1. NATURE AND CONTINUANCE OF OPERATIONS

2.   SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary Minera Tres-Or S.A. de C.V., a company incorporated in Mexico.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the year.  Actual results could differ from these estimates. 

Financial instruments

The Company's financial instruments consist of cash, accounts receivable, note receivable, due to related parties, accounts payable and accrued liabilities.  Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.  The fair value of these financial instruments approximate their carrying values, unless otherwise noted. 

Capital assets and amortization

Capital assets, being computer equipment, are recorded at cost less accumulated amortization.  Amortization is being provided for using the declining balance method at the rate of 30% per annum.

Mineral properties

The Company records its interests in mineral properties and areas of geological interest at cost.  All direct and indirect costs relating to the acquisitions of these interests are capitalized on the basis of specific claim blocks or areas of geological interest until the properties to which they relate are placed into production, sold or abandoned.  These costs will be amortized over the estimated useful life of the related property following commencement of production.  Using the units of production method based on proven and probable reserves, or written-off if the mineral properties are sold or abandoned.

Deferred exploration costs

The Company defers all exploration expenses relating to mineral properties and areas of geological interest until the properties to which they relate are placed into production, sold or abandoned.  These costs will be amortized over the proven reserves available on the related property following commencement of production.

Cost of maintaining mineral properties

The Company does not accrue the estimated future costs of maintaining its mineral properties in good standing.

            Environmental protection and rehabilitation costs

            Liabilities related to environmental protection and rehabilitation costs are accrued and charged to income when their likelihood of occurrence is established.  This includes future removal and site restoration costs as required due to environmental law or contracts. 

              Stock based compensation plan

            The Company does not have a formal stock option plan but periodically grants stock options to executive officers and directors, employees and consultants pursuant to the Canadian Venture Exchange Policy as described in Note 8.  No compensation expense is recognized for this plan when stock options are granted or extended.  Any consideration received on exercise of stock options is credited to capital stock.

             Loss per share

             Loss per share is calculated using the weighted average number of shares outstanding during the year.

             Comparative figures

             Certain comparative figures have been reclassified to conform with the current year's presentation.

Included in issued capital stock are 375,000 common shares currently held in escrow as required by the regulatory authorities.

           Stock options

            The Company does not have a formal stock option plan in place but follows the Canadian Venture Exchange policy under which it is authorized to grant options to directors and employees to acquire up to 10% of issued and outstanding common stock.  Under the plan, the exercise price of each option equals the market price of the Company's stock as calculated on the date of grant.  The options can be granted for a maximum term of 5 years.

The following stock options were outstanding and exercisable at November 30, 2000:

Warrants

The following share purchase warrants were outstanding at November 30, 2000:

These financial statements include transactions with related parties as follows:

a) The Company paid or accrued $36,200 (1999 - $10,350) to a Company controlled by a director for geological services which have been capitalized to mineral properties. In addition the Company paid or accrued $10,800 (1999 - $40,500) to this Company for consulting services.

b) The Company paid $Nil (1999 - $7,294) to a company controlled by a former director for administrative services.

c) The Company paid $Nil (1999 - $31,500) in management fees to a company controlled by a former director.

 d)  As at November 30, 2000, the Company owed $27,397 to a director.

 

10.    SUPPLEMENTAL DISCLOSURE OF NON-CASH OPERATING, INVESTING AND FINANCING ACTIVITIES

Significant non-cash transactions for the period ended November 30, 2000: 

              a)  On November 20, 2000, the Company announced a non-brokered private placement of up to 1,200,000 units of the Company at $0.10 per unit.  Each unit consists of one common share and one non-transferable share purchase warrant.  each share purchase warrant can be exercised to acquire one additional common share of the Company for a period of two years at an exercise price of $0.10 per share during the first year and at an exercise price of $0.20 per share in the second year.  For the period ended November 30, 2000, the Company had received $77,800.00 in share subscriptions.  No shares were issued during the period.  Final closure and Exchange approval is pending. 

 11.       CONTINGENCIES

            As at November 30, 2000, the Company is both plaintiff and defendant in several claims.  The outcome of these legal claims cannot be determined at this time.  No provision for gains or losses arising from these legal claims have been made in these financial statements.  Any losses arising as a result of these legal claims will be recorded in the period the losses are determined.

12.       UNCERTAINTY DUE TO THE YEAR 2000 ISSUE 

            The Year 2000 Issue arises because many computerized systems use two digits rather than four to identify a year.  Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using year 2000 dates is processed.  In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date.  Although the change in date has occurred, it is not possible to conclude that all aspects of the Year 2000 Issue that may affect the entity, including those related to customers, suppliers, or other third parties, have been fully resolved.

1.     See attached audited consolidated financial statements for the period ended November 30, 2000.

2.     a)   No securities issued during the quarter:

        b)  During the quarter, no incentive stock options were granted.

3.     a)   See Note 8 of the attached audited financial statements.

        b)  See Note 8 of the attached audited financial statements.

        c)   See Note 8 of the attached audited financial statements.

         d)  List of directors:            Gareth Mason

                                                 David St. Clair Dunn

                                                 Laura Lee Duffett

                                                 Ron Findlay

                                                 N. Reid Toreson  

            e)  List of officers:            Laura Lee Duffett, President

                                                   David St. Clair Dunn, Vice President, Exploration

                                                   Dale Rondeau, Corporate Secretary