 km East of Rabaul, Papua New Guinea.

Terms of the Agreement are as follows: 800,000 shares of Paccom payable to NGG, in stages, over three years, including 200,000 shares upon Exchange approval. Minimum exploration expenditures totalling CDN $2,500,000, staged over three years, including a minimum expenditure of $500,000 before June 30, 2004. Paccom Ventures Inc. will act as operator. A finders' fee is payable in respect of this agreement, of the lesser amount of either 10%, or the maximum Finder's Fee, equal to 80,000 shares of Paccom, payable in four instalments of 20,000 shares each and as allowed under the policies of the TSX Venture Exchange (the "Exchange").

On February 28, 2003 the Company announced that it had arranged a long-term loan with Macmin for exploration and working capital purposes. Macmin advanced the Company CDN$150,000 for a term of two years or such lesser period as the Company may elect. The loan bears interest at the rate of 4.5% per year, payable on repayment of the loan. As consideration for advancing the loan, Macmin is to receive a bonus of $30,000 equivalent in common shares of the company at a deemed value of $0.10 per share in accordance with the policies of the Exchange. The Loan Agreement was accepted for filing by the Exchange on March 10, 2003.

Treasury Orders for the issuance of shares in respect of the acquisition of Macmin PNG and Bonus Shares related to the long-term loan from Macmin were issued on April 1, 2003.

Significant Acquisitions and Dispositions

The Company received TSX Venture Exchange approval for the acquisition of 100% of Macmin PNG and thus ownership of the seven referenced properties on March 14, 2003. The projects are described in summaries in Item 5 herein and terms of the acquisition may be referred to in the June 12, 2002 Agreement referenced above. Macmin (PNG) Limited is now a wholly-owned subsidiary of the Company.

Trends

Mineral exploration often involves speculative ventures with high risk/reward ratios. The Company's focus is on the the exploration of gold and silver properties, primarily in Papua New Guinea. The Company depends on the sale of equity shares in the Company as its main source of income to finance exploration, acquisitions and other corporate activities.

The world price of gold and, to a lesser degree, silver, are important market factors in the attractiveness of the Company's present exploration activities to equity investors. The Company believes that maintenance of the upward trend in the price of gold, shown on the chart below, would be favourable to its future prospects.

ITEM 4: NARRATIVE DESCRIPTION OF THE BUSINESS

Description of the Company's Natural Resource Operations

The Company's sole reportable operating segment is mineral exploration and development. The Company does not have any material real estate holdings or other material assets other than its interests in the mineral properties described herein.

The Company has one employee, the Corporate Secretary/CFO who provides accounting and administrative services. Exploration is carried out for the Company by Australian listed company and 65% shareholder, Macmin.

The Company's projects are in Papua New Guinea. The following description of Papua New Guinea is quoted from the Company's Exchange Offering Prospectus, dated November 6, 1998.

"Papua New Guinea is located in the southwest Pacific and adjoins Australia. The population of Papua New Guinea is approximately 5.0 million, and its land area is approximately 462,000km _ .

English is the offical language of government and commerce. The majority of Papua New Guineans speak Pidgin, although over 700 different local languages have been identified. Papua New Guinea is therfore a multicultural society.

Papua New Guinea was granted independence from Australia in 1975 and rapidly assumed full management of its own affairs. Since independence, Papua New Guinea has engaged in regular general elections, undergoing several democratic changes of government.

Papual New Guinea has had an extensive history of exploration, beginning with the Australian sponsored geological services which date back to the early 1900's. Mineral exploration throughout the past three decades has developed a wealth of available data, including the production of a set of 1:250,000 scale geological maps covering the entire country commissioned by the Australian Burea of Mineral Resources. Since 1977, strategic geologic mapping has been undertaken by the Geological Survey of Papua New Guinea. The interest in petroleum resources by the private sector has spauned vast geophysical and remote image sensing work. In addition, the geology of Papua New Guinea has received considerable academic attention. Research relating to plate tectonics, structural geology, volcanism, sedimentology, palaeontlogy and mineral deposits continues to augment the database available to exploration companies. The geologic framework that this information provides allows exploration companies to focus their efforts quickly and cost effectively on prospective mineral occurrences that meet their investment criteria.

As a result of exploration during the past 30 years, a well established exploration service sector has emerged. Businesses catering to exploration needs such as drilling contractors, helicopter charter firms, contracting and consulting companies offer readily accessible professional services at a competitive price.

Finally, the development of a trained, professional national workfore is beginning to be felt throughout the industry. A substantial labour pool comprised of geologists, engineers, metallurgists, technicians, field assistants and miners with years of practical experience is available to exploration and mining companies.

Papua New Guinea is not without problems. In recent years, there have been "law and order" or security concerns, particularly in the cities and parts of the Highlands. Politicians in Papua New Guinea, as in any democracy, will on occasion make statements, which, if acted upon, would have a negative impact on business. In undertaking exploration in Papua New Guinea, it is essential to liaise continually with local landowners in planning the early stages of exploration through to potential mine development. There is no specific, quantifiable relationship between political stability in Papua New Guinea and the Company's properties except to the extent that political stability may affect political adherence to the Mining Act."

Major gold mines in operation at present in Papua New Guinea include the Porgera Gold Mine operated by Placer Dome, and the Lihir Gold Mine operated by Rio Tinto. These mines produce in excess of 1.2 million ounces of gold per year.

The following summary reports on the mining interests comprising the Properties are based upon the following reports:

1. Technical Report on the Mt. Nakru, Simuku, Sinivit, Normanby and Feni Properties, Papua New Guinea, prepared by Peter A. Christopher Ph.D., P.Eng., dated October 1, 2002 and revised November 21, 2002.
2. Technical Report on the Crater Mountain Property, Papua New Guinea, preapred by Peter A. Christopher Ph.D., P.Eng. and Trevor W. Smith, dated September 10, 2002.
3. Technical Report on the Sehulea Property, Papua New Guinea, prepared by Peter A. Christopher Ph.D., P.Eng., and Ian David Lindley Ph.D., M.A.I.G., dated September 10, 2002.

The authors of the above technical reports are all independent to the Company, and Macmin PNG and copies of the reports are available for review at the Issuer's office during normal business hours, or may be reviewed on the Company's website at www.newguineagold.ca

The initial objective of the Company is to complete in-house studies on the feasibility of placing three modest oxide (cyanide recoverable) gold projects in production. Each of these smaller projects is contained within a larger mineralised system. The first small project (the "Sinivit Project") is located at the Sinivit Property and the other two are located on Normanby Island within the Normanby and Sehulea Properties (the Imwauna and Weioko Projects).

Throughout this documentation NGG refers to New Guinea Gold Corporation, Macmin PNG to Macmin (PNG) Limited and Macmin to Macmin Silver Ltd. Macmin PNG is a wholly-owned subsidiary of NGG and Macmin is a separate public company listed on the Australian Stock Exchange. Macmin is the majority shareholder in NGG (65%). The current project status is given in the following table. Exploration and mining title is explained below under the section Title Matters.

In addition to the above, Macmin retains 1% net smelter returns royalty on production from the Properties and the right to receive additional share consideration (in NGG) if production from any one of the Properties exceeds 50,000 ounces of gold (or gold equivalent) in any year.

Risk Factors

As of the date of this AIF, the Company is actively exploring the Feni, Sinivit and Simuku properties and is planning to commence work on the Mt Nakru property in April 2003. As a mineral exploration company however, the following risk factors generally apply to the Company due to the nature of the Company's business and its stage of development:

EXPLORATION AND MINING RISKS

Resource exploration and development is a speculative business and involves a high degree of risk. The marketability of natural resources, which may be acquired or discovered by the Company, will be affected by numerous factors beyond the control of the Company. These factors include, but are not limited to, market fluctuations, the proximity and capacity of natural resource markets, and processing equipment and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection.

Hazards such as unusual or unexpected mineral formations and other conditions are involved. The Company may become subject to liability for pollution or other environmental contamination, cave-ins or hazards against which it cannot insure or against which it may elect not to insure. The payment of such liabilities could have a material, adverse effect on the Company's financial position.

The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital.

None of the Company's properties have a proven commercial body of ore and the programs being conducted on such properties and intended to be conducted in the future constitute feasibility studies on defined mineralisation and exploratory searches for mineral resources. Bodies of potentially ore grade mineralisation have been located on the Sinivit, Normanby and Sehulea properties and the Company is currently calculating the size and grade of the mineralisation on the Sehulea property. A feasibility study has already been carried out for the Sinivit mineralisation in 1995 and will be updated to determine if this project is now viable.

While the rewards to an investor can be substantial if an economically viable discovery is made, few properties which are explored are ultimately developed into producing mines. If the Company's exploration programs are not successful, investors in the Company's securities may lose their investments.

FINANCING RISKS

The Company has limited financial resources, has no source of operating cash flow and has no assurance that additional funding will be available to it for exploration and development of projects or to fulfill its obligations under any applicable agreements. If the Company's exploration programs are successful in establishing ore of commercial tonnage and grade, additional funds will be required for the development of the ore body and to place it in commercial production. One source of future funds presently available to the Company is through the sale of equity capital. Another alternative for the financing of further exploration would be the offering by the Company of an interest in one of its mineral properties to be earned by another party or parties carrying out further exploration or development thereof. There can be no assurance that additional required funds will become available to the Company on acceptable terms, if at all. Future sales of equity capital may result in a substantial dilution to purchasers of such equity capital.

While the Company's Common Shares are currently listed and trading on the The Exchange, there can be no assurance that they will remain listed.

MINERAL PRICES

The marketability of any minerals discovered by the Company will be substantially dependent on prevailing prices for those minerals, and the prevailing prices are subject to fluctuations in response to changes in supply of and demand for such minerals, market uncertainty and a variety of other factors beyond the control of the Company.

UNINSURED RISKS

In the course of exploration, development and production of mineral properties, certain risks, and in particular, unexpected or unusual geological operating conditions including rock bursts, cave-ins, fires, flooding and earthquakes may occur. The Company may decide not to take out insurance against such risks as a result of high premiums or other reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the securities of the Company.

COMPETITION

The mining industry is highly competitive and some competitors of the Company could possess greater financial resources and technical capabilities than the Company for the acquisition of mineral concessions, claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees.

ENVIRONMENTAL AND OTHER REGULATORY REQUIREMENTS

Mineral exploration activities require permits from various governmental authorities and are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, safety and other matters. Companies engaged in the exploration and development of mineral properties generally experience increased costs, and delays as a result of the need to comply with applicable laws, regulations and permits. Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mineral exploration and development activities may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental laws.

Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.

TITLE MATTERS

In Papua New Guinea minerals are owned by the National government. All Papua New Guinea governments to date have shown a strong commitment to the development of mineral resources by foreign investors. The Department of Mining (DMP) regulates the mining industry of Papua New Guinea. The legislative basis of the government's policy is defined by legislation such as the Mining Act and the Income Tax (Mining and Petroleum) Act. The Mining Act covers all the salient points of the application process, land tenure, responsibilities and reporting guidelines for exploration and mining companies as well as compensation matters and issues relating to the local population. Administration of the Mining Act is the responsibility of the DMP. Working under the direction of the Minister for Mining, the DMP provides a wide range of services to the mining industry.

The Mining Department administers all mineral tenements and provides government sponsored public hearings to ensure landowners and indigenous residents understand the purpose and method of exploration.

Exploration Licenses (EL's) and Mining Leases (ML's) are granted by the Minister for Mining, who is advised by the Mining Advisory Board. EL's are normally granted for 2 years and are renewable for an indefinite number of 2 year periods, provided work and expenditure commitments have been fulfilled. A 50% reduction in size is required, the area of which is determined by the tenement holder, with each renewal until a minimum size of 100km _ is reached at which point no further reduction is required. Minimum expenditure commitments are as follows:

One kina is approximately equal to CDN$0.37 (24.03.03) and there are approximately 3.4km _ in every sub block.

Small and medium mines can be developed on a ML. The grant of a ML requires only the approval of the Minister for Mining. A major mine would be developed on a SML (Special Mining Lease). The mine developer is usually required to enter into a Mining Development Agreement with the Government of Papua New Guinea in relation to each major or very large mine. Any such agreement would be based on the format of the Government's Standard Mining Development Agreement.

The Papua New Guinea Government has a policy of reserving a right to take up, at cost, up to a 30% participating interest in any major mineral development in Papua New Guinea. The Government repays the developer its share of sunk costs and funds its share of capital and ongoing costs. The Government has not always exercised this option and a decision in this regard is taken at the time of the granting of the SML or ML. The Government did not exercise this right in respect to the Sinivit ML. The Government has set up a review to examine if this "right" is a deterrent to new exploration in PNG.

Although the Company has exercised due diligence with respect to determining title to the various mineral properties in which it has interests, there is no guarantee that title to any of such properties will not be challenged, impugned or revoked. There cannot be any guarantee of title.

CONFLICTS OF INTEREST

Certain of the directors serve as directors of other companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. From time to time, several companies may participate in the acquisition, exploration and development of natural resource properties, thereby allowing for their participation in larger programs, permitting involvement in a greater number of programs and reducing financial exposure in respect of any program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment. In accordance with the laws of British Columbia, the directors of the Company are required to act honestly, in good faith and in the best interests of the Company. In determining whether or not the Company will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at the time.

PRICE FLUCTUATIONS: SHARE PRICE VOLATILITY

In recent years, securities markets have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly those considered development stage companies, have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. In particular, the per share price of the Company's common shares fluctuated from a high of $0.26 to a low of $0.03 within the 12 months preceding the date of this AIF. There can be no assurance that continual fluctuations in price will not occur.

LIMITED OPERATING HISTORY: LOSSES

The Company has experienced, on a consolidated basis, losses in all years of its operations. There can be no assurance that the Company will generate profits in the future. The Company may, in the future, be unable to pay its share of costs incurred under certain agreements and arrangements, as a result of which its interest in properties subject to those agreements or arrangements may be reduced or lost entirely.

DIVIDENDS

All of the Company's available funds will be invested to finance the growth of the Company's business and therefore investors cannot expect to receive a dividend on the Company's common shares in the foreseeable future.

Sinivit Property, East New Britain Province Papua New Guinea

LOCATION AND PROPERTY DESCRIPTION

The Sinivit property is situated about 50 km SSW of Rabaul in the Baining Mountains of the Gazelle Peninsula, East New Britain Province, Papua New Guinea. The deposit is located on the Gazelle (SB 56-2) 1:250,000 and Merai (9388) 1:100,000 scale map sheets at geographic coordinates 4º37'S latitude and 152º03'E longitude.

The Sinivit property is held under three titles in which Macmin PNG has a direct 90% equity, and a further 2.5% indirect equity through equity in Gold Mines of Niugini Holdings Limited (GMN), a 10% equity holder. Exploration Licence 1140 granted to GMN on May 11, 1995 covers about 43km². Mining Easement 70 covering 1.44km² and Mining Lease 122 covering 3.536km² were granted on February 16, 1996.

ACCESSIBILITY, PHYSIOGRAPHY, CLIMATE, LOCAL RESOURCES, AND INFRASTRUCTURE

The Sinivit property is connected to the ports of Kokopo and Rabaul by 40 km of all-weather road to Reit, 6km to the east. Parts of the Sinivit area are accessible by 4WD tracks, the remaining area is accessible by walking tracks. The project has a permanent exploration camp with infrastructure expected to improve as development work on the Sinivit mineral deposit progresses.

The Sinivit property is situated on the northeast slopes of the Baining Mountains. The terrain, within the tenement, has steep slopes and drainage is deeply incised. Local relief ranges from 500m with the highest peak at 1440m.

The property is within 5º of the equator and has a tropical climate with warm or hot temperatures throughout the year. Seasons consist of wet-hot and wet-day intervals. The generally humid and warm environment has resulted in tropical rain forest conditions and thick dense bush.

The Rabaul/Kokopo area population is estimated at about 20,000 with recent shift in residence toward Kokopo following volcanic eruption in 1994. Rabaul airport was covered by volcanic ash and flows and daily scheduled air service from Lae and Port Moresby shifted to Tokua Airport about 8km east of Kokopo.

Port facilities can be found at Rabaul and Kokopo, and the local population justifies schools, a hospital, and commercial areas with supplies and services.

The local population has provided a good pool of labor for exploration programs and with training could provide most of the labor for mining and processing at the Sinivit project.

Power will require generation on site. The all weather road to Kokopo will require modest upgrade and 3km of haul road constructed. Use of vat leaching will eliminate the need for expensive disposal and maintenance of tailings.

HISTORY, VENDOR INFORMATION

Gold, in trace amounts, was reported in 1942 to be found in the main streams draining the Baining Mountains. In 1965, C.R.A. Exploration Pty. Limited (CRA) used stream sediment sampling to explore the Gazelle Peninsula for a porphyry copper deposit like Bougainville. CRA was followed by U.S. Metals Refining Company's brief effort to explore P.A. 13 and in 1967 Asarco examined an area that included the Arabam Copper occurrence as P.A. 33.

In the early 1970's BHP Company Ltd. conducted a four-year exploration of P.A. 172 that included traverses of most streams in the Gazelle Peninsula and a 3 to 4 stream silt sample density per km² for most of East New Britain Province.

The Sinivit deposit, originally called "Wild Dog", was discovered in July 1983 by Esso. It was found fourteen months after the commencement of a detailed sampling and mapping program in the 90km² area between the headwaters of the Nengmutka and Rapmarina Rivers. Prospectors, following a trail of quartz float, found siliceous outcrops in Sinivit and Wet creeks. Limited surface sampling returned values up to 45m @ 4.02 g/t, but five diamond drill holes totaling 636m, completed in early 1984, failed to establish easterly continuity. In September 1984, Sinivit was joint-ventured by a subsidiary of City Resources (City Resources (PNG) Pty Ltd.). Further drilling established a westerly dip and by 1987 a total of 71 diamond drill holes (12,790m) and 40 reverse circulation drill holes (1,833m), on the Sinivit deposit, defined a resource reported to be 103,000 ounces Au in the indicated and inferred categories.

The project remained inactive from 1988 to 1990 when the property was purchased by Highlands Gold Limited in 1990 for a cash payment of $8M. Highlands conducted further sampling, trenching and drilling between 1989 and 1992. During February 1990 to April 1991 Highlands Gold completed 20 diamond drillholes (1,957m) in a program directed toward the evaluation of the oxide portion of the deposit. Diamond drilling (31 holes; 3,028m) of veins, near the Northern Oxide deposit, defined significant oxide mineralization at the Kavursuki deposit.

The property remained inactive for most of 1992, and in 1993 Gold Mines of Niugini Holdings Pty Limited ("GMN") acquired the Sinivit property and started preparing the Sinivit vein system for small-scale production. Macmin, an investor in GMN, acquired an option in 1995 to earn 90% equity in the property. Previous explorers have invested about CDN$9,000,000 on exploration and completed over 22,000m of drilling in about 200 holes. Macmin's 1995 annual report contained resource calculations of 810,200 tonnes at 5.05 g/t Au. A positive feasibility, to develop the oxide reserve in the upper part of the Sinivit vein system, was obtained by Macmin in 1995.

In 1995 a structural, dilation zone with a clay alteration cap between the Sinivit Structure and Gunsap Mountain Structure was defined. The zone was considered to be structurally and geologically prospective for low sulphidation gold mineralization of the Martha Hill, New Zealand type where a 5.8 million ounce gold reserve is situated in a dilational jog between parallel structures. In 1996 Multinational (now NGG) optioned the Sinivit property to mainly tests the dilational jog zone, Gunsap Mountain Structure and sulphide potential of the Sinivit Structure.

A single drill hole was completed near the westerly limit of the 600m wide dialational jog zone between the Gunsap Mountain and Sinivit structures. The hole (292.2m) tested only a small section of the jog without success before the project was shelved due to declining gold prices.

The Company is a 65% owned subsidiary of Macmin Silver Ltd.

Vendor:

Macmin Silver Ltd
94 Bundall Road
Bundall
Queensland 4217
Australia

Terms of Acquisition: See June 12, 2002 Agreement summarised in Item 3.

GEOLOGY

The regional structure of the Gazelle Peninsula is dominated by a series of NNW trending faults within a zoned referred to as the Baining Mountain Horst and Graben Zone. During the Mio-Pliocene the Nengmutka, Keravat and Sikut calderas were localized along the horst and graben zone.

The Nengmutka Caldera, host to the Sinivit deposits, is characterized by calc-alkaline andesite breccia and ash flow tuff called the Nengmutka Volcanics. Tonalite of the Arabam Diorite, dated at 14 Ma, intrudes the partly coeval volcanic sequence.

The Sinivit deposit, a NNE (025^o) trending structurally controlled vein zone, is hosted by a nearly flat lying sequence of volcaniclastic rocks, tuff, andesite lava and minor red mudstone of the Nengmutka Volcanics. A multiphase, potassic altered, quartz diorite to monzonite porphyry with an associated, phyllic altered, circular (250m), pebble breccia body occurs in the Magiabe Creek valley. The sequence is intruded by post-mineral basic bodies of the Arabam Diorite. Unconsolidated volcanic ash, derived from Recent eruptions of the Rabaul Caldera, has blanketed the area.

The structural setting of the Nengmutka vein system resulted from late Oligocene early Miocene tectonics. NNE trending, sub-parallel faults were vein-filled and silicified which resulted in the Sinivit and Gunsap Mountain vein systems. A dilational jog structure, trending 330-340^o connects the northerly end of the Sinivit structure and the southern end of the Gunsap Mountain structure. The 1.5km long fault jog, marked by a 600m wide zone of quartz-vein mineralization and hydrothermal clay, has mineralogy similar to clay caps above auriferous sections of the Nengmutka vein system.

DEPOSIT TYPES

Mineralization on the Sinivit property occurs in structurally controlled, NNE trending, vein zones called the Sinivit and Gunsap Mountain structures. An early stage of mineralization is considered to be low sulphidation and introduced mainly gold and silica in a hotspring environment. A later stage of gold-copper mineralization is typical of a high sulphidation system. The distribution of interlayered illite-smectite, hydrothermal clay over the driving faults and dilational jog structure suggests regions of high fluid upflow. The argillic zones is typical of low sulphidation systems like Creede, Colorado, and the dialational jog at Sinivit has similar dimensions as the low sulphidation vein system at Martha Hill, New Zealand that hosts a resource of 5.8m ounces of gold.

Weathering, oxidation and leaching has formed a surficial zone of gold and silver bearing oxidized vein material that on average is 30m thick and overlies high-grade gold-copper-silver telluride bearing veins. Oxidation and leaching has typically resulted in the removal of copper, arsenic and tellurium, and remobilization of gold and silver into leachable form. The partial leaching of gold and silver from primary mineralization, making the low copper oxide material amenable to vat leaching according to the Sinivit Gold Project Feasibility Study.

MINERALIZATION

In the Nengmukta district two NNE trending sub-parallel structures, the Gunsap Mountain and Sinivit, control the main areas of silicification and quartz veins. The structures are either covered with hydrothermal clay or have been eroded to expose veins and silicification. Strike-slip movement during the mineralization episode has opened a tensional structure or NNW dilational jog. A large hydrothermal clay cap suggests a region of strong fluid upflow with good gold potential.

Four hydrothermal vein types and two hydrothermal episodes are present in the Sinivit deposits. Auriferous vein material represent a second period of hydrothermal veining that cuts earlier veins, silicification, and locally altered hanging wall alteration zones.

Later veins contain chalcopyrite, chalcocite, bornite, telluride (native tellurium, rickardite, hessite, and calaverite), several gold-silver-bismuth tellurides, and most of the gold mineralization. Steep, west dipping veins are cut by near vertical later veins which form mineralized shoots ranging from 4 to 10m wide and up to at least 120m strike length. Epithermal vein textures suggest that gold was deposited as a result of pressure release and boiling of hydrothermal fluid localized by a major fault structure.

EXPLORATION BY MACMIN AND NGG

Macmin PNG Pty. Ltd. (Macmin PNG; now a subsidiary of NGG) has explored the Sinivit property since acquiring an option to earn 90% interest from GMN in 1995. Macmin PNG sponsored a feasibility study by Australian Mine Design and Development Pty Limited that was based on resource calculations by R. Curtis and Associates (August 1991 and May 1994), and Lindley (1995). Macmin PNG completed surface trenching and sampling and drilled one hole near the western boundary of the dilational jog structure before the project was shelved in 1997 because of low gold prices.

The 1997 drill hole did not encounter significant mineralization, but most of the at least 600m by about 1.5km alteration zone, associated with the dilational jog, remains untested.

Exploration since 1995 of the Sinivit project area has been conducted by Macmin with the work supervised by Macmin personnel, but contractors used for mapping, sampling, petrographic studies and drilling. NGG has now acquired the Sinivit property from Macmin and both NGG and Macmin share the same professional personnel. Macmin and NGG management are qualified persons using criteria outlined in NI 43-101. Surface exploration and drilling programs, which forms the basis for resource calculations for previous feasibility studies, were conducted by Esso Papua New Guinea/City Resources (PNG), and verified by later operators Highland Gold, and Gold Mines of New Guinea Holdings Ltd. (GMN)

DRILLING

During April 1994 to September 1987 Esso/City Resources completed a total of 71 diamond drill holes (12,790m) and 40 RC holes (1,833m). Their drilling defined the South and North Oxide Zones and the Northern Sulphide zone. During February 1990 to April 1991 Highland Gold completed 20 diamond drill holes (1,957m) in a program directed towards evaluation of the oxide portions of the deposit. Highland Gold also conducted exploration and diamond drilling (31 holes; 3,028m) of a previously located vein near the Northern Oxide deposit that located the Kavursuki deposit. From October 1993 till acquisition by Macmin in August 1995, GMN drilled 22 RC holes (767m) on the Southern Oxide Zone.

Drilling by Esso/City Resources, Highland Gold, and GMN provided data for reserve calculations by Curtis (1991 and 1994) and Lindley (1995). In 1987, NGG completed one drill hole near the westerly limit of the 600m wide dialational jog zone between the Gunsap Mountain and Sinivit structures. This hole, with a total length of 292.2m, tested only a small section of the jog.

SAMPLING METHOD AND APPROACH

RC sampling was conducted by all operators using conventional methods with samples placed in a bag that allowed de-watering by overflow, and diffusion through the bag surface. Samples were dried, weighed and 25mm riffle split into one-quarter/three-quarter splits on site. Consecutive one-quarter splits were combined and combined (2m) samples sent to Pilbara Laboratories or PNG Analytical in Lae, PNG.

SAMPLE PREPARATION, ANALYSIS AND SECURITY

The laboratory crushed samples to -40 mesh by roll mill, then to -60 mesh by a Keegor mill. The sample was pulverized to -150 mesh, and analyzed by fire assay of a 50g charge, with atomic absorption spectrometer (AAS) finish. If assays of >0.5 g/t Au were obtained, a second quarter split on an individual meter basis was submitted for analysis. Diamond Core samples were prepared in the same was, but required a preliminary jaw crushing stage.

Gold determinations till March 1987 were completed on 50g charges. In March 1987, comparison analyses of both 50g and 25g charges were completed on 50 samples with gold content from below detection to 12 g/t Au. The 50g and 25g results showed close correlation, and future analyses were mainly completed on 25g charges.

DATA VERIFICATION

In 1986, 2 RC holes were twinned by diamond drill holes within 4m of the initial holes. The diamond holes were carefully constructed to obtain 100% core recovery. Down-hole comparison of drill results indicate a near perfect match with respect to that of the corresponding drill hole.

Sinivit analytical results indicate regular reruns by the lab, and checks of high or unusual results. Data used for feasibility work on Sinivit project was mainly produced by qualified exploration personnel employed by Esso/City Resources, and Highland Gold. GMN and Macmin employed qualified exploration personnel.

MINERAL PROCESSING AND METALLURGICAL TESTING

From a mineral processing and metallurgical viewpoint the oxide and sulphide mineralization represent extremes in the gold recovery process. Metallurgical test work on the Sinivit oxide deposits by City Resources, Warman Laboratories, Ed Newman & Associates and the Julius Kruttschnitt Research Centre have not revealed the gold mineralogy of oxidized mineralization, but cyanide leach tests indicate low levels of tellurium, arsenic and copper, and remobilization of gold into leachable form. Since gold in sulphide ore is mainly present as gold tellurides, it is refractory to cyanide leaching. Available sulphide test-work suggests that a simple flotation, in a low cost flotation cell (e.g. Jameson cell), followed by shipment to Mt Isa for treatment would be feasible. There would be a smelter penalty for tellurium content of 600-700 g/t in concentrate and low copper (Ausenco, 1995 feasibility study).

MINERAL RESOURCES AND MINERAL RESERVES

Resource estimates have been completed on the Southern and Northern Oxide Zones and Northern Sulphide Zone by City Resources in 1987/1988, and by R Curtis & Associates (Curtis) in August 1991 (Curtis, 1991) and May 1994 (Curtis, 1994a). Resource estimates were completed for the Kavursuki oxide zone by Curtis (1994b) in December 1994 and for the Central Oxide Zone by I.D. Lindley in July 1995. The Curtis and Lindley resource calculations are summarized in Table 1 below:

Sinivit Resource Calculations by Curtis and Lindley.

Assumption used for resource calculations:

1. Southern and Northern Oxide Zones-1.0 g/t Au cut off grade and 0.5 dilution envelope, S.G. 2.5.
2. Central Oxide Zone-1.0 g/t cut off grade and 20 g/t Au high assay cut, S.G. 2.5.
3. Kavurski Zone-0.5 g/t Au cut off, S.G. 2.5.
4. Northern Sulphide Zone-5 g/t cut off, S.G. 2.5.

A feasibility study by Australian Mine Design and Development Pty Ltd. (AMD) (1995) presented oxide resource on the Northern, Central and Southern Oxide Zones of 510,000 tonnes at 3.80 g/t Au (UNCUT) and 2.93 g/t Au (CUT) (Table 2).

The calculations were prepared by qualified individuals that would meet the NI 43-101 requirements for a qualified person. The resources and reserve calculations were prepared for the Australian Stock Exchange using categories and Australian methods acceptable in 1995.

Assumptions used for resource and mining reserve calculations.

1. A specific gravity of 2.61,the average of about 130 determinations on ore grade core samples, was used.
2. Dilution envelope of 0.5m,
3. Cut off grade of 0.5 g/t Au, and
4. A 22 g/t Au high assay cut.

EXPLORATION AND DEVELOPMENT

Several exploration targets have been identified, and trenching and drilling has an excellent possibility of increasing the mineral resources of the property. Kavursuki veins have untested extensions and further exploration should expand the auriferous sulphide resources of the vein system.

Conceptual modelling of the vein systems proposed a dilational jog, similar to the control for the Martha Hill vein system in New Zealand, between the Sinivit mineralization and the Gunsap Mountain structure. The jog structure has at least a 600m wide cap or cover of hydrothermal clay that warrants initial drill testing.

The Magiabe Valley intrusive has alteration and some sulphide mineralization associated with a potassic intrusive and pebble breccia. Since gold is reported in panned concentrates from streams draining the intrusive, initial geochemical sampling and mapping should be conducted.

NGG's initial scoping suggests the use of open pit methods and inexpensive vat leach methods could make the project viable at current metal prices. The property also has excellent exploration potential along strike and dip to expand the known resources. The 1.5km by 600m clay capped structural jog-zone, is an excellent exploration target.

Normanby Property, Milne Bay Province, Papua New Guinea

LOCATION AND PROPERTY DEFINITION

The centre of the Normanby property is about 325km east of Port Moresby and 65 km northeast of Alotau in Milne Bay Province, Papua New Guinea. The property consists of EL 1091 that covers 44.2km² in the central part of Normanby Island, the southern and eastern most of a three, island chain called the D'Entrecasteaux Islands. The license is centered at about 10º04'S latitude and 151º02'E longitude and is covered by parts of the Duau, Esa'ala and Hehego 200,000 topographic maps.

The Normanby exploration license (EL1091) covering 461km² was granted to Mac Mining NL on 26.04.94. The company later changed its name to Macmin NL. The license has gone through several 2-year renewals and reductions. The present tenement covers 44.2km² .

ACCESSIBILITY, PHYSIOGRAPHY, CLIMATE, LOCAL RESOURCES AND INFRASTRUCTURE

Access is by 25-minute duration, Milne Bay Air flights that employ a Twin Otter from Alotau to grass airstrips at Sehulea or Esa'ala (Miadeba). Alternative access is by helicopter based in Port Moresby, small boat or by coastal vessels.

A few usable 4WD tracks within the license area are limited to coastal areas. Macmin has constructed a bulldozer track from Mt. Wahola to the Nedebara River, and this allows tracked vehicle access from the SW end of Normanby Island (Bwasiyaiyai) to the central north coast. A second track extends about 5 km from Awaiara Bay to the Imwauna camp. A Bombardier-Muskeg Carrier is presently used for hauling supplies and equipment. There are numerous walking tracks around the coastal regions and also across the island.

The property terrain varies from broad valleys to steep mountains with relief of 1,073m from the highest peak of Mt. Hobiya to sea level.

Diurnal temperatures range from 20ºC to 33ºC with cool temperatures at higher elevations. A wet season, from March through October, is associated with the SE monsoon season. Annual rainfall varies from about 4.5-5.5m of rain/year at the Imwauna prospect to about 10m in the Wahola prospect area. The heavy rainfall has resulted in tropical rain forest growth over most of the property. The property is mainly primary rainforest with secondary overgrowth in areas of shifting gardens. Coconut plantations occupy some of the better agricultural land along the coast.

Supplies and services are available at Alotau and the local settlements can supply labourers for camp and exploration purposes. Fishing is the main industry with hunting along walking trails into the island interior. Local gardeners and fishermen provide a source of fresh food for exploration camps. Road building equipment and drilling equipment can be barged to the island shore and moved along exploration tracks to the prospects. PNG has a mining industry with a number of skilled workers. Locals have been trained to assist with exploration and mining activities.

Access and surface rights must be obtained from local owners, and compensation paid for damages. There is an abundant, natural water supply, but a small generating plant must be established to supply power.

HISTORY, VENDOR INFORMATION

Modern exploration of the D'Entrecasteaux Islands initiated when Esso acquired P.A. 469 over most of the island group in December 1981. Esso conducted helicopter supported reconnaissance of Normanby Island in January 1984 and applied for 171km² P.A. 537 (Sewataitai) to conduct prospect-scale exploration. P.A. 537 was included in Esso's PNG assets sale to City Resources Limited at the end of 1986.

P.A.537 was joint-ventured by Inco (Ingold Holdings Pty. Ltd). Ingold changed the licence to P.A. 939-1 through amalgamation with some surrounding areas. Regional stream reconnaissance surveys in late 1989 located the Wahola Prospect. Geochemical, geophysical and geological surveys were used to define targets that were tested with 25 diamond drill holes totaling 2251.55m in 1990, 1991 and 1992. The Imwauna prospect was also found by following up Esso stream anomalies, and after surface definition and trenching, a 350m section of the vein system was tested with 17 diamond drill holes totaling 1203.7m. Significant drill results are summarized in Table 1 for the Wahola and Table 2 for the Imwauna. By extrapolating the drill-tested section of the Imwauna vein to 500m, Ingold estimated it contained a resource of 30,000 ozs Au to a depth of 60m.

The Ingold/City joint venture allowed PA 939-1 to lapse in August 1993, and Macmin (as Mac Mining N.L.) applied for the Normanby tenement and was granted E.L. 1091 on 26/04/94. After conducting 1994 exploration programs, Macmin recognized the potential of the Knob prospect and applied for the Awaiara Bay tenement that was granted on 26/01/95. In 1994/1995, Macmin conducted soil sampling and trenching on the Imwauna vein system that extended the known system from 500m to over 2000m.

Significant Drill Results, Wahola Prospect (Ingold, 1990-1992).

Notes:
(1) Only values over 3 g/t Au are shown
(2) Drilling is mainly within a <1km² area.

Significant Drill Results, Imwauna Prospect (Ingold, 1990-1992).

Notes:
(1) Only grades >4 g/t & 0.6m wide are tabulated.
(2) Zone was drilled intensively over a length of about 190m.

A coincident arsenic and gold in soil anomaly, extending for over 1200m by 400m wide, was defined at the Knob Prospect. Bulldozer trenching totaling 1320m in the Knob Prospect soil anomaly revealed a large area of clay alteration with results up to 1.4 g/t Au over a 20m interval and an average of 0.5 g/t Au over a 320m interval with the trench and sampling ending in anomalous material (McNeil, 1995).

The Company is a 65% owned subsidiary of Macmin Silver Ltd.

Vendor:

Macmin Silver Ltd
94 Bundall Road
Bundall
Queensland 4217
Australia

Terms of Acquisition: See June 12, 2002 Agreement summarised in Item 3.

EXPLORATION BY MACMIN AND NGG

At the Imwauna Prospect, 18 holes (IMH001 to 018) totaling 1450.1m were drilled along a 950m strike-length of the vein system. Reverse circulation (RC) drilling totaled 975.5m and core drilling totaled 574.6m. The RC holes were sampled at 2m intervals and the core holes sampled on both an interval and lithologic basis. A total of 708 samples were collected and analyzed by Analabs PNG for gold using the GG329 method (aqua regia digestion, AAS gold analysis) and for silver by the GA140 method (Hall and Kameko, 1997). A summary of the drill holes is presented in Table 2A.

A total of 207 excavator trenches were dug across the Imwauna, Ebessowa and Kela's veins. The trenches, averaging 3m deep, 1.5m wide and 15m long, were spaced at 20 to 100m intervals, and were constructed in an area 4km x 1.3km. A total of 1338 samples were collected and sent to international laboratory, Analabs (Niugini) Pty Ltd., for Au, Ag, Cu, Pb, Zn and As + Sb analyses. An additional 184 rock chip and channel samples were collected during bulldozer trenching/access road cutting and prospecting. At the Gwamogwamo Prospect, 1.2km of access road and 350m in two trenches (No. 2A and 3A) were bulldozed and 70 samples collected. One RC hole GW001 was completed to a depth of 54m.

At the Knob Prospect, 3 holes (KHB001 to 003) totaling 308.9m were drilled in June-July, 1996 to test a gold in soil and rock chip anomaly. Reverse circulation drilling totalled 207.0m and core drilling totalled 101.9m. Samples were collected at 2m intervals and assayed by Analabs for Au, Ag, and As. At the Wahola/NE Wahola Prospect, soil sampling of NE Wahola by Macmin/NGG indicated patchy moderate Au/As anomalism across the grid, and access road channel sampling increased the length of low-grade anomalism at Wahola North to >700m at >0.2 g/t Au.

In June 1997, Southern Geoscience Consultants Proprietary Limited (SGC) re-processed and interpreted 1985 vintage helicopter aeromagnetic and radiometric surveys consisting of about 500 line-km flown over about 105km² area of the Normanby property. He named prospects with the exception of Miadeba in Pliocene volcanics at the northern edge of the property. The magnetic interpretation was complicated by variable magnetic character of Cretaceous mafic to ultramafic basement rocks of the D'Entreacasteaux Complex. The possible presence of an extensive intrusive body/system beneath the southern section of the survey was suggested by SGC to be an indicator of a porphyry style mineralization environment.

In 1998 an area along the Imwauna structure was cleared and prepared for a metallurgical and assay check bulk-sample. This bulk sample confirmed the previous chip sample results. A CSAMT survey was conducted over selected areas of arsenic and gold in soil anomalies to meet minimum assessment. NGG recommenced exploration on the Normanby Island gold properties in July 2002 with successful gold metallurgical extraction test work at the Imwauna project.

GEOLOGY

REGIONAL GEOLOGY

The Normanby Island, part of the D'Entrecasteaux Island Group, is part of a near-linear chain in the Solomon Sea off the ENE tip of the Papuan Peninsula. The D'Entrecasteaux Islands are at the western end of the Woodlark Basin rift system, an active crustal extensional feature which developed around 5 Ma ago in response to subduction and plate rotation along an irregular boundary between the Pacific and Indo-Australian plates. Crustal expansion has created domal structures of high-grade metamorphic basement rocks. The metamorphic rock domes, called core complexes, formed within ophiolitic assemblages in the Cretaceous Papuan Fold Belt. The westward migration of the Woodlark Basin appears to have been preceded by calc-alkaline magmatism and emplacement of basic and intermediate intrusive and volcanic rocks into and unconformably over the ophiolites and greenstone assemblage. Recent magmatism within the D'Entrecasteaus Islands is indicated by hot spring activity within active extensional structural zones. The D'Entrecasteaux Islands are considered by Adshead (1997) to be a modern analogue of Misima Island at the time (3.2-4.0 Ma) of gold deposition at the Umuna deposit.

LOCAL GEOLOGY

The geology of the D'Entrecasteaux Islands defines a series of amphibole and gneiss domes of probable Cretaceous age with arcuate flanking decollement or detachment faults. The domes are cored by Pleistocene age, intrusive complexes composed of granodiorite, tonalite and adamellite. Remnants of an obducted sheet of ultramafic and gabbroic rocks locally overlie the metamorphic rocks. A number of major NNE trending, extensional fault structures segment the island and control the major drainages. Pliocene to Pleistocene volcanics occur on southern Fergusson Island and on Normanby Island.

On Normanby Island, NNE trending transform fault structures form graben or rift zones. The transform structures have localized Pleistocene to Recent volcanic activity and associated gold mineralization. A Recent volcanic cone forms a small island off the NW tip of Normanby Island.

The eastern part of Normanby Island consists of high-grade metamorphic of the Prevost Dome flanked by greenstone facies metasediments and metavolcanics of the Kurada Metamorphics. The Gwamogwamo massive sulphide prospect is in Kurada Metamorphics adjacent to and east of the major NNE trending Sawatupwa River Structure.

A central section, a 10km wide belt between the NNE trending Sawatupawa and Bwasiaiai faults, consists of Kurada Metamorphics and remnants of ultramafic and gabbroic ophiolite. In the northern part of the section, the metamorphic and ultramafic rocks are unconformably overlain by Pliocene Normanby Volcanics, conglomerates and unconsolidated sediments. Normanby calc-alkaline volcanism and associated intrusions are localized by basement structures. The section contains the Imwauna, Mwatebu, Knob, Wahola and Salupa Awa prospects.

West of the Bwasiaiai Fault, a 4-8km wide ophiolite belt trends NE across the island and is flanked by Normanby Volcanics to the northwest. The ophiolite section contains the Dimwadimwala, Lebudowa, Galakuwai, Waupwaluna and Doyalayala prospects.

The northwest section consists mainly of Normanby Volcanics that unconformably overlie ophiolite and greenschist metamorphic basement. The Miadeba prospect, in the northwest section, has received only minor exploration.

The very northwestern tip or section of Normanby Island appears to have experienced uplift related to emplacement of Pliocene intrusive rocks. Uplift has exposed ophiolite and metamorphic rocks. The section is outside the area of the Normanby property.

DEPOSIT TYPES

Strong anomalous gold and arsenic values, found in stream sediment samples, pan concentrate samples, rock float samples and soil anomalies, have been derived from:

1. Stockwork quartz vein swarms that cut basement metamorphic rocks and/or overlying sedimentary rocks (low-sulphidation Imwauna Vein Swarm);
2. Mesothermal quartz veins cutting basement metamorphic rocks;
3. Hot spring activity that has silicified recent beach sediments (Weioko area);
4. Epithermal solutions moving along decollement zones;
5. Massive sulphide lenses in metamorphic rocks (Gwamogwamo); and
6. Supergene enrichment of above deposit types in the near surface environment.

MINERALIZATION

The Normanby property contains 19 named mineral occurrences and/or anomalous zones. The occurrences contain mainly very high level, epithermal mineralization. Metals enriched in the deposits are Cu, As, Sb, Mo, Ba and W, with pyrite and arsenopyrite common and chalcopyrite mentioned at some occurrences. Mineralization is generally associated with either north or NNE structures (Kela's, Imwauna) or curved structures at the margins of metamorphic domes. The Imwauna and Wahola prospects are the most advanced and have been tested by Ingold with bulldozer trenching and drill programs of 25 and 17 holes, respectively. The Imwauna prospect was tested by NGG with 18 holes. Bulldozer trenching programs have also been conducted on the Knob and Mwatebu prospects with hand pits and trenches used in areas without track access. NGG drilled three holes at the Knob prospect in 1996. The more advanced prospects are reviewed below in a priority sequence.

Imwauna Prospect & Kela's Prospect

The Imwauna prospect, the most advanced prospect, and the Kela's Prospect, a new discovery in late 1994, are presented together because of proximity and similar mineralization styles. The main controlling structures are 030^o (magnetic) for the main Kela's vein and 010^o for the main Imwauna veins. A 200m section of the Imwauna vein was advanced by trenching and systematic drilling. Ingold (1992) calculated a resource of about 30,000 oz. Au in a 500m section of the vein to 60m depth (97,500 tonnes @ 9.13 g/t Au). Sampling by Macmin, on the southern extension of the zone explored by Ingold, has yielded assays of up to 1.5m grading 27.04 g/t Au. The 160º vein at 9,900E-11,500N was reported to run 69 g/t Au over 15 cm with assays to 108.55 g/t Au. Drill results like Ingold hole IMD 6 with 20.9m at over 22 g/t Au and including 0.85m at 315 g/t Au encourage exploration for a bonanza gold-quartz vein system.

The Kela's vein prospect, when compared to the Imwauna prospect, has a stronger and more continuous anomalous soil response. Of 58 float and sub-outcrop samples reported by Macmin 12 contained over 7 g/t gold with assays of 33.60 g/t, 35.70 g/t and 41.52 g/t Au suggesting the possibility of bonanza gold-vein mineralization in the Kela's system. In 1996 NGG drilled 18 holes along a 950m section of the Imwauna vein system. The significant intersections for the NGG drilling are summarized in Table 2A. NGG, used only data from their 18 holes, calculated an inferred resource of 990,000 tonnes grading 6.1 g Au/tonne for a 1050m length and 145m dip extent of the vein system.

A trenching and sampling program was conducted in 1997 with a PC 300 Komatsu bucket excavator used from May to September. Trenching started at southern end of the Imwauna vein with 102 trenches dug on the Imwauna vein, 69 trenches dug on the Ebessowa vein and 36 trenches dug on the Kela's vein. Of the 207 trenches excavated, 183 trenches with quartz veins greater than 10 cm were panel sampled. The veins were intersected between 0.6m and 7.0m depths in trenches with three continuous chip samples collected from each trenched vein, one sample across the top width of the vein (sample A) and two samples across the bottom width of the vein at the base of the trench (samples B & C). The lower samples were averaged and a weighted value calculated for the intersected vein area. The samples were assigned numbers in the 22000 series with trench #1 (TR-1) assigned sample number 22001, TR-2 assigned sample number 22002, etc., and submitted to Analabs-Niugini for Au, Ag, As, Cu, Pb and Zn analyses. Extreme variations obtained from the 3 samples collected from the same section of quartz vein are apparent from the following table.

Extreme Sample Variation in Gold Analyses from the Imwauna Prospect.

Notes:
(1) Vein was sampled from vein top to vein bottom.
(2) Multiple samples and larger assayed samples have been used to reduce the effect of the strong variation in gold distribution ("nugget effect").

A total of 84 trenches contained gold values >3 g/t Au, including 36 trenches with >10 g/t Au, or 20 trenches with >20 g/t Au. Samples were also collected across one or more metres from the hanging wall and footwall adjacent to each sampled vein, but the wall rock values were not included in vein grade calculations. Gold values for wall rocks range from nil to 16.72 g/t Au (Appendix B) with 30 trenches containing >1 g/t Au in at least one wall rock sample.

Knob Prospect

The Knob prospect in the Awaiara Bay area has a large gold in soils surface anomaly with generally coincident anomalous arsenic values. Chip sampling of bulldozer trenches has returned average interval values of 320m @ 0.50 g/t Au, 280m @ 0.29 g/t Au and 320m @ 0.23 g/t Au. The trench result is from a zone 400 metres wide and 1200 metres long and open toward anomalous stream silts to the SW. Three holes were drilled by NGG in the Knob prospect with the results summarized in the table below

Drill Results from 1996 on the Knob Prospect.

Wahola Prospect

Ingold drilled 25 holes to test fault/detachment related epithermal gold mineralization. The drilling concentrated on geochemical anomalies for gold and arsenic and on identified structures. The best intersections included 4m @ 5.57 g/t Au in hole 2 and 1.5m @ 21.0 g/t Au in Hole 8. Sufficient encouragement has been obtained to justify definition of additional drill targets.

Wahola North Prospect

The Wahola North prospect is a coincident arsenic and gold anomaly that was recognized by plotting Ingold soil data. The prospect has well developed northerly and NNW anomalous gold trends, which are thought to reflect directions of controlling structures. Further trenching is warranted to define drillable targets.

Dimwadimwala Prospect

The Dimwadimwala prospect is situated in the southwest part of the island. The initial stream sediment sampling and pan concentrates show another possible northerly mineralized structural trend with several silt values in the 0.1 to 1.0 g/t Au range and pan concentrate values up to 266 g/t Au. A large float boulder assayed 5800 g/t Au (repeat value 91.2 g/t Au). A number of zones with pyritic quartz float and anomalous gold in float occur in the prospect area.

Ebessowa Prospect

Follow-up of anomalous float in the Ebessowa Prospect area resulted in the location of a 1m wide quartz vein system with a strike length of over 100m. Rock chip sampling is reported to have originally returned values between 0.70 g/t Au and 9.56 g/t Au. The area is situated along the access roads for the Knob and Imwauna prospects.

Salupa Awa Prospect

At the Salupa Awa Prospect re-evaluation of previous stream sediment and pan concentrate data delineated a 4-6km² highly anomalous zone with most assays in the 1-30 g/t Au range and a maximum value of 871 g/t Au. Prospecting located boulders of hematitic quartz breccia and a 100m wide zone of weakly to moderately silicified, argillized and limonitic ultramafic rocks. A grid based soil sample program, completed over an area of 1km², reduced this area's potential.

Gwamogwamo Prospect

The Gwamogwamo Prospect (outside the present EL 1069 boundary), consists of rusty, pyritic schist with narrow semi-massive sulphide lenses. A sample was collected by Peter Christopher, GPC 96315 at station 10+020E and 9+760N to check a previous two-metre interval of 1.5 g/t Au. Sample GPC 96315 contained 414ppb gold, 3641ppm Cu and anomalous 31 ppm Mo, 56ppm Pb, 693ppm Zn, 112ppm As and 328ppm V. The Gwamogwamo prospect, a precious metal enhanced, metamorphosed volcanic massive sulphide occurrence, differs from other prospects which are structurally controlled, epithermal quartz veins (e.g. Imwauna, Kela's) or low-sulphide epithermal occurrences (e.g. Knob, Weioko [EL 1069]).

Mwatebu Prospect

At the Mwatebu Prospect, a large, 300m by 800m zone of coincident anomalous gold and arsenic in soil was defined, and rock chips of float have returned values to 6.43 g/t Au. A polymictic pyritic breccia occurs at the contact of volcanics with underlying Kurada Metamorphics, but anomalism appears to be related to epithermal vein gold mineralization in the metamorphics. To date, bulldozer trenching, with 1,130m sampled, has not produced gold results that explain the soil, silt and float anomalies.

1998 Check Chip Samples from the Imwauna Vein.

Notes: B = trench bottom; T = trench top; NGG samples are panel values calculated by averaging the two bottom samples and weighted average of bottom panel and top panel.

EXPLORATION BY MACMIN/NGG

In 1994 and 1995, Macmin conducted soil sampling and trenching on the Imwauna vein system that extended the known vein system from 700m to 2,000m. A coincident arsenic and gold anomaly in soil anomaly was defined over the Knob prospect. Bulldozer trenching totaling 1,320m in the Knob prospect soil anomaly revealed a large zone of clay alteration with chip sampling over a 320m interval averaging 0.5 g/t Au with a best interval of 1.4 g/t Au over a 20m interval. In.1996, 1997 and 1998 NGG funded 18 reverse circulation (RC) and diamond core drill holes totaling 1,204m at the Imwauna prospect, and 3 short holes totaling 308.9m at the Knob prospect. NGG personnel calculated an inferred resource of 1.0Mt at 6.1 g/t Au and 12 g/t Ag for the Imwauna prospect. Large samples were collected in the higher grade are of the inferred resource which suggested 197,000t at 10.1 g/t to a depth of 50m (July 2002 NGG project summary). In 1998, an area of the higher grade mineralization was prepared for a bulk sample and metallurgical test, but the decline in metal prices postponed testing to March 2003.

CSAMT geophysical surveys were conducted in conjunction with assessment work on the adjacent Sehulea project. Anomalous resistivity values are coincident with anomalous arsenic and gold in soil anomalies, and probably reflect gold bearing siliceous zones that warrant surface evaluation.

In August 2002, feasibility studies commenced on the Imwauna Project, Normanby Island, Papua New Guinea, with the collection of fourteen (14) bulk samples totaling 787.5 kilograms ( average 56kg each), from excavator trenches 3 to 6m deep and other quality exposures, for metallurgical testing.

Assays up to nearly 14 ounces per tonne (424 g/t) gold were returned from the initial grab sampling (500gm) and analysis of these bulk samples by ALS - Chemex in Brisbane Australia, confirming the high grade gold potential of the Imwauna Vein System. This is the highest gold assay returned to date by NGG / Macmin exploration at Imwauna.

The arithmetic average of all the bulk samples, over a strike length of approximately 400m meters, is 51.4 g/t gold and if the high result of 424g/t gold is omitted the average is 22.75 g/t gold. The low results from Trenches 36 and 38 can reasonably be omitted for technical reasons, resulting in even higher averages. Complete results are listed below:

Column leach tests on various crush sizes from these bulk samples have commenced (March 2003) to determine optimum crush size for vat leach extraction of the gold.

INTERPRETATION OF EXPLORATION INFORMATION

Exploration conducted by Macmin/NGG has continued to demonstrate continuity of the gold bearing Imwauna vein system. The zone has considerable near surface evaluation but continuity to depth has not been evaluated. Impressive soil geochemical and trench results at the Knob prospect was tested with 3 short holes totaling 308.9m that resulted in long intervals of about _ gram gold. Comparison of drill program results at the Knob with soil and trenches suggest that gold has been enriched in the surficial environment.

LOGISTICS OF INVESTIGATIONS

Contractors were used for geophysical surveys and drilling. Geophysical surveys were completed by Zonge Australia with supervision by Southern Geoscience Consultants Pty Ltd. Drilling at Normanby was completed by United Pacific Drilling Pty of Madang, PNG. Macmin and NGG management are qualified persons using criteria outlined in NI 43-101.

DATA RELIABILITY

Exploration of the Normanby property area has been conducted by Esso, City Resources, Ingold (Inco) and by Macmin personnel. Work conducted by the major companies support the Macmin exploration results. Peter Christopher has collected check samples during 1996 and 1998 examinations of the Normanby property. Peter Christopher's sample results are summarized in his report. The 1998 sampling of the Imwauna vein is summarized and compared with Macmin/NNG sampling, also in Peter Christopher's report. The check samples show the same nugget effect found by NGG sampling. The check samples were small, about 2kg, chip samples that were assayed at Acme Analytical Laboratory in Vancouver, B.C. Canada. These samples confirm the presence of high grade and variable gold content in sections of the Imwauna vein zone, but systematic sampling with larger samples is necessary to properly evaluate the reliability of previous sampling.

DRILLING

Several phases of drilling have been conducted on prospects within the Normanby tenement. The Normanby drill programs are summarized in the following table

Summary of Drilling Programs on Normanby Property.

SAMPLING METHOD AND APPROACH

Samples were dried and shipped to Analabs in Lae, PNG for Cu, Pb, Zn, Ag, As and gold analysis. Base metals and silver were analysed by AAS methods and gold by fire assay and AAS finish.

SAMPLE PREPARATION, ANALYSIS AND SECURITY

RC samples from the Macmin (PNG) Pty Ltd drilling program were collected at 1m intervals downhole. Each sample was kiln dried and weighed. Actual recoveries (recorded dry weight of each 1m drill interval) were compared with theoretical recoveries to ensure adequate and representative downhole sampling. Successive 1m intervals were combined using a clean riffle splitter, which sub-sampled _ portions of each 1m sample, to prepare samples for assay submission. Sample preparation, weighing of 1m returns to determine recoveries, and riffle-splitting of 2m composite samples for assay submission, were all completed under the supervision of the site geologist. Logging of representative chips retained from each 1m sample, was completed on-site by a geologist. Representative chips, on a metre per metre basis, from each RC hole have been retained for future reference.

Drill core was logged and split, using a core saw, on-site. Half-core was sampled according to drill-runs to enable quantification of recoveries. A core storage area is at Weioko village, Normanby Island.

Samples were sent to Analabs Pty Ltd, a division of Pilbara Laboratories (Nuigini) Pty Ltd, Lae, PNG, for gold assay (method 630 or 650) and Cu, Pb, Zn, Ag and As. Repeat and check analyses were routinely completed on a 1 in 10 to 1 in 15 basis. All high (>10,000ppm) copper analyses were repeat assayed.

DATA VERIFICATION

Peter Christopher has taken personal samples to verify data, and has reviewed analytical results that indicate regular reruns by the lab and checks of high or unusual results. Since erratic high values are encountered, large assay samples have been used.
The Normanby project area has previously been explored by Esso/City Resources and Ingold (Inco). Their work provides independent verification of significant gold values in trenches and drill holes on the Normanby property. Resource and reserve calculations for the pre-feasibility study will require independent sampling and evaluation of continuity of mineralization.

MINERAL PROCESSING AND METALLURGICAL TESTING

Preliminary metallurgical test work completed on surface samples from Imwauna prospect by Macmin Ltd. NGG has reported (September 2002) that the results from bottle roll tests of cyanide leaching show between 94% and 98% of the gold and between 64% and 90% of the silver was extracted from pulverized samples after a short residence time of only 24 hours. This test work was on three samples analysed by ALS Chemex Laboratories in Brisbane, Australia. Column leach testing commenced in March 2003.

MINERAL RESOURCES AND MINERAL RESERVE ESTIMATES

NGG has reported (News Release, 31 October 1996) an inferred resource of 990,000 tonnes of 6.1 g/t Au and 12 g/t Ag for 194,000 ounces of gold and 382,000 ounces of silver. The resource was calculated from approximately 20% of the surface area of the Imwauna Vein Swarm that had been drill tested by Macmin/NGG with 17 RC and diamond drill holes totaling 1,300m. The resource was calculated by qualified Australian geologists that work for Macmin and NGG, but they were prepared prior to NI 43-101. The recommended pre-feasibility study will require calculation of resources and reserves by a qualified person in the form outlined in NI 43-101. The qualified person must clearly specify the sampling and check sampling approach used to deal with the variability in sampling results described above.

The Sehulea Property, Normanby Island, Milne Bay Province, Papua New Guinea

PROPERTY DESCRIPTION, LOCATION, OWNERSHIP

The Sehulea property, consisting of Exploration Licence 1069 (EL 1069), covers about 30km² in the eastern part of Normanby Island, in Milne Bay Province, Papua New Guinea (PNG). The tenement is divided into two separate blocks, situated on the northern and southern coasts. Normanby Island lies approximately 65km northeast of the mainland town and provincial capital at Alotau. The licence is centred at 10 ° 03'S latitude and 151 ° 08'E longitude.

Macmin (PNG) Limited is the holder of EL 1069 and has 73% interest while Hunter Exploration PNG hold the remaining 27%

ACCESS, CLIMATE, INFRASTRUCTURE, PHYSIOGRAPHY

Access is good for PNG with an airstrip within a few kilometres of Weioko. Barge and boat access is available for equipment and supplies. Bulldozer tracks lead from the shore to a number of the drill sites, and hunting trails provide access to other areas. The property has local relief of 600m.

Diurnal temperature range from 20 to 33 ° C with cooler temperatures at higher elevations. A monsoon or wet season, from May to October, is associated with the SE trade winds which make water transportation more difficult. Rainfall varies from about 4.0-10.0m of rain/year. The heavy rainfall has resulted in tropical rainforest over most of the property. The property is mainly primary rainforest with secondary overgrowth in areas of shifting gardens. Coconut plantations occupy some of the better agricultural land along the coast.

The Sehulea property is situated at the eastern end of Normanby Island. The Sehulea area is deeply dissected and is dominated by north-south trending ridges and valleys. The property has moderate to steep topography with elevation in Block A ranging from about 480m to sea level and elevations in Block B from 600m to sea level. The Malaha River valley is east of Block A and the Ibuwar River extends southerly from Weioko Bay through Block A.

Supplies and services are available at Alotau and the local settlement can supply labourers for exploration purposes. Fishing is the main industry with hunting along walking trails into the island interior. Local gardeners and fishermen provide a source of fresh food for exploration camps. Road building equipment and drilling equipment can be barged to the island shore and moved along exploration tracks to the prospects. PNG has a mining industry with a number of skilled workers. Locals have been trained to assist with exploration and mining activities.

Access and surface rights must be obtained from local owners, and compensation paid for damages. There is an abundant, natural water supply, but a small, possibly hydro, plant must be established to supply power.

HISTORY, VENDOR INFORMATION

The Sehulea Exploration Licence (EL 1069), covering 145 sq km, was originally granted to Swan Resources. Macmin NL purchased the property on the 31 October 1995. Renewal and licence area reductions have resulted in the present 30km² tenement for which a renewal is lodged and in progress. The Company owns approximately 73% interest in the Sehulea property.

Hunter Exploration PNG (Hunter) joint ventured Sehulea in 1996 and hold the remaining 27%.

The Company is a 65% owned subsidiary of Macmin Silver Ltd.

Vendor:

Macmin Silver Ltd
94 Bundall Road
Bundall
Queensland 4217
Australia

Terms of Acquisition: See June 12, 2002 Agreement summarised in Item 3.

GEOLOGY AND MINERALISATION

The Sehulea property is situated in the "Misima Corridor" at the western end of the Woodlark Basin seafloor-spreading centre. Extensional deformation ahead of the westward propagating rift system caused young tectonothermal features on Normanby Island. Exhumation of Papuan Peninsula basement rocks of Cretaceous age has resulted in formation of the Prevost Metamorphic Dome, a core complex. Metamorphic rocks are overlain by mollasse type sedimentary rocks and/or Quaternary to Recent volcanic rocks. Uplift and tensional tectonics has resulted in detachment faulting, half-graben type basins, peralkaline volcanism, hydrothermal activity and associated epithermal mineralization.

At the Weioko prospect gold mineralization is associated with steeply dipping, cross cutting, rift faults or dome bounding faults called decollement zones. Low grade, disseminated gold mineralization is associated with silicification and argillic alteration of porous sedimentary rocks, and higher-grade veins cut both metamorphic basement and overlying sedimentary rocks.

The Gwamogwamo prospect, a copper/gold system, is centred on gossans derived from massive and disseminated sulphides within amphibolitic volcanic rocks.

Gold deposit types targeted in the Sehulea area include:

• Hot spring deposits marked by present activity that has silicified recent beach sediments;
• Decollement zone mineralization precipitated from channelled epithermal solutions;
• Stockwork quartz veins cutting basement metamorphic rocks and/or overlying sedimentary rocks;
• Mesothermal quartz veins cutting basement metamorphic rocks;
• Massive to high sulphide lenses in metamorphic rocks (e.g. Gwamogwamo prospect); and
• Supergene enrichment of the above deposit types in the near surface environment.

EXPLORATION HISTORY AND EXPLORATION CONCEPT

Exploration interest in the Sehulea property area dates to the early 1970's with the development of the nearby large Misima gold deposit. Prospecting Authorities (PAs-now known as Exploration Licences) covered most of the islands within the "Misima Corridor". The PAs were explored by conducting regional silt sampling, prospecting, reconnaissance geological mapping and airborne surveys. Rock float sampling in the Sehulea area resulted in over a hundred samples with >1 g/t Au with a number of samples >10 g/t Au (high of 363 g/t Au), and resulted in grid soil sampling of an 18 sq km area centred on the Weioko prospect. The soil survey resulted in large areas with >100ppm As and >80ppb Au. The Weioko prospect was defined by a strong, open-ended, gold-in-soil anomaly (>700ppb Au) covering an area of 350m by 250m. Previous explorer (Esso/City Resources) located the presence of bedrock gold mineralization by hand trenching within the soil anomaly. Three of their trenches returned 156m at 2.43g/t Au; 72m at 2.34g/t Au; and 60m at 1.20g/t Au.

A six-hole reconnaissance diamond drilling program (totalling 869.7m) tested the apparent north-trending strike of the contact between the cover and basement rocks with five holes and the sixth hole tested for a possible southern extension. Hole WED 003 graded 0.75g/t Au from 0 to 117.5m and included 27.7m grading 2.07g/t Au and 17.1g/t Ag with a section from 30.7m to 32.2m grading 19.90g/t Au. WED 001 graded 0.53g/t Au from 0 to 114.8m; WED 002 graded 0.44g/t from 0 to 150.0m: and WED 005 graded 1.35g/t Au for the top 27.7m. A second program of four holes tested for east and west extensions of the mineralization with less encouragement, but encountered long anomalous sections like: 47.2m to 86.0m at 0.37g/t Au in hole WED 007; 37.9m to 52.9m at 0.40g/t Au in hole WED 008; and 78.4m to 124.8m at 0.36g/t Au in hole WED 009.

Macmin and Hunter carried out additional trenching with a diamond saw used to cut channels for sampling. Channel sampling results included: 164m of 3.96g/t Au (inc. 16m of 20.03g/t Au); 28m of 5.19g/t Au, 26m of 5.70g/t Au; 20m of 2.69g/t Au; 16m of 2.67g/t Au; and 12m of 3.02g/t Au. The trench results encouraged completion of 29 RC holes that confirmed mineralization over a strike length of 600m and down dip in a 100m test. Mineralization remains open along the north and south trend and down dip. The RC drilling contained many assay intervals grading between 1 and 3 g/t Au, but results comparable to those in the trenches were not encountered. Previous drilling suggested that higher-grade sections may plunge along the mineralised contact in zones that parallel drill sections or that there could be surface gold enrichment. An IP survey was completed to check for possible continuations of the mineralised system, and showed that Weioko mineralization could extend over a further kilometre to the south and that another mineralised system may occur near Lataona Hill.

Best gold results from reconnaissance diamond drilling of Weioko prospect.

Gold grades from diamond drill holes at Weioko prospect.

Highlights of gold grades from RC and diamond drill holes at Weioko prospect.

The Gwamogwamo massive sulphide prospect has been tested with trenching and 16 RC holes totalling 680m with the best RC intersection in hole GW007 grading 0.61 g/t Au and 1.34% copper from 7m to 16m. Trench 2 contained a 10m interval grading 2.02% copper and 3.32 g/t Au.

In the Weioko area, previous exploration suggests that decollement zones between basement and overlying sedimentary and volcanic rocks, and recent tensional, northerly trending graben structures may be controls for epithermal mineralising solutions. Supergene enrichment of gold in tropical environments is common and has resulted in many economic concentrations.

The Weioko area could host economic precious metal deposits in structural zones, porous units encountered along mineralising structures or in surface environments affected by tropical weathering and supergene enrichment. The three types of deposits present exploration targets that warrant further drill testing and should be considered with other geotechnical data when selecting drill sites.

LOGISTICS OF INVESTIGATION

EL 1069 has been explored by Macmin (PNG) Pty Limited and joint venture partner Hunter with the work supervised by company personnel. Contractors were used for geophysical surveys and drilling. Geophysical surveys were completed by Zonge Australia with supervision by Southern Geoscience Consultants Pty Ltd. Drilling at Sehulea was completed by United Pacific Drilling Pty Ltd of Madang, PNG. NGG is acquiring the Sehulea property from Macmin and both NGG and Macmin share the same professional personnel. Macmin and NGG management are qualified persons using criteria outlined in NI 43-101.

DATA RELIABILITY

Exploration of the Sehulea area has been conducted by Esso, City Resources and by Macmin personnel. Work conducted by the major companies support the Macmin exploration results.

DRILLING

Several phases of drilling have been conducted on prospects within the Sehulea tenement. An initial six reconnaissance DD holes, totaling 869.7m, were drilled at the Weioko prospect by City Resources (PNG) Pty Limited in June/July 1987. This was followed by another four follow-up DD holes, totaling 706.4m, in September 1987. During 1996/1997 Macmin (PNG) Pty Limited completed 29 RC drill holes at Weioko, two with diamond holes, totalling 1,765m of RC and 167m of DD. Elsewhere in the tenement Macmin, during 1996/1997, completed a total of 27 RC holes, totaling 1,346m at Gwamogwamo, Peter's, Martin's, Lataona Hill and Gui prospects.

SAMPLING METHOD AND APPROACH

Samples were dried and shipped to Analabs in Lae, PNG for Cu, Pb, Zn, Ag, As and gold analysis. Base metals and silver were analysed by AAS methods and gold by fire assay and AAS finish.

SAMPLE PREPARATION, ANALYSIS AND SECURITY

RC samples from the Macmin (PNG) Pty Ltd drilling programme were collected at 1m intervals downhole. Each sample was kiln dried and weighed. Actual recoveries (recorded dry weight of each 1m drill interval) were compared with theoretical recoveries to ensure adequate and representative downhole sampling. Successive 1m intervals were combined using a clean riffle splitter, which sub-sampled _ portions of each 1m sample, to prepare samples for assay submission. Sample preparation, weighing of 1m returns to determine recoveries, and riffle-splitting of 2m composite samples for assay submission, were all completed under the supervision of the site geologist. Logging of representative chips retained from each 1m sample, was completed on-site by a geologist. Representative chips, on a metre per metre basis, from each RC hole have been retained for future reference.

Drill core was logged and split, using a core saw, on-site. Half-core was sampled according to drill-runs to enable quantification of recoveries. A core storage area is at Weioko village, Normanby village.

Samples were sent to Analabs Pty Ltd, a division of Pilbara Laboratories (Nuigini) Pty Ltd, Lae, PNG, for gold assay (method 630 or 650) and Cu, Pb, Zn, Ag and As. Repeat and check analyses were routinely completed on a 1 in 10 to 1 in 15 basis. All high (>10,000ppm) copper analyses were repeat assayed.

DATA VERIFICATION

Independent consultant Dr P. Christopher has reviewed analytical results which indicate regular reruns by the lab and checks of high or unusual results. Since erratic high values are encountered, large assay samples have been used. Geologist, Dr. David Lindley, a qualified person, supervised Macmin programs from 1996 to 1998, and has checked sample preparation, logging and security procedures. Dr. Peter Christopher checked massive sulphide mineralization at the Gwamogwamo prospect in 1996.

The Sehulea project area has previously been explored by Esso/City Resources. Their work provides independent verification of significant gold values in trenches and drill holes on the Sehulea property.

MINERAL PROCESSING AND METALLURGICAL TESTING

Preliminary metallurgical testwork completed on two surface samples from Weioko prospect by Macmin Ltd has indicated a high percentage (>90%) of gold and silver recovery by cyanide leaching.

MINERAL RESOURCES AND MINERAL RESERVE ESTIMATES

There are no mineral resources or mineral reserve estimates for the Sehulea property. The project is at an early exploration stage and has some significant drill intersections and trench results.

Feni Property, New Ireland Province, Papua New Guinea

PROPERTY DESCRIPTION AND LOCATION

LOCATION

The Feni property consists of two separate areas on adjacent Ambitle and Babase Islands in the Feni-Tabar chain of islands in the New Ireland Province of Papua New Guinea. The total area of 37km² comprises 30km² in area A on Ambitle Island and 7km² in area B on Babase Island. The Feni (Anir) Islands is the collective name for the adjacent Ambitle (87km²) and Babase (23km²) islands that are separated by a 400m wide Salat Strait. The Feni Islands are 165km northeast of Rabaul/Kokopo, the capital of East New Britain. The license is centred at about coordinates 4º04'S latitude and 153º38 E longitude, and is covered by part of the Feni 1:100,000 topographic-map.

PROPERTY DEFINITION

The Feni property, consisting of EL 1021 covering 373km², was granted to Janjubilee Pty Ltd., a wholly owned subsidiary of Macmin, on November 4^th, 1992. On December 23^rd, 1994 the tenement title was transferred to Macmin PNG. The license has gone through several 2-year renewals and reductions. The present tenement covers 37km² in 2 separate parts. The renewal, due on 3 November 3 2002, is lodged; processing is currently in progress.

NGG has joint-ventured the Feni project with Macmin since April 1996 and on March 3^rd, 1998 a 25% interest in EL1091 was assigned to NGG and registered.
NGG has acquired the remaining 75% interest in the Feni property, through its acquisition of Macmin PNG.

On February 24, 2003 the Company announced it had reached an Agreement with Paccom Ventures Inc. ("Paccom") wherein the Company would option to Paccom a 75% undivided interest in the Feni Gold Project located in New Ireland Province, 160 km East of Rabaul, Papua New Guinea.

Terms of the Agreement are as follows: 800,000 shares of Paccom payable to NGG, in stages, over three years, including 200,000 shares upon Exchange approval. Minimum exploration expenditures totalling CDN $2,500,000, staged over three years, including a minimum expenditure of $500,000 before June 30, 2004. Paccom Ventures Inc. will act as operator. A finders' fee is payable in respect of this agreement, of the lesser amount of either 10%, or the maximum Finder's Fee allowable under the policies of the TSX Venture Exchange (the "Exchange").

Subject to any agreement made under Section 17 of the PNG Mines Act, the State reserves the right to elect at any time, prior to the commencement of mining, to make a single purchase up to 30% equitable interest in any mining discovery arising from this license, at a price pro rata to the accumulated exploration expenditures and then to contribute to further exploration and development in relation to the lease on a pro rata basis, unless otherwise agreed. Macmin estimates that CDN$ 814,446 has been spent on EL1021.

ACCESSIBILITY, PHYSIOGRAPHY, CLIMATE LOCAL RESOURCES AND INFRASTRUCTURE

Access to camps, previously located along the southerly coast, is via boat from the Rabaul. Bulk supplies and equipment can be chartered from Rabaul, 160km to the west, for loading/unloading directly on the beaches. A government operated grass airstrip with a first aid post is found at Malekolon on the western tip of Babase Island. There is a single flight per week from Rabaul by light aircraft. Helicopter companies (Pacific and Island) have bases in Rabaul. Ambitle and Babase islands have rough gravel roads around their perimeters, but ground transportation services are minimal. On Ambilte Island there are bulldozer tracks linking prospects to the coast. Foot trails cross both islands.

The relief is rugged with elevations ranging to 400m. The islands have tropical rain forest cover with agriculture restricted to a narrow belt along the ocean. Rainfall is approximately 200cm annually. Active hot springs and fumaroles have resulted in several kill zones or areas of stunted vegetation.

A number of small villages along the coasts of the Feni Islands provide a source of labour for camps and exploration programs. About 2000 habitants of the Feni Islands subsist mainly on agriculture and fishing. Several small stores are situated throughout the islands. There is no central power supply on the islands and communication is mainly by radio.

HISTORY, VENDOR INFORMATION

Small-scale alluvial gold mining occurred on Tatau Island in the Tabar Group prior to the Second World War. The islands belt received cursory evaluation by CRA using stream silt sampling, but much stronger copper anomalies diverted CRA's attention to Bougainville and resulted in the discovery of a world-class copper/gold deposit at Panguna. Aggressive exploration of the lode potential of the Feni Islands was prompted by a world-class gold discovery on Lihir Island by Niugini Mining/Kennecott joint venture. Esso, City Resources, and Ingold Holdings explored the Feni Islands from 1983 to 1992 with combined expenditures of about $10.5 million Australian dollars. Basic exploration of the Feni Islands was started by Esso in 1983 and continued by a City Resources joint venture in 1984. Early geological, geochemical and geophysical surveys led to an initial scout, reverse circulation drill program on the Lacey, Kabang, Saddle, Natong, and Dome prospects in 1985. Diamond drilling started in 1986, with several holes completed in the Kabang, Saddle and Natong prospects.

Ingold entered a joint venture agreement with City Resources in 1989 and completed additional soil sampling, trenching and reverse circulation and diamond drilling before terminating the joint venture in 1991. City Resources, inactive by 1991, allowed the tenement to lapse in late 1991 or early 1992.

Mac Mining, now Macmin, was formed in 1992 to acquire the Feni tenement. The property was joint-ventured by Union Mining NL in 1992 with compilation and program recommendation reports prepared, but little fieldwork completed.

The property was returned to Macmin in 1994. A surface exploration and drilling program was planned for 1994, but the 1994 work plans were interrupted by eruption of the Rabaul volcano. In 1995 Macmin diamond drilled 989m in four holes on the Natong prospect to follow-up significant Ingold 1989 drill results. The 1995 drilling intersected long intervals of anomalous gold values, but intersections with grades like Ingold's Hole 1 (3.1m @ 2.83 g/t Au & 1.5m @ 8.7 g/t Au), Hole 2 (0.95m @ 35 g/t Au, 10m @ 5.7 g/t Au & 3.4 g/t Au) and Hole 8 (3m @ 10 g/t Au) were not encountered.

Summary of Aircore and RC Drilling, Feni Property.

Summary of Diamond Core Drilling, Feni Property.

In 1996 the geology of the Kabang prospect was reviewed by Dr. Lindley, and further exploration on Feni Islands was evaluated by Dr. Lindley on the basis of geological, geochemical, geophysical review of the concealed Minifie orebody on Lihir Island. Dr. Lindley noted that arsenic and mercury soil geochemistry provided excellent pathfinders to the buried Minifie deposit. A preliminary soil survey was conducted at the Kabang prospect in 1996. In 1997, 1985 vintage airborne geophysical data, flown for Esso, was reinterpreted, and an 1,840 sample soil geochemical survey completed over the Kabang prospect area and grid sampling extended westerly from Kabang to the Kapkai hot spring area.

NGG contracted Zonge Engineering to complete a 20.05 line km induced polarization survey (IP) over the Kabang prospect. Trenching and four diamond drill holes totalled 618.7m. The drill holes tested coincident IP and geochemical anomalies within the Kabang grid area. The holes (Mad2 - Mad4) encountered an active hydrothermal system and failed to test the target zone.

The Company is a 65% owned subsidiary of Macmin Silver Ltd.

Vendor:

Macmin Silver Ltd
94 Bundall Road
Bundall
Queensland 4217
Australia

Terms of Acquisition: See June 12, 2002 Agreement summarised in Item 3.

REGIONAL GEOLOGY

The Feni property lies within an evolving island arc of Tertiary age. It is a northwesterly trending structural province with alkaline intrusive and volcanic rocks extending from Bougainville through the Green, Feni, Tanga, and Lihir to Tabar island group at the northwest.

The center of the Ambitle Island is an eroded caldera. The country rocks are alkalic mafic to intermediate strato-volcanics. Numerous active thermal areas are aligned along young faults and caldera ring fracture zones. Older counterparts of the active geothermal areas have been the main exploration targets. The eroded caldera is cut by the NNW trending Matampasel Fault. The Matampasel Fault flanks the NNW trending Niffin Graben. Movement on NNW structures resulted in graben cross structures like the northeasterly Natong Structure. Polymictic, angular clast, altered volcanic breccia bodies occur along the Natong structure. Silicified clasts from the breccias are reported to have gold values up to 75 g/t Au.

Babase Island is composed of a volcano that consists of basaltic trachytic rocks of Plio-Pleistocene age with some reef limestone.

An airborne magnetic and radiometric survey, conducted for Esso, suggested an intrusive complex in the southwest part of the Ambitle Island. The intrusive complex is postulated to be related to or at least the heat source for mineralizing episodes. In 1997 consultants re-processed Esso's 1985 vintage aeromagnetic and radiometric data, and suggested that mid-level intrusives were more extensive below the southern half of Ambitle Island than suggested by mapping and previous geophysical interpretation. He also suggested that northeasterly trending faults and fractures appeared to be a more significant control of mineralization than suggested by previous work.

DEPOSIT TYPES

The Feni project is situated in a structural and geological zone which hosts a world-class porphyry copper-gold deposit at Bougainville and a world-class epithermal, hot spring gold deposit at Lihir. The gold deposit at Lihir contains an estimated gold resource of over 40 million ounces in material grading over 3 g/t Au.

The Feni property is mainly a target for hot spring gold deposits like Lihir or a deeper "high-grade" multi-vein deposit such as Tolukuma on the main island of Papua New Guinea, or also has potential for very high-grade structurally controlled mineralization like Hishikari in Japan, and has indication of a porphyry copper-gold system in some of the drill holes.

MINERALIZATION

Previous exploration of the Feni property has identified over 30 separate gold anomalies and occurrences.

The presence of pyrite, chalcopyrite, arsenopyrite and alteration mineralogy are indicators of a possible buried, moderate size, copper-gold porphyry system. Although gold exploration has concentrated on fossil boiling zone deposits like Lihir, the geological setting is also prospective for shallow, oxidized vein type and/or structurally controlled, deeper "high grade", bonanza vein or multi-vein deposits like Tolukuma near Port Moresby.

EXPLORATION BY MACMIN AND NGG

GEOCHEMICAL SURVEY

The 1996 and 1997 soil geochemical survey consisted of 1,840 soil samples from a 9km² grid area over the Ambitle intrusive complex. The samples were collected at 25m intervals along lines spaced mostly at 200m intervals. Samples were obtained with a hand-held auger that allowed penetration of up to 2m and sampling below the surface organic layer. A 30g sample was digested in aqua regia and analyzed for gold by AA, copper by AA, mercury by cold vapor AA and arsenic by hydride generation AA at Analabs Niugini at Lae, PNG.

Gold values in soil, ranging from <0.02 to 0.48 ppm, were contoured at 0.02 ppm, 0.05 ppm and 0.10 ppm on Plate 1 in Christopher's report. Approximately 23% of the soil samples contain anomalous values of gold >20 ppb.

Mercury values in soil, ranging from <0.05 ppm to 39.00 ppm, were contoured at 0.05 ppm, 0.10 ppm and 0.20 ppm on Plate 2 in Christopher's report.

Arsenic values in soil, ranging from <50 ppm to 742 ppm, were contoured at 50 ppm, 75 ppm and 100 ppm in Christopher's report.

Copper values in soil, ranging from <150 ppm to 1000 ppm are shown by grid coordinates in Appendix C in Christopher's report.

SOIL GEOCHEMICAL SUMMARY

Contouring of soil geochemical results has outlined ten priority anomalies of coincident gold, arsenic and/or mercury and two secondary anomalies. The sampled area includes the surface expression of the inferred resource at the Kabang prospect. The Kabang zone was defined by anomalous values of 0.40 g/t, 0.02 g/t and 0.05 g/t gold in soil that indicates that small areas with anomalous values above 0.02 g/t gold in soil are significant.

Anomaly 1. 7900-8300E/9375-9650N (400m x 275m). Anomaly 1 is defined on gridlines 8000E and 8200E and gave local highs of 0.10-0.12ppm Au, 0.10-0.25ppm Hg, 214-254ppm Cu but no coincident As anomaly. The anomaly trend is similar to structural trend of the Niffin graben. The anomaly is in an area probably underlain by precaldera volcanics.

Anomaly 2. 7900-8300E/9775-10025N (400m x 250m). Anomaly 2 is defined along the same grid lines as anomaly 1 by anomalous Au and Hg with highs of 0.10-0.12ppm Au, 0.10-0.691ppm Hg, 200ppm to 314ppm Cu but no coincident As anomaly. The anomaly trend is similar to structural trends that crosscut the Niffin graben structure. The anomaly is in an area probably underlain by precaldera volcanics.

Anomaly 3. 8140-8480E/10775-11000N (340m x 225m). Anomaly 3 is NW of the Saddle geothermal area and is defined by anomalous Au, Hg, and Cu with highs of 0.10-0.14ppm Au, 0.20-1.10ppm Hg, 200-435ppm Cu but no coincident As anomaly. The anomaly trend is similar to structural trend of the Niffin graben. The anomaly is in an area probably underlain by precaldera volcanics.

Anomaly 4. 9300-9700E/10750-11000N (190m x 250m). Anomaly 4 is defined by anomalous Au, Hg and As and is located NE of the Saddle geothermal area with highs of 0.06-0.08ppm Au, 0.10-0.13ppm Hg and 86-102ppm As. The anomaly trend is similar to structural trends that crosscut the Niffin graben structure. The area is within what was called the Dome and is underlain by tephra covered volcanics and a trachyte dome.

Anomaly 5. 9720-10150E/10825-11000N (430m x 175m). Anomaly 5 is also within the Dome prospect and is defined by anomalous Au, Hg, and As values with highs of 0.05-0.09ppm Au, 0.11-0.20ppm Hg, and 103-143ppm As. The anomaly trend is parallel to the Niffin graben structure and is in an area covered by tephra covering volcanics and a trachyte dome. Six short holes were previously drilled in the anomaly with moderately altered trachyte and elevated values of Au, Cu and As reported.

Anomaly 6. 10080-10450E/10350-10625N (370m x 275m). Anomaly 6 is about 400m NE of the Kabang resource area and is defined by anomalous Au, Hg, As and patchy anomalous Cu with highs of 0.10-0.50ppm Au, 0.10-11.0ppm Hg, 110-742ppm As and Cu 200-383ppm. The anomaly parallels the trend of the Niffin graben structure in an area were tephra covers volcanics and trachyte. Holes CCR16-18, CC39 and CC50 tested the area with long intersections of anomalous gold values up to 0.159 g/t Au. Zones of anomalous As and Cu and up to 5% pyrite (brecciated trachyte at end of hole CC39 were reported. Hole CCR16 contained values ranging from 0.07 g/t to 0.159 g/t Au between 78-116m and 0.13 g/t Au from 116-118m (119m EOH).

Anomaly 7. 10570-10900E/10375-10525N (330m x 150m). Anomaly 7 is defined by anomalous Au, Hg, As, and Cu with highs of 0.10-0.11ppm Au, 0.202-0.699ppm Hg, 83-109ppm As and 386-1000ppm Cu. The anomaly is north of the inferred gold resource at the Kabang prospect and 50m easterly and parallel to anomaly 6. The area is underlain by tephra that overlies trachyte. The area of anomaly 7 was partially tested with drill holes CCR15-16 and CC13. Hole CC13 terminated at 28m in pyritic trachyte. Hole CCR15 contained gold values to 0.05 g/t Au and hole CCR 16 between anomaly 6 and anomaly 7 contained values to 0.159 g/t Au.

Anomaly 8. 9950-10350E/10000-10150N (400m x 150m). Anomaly 8 is defined by anomalous Au, Hg, and As with local high values of 0.08-0.40ppm Au, 0.11-39.0ppm Hg, and 110-200ppm As. The anomaly trends parallel to structures that crosscut the Niffin graben, and it is associated with the inferred gold resources at the Kabang prospect. The anomaly is developed in a tephra-covered area and has been partially tested by holes AMD2-8, KAD1-6 and CCR20 and CCR25. The holes are reported by Bateman Kinhill to define an inferred resource of 4.0 million tonnes grading 1.4 g/t Au. Review of the geochemical plots shows that anomalous conditions remain open to the east and northeast areas of the grid, and that stronger, more continuous response occurs in areas with limited tephra cover like the ridge area surveyed by line 8200E. The anomalous areas warrant physical testing to determine their significance and then extension to the east and northeast.

Anomaly 9. 10920-11050E/10000-10225N (130m x 225m). Anomaly 9, east of the Kabang prospect about 1km, is defined by anomalous Au, Hg, Cu and patches of anomalous As with local highs of 0.10-0.27ppm Au, 0.10-0.29ppm Hg, 270-538ppm Cu, and patches of 52-93ppm As. The area is underlain by precaldera volcanics. The nearest drill hole CCR22, about 300m to the WNW, contained values of 0.02 g/t-0.07 g/t Au and 200-450ppm Cu.

Anomaly 10. 9520-9900E/9425-9600N (380m x 175m). Anomaly 10, 500m SSW of the Kabang prospect, is defined by localized anomalies with highs of 0.05-0.10ppm Au and 0.10-0.45ppm Hg developed over tephra cover. Contour trenching and drill hole CCR1 were completed in the anomalous area. CCR1 averaged 0.08 g/t Au with a high value of 0.19 g/t Au. The high value from contour trenches was 0.10 g/t Au.

Anomaly 1B. 7950-8300E/9000-9175N (350m x 175m). Anomaly 1B is defined by anomalous Au, Hg, and Cu with local highs of 0.11-0.12ppm Au, 0.12-0.20ppm Hg, and 200-471ppm Cu. The anomaly overlies basement volcanics in area with only limited surface sampling.

Anomaly 2B. 8600-8850E/8750-8975N (250m x 225m). Anomaly 2B is defined by local values to 0.05ppm Au and 0.165ppm Hg. The values are considered of interest because of lack of proximity to a geothermal area and no previous work in the area.

DRILLING

Several programs of reverse circulation, aircore and diamond drilling have been conducted on the Feni property. Pervious drilling was summarized to 1993 by Bateman Kinhill as follows: "On Ambitle Island up until 1989, Esso and City had completed a total of 3,731m of reverse circulation and 2,622m of diamond core drilling. On Babase Island 1,219m of reverse circulation and 400 m of diamond core drilling was undertaken. In 1989 and 1990 Ingold completed a total of 3,438m of aircore drilling and 3,095m of diamond core drilling in the Natong, Kabang, Dome and Central caldera prospects on Ambitle Island."

In 1995 Macmin diamond core drilled 989.0m on the Natong prospect and targeted high- grade trench results (two channels samples over selected 1m intervals grading 53.8 g/t Au and 19.8 g/t Au), and extensions of Ingold drill holes that contained intervals of 0.95m at 35 g/t Au and 3m at 10 g/t Au. In 1998 and 1999, NGG drilled four diamond drill holes to test coincident soil geochemical and IP anomalies.

Statistics for Diamond Drilling on the Feni Property.

SAMPLING METHOD AND APPROACH

RC sampling was conducted by all operators using conventional methods with samples placed in a bag that allowed dewatering by overflow, and diffusion through the bag surface. Samples were dried, weighed and 25mm riffle split into one-quarter/three-quarter splits on site. Consecutive one-quarter splits were combined and combined (2m) samples sent to Analabs PNG Pty Ltd (Analabs) in Lae, PNG.

A total of 295 samples of saw split diamond drill core were collected from the Mad 001 to 004 holes in 1998 and 1999. The samples were shipped to Analabs in Lae, PNG and assayed for Au, Cu, As and Hg. A petrographic study of 11 core samples from holes Mad 001 to 003 was conducted by Terry Leach and Associates in New Zealand.

SAMPLE PREPARATION, ANALYSIS AND SECURITY

The laboratory crusted RC samples to -40 mesh by roll mill, then to -60 mesh by a Keegor mill. The sample was pulverized to -150 mesh, and analyzed by fire assay of a 50g charge, with atomic absorption spectrometer(AAS) finish. If assays of >0.5 g/t Au were obtained, a second quarter split on an individual meter basis was submitted for analysis. Diamond Core samples were prepared in the same way, but required a preliminary jaw crushing stage. Diamond drill core is split on site by using a saw designed for cutting core. Cores were logged, and splitting and sampling supervised by a qualified geologist.

DATA VERIFICATION

Assaying was completed by Analabs (PNG) Pty Ltd in Lae PNG, who comply with ISO Guide 25 that covers the TSX requirements. Check assaying was undertaken on a separate split of every tenth sample with the results showing acceptable variation.

Esso/City, Ingold and Macmin/NGG are all judged to have employed qualified exploration personnel. The writer is of the opinion that previously generated data is of excellent quality.

MINERAL PROCESSING AND METALLURGICAL TESTING

The Feni property is at an exploration stage, and inferred resources that have been calculated for the Kabang prospect must be expanded before processing and metallurgical testing is justified. Petrographic and mineralogical studies undertaken on core specimen, and analytical determinations on cores provide data that can be used by metallurgical engineers to recommend appropriate mineral processing tests.

MINERAL RESOURCES AND MINERAL RESERVES

An inferred mineral resource of 4.0 million tonnes at 1.4 g/t Au has been cited by Bateman Kinhill. Christopher accepted the mineral resources of Bateman Kinhill in his technical reports on Feni and also drill indicated resource of approximately 7.0 million tonnes at 1.3 g/t in a tabulated summary prepared by Macmin for the Kabang prospect. The Macmin resource figures were calculated by qualified Australian geologists for use in ASX news releases. The resources are not in the form required by NI 43-101, and at the grades reported would be uneconomic since the top of the resource zone is 50 to 100m below the surface. The Kabang resource occurs within an open ended, 1500m long anomalous IP zone that has been tested for only 600m with stronger chargeability along structural trending to the south. Further drilling of the Kabang mineralized structural zones has good potential for locating higher grade gold mineralization that would justify grid drilling. If grid drilling is successful then resources will be calculated and reported in the form required by NI 43-101.

Simuku Property, New Britain, Papua New Guinea

PROPERTY DESCRIPTION AND LOCATION

The Simuku prospect, held as EL 1077, covers 43km² SW of Kimbe in West New Britain Province, PNG. The EL is centred at geographic coordinates 5º44'S latitude and 150º02'E longitude in the 1:100,000 topographic sheets Dagi (8996) and Namo (8886) and 1:250,000 geological map sheets Andewa (SB55-8) and Tolasea (SB56-5).

The Simuku exploration licence (EL1077) covering 203km² was granted to Macmin on 29^th November 1993. The licence has gone through several two-year renewals and reductions. The present Simuku tenement covers about 43km².

NGG has acquired a 90% interest in the Simuku property from Macmin. Mr. S. Yeaman has a 10% carried equity in the Simuku project up to Bankable Feasibility Study stage. If the parties decide to develop mining operations Yeaman's interest becomes 10% fully contributing interest.

Subject to any agreement made under Section 17 of the PNG Mines Act, the State reserves the right to elect at any time, prior to the commencement of mining, to make a single purchase of up to 30% equitable interest in any mining discovery arising from this licence, at a price pro rata to the accumulated exploration expenditures and then to contribute to further exploration and development in relation to the lease on a pro rata basis, unless otherwise agreed.

ACCESSIBILITY, PHYSIOGRAPHY, CLIMATE, LOCAL RESOURCES & INFRASTRUCTURE

Four-wheel drive access is via a logging road north of the property, however due to heavy rainfall this track is unlikely to remain in good repair without continuous maintenance. Walking tracks, along moderate gradients, and a road/trench system provide access to most of the prospect locations, but tracks not used for a wet season require brushing. Alternate access is by helicopter from Kimbe or the Hoskins airport. No population centers occur in the EL, landownership claims related to traditional hunting grounds and cultivated areas originate from coastal villages at Ismi, Mingai, Morokea, Ruango and Kulungi.

The exploration licence is on the northern flank of the Whiteman Range. Rugged terrain results from incised, seasonal streams and relief of about 600m with elevations ranging from about 200m to 800m. Small garden areas are restricted to nomadic developments at lower elevations with the remainder of the EL covered by dense tropical forest. A tropical monsoonal climate has a wet season from November through April. Hoskins receives about 75% of about 4m of annual rainfall during the wet season.

Coastal villages provide a good supply of camp personnel and labour for exploration projects. Hiring locally also creates good will that generates local support for renewal of tenements. PNG has a good supply of exploration geologists, miners, and equipment operators that can be called on as the project progresses.

HISTORY, VENDOR INFORMATION

After discovery of Bougainville, CRA investigated New Britain Island with a regional stream- sediment sampling program in 1965. Four areas of anomalous copper in stream sediments were detected within tributaries of the Kulu River. The stream sediments led to location of the Simuku, Kulu, Talelumas, Rapisme and Rapilli prospects. CRA used ridge and spur auger soil sampling and limited rock chip sampling for follow-up. A copper in soil geochemical anomaly, in the Rapalli prospect area, was tested with three diamond drill holes totaling 916.1m. Only primary copper mineralization with generally less than 0.2%Cu was encountered. Soil sampling in the Central Simuku area revealed a zone 400m by 800m of >10ppm Mo associated with weakly anomalous and patchy copper values.

In the early 1970's BHP used rock chip sampling to outline the Rapisme prospect. Four diamond drill holes totaling 607.3m were reported by Bateman Kinhill (1993) to have intersected comparable results to those from the Rapalli anomaly.

In 1979 Nord Resources conducted regional surveys that included the Simuku area. Esso worked the area between 1981 and 1986 with programs directed toward evaluation of identified porphyry Cu systems. Four diamond drill holes, totaling 624.7m, were drilled at the Simuku prospect in 1983. The drill holes confirmed the presence of a chalcocite enriched zone overlying primary copper mineralization. A gold enriched system is also suggested with a best intersection of 0.12 g/t Au from hole-SM-1. A summary of significant copper intersections from Bateman Kinhill follows:

Drill Intersections, Simuku Prospect (plus 1m @ 0.1% Cu).

City Resources acquired the Simuku property in 1987 and conducted further basic geochemical sampling and mapping for definition of the Talelumus Prospect before financial problems lead to termination of City's interest.

In 1993 Macmin conducted a data compilation of the Kulu River in order to select an appropriate EL application area. The Simuku Tenement was granted to Macmin on 29/11/93 with Macmin holding 50% in trust for W.S. Yeaman (now a 10% carried interest).

In September 1994 Placer (PNG) Exploration Pty Ltd. (Placer) optioned the Simuku property. Placer's work program consisted of IP and magnetic surveys, detailed mapping, geochemical sampling, pitting and bulldozer trenching on the Simuku prospect. Placer's report (1995) stated: "The hypogene potential of the Simuku prospect has been demonstrated by surface geochemistry in conjunction with IP geophysics and diamond drilling by Esso. It is believed that high grades encountered in Trench 2 are due to an overprint of supergene mineralization on a disseminated hypogene zone. The requirement for additional exploration of a hypogene copper target has been highlighted. The recommended program should include a structural air photo interpretation over the entire EL, reconnaissance mapping of all hypogene Cu occurrences, additional hand dozer trenching over all IP anomalies followed by a 2-3 diamond hole drilling program." Although Placer's property report contained a positive recommendation for further work, Placer terminated its option in late 1995 without completing the recommended work program.

In 1996/1997 Macmin / NGG completed 3,200m of bulldozer trenching with large intervals grading 0.2 to 0.5% Cu, and completed 8 drill holes totaling 857m (RC 584m; Diamond Core 273m). Significant copper mineralization was encountered in holes 7, 10, 11 and 12 that are tabulated below:

Significant Simuku Drill Results 1996/97.

In February 1999, Cyprus Amax PNG Holdings Inc. finalized a farm in agreement with Macmin and Yeaman (on EL 1077 only) to earn up to 80% in 3 exploration licences covering >4,000km². After spending over US $300,000, a November 1999 merger of Cyprus Amax with Phelps Dodge resulted in restructuring and withdrawal from the joint venture. Creek mapping and prospecting was conducted on the Simuku tenement and supported by 91 rock chip samples. The best rock sample results were from outcrop of phyllic altered crystal lithic tuffs along Misasuguran Creek where a single grab sample returned a high grade gold assay of 210 g/t Au. A nearby 20m chip channel returned 20m @ 0.2% Zn, and a 1.5m wide clay silica altered fault zone returned 7.2% Zn.

After Cyprus Amax returned the Simuku property to Macmin, a petrographic study was completed on sixteen drill core samples from hole SMH-012 by Terry Leach & Co.

The Company is a 65% owned subsidiary of Macmin Silver Ltd.

Vendor:

Macmin Silver Ltd
94 Bundall Road
Bundall
Queensland 4217
Australia

Terms of Acquisition: See June 12, 2002 Agreement summarised in Item 3.

REGIONAL GEOLOGY

The island of New Britain formed as a result of Eocene to Oligocene volcanism above a southwest dipping subduction zone. The subduction pattern changed during the Miocene with subduction moving to the New Britain trench to the south of the island. Lower Tertiary island arc volcanics, volcaniclastics and intrusives form the basement rocks for New Britain with Eocene Baining Volcanics, Oligocene Merai Volcanics (East New Britain) and Kapuluk Volcanics and Oligocene intrusives .

Baining Volcanics are mainly massive to well bedded volcanics, volcanic sediments and related intrusives. The volcanics are basic to intermediate and believed to be over 600m thick. Sediments consist mainly of marine conglomerates, sandstones and siltstones with minor limestone lenses.

The Kapuluk volcanics are compositionally similar to the Banning Volcanics and formed under similar island arc conditions. Plutonic and hypabyssal rocks, of granodiorite to gabbro composition, are mainly comagmatic with the upper Oligocene volcanics. Porphyry copper mineralization is mainly found within the intrusive complex.

Change in the subduction pattern during Early Miocene resulted in a hiatus in volcanic active, and gradual subsidence accompanied by deposition of thick limestone sequences of the Yalam and Sai Beds. Volcanism resumed in the Pliocene with deposition of tuffaceous sediments, acid tuff and basal conglomerates of the Kapiura Beds. The Quaternary Kimbe Volcanics border the Bismarck Sea and form island off the north coast of New Guinea. The Kimbe Volcanics are products of strato-volcanoes that produce mainly andesitic lavas. Recent volcanic activity has resulted in expensive post mineral cover of a large part of New Britain with pumice and volcanic ash.

The Simuku property is mainly underlain by andesitic to basaltic volcanic and volcaniclastic rocks of the Kapuluk Volcanics and felsic andesitic to dacitic intrusive dykes, sills and stocks belonging to the Upper Oligocene intrusive suite related to the Kapuluk Volcanics.

DEPOSIT TYPES

The main exploration target on the Simuku property is a gold enhanced porphyry copper deposit with enrichment resulting from generation of a supergene, chalcocite rich blanket or secondary enriched zone. Skarn mineralization occurs when dacite porphyry bodies intrude limy volcanoclastic or sedimentary rocks, and may be a target on the Simuku property. Structurally controlled zinc mineralization and auriferous quartz veins occur peripheral to the porphyry system. The presence of auriferous (single grab sample grading 210 g/t Au) phyllic altered crystal lithic tuff, along Misauguran Creek, suggests the possibility of epithermal gold deposition in porous volcanic rocks.

MINERALIZATION

The Simuku property is part of a WNW trending Kulu-Simi belt of Kapuluk Volcanics and associated, sub-volcanic intrusives with potential for precious metal enhanced porphyry copper mineralization. The Simuku property is near the NW extremity of the mineralized trend that also includes the Mt. Nakru property.

The Simuku prospects comprise a mineralized zone about 3km long and 300 to 500m wide within a mineralized area of about 12km². Three 400m hills (i.e. Wokayalae in south Simuku and Misilli and Tobarum in central Simuku) have hematitic, siliceous, leached caps within the zone. On Tobarum Hill, drill hole 83-SM-4 has intersected a chalcocite rich zone or blanket. Similar blankets may underlie the leached caps at Wokayalae and Misilli hills. The Simuku north prospect has lower relief with elevations less than 230m, but narrower secondary blankets of chalcocite mineralization were encountered in holes 83-SM-1 and 83-SM-3.

Mineralization at the Simuku prospects appears to be associated with porphyritic microdiorite which has estimated sulphide content ranging from 5-7%, comprised of pyrite and chalcocite in the oxidized zone and pyrite, chalcopyrite, sphalerite and molybdenite in the primary zone. Hydrothermal breccias, associated with the microdiorite, have intrusive clasts with sulphide content up to 15%, comprised of pyrite, chalcopyrite, chalcocite, bornite and minor molybdenite. Propylitic altered volcanics are generally pyritic with only minor chalcopyrite. Four high chargeability IP anomalies obtained by Placer were interpreted to contain up to 15% disseminated sulphide mineralization.

The Kulu prospects have been explored in the past by CRA, BHP and Esso as supergene porphyry copper targets. Drilling on the Rapilli and Rapisme prospects, by CRA and BHP respectively, intersected mainly primary mineralization grading less than 0.2% copper with no gold analyses conducted. Bateman Kinhill (1993) reported that Esso obtained anomalous gold (from 0.02 to 0.09 g/t Au) from five creeks that drain the drill area. Addition checking of the gold content of the Kulu prospect areas is warranted.

The Talelumas prospect was located in 1984 by Esso following up anomalous arsenic in silt samples and pyritic float in creeks draining an airport circular feature. Gold mineralization discovered to date consists of narrow shear zones with quartz, sphalerite, chalcopyrite and pyrite.

A grab sample from a 20cm. wide sphalerite-quartz vein in the Misek creek area assayed 26.65 g/t Au, 24.0 g/t Ag, 2.14 Cu and 22.4% Zn. A 5m channel taken across the structure averaged 5.0 g/t Au (Bateman Kinhill, 1993).

EXPLORATION BY MACMIN/NGG

In 1996/1997 Macmin completed 3,200m of bulldozer trenching with large intervals grading 0.2 to 0.5% Cu, and completed 8 drill holes totaling 857m (RC 584m; Diamond Core 273m). Significant copper mineralization was encountered in holes 7, 10, 11 and 12.

In 2002, a petrographic study was completed on sixteen drill core samples from hole SMH-012 by Terry Leach & Co (Topp et al., 2002).

Exploration since 1995 of the Sinivit project area has been conducted by NGG and Macmin with the work supervised by company personnel, but contractors used for mapping, sampling, petrographic studies and drilling. The Company is acquiring the Sinivit property from Macmin and the Company and Macmin share the same professional personnel. Macmin and the Company management are qualified persons using criteria outlined in NI 43-101.

Surface exploration and drilling programs conducted by Esso Papua New Guinea/City Resources (PNG), Placer, Cyprus Amax, and BHP validate the presence of significant porphyry mineralization on the Simuku property.

DRILLING

Significant results from the Simuku prospect drilling are summarized below.

Drill Intersections, Simuku Prospect (>0.1% Cu).

Notes:
Drilling by Macmin RC - 584m Diamond Core - 273m
Drilling by Esso 624.7m - Diamond Core
Trenching by Macmin 3.2km
Trenching by Placer 1.3km

SAMPLING METHODS AND APPROACH

Samples were dried and shipped to Analabs in Lae, PNG for base metal, and silver and gold analysis. Base metals and silver were analysed by AAS methods and gold by fire assay and AAS finish.

SAMPLE PREPARATION, ANALYSIS AND SECURITY

RC samples from the Macmin drilling program were collected at 1m intervals downhole. Each sample was dried and weighed. Actual recoveries (recorded dry weight of each 1m drill interval) were compared with theoretical recoveries to ensure adequate and representative downhole sampling. Successive 1m intervals were combined using a clean riffle splitter, that sub-sampled _ portions of each 1m sample, to prepare samples for assay submission. Sample preparation, weighing of 1m returns to determine recoveries, and riffle splitting of 2m composite samples for assay submission, were all completed under the supervision of the site geologist. Logging of representative chips retained from each 1m sample, was completed on-site by a geologist. Representative chips, on a meter per meter basis, from each RC hole have been retained for future reference.

Diamond drill core was logged and split, using a core saw, on site. Half-core, from hole SMH-012, is stored at the Simuku Camp. Sixteen core samples were submitted at a later date to Terry Leach & Co for petrographic study.

Samples were sent to Analabs Pty Ltd, a division of Pilbara Laboratories (Nuigini) Pty Ltd, Lae, PNG, for gold assay, and Cu, Mo, Zn and Ag analysis.

DATA VERIFICATION

Chalcopyrite, chalcocite and malachite visible in the trenches are adequate to explain previous trench sample results.

The Simuku property has been explored and confirmed as a significant porphyry by City Resources, Esso, Nord Resources, BHP, CRA Explorations, and Placer. All of the previous operators confirmed the presence of low-grade porphyry mineralization on the Simuku property.

MINERAL PROCESSING AND METALLURGICAL TESTING

No metallurgical test work has been completed on the Simuku property.

MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

The Simuku prospect area is at the drilling stage with a total of 12 holes completed in a 3km by 300 to 500m wide mineralized zone. The drill hole spacing allows a qualified person to connect widely spaced holes because they have similar geology and are within similar intensity IP areas. The deepest hole, SMH-12, graded 0.33% Cu and 0.06 g/t Au over its entire 276.6m length and holes SMH-11 and SMH-7 contained 0.50%Cu and 0.52% Cu, respectively, over their entire lengths. Resource blocks can be constructed that would result in a multi million tonne inferred resource grading over 0.35% Cu with small precious metal credits.

A 1999 exploration summary for Cyprus Amax, stated, "A 2-week review of the Simuku prospect confirmed the presence of low grade porphyry copper mineralization in an elongate NNE-trending body of phyllic altered dacite porphyry measuring approximately 2500m by 200 to 500m. Diamond drill holes (12 holes, 1463m) and rock chip data suggest that a significant portion of the dacite averages 0.2% to 0.4% Cu and <0.1 g/t Au."

Other porphyry prospects, on EL 1077, are at an early exploration stage and do not have sufficient data for resource determinations.

Hole SMD-4 intersected 40.7m grading 0.64% Cu in a secondary blanket above 84.6m of primary mineralization grading 0.28%Cu. Hole SM-3 ended in primary mineralization with 50.2m (100-150.2m) grading 0.50% copper and terminated in primary mineralization grading 0.66%. An eight hole drilling program completed by Macmin in 1987 resulted in good porphyry type mineralization in holes SMH-7 through SMH-12 with hole SMH-7 grading 0.52% Cu and 0.12 g/t Au over the 63m hole length, hole SMH-11 grading 0.49% Cu and 0.11 g/t Au over the 77m hole length, and hole SMH-12 grading 0.33% Cu and 0.06 g/t Au over the 276.6m full hole length. Only 12 holes have been drilled in a mineralized zone from 300 to 500m wide and over 3km long with further drilling justified by previous encouraging results.

Mt Nakru Property, West New Britain Province, Papua New Guinea

PROPERTY DESCRIPTION AND LOCATION

The Mt. Nakru property is in a belt of porphyry copper and gold prospect in West New Britain Province about 60km south of the airport at Hoskins and from 50km to 70km SE of the helicopter base at Kimbe. The property covers 47km² in the Dagi (SB-56) 1:100,000 scale map. The licence is centred at geographic coordinates latitude 5º58'S and longitude 150º25'E.

The Mt. Nakru exploration licence (EL1043) covering 322km² was granted to Mac Mining NL on 8^th December 1992. The company then changed its name to Macmin NL. The licence has gone through several two-year renewals and reductions. The present Mt. Nakru tenement covers about 47km² in two separate blocks. The property can be maintained at its present size with future reductions optional.

NGG, subject to shareholder and regulatory approval, is presently acquiring a 100% interest in the Mt. Nakru property from Macmin.

Subject to any agreement made under section 17 of the PNG Mines Act, the State reserves the right to elect at any time, prior to the commencement of mining, to make a single purchase of up to 30% equitable interest in any mining discovery arising from this licence, at a price pro rata to the accumulated exploration

ACCESSIBILITY, PHYSIOGRAPHY, CLIMATE, LOCAL RESOURCES & INFRASTRUCTURE

The property is presently best reached by helicopter from a base at Kimbe. Previous drill access roads could be upgradeable for future use, and generally require maintenance for temporary use. Walking tracks, along moderate gradients, and a road/trench system provide access to most of the prospect locations, but tracks not used for a wet season require brushing. Alternate access is by helicopter from Kimbe or the Haskins airport. No population centers occur in the EL, landownership claims related to traditional hunting grounds and cultivated areas originate from coastal villages at Ismi, Mingai, Morokea, Ruango and Kulungi.

The exploration licence is situated in the Whiteman Range. Rugged terrain results from incised, seasonal streams and relief of about 500m with the highest peak at 830m.

A tropical monsoonal climate has a wet season from November through April. Hoskins receives about 75% of about 4m of annual rainfall during the wet season. The Mt. Nakru licence area is mainly covered by dense tropical forest.

Costal villages provide a good supply of camp personnel and labour for exploration projects. Hireing locally also creates good will that generates local support for renewal of tenements. PNG has a good supply of exploration geologists, miners, and equipment operators that can be called on as the project progresses.

HISTORY, VENDOR INFORMATION

The discovery of Bougainville prompted the first modern, helicopter-supported exploration of New Britain with CRA geochemical reconnaissance surveys conducted in the mid 1960's. Placer Prospecting (Australia) Pty Ltd (Placer) acquired P.A.54 in 1967. Placer's detailed geochemical reconnaissance resulted in the discovery of the Plesyumi porphyry copper prospect in 1968. After conducting basic geological, geochemical and geophysical surveys, Placer completed a program of trenching and 7 diamond drill holes (totaling 1178m.).

In 1971, Triako Mines N.L. obtained a J.V. for further exploration of the Plesyumi Prospect area. Further basic surveys, trenching, 300m of adit excavation and 14 diamond drill holes (totaling 1979m) were completed on the Plesyumi Prospect. Placer and partners tested the Plesyumi porphyry prospect with 21 diamond drill holes totaling 3157m (Bateman Kinhill, 1993) with better copper results (Table C1) as follows:

TABLE C1. Significant Drill Results from Plesyumi Prospect.

Only selected intervals were assayed for gold with the highest reported value of 0.38 ppm Au over 1.5m in hole TD5 and most gold values less than 0.10ppm.

Through sale of a subsidiary, Placer's interest passed to Carpentaria Exploration Company (CEC) in 1975. CEC conducted check sampling prior to relinquishing the area.

Esso acquired P.A. 467 over most of Central New Britain in 1981 and targeted porphyry copper/gold, skarn and epithermal precious metal deposits. To prepare for a required 80% size reduction after two years, regional stream silt sampling program, a 7626 line-km aeromagnetic survey and photogeological mapping was completed. After evaluation of regional surveys PA 467 was reduced to P.A. 504 in 1983.

City Resources acquired P.A. 504 from Esso and in 1984 continued follow-up of Esso anomalies that delineated the Nakru 1 through 4 prospects. The Mt. Nakru 1 (Nakru 1) prospect was evaluated by grid soil sampling, bulldozer trenching, and 3 diamond drill holes totaling 396.55m.

In 1988, P.A. 504 was joint-ventured by BHP that agreed to spend about CDN$ 10,000,000 to earn 70%. BHP conducted sampling programs and completed 5 diamond drill holes totaling 562.55m at the Nakru 1 before terminating work in October 1989. The main drill intersections from the Nakru 1 prospect are summarized below in Table C2:

TABLE C2. Summary of Drill Results Nakru 1 Prospect.

Since City was no longer active, P.A. 504 lapsed. Macmin applied for the area that was granted as EL 1043 on 8/12/92. The initial EL 1043, covering 373km², was reduced after two years to 162km². A Wacker bedrock-sampling program was conducted with 423 holes totaling 2772m completed in an area 500x3000m (Nakru 4 prospect).

In November 1998, a 480 line km Dighem, radiometrics and magnetic survey was flown Macmin and Cyprus Amax by Geoterrex with 65% of the survey within the 1998 EL1043 boundary. In February 1999, Cyprus Amax PNG Holdings Inc. finalized a farm in agreement with Macmin and Stan Yeaman (on EL 1077 only) to earn up to 80% in 3 exploration licences, that included EL 1043, covering >4,000km². After spending over US$302,000, mainly on trenching of the Mt. Nakru property, a November 1999 merger of Cyprus Amax with Phelps Dodge resulted in restructuring and withdrawal from the joint venture.

The Company is a 65% owned subsidiary of Macmin Silver Ltd.
Vendor:

Macmin Silver Ltd
94 Bundall Road
Bundall
Queensland 4217
Australia

Terms of Acquisition: See June 12, 2002 Agreement summarised in Item 3.

GEOLOGICAL SETTING

Lower Tertiary island arc volcanics, volcaniclastics and intrusives form the basement rocks for New Britain with Eocene Baining Volcanics, Oligocene Kapuluk Volcanics and intrusives in the Mt. Nakru area.

Baining Volcanics are mainly massive to well bedded volcanic rocks, volcaniclastic sedimentary rocks and related intrusive rocks. The volcanic rocks are basic to intermediate and believed to be over 600m thick. Sediments consist mainly of marine conglomerates, sandstones and siltstones with minor limestone lenses.

The Kapuluk volcanics are compositionally similar to the Baining volcanics and formed under similar island arc conditions. Plutonic and hypabyssal rocks, of acid to intermediate composition, are mainly comagmatic with the upper Oligocene volcanic rocks. Porphyry copper mineralization is found within both the intrusive complex and associated rhyodacitic volcanic rocks.

The Miocene was a period of volcanic quiescence and subsidence that allowed a large thickness of Yalan Limestone to form. The Kapiura Beds resulted from intermediate volcanism that resumed during the Pliocene.

Quaternary volcanism, mostly strato-volcanoes of basaltic to rhyolitic composition, resulted from subduction of the Solomon plate below the Bismarck plate. The Quaternary volcanism has resulted in widespread ash and pumice deposits and 1 to 10m of cover in the Mt. Nakru area. Geochemical sampling must penetrate the pumice that might result in spot anomalies above continuous bedrock mineralization.

The Mt. Nakru 1 prospect is located in the approximate center of the Mt. Nakru extrusive/intrusive complex. The Kapuluk volcanics overlie the Banning volcanics in the western property area with the Plesyumi Porphyry copper prospect in altered intermediate intrusive rocks that are partly covered by Kapiura beds. The Plesyumi prospect appears to be associated with NW fault structures in a NNE trending, graben-like structure. Limestone lenses with potential for skarn mineralization (e.g. Lae River Skarn) occur in the western and northern part of the property.

DEPOSIT TYPES

The main exploration target on the Nakru property is a gold enhanced porphyry copper deposit with possibility enrichment of gold and copper resulting from leaching and supergene enrichment. Skarn mineralization occurs when dacite porphyry intrudes limy volcanoclastic or sedimentary rocks (e.g. Lae River Skarn), and may be a exploration target in limestone lenses that were previously reported in the northern and western area of the Nakru property.

The Plesyumi porphyry prospect occurs within and is genetically related to high-silica, high-soda, low-potash porphyritic rocks. The Plesyumi prospect is similar to Simuku with network veinlets in dacite porphyry.

Secondary copper and gold deposits, resulting from tropical weathering and leaching and supergene enrichment, represent an alternate target on the Mt. Nakru property.

MINERALIZATION

A total of 14 named prospects are present within EL 1043. The Plesyumi and Mt. Nakru 1 porphyry copper prospects are advanced by good drill intersections. Hole 6 in the Mt. Nakru 1 reported to grade 0.40% copper over its full 205m length and hole 3 contained 93.99m grading 0.46 g/t gold and 0.43% copper.

Near surface gold grades at the Mt. Nakru 1 prospect justify evaluation for gold enriched surficial blanket with trenches grading 27m @ 0.97 g/t Au, 3m @ 17.00 g/t Au and 21m 0.97 g/t Au and the upper part of holes 1, 2, and 3 containing 8.60m @ 1.34 g/t Au, 47.34m @ 0.312 g/t Au and 27.75m @ 0.51 g/t Au, respectively. BHP check assays are reported to have supported the results in hole Nak 001 but did not confirm the 7.4 g/t Au assay in hole Nak 003. The gold discrepancy, reported by Bateman Kinhill (1993), has not been explained.

The Plesyumi porphyry Cu mineralization, occurring in phyllic and propylitic altered fragmental rocks and intrusive breccias associated with the Metelen multi-phase granodiorite intrusive, is reported to occur in an elongate zone about 1,000m wide and 4,000m long. The best drill intersections in the Plesyumi prospect were 44m at 0.85% Cu, 110m @ 0.31% Cu and 101m @ 0.20% Cu (Interval not reported in the 1983 summary prepared for Esso by Peter Goldner). Selected intervals were analyzed for gold with most values <0.1 g/t Au and a highest result of 0.38 g/t Au. The strongest chalcopyrite-pyrite in the primary zone is associated with increased density of quartz stockwork and magnetite veins.

At the Molonk Creek prospect BHP located siliceous float with values up to 2.6 g/t Au and pan concentrates of silt with analyses of 6.22, 16.3 and 7.16 g/t Au. Most of the other prospects have anomalous gold or base metal values in reconnaissance geochemical samples. Since stronger, better-defined anomalies remain untested at Mt. Nakru, the next stage of exploration should concentrate in that area.

EXPLORATION BY MACMIN/NGG

In 1995, Macmin conducted Wacker overburden drilling on the Nakru 4 prospect with a 500 by 3000m area covered by 423 holes totaling 2772m. The survey was reported by Macmin (1995 Annual Report) to have outlined several subtly anomalous gold zones with a peak weighted assay average 0.20 g/t Au, 395ppm Cu and 73ppm As for a 100m interval.

Surface exploration and drilling programs conducted by Esso Papua New Guinea/City Resources (PNG), Placer, Cyprus Amax, and BHP validate the presence of significant porphyry mineralization on the Mt. Nakru property.

DRILLING

The Plesyumi porphyry Cu mineralization, occurring in phyllic and propylitic altered fragmental rocks and intrusive breccias associated with the Metelen multi-phase granodiorite intrusive, is reported to occur in an elongate zone about 1,000m wide and 4,000m long. The best drill intersections in the Plesyumi prospect were 44m at 0.85% Cu, 110m @ 0.31% Cu and 101m @ 0.20% Cu (intervals not reported in the 1983 summary prepared for Esso by Peter Goldner). The drill results are summarized in Table C1. The Pleysumi prospect area was tested by Placer in 1968 and 1969 with 21 holes totaling about 3,175m and 300m of adit. The best intersection was 44m at 0.85% Cu in hole P5, and several holes, P1 (101m @ 0.20% Cu), TD9 (152.4m@ 025%), T12 (152.5m @ 0.20% Cu), contained long interval of at least 0.20% Cu.

The Mt. Nakru property has several prospects that have previous drilling. The Nakru 1 prospect has been tested by 9 diamond drill holes totaling 1285.6m and returned several significant intercepts (Table C2): NAK001 (50m @ 0.4% Cu), NAK002 (8m @ 1.13 g/t Au), NAK003 (94m @ 0.46 g/t Au and 0.43% Cu), and Q74D6 (205m @ 0.4% Cu, incl. 74m @ 0.78% Cu).

In 1995, Macmin conducted Wacker overburden drilling on the Nakru 4 prospect with a 500 by 3000m area covered by 423 holes totaling 2772m.

SAMPLING METHODS AND APPROACH

Samples were dried and shipped to Analabs in Lae, PNG for Cu, Mo, Ag, and gold analysis. Base metals and silver were analysed by AAS methods and gold by fire assay and AAS finish.

SAMPLE PREPARATION, ANALYSIS AND SECURITY

Sampling conducted by Macmin and NGG was supervised by qualified exploration geologists that have experience with sampling programs run by major companies in PNG.

Samples were sent to Analabs Pty Ltd, a division of Pilbara Laboratories (Nuigini) Pty Ltd, Lae, PNG, for gold assay, and Cu, Mo, and Ag geochemical analysis by standard AAS methods.

DATA VERIFICATION

The area of EL1043 has been explored and confirmed as a significant porphyry copper/gold exploration target by City/Esso, BHP, CRA Explorations, and Placer. All of the previous operators confirmed the presence of low-grade porphyry mineralization on the Simuku property.

MINERAL PROCESSING AND METALLURGICAL TESTING

No metallurgical test work has been completed on the Mt. Nakru property.

MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

The Mt. Nakru prospect area is at the drilling stage with a total of 21 holes totaling 3,175m completed in Plesyumi prospect area and 8 holes totaling about 1057.55m completed in the Mt. Nakru prospect area. The Mt. Nakru property has a number of excellent exploration targets, but does not have calculated resources or reserves that meet the requirements of NI 43-101.

Crater Mountain Property, Chimbu And Eastern Highland Provinces, Papua New Guinea

PROPERTY DESCRIPTION AND LOCATION

The Crater Mountain property, consisting of exploration licence 1115 (EL 1115), covers about 44km² (13 sub-blocks) and straddles the Chimbu Province and Eastern Highland Province boundary. The Company has acquired a 100% interest in the licence through the acquisition of Macmin PNG. The licence was granted to Macmin by the Dept of Mining , Papua New Guinea on 26.09.94

ACCESSIBILITY AND LOCATION

The Crater Mountain property is 50km SW of Goroka. The property is centered at about 6 ° 32'S latitude and 145 ° 05 ° E longitude. Access is reasonable with nearby airstrips and 4WD track access to about 8km from the licence area. Drill programs have been helicopter supported. The property has local relief of 1,200m with highest point at 3,100m.

HISTORY AND PREVIOUS WORK, VENDOR INFORMATION

Regional exploration in the Crater Mountain area was started on PA 148 (1970-71) and PA 272 (1971) by Kennecott with broad reconnaissance stream sediment sampling of the southern and western drainages of Crater Mountain. The program was orientated toward porphyry copper deposits with no gold analyses.

CRA Explorations conducted similar work in 1971 and 1972 on PA 146 which covered the northern flank of Crater Mountain. Values of 166ppm Pb, 510ppm Zn, and 1.25ppm Ag in Ava Creek near Ubaigubi led to low grade Pb-Zn in argillic altered, pyritic rocks. CRA returned in 1977 and explored PA 432 from 1977 to 1979. A float sample from the present Nevera Prospect contained 105ppm Pb, 480ppm Zn and 0.1ppm Au, and float from the Nimi Prospect contained up to 0.12% Cu, 1.1% Zn, 680ppm Pb, 3ppm Ag, 10ppm Mo and widespread values of 0.1ppm Au. The prospects were described as bleached, pyritic-argillic altered volcanics and several hot springs were noted.

In 1983, Esso reassessed the area with reconnaissance indicating an epithermal gold target. In 1984 Esso applied for PA 566 covering a 592km² area. Helicopter borne radiometrics and aeromagnetics were flown over the Crater Mountain PA during 1985. The Crater Mountain volcanics are distinguishable from underlying marine sediments, but rugged topography and cloud cover resulted in poor coverage.
In 1988 City Resources completed 26 hand trenches totaling 1,150m on the Nevera Prospect. About 400m of outcrop was channel sampled and an aerial photo interpretation completed.

In 1995 Macmin conducted a grid based soil program and 970 samples were collected. Samples were collected by hand auger at an average depth of 0.7m on lines spaced 200m apart and samples at 25m intervals, with coverage of about 4 square kilometres. The best results were from the northern part of the Nevera Prospect. Two intersecting anomalous zones with soil values to 17.7 g/t were delineated. The anomalous zone was in excess of 1,500m long, up to 600m wide, and open to the north. On line 10800N a 200m interval averaged 4.76g/t Au; on line 1100N a 100m interval, including the high value of 17.7g/t Au, averaged 4.76 g/t Au; and on line 11400N a 7.5m interval averaged 0.47g/t Au. A 20m wide rock chip sample, in the anomalous area on line 10800N, averaged 2.18g/t Au.

A joint venture agreement was reached with BHP Minerals Exploration Pty Ltd (BHP) on 30 August 1995. BHP explored the tenement from February 1996 to mid-May 1996. Application for renewal of a reduced (353km²) licence was granted in March 1997.

In 1996 BHP completed a program of gridding, geological mapping, geochemical (including re-assaying Macmin samples for multi-element data) and petrographic sampling and a ground magnetic survey. A petrographic study resulted in an alteration model suggesting that the Nevera Prospect represented the top of a telescoped porphyry Cu/Au system.

In 1997 BHP completed 3 holes totaling 986m with the best results obtained from hole NEV 2 with a 115m interval between 225m and 340m (end of hole) averaging 1.83 g/t Au. The hole terminated in good mineralisation (last 2m sample 1.23g/t Au and last 36m @ 1.51g/t Au). In April 1998 BHP suffered worldwide restructuring which resulted in withdrawal from exploration in PNG and the Crater Mountain JV.

In 1998 Macmin completed trenching, further auger soil sampling and drilling of 4 core holes totaling 983.2m. The best intersection was in hole NEV 5 which contained 24m (from 214-238) grading 6.55g/t Au. Crater Mountain drill results are summarised on Table 1.

At the Nevera SW prospect an area about 2km² and 1.5km south-west of the Nevera Prospect, 5 rock float samples contained stringy anomalous lead (0.3 to 13.2%), zinc (up to 33.31%), silver (25 to 453g/t) and gold (0.3 to 0.6g/t). Since lead and zinc anomalism is broadly associated with gold at Porgera, the Nevera South-west Prospect may contain better gold values at depth.

WORK COMPLETED BY THE COMPANY

The Company has not yet carried out any work at Crater Mountain .

Gold analyses from Crater Mountain drill holes.

The Company is a 65% owned subsidiary of Macmin Silver Ltd.

Vendor:

Macmin Silver Ltd
94 Bundall Road
Bundall
Queensland 4217
Australia

Terms of Acquisition: See June 12, 2002 Agreement summarised in Item 3.

GEOLOGICAL SETTING AND MINERALISATION

The Pliocene to Quaternary Highland strata-volcanoes are located along the southern margin of the New Guinea Mobile Belt with Crater Mountain situated between the southern margin of the Mobile Belt and the northern boundary of the Papuan Fold Belt. The Mobile Belt is a tectonically active zone which trends WNW between the Australian Continental Plate and Melanesian Oceanic Plate. The plate boundary is marked by a series of prominent faults. The continuation of this boundary lies roughly twenty kilometres to the north of the Crater Mountain area. To the east, the boundary is marked by the Owen Stanley Thrust Belt . The area was the site of the New Guinea Orogen from later Mesozoic to Tertiary times with deformation resulting from continual terrain accretion on to the Australian Continental Plate since the Eocene. Uplift started in the Pleistocene and continues to the present.

The Crater Mountain Volcanic Complex is part of the composite PNG Highlands andesitic stratovolcanic development with activity from Pliocene to Recent. Volcanic units are underlain by Cretaceous to lower Tertiary marine black-shale, siltstone and minor limestone.

Regional property mapping was compiled in 1983, and local geology in the Nimi and Nevera areas was mapped by BHP and Macmin.

Cretaceous and early Tertiary marine siltstone, black shale and minor limestone form the basement through which andesitic stratovolcanics were extruded. The sedimentary basement rocks are overlain by the Crater Mountain volcanic complex which was deposited during two separate phases of volcanism. The older and more voluminous Phase I activity took place in Pliocene or Early Pleistocene about 2 Ma and the later Phase II episode took place in Holocene to Recent times.

Phase I volcanics composed of andesitic volcanic rocks include porphyritic andesite lavas, agglomerates, volcanic breccias and tuffs. Intrusive dioritic plugs and porphyritic dykes cut Phase I volcanics. The intrusive rocks are better exposed in the Nimi Prospect area.

The Phase II volcanics are generally basaltic in chemical composition with flows, some scoria and lahar. The Crater Mountain complex includes two large craters >1km in diameter and about 30 small cones or vent areas. Large parts of the project area are covered in a several metres thick blanket of recent volcanic ash, presumably a continuation of the Phase II volcanics.

A NNE fault zone extends through the Nimi and Nevera Prospect areas. Radial fracture patterns have also been suggested for crater areas.

DEPOSIT TYPES

The Crater Mountain Project is within the Papua New Guinea Highlands geological trend that also contains the Porgera and Mt Kare deposits. Similarities have been noted between the Nimi and Nevera Prospect areas of Crater Mountain and postulated pre-erosional areas at Porgera and Mt Kare. The gold-base metal association found at Porgera and Mt Kare is suggested by early float sampling at Crater Mountain. The presence of a buried intrusive body with higher grade mineralisation in the contact areas has been suggested by petrographic evidence and telescoped alteration but not yet located by drilling.

MINERALISATION

Sulphide and gold mineralisation at Crater Mountain is associated with intense silica, argillic and carbonate alteration. Alteration, mineralisation and veining generally increases near structures.

The most common mineralisation in the Nevera Prospect area is pyrite as veinlets, disseminations and stockworks. Disseminations and veinlets of galena and sphalerite with carbonate or pyrite are noted in drill core. At least three phases of mineralisation are present. Mineralisation is in a broad zone of argillic alteration with local zones of phyllic (sericite-quartz-clay-pyrite) and advanced argillic alteration. Petrographic descriptions suggest that silica introduction has converted andesitic rocks to more acidic units. Gold mineralisation is probably associated with silica flooding, but silica introduction has produced only a minor quartz vein component.

Five named prospects occur within the Crater Mountain Structural Corridor. Four are in the Nevera Alteration area, a 5km long by over 2km wide argillic altered area. The Nimi Prospect, a 0.6 by 2.0km argillic altered area, is about 10km SSW of the Nevera Prospect.

The Nevera prospect is the most advanced with all of the previous drilling. The prospect is at the northern end of the mineralised structural zone. The prospect is at a high level in what may be a major gold system. Significant drill intersections are summarised in the enclosed table. Hand dug trenches contain values of 35m @ 3.1g/t Au and 54m @ 1.21g/t Au, but surface evaluation of the zone is complexed by 3 to 6 metres of recent volcanic ash. Recent work has clearly avoided sampling this volcanic ash, however it is not clear to what extent it was identified in the earlier exploration and it may have been mistakenly sampled.

The Nevera South Prospect is 2km to 3km south of the drilled area. It was defined by two pan concentrate stream values of 2.56g/t Au and 86.3g/t Au. Difficult access has prevented adequate follow-up.

The Nevera South-west Prospect is about 2.5km southwest of the drilled area, and is defined by numerous anomalous lead/zinc/silver soil and rock float values in an area of approximately 2km. Rock float samples assayed between 0.3% and 13.2% lead, 0.56% and 33.31% zinc, 25g/t and 453g/t silver, and 0.3g/t and 0.6g/t gold.

The Nevera West Prospect, on the western edge of the Nevera area, is defined by a NW trending zone of arsenic soil anomalism with erratic anomalous lead, zinc or gold values. Arsenic values are up to 860ppm and strong gold in soil values of 15g/t and 46g/t were obtained. A several hundred metre wide anomalous zone follows the sedimentary/volcanic rock contact for about 3km .

The Nimi Prospect is a argillic altered zone with erratic high stream sediment gold values to 0.35g/t Au and pan concentrate values to 7.51g/t Au. Silver is prominent with rock float values to 500g/t Ag and 3g/t Au.

MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

There are no known ore reserves for the Crater Mountain Property.

ITEM 5: CONSOLIDATED FINANCIAL INFORMATION

Annual

The following is a summary of selected financial data for the Company for its last three completed financial years ended December 31, 2002. This information is derived from the financial statements of the Company and should be read in conjunction with those financial statements and notes thereto, available on the SEDAR website.

No dividends have been declared or paid on the common shares of the Company since incorporation. The Company will consider paying dividends in the future on its common shares when its operational circumstances permit, including earnings, cashflow, financial and legal requirements and business considerations.

Quarterly

The following is a summary of selected financial data for the Company for its last 8 completed financial quarters ending December 31, 2002. Each quarter of each financial year is shown on a quarterly basis.

Liquidity and Capital Resources

The Company's financial success is dependent upon its ability to find economically viable mineral properties and develop them. This process can take many years and is largely dependent on factors beyond the Company's control. Since inception, the Company's capital resources have been limited. Accordingly, the Company has had to rely upon the sale of equity securities for cash required for its operations and will have to continue to rely on sales of equity securities, or the disposition of interests in its properties, to raise additional required capital. It follows that there can be no assurance that financing, whether debt or equity, will always be available to the Company in the amount required at any particular time or for any particular period or, if available, that it can be obtained on terms satisfactory to the Company.

In July 2002 the Company completed a non-brokered private placement consisting of 862,745 units at $0.1275 per unit. Each unit consisted of one common share and one share purchase warrant. Each share purchase warrant is exercisable into a common share at $0.20 per common share for one year from the closing date. Proceeds from this private placement are being used to fund general working capital and legal and administrative costs involved in the acquisition of interests in seven gold/gold copper projects owned by Macmin (PNG) Limited, a private Papua New Guinea company which is a wholly owned subsidiary of Macmin Silver Limited, the Company's majority shareholder. This acquisition is now complete.

Also in July 2002 the Company settled outstanding debt of $307,017.50 in exchange for 3,070,175 shares at a deemed price of $0.10 per share. Under the settlement, Macmin Silver Ltd acquired an additional 3,070,175 shares of the Company, increasing it's equity ownership to 65%.

On March 14, 2003 the Exchange accepted for filing a Loan Agreement dated February 26, 2003, between the Company and Macmin Silver Ltd.

There are no other commitments for significant capital expenditures and any significant expenditures that are necessary but not yet committed.

Results of Operations

The company does not currently have any operating mines

ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS

General

Since incorporation, the Company has been primarily a natural resource company engaged in the business of exploration of oil and gas and mineral properties. The Company currently has no producing mineral properties and consequently no operating income or cash flow.

The following are summaries of the Management Discussions and Analysis filed by the Company for the three complete financial years (January 1 - December 31, 2002, 2001 and 2000) summarised above in ITEM 5.

The Company's accounting policy is that the audited consolidated financial statements have been prepared on a going-concern basis, which assumes that the Company will be able to realize assets and discharge liabilities in the normal course of business. If the going-concern assumption were not appropriate for these financial statements, then adjustments would be necessary in the carrying value of assets and liabilities, the reported revenue and expenses, and the balance sheet classifications used.

January 1 - December 31, 2000

Description of Business

New Guinea Gold (NGG - CDNX) is a natural resource company engaged in exploration and development of mineral properties. It currently holds a 25% interest (has rights to earn between 50 and 70%), in two mineral exploration properties (gold targets) in Papua New Guinea (PNG). The Company has completed exploration and drill programs on both properties and small resources of gold have been defined.

Discussions of Operations and Financial Condition

Duirng the year 2000 and subsequently, the Company held discussusions with its major shareholders to seek ways of improving the company's financial position and the return on investment for shareholders. It is hoped these discussions will be finalized in the immediate future.

The company assessed several acquisition possibilities, from internet-based to environomntal remediation, but decided not to pursue them. In addition, NGG evaluated the land/property position in PNG with respect to platinum/palladium possibilites, but declined to acquire the grass-roots exploration properties that were available. Advanced and grass-roots gold projects were also reviewed.

Macmin Ltd. Is the operator of the PNG joint venture and they have effectively carried NGG's costs required to try to maintain the tenements in "good standing" with the PNG Mines Department and the joint venture. No specific exploratioin programs were completed during the term, however, a minimum level of data compilation/evaluation/community relations work continued. Wardens Court Hearings (required for 2 year licence renewal) were conducted at different times of the year. The Normanby License has been renewed, but the Feni license still awaits ministerial action. It is possible this license will not be renewed, but this is not viewed as the likely outcome.

NGG's expenditures were the costs required to maintain a public company in good standing, to renew the Exploration Licenses it holds and to evaluate potential business assets or properties. Public company costs include audit and legal fees, transfer agent fees, exchage listing fees, regulatory filing fees and costs of printing and mailing quarterly reports and annual general meeting materials to shareholers. No fees are paid for third party investor relations.

A management fee, based on work completed, was paid to the President and is disclosed in Schedule B as being $38,500 having been paid and outstanding payable to the President of $12,743 for a total of $51,243 for the fiscal yeaar 2000. These costs are mostly for geological and administrative work conducted on the exploration licenses and were paid by Macmin Ltd. Macmin's costs (including the President's management fee) for year 2000 are a debt of NGG's totalling $111,533.

The Contract with the President for his services expired in March 2000 and has not been renewed. The President currently provides services only as required.

The Company incurred a loss of $3,325,892 (loss per share of $0.17) for 2000, primarily related to the write-down of mineral properties, compared to a loss of $387,838 (loss per share of $0.01) for 1999. The carrying vale of the Feni and Normanby Exploration License assets have been written down in the company accounts from $3,373,087 to $200,000.

The Company has no material contracts or commitments, but does have liabilities to Macmin Ltd. and to the President (Exploration & Management Consultants Pty Ltd.) as outlined above.

Liquidity and Solvency

Working capital deficit increased from $29,519 as of December 31, 1999 to $134, 066 as of December 31, 2000. Operational expenses required to the the Company for the year 2000 were $5,997 per month compared to $5,892 in 1999. Salary and administration costs were reduced by $17,676 and travel expenses increased by $7,150. The Company presently does not have sufficient capital to meet its ongoing operating expenses for a minimum of one year but is currently taking steps to rectify that situation.

Conclusion

The Company intendes to put forth its best efforts to remain in the resource business and is actively working toward a solution to its immediate cash flow problems. The company will continue to assess opportunities as they arise.

"P.A. McNeil", MSc.
President

January 1 - December 31, 2001

Description of Business

New Guinea Gold (NGG - CDNX) is a natural resource company engaged in exploration and development of mineral properties. It currently holds a 25% interest (with rights to earn between 50 and 70% subject to an agreement that lapsed in April 2002), in two gold exploration properties in Papua New Guinea (PNG). The company has completed exploration and drill programs on both properties and small resources of gold have been defined.

Discussions of Operations and Financial Condition

During the year 2001 and subsequently, the Company continued discussions with its major shareholders to seek ways of improving the company's financial position and the return on investment for shareholders. These discussions were finalized in February 2002, with Macmin Ltd purchasing 7,000,000 shares of the Company from Goldcorp Inc. to now hold 11,166,670 shares. Principal shareholders in NGG are now Macmin Ltd with 58.06%, Goldcorp Inc with 6.5% and Management with 3%. Macmin Ltd. is the operator of the PNG joint venture and they have carried some of NGG's costs to try to maintain the tenements in "good standing" with the PNG Department of Mines and the joint venture. No specific exploration programs were completed during the term, however, a minimum level of data compilation / evaluation / community relations work continued. Bulk (50kg) samples were collected from Imwauna Vein trenches for metallurgical testwork, but this work has yet to be undertaken

Liquidity and Solvency

The Company relies on equity financing for funding which junior exploration companies have found to be very difficult to accomplish over the past several years. During the fiscal year the Company sold shares in its investment of Macmin for proceeds of $18,307 at a loss of $10, 763, based on a book value of $0.06 per share. Macmin Ltd. has been advancing the Company funds used for working capital and overhead costs. The Company is currently taking steps to improve its cash flow.

Conclusion

The Company intends to remain in the resource business, is actively working toward a solution to its immediate cash flow problems and will continue to assess opportunities as they arise. There are various options being evaluated at present. One option is for New Guinea Gold Corporation to merge with, or acquire, Macmin's Papua New Guinea ("PNG") subsidiary, Macmin (PNG) Limited which owns a number of PNG gold/silver properties at various stages of exploration. This could be accomplished by issuing NGG shares to Macmin and is presently being discussed with an Australian stockbroker. Additionally, management will be attending an "investment" conference to attract new investment capital. No decisions have yet been made on which "route to take" and it may be some time before any such arrangement can be finalized.


"P.A. McNeil" MSc.
May 14, 2002.
President

January 1 - December 31, 2002

The Company experienced several positive changes during the quarter.

The Imwauna Project (Normanby Island, Papua New Guinea) had it's high grade gold potential re-affirmed from assays of fourteen (14) bulk samples totaling 787.5 kilograms (average 56kg each), collected from excavator trenches 3 to 6m deep and other quality exposures for metallurgical testing. Assays up to nearly 14 ounces per tonne (424 g/t) gold were returned from the initial grab sampling (500gm) of these bulk samples by ALS - Chemex in Brisbane Australia, this being the highest gold assay returned to date by NGG / Macmin exploration at Imwauna.

The arithmetic average of all the bulk samples, over a strike length of approximately 400m meters, is 51.4 g/t gold and if the high result of 424g/t gold is omitted the average is 22.75 g/t gold. The low results from Trenches 36 and 38 can reasonably be omitted for technical reasons, resulting in even higher averages. Complete results are listed below:

It is intended over the next few months to carry out column leach tests on various crush sizes from these bulk samples, to determine optimum crush size for vat leach extraction of the gold.

Elsewhere in Papua New Guinea, exploration is scheduled to recommence on the Sinivit Project in January, 2003, the Feni Project in February, Simuku in March and Mt Nakru in April, geochemically evaluating new structural targets and under-explored known gold anomalous areas in each property dominantly via grid based soil sampling.

Nanotek Inc entered into an option agreement with New Guinea Gold Corporation ("NGG"), Macmin (PNG) Limited ("Macmin PNG") and Macmin Ltd. in regard to certain projects in Papua New Guinea. Under the terms of the agreement Nanotek was required to advance $500,000 to Macmin PNG for the benefit of its projects by September 15, 2002. Nanotek has to date been unable to raise the necessary funding to meet its obligations under such agreement although they continue to pursue financing for such project.

The Company has given notification to Nanotek that it is in default under such agreement. While such default confirms that it is the intent of Macmin PNG and NGG to continue working together with Nanotek to finance the project, if Nanotek is unable to obtain financing, Macmin PNG and NGG must be able to seek alternate financing arrangements, including optioning some or all of the project to third parties. In such regard, the Company has given notice to Nanotek that if Macmin PNG and NGG successfully negotiate the participation of other parties in the projects or in the financing of those projects, it will give Nanotek seven (7) days notice to meet their obligations under the option agreement and if the Nanotek fails to advance the outstanding $500,000 within seven (7) days, or fails to meet its obligations under the agreement, then the parties will either renegotiate the option agreement to reflect the additional participation of the additional parties (and the reduced participation of the Nanotek) or the option agreement will terminate. The board and management of Macmin believes that our Company may be better positioned to raise funds or proceed to joint venture arrangements with qualified partners for the PNG holdings than they were in the Australian market.

The Company is in the process of preparing to file an Annual Information Form ("AIF") with the regulatory authorities. Peter Christopher, Ph.D., P. Eng., has completed his work on the seven project's technical reports which have now been lodged with the TSX Venture Exchange. The filing of an AIF will streamline future filings and financings as well as provide complete and full disclosure of company information on an on-going basis.
 
NGG's expenditures in the period were the costs required to maintain a public company in good standing and to evaluate potential business assets or properties. Public company costs include audit and legal fees, transfer agent fees, exchange listing fees, regulatory filing fees and costs of printing and mailing quarterly reports and annual general meeting materials to shareholders. No fees are paid for third party investor relations.
 
There were no management or directors' fees paid in the period. The Company has no service contracts with the President or any other officer/director. The President currently provides services on an, if and as needed, basis. The Company relies on equity financing for funding. Macmin Silver Ltd. has been advancing the Company funds by way of non-interest bearing loans and, more recently, a private placement of funds, as mentioned above. These funds are to be used for working capital and overhead costs.
The Company intends to remain in the resource business, with a focus on gold and gold/copper properties in Papua New Guinea. Full technical details on all projects are available the Company's web site of newguineagold.ca

On Behalf of The Board


"Peter McNeil"
Director

ITEM 7: MARKET FOR SECURITIES

The Company's securities are listed and posted for trading on the The Exchange under the symbol "NGG".

ITEM 8: DIRECTORS AND OFFICERS

The following are the names, places of residence and principal occupations for the last five years of the directors and officers of the Company, and their share holdings.

(1) Denotes member of the Audit Committee.

At this time the Company does not have an executive committee. The directors of the Company are elected annually by the Company's shareholders at their annual general meeting and, typically, hold office until the next annual general meeting, at which time their terms expire and they may be re-elected or replaced. Officers of the Company are appointed by the Board of Directors.

Aggregate Ownership of Voting Securities

As at the date of this AIF the directors and senior officers of the Company, as a group, own, directly or indirectly, or exercise control or direction over 18,407,040 shares or 70% of the outstanding shares of the Company⁽¹⁾. In addition, the directors and officers of the Company hold, as a group, options exercisable to purchase up to 1,508,409 shares at a deemed value of $0.15 per share until June 5, 2004.

1. This includes

Corporate Cease Trade Orders or Bankruptcies

None of the directors or officers of the Company, or any shareholders holding a sufficient number of securities of the Company to affect materially the control of the Company, has been the subject of any penalties or sanctions imposed by a court relating to Canadian securities legislation or by a Canadian securities regulatory authority, or been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

Personal Bankruptcies

None of the directors or officers of the Company, or any shareholders holding a sufficient number of securities of the Company to affect materially the control of the Company, or a personal holding company of any such person has, within the ten years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or was subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold assets of that person.

Conflicts of Interest

The Company's directors and officers may serve as directors or officers of other companies or have significant shareholdings in other resource companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. In the event that such a conflict of interest arises at a meeting of the Company's directors, a director who has such a conflict will abstain from voting for or against the approval of such a participation or such terms. From time to time several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participation in larger programs, permitting involvement in a greater number of programs and reducing financial exposure in respect of any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another of these companies due to the financial position of the company making the assignment. In accordance with the laws of British Columbia, the directors of the Company are required to act honestly, in good faith and in the best interests of the Company. In determining whether or not the company will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at the time.

The directors and officers of the Company are aware of the existence of laws governing the accountability of directors and officers for corporate opportunity and requiring disclosure by the directors of conflicts of interest and the Company will rely upon such laws in respect of any directors' and officers' conflicts of interest in or in respect of any breaches of duty by any of its directors and officers. All such conflicts will be disclosed by such directors or officers in accordance with the Company Act (British Columbia) and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law. The directors and officers of the Company are not aware of any such conflicts of interest.

ITEM 9: ADDITIONAL INFORMATION

Additional information, including directors' and officers' remuneration and indebtedness, principal holders of the Company's securities, options to purchase securities and interests of insiders in material transactions, where applicable, is contained in the Company's information circular for its most recent annual meeting of members that involved the election of directors. Additional financial information is provided in the Company's comparative financial statements for its most recently completed financial year (2002).

Upon request to the Secretary of the Company, the Company will provide to any person:

(a) when the securities of the Company are in the course of a distribution pursuant to a short form prospectus or a preliminary short form prospectus has been filed in respect of a distribution of its securities:

(i) one copy of the Annual Information Form of the Company, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in the Annual Information Form;
(ii) one copy of the comparative financial statements of the Company for its most recently completed financial year together with the accompanying report of the auditor and one copy of any interim financial statements of the Company subsequent to the financial statements for its most recently completed financial year;
(iii) one copy of the management information circular in respect of the most recent annual meeting of members that involved the election of directors or one copy of any annual filing prepared in lieu of that information circular, as appropriate, and
(iv) one copy of any other documents incorporated by reference into the preliminary short form prospectus or the short form prospectus not required to be provided under (i) to (iii) above; or

(b) at any other time, one copy of any other documents referred to in (a)(i), (ii) and (iii) above, provided the Company may require the payment of a reasonable charge if the request is made by a person who is not a security holder of the Company.

May 1, 2003
Vancouver, British Columbia

"Robert D. McNeil"
President and CEO