Miramar Mining Corporation

Miramar Mining Corporation

March 25, 2005 00:33 ET

Miramar Announces Extended & Expanded Production Objectives for Hope Bay Project


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: MIRAMAR MINING CORPORATION

TSX SYMBOL: MAE
AMEX SYMBOL: MNG

MARCH 25, 2005 - 00:33 ET

Miramar Announces Extended & Expanded Production
Objectives for Hope Bay Project

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 24, 2005) - Miramar
Mining Corporation (TSX:MAE)(AMEX:MNG)

Year End Financial Results Show Healthy Financial Position Despite Loss
Related to the Termination of Mining Operations in Yellowknife

Miramar Mining Corporation ("Miramar" or the "Company") today announced
its objectives for the integrated development of the Hope Bay project in
Nunavut, with the goal of achieving intermediate gold producer status by
maximizing gold production from the substantial resources at Hope Bay.
Miramar believes it is on track to complete a feasibility study in 2006
that is expected to demonstrate the opportunity for the development of a
significant, long-life mining operation and a scoping study that
outlines potential for a major expansion to follow. In addition, Miramar
reported its year end 2004 financial results that showed a significant
loss resulting from termination of operations at the Con and Giant mines
in Yellowknife, but ended the year with working capital of $25.4
million, excluding reclamation cash collateral deposits of $14.7 million
and the proceeds from the sale of the Back River project for $10 million
in January 2005.

"With the substantial gold resources we have delineated at Hope Bay, we
are now in a position to launch economic studies which are expected to
demonstrate the potential for extended and expanded production levels on
the Hope Bay belt," said Tony Walsh, Miramar's President & CEO. "Our
overall objective is to be in a position to deliver a feasibility study
in the latter part of 2006 for the next step in a phased development of
the Hope Bay belt. This would follow the Doris North project, a proposed
smaller scale, high grade mining operation currently in the permitting
process. Our balance sheet remains healthy and we currently believe we
have sufficient funding to meet these objectives without the need to
access the market at this time."

Strategic Objectives

Miramar aims to become an intermediate gold producer through the
integrated development of the Hope Bay belt. In order to achieve this
objective, while seeking to minimize potential dilution and risk to
shareholders, Miramar plans a three phase strategy to maximizing gold
production from the Hope Bay belt:

Phase 1: Short term: Develop a small scale, high grade, low cost, high
return gold mine at Doris North with the objective of generating
significant cash flow, after capital payback, to advance the subsequent
phases while minimizing equity dilution. Doris North is projected to
produce 155,000 oz of gold per year for two years.

Phase 2: Medium Term: To extend and expand production levels by
developing the higher grade, more accessible areas of the Boston, Doris
and Madrid deposits, with a target production level of approximately
200,000 oz of gold per annum, generating cash flow to complete Phase 3.

Phase 3: Longer Term: To further expand gold production by maximizing
the potential of the very large Madrid deposit, and the remainder of the
Boston and Doris deposits, to generate sustained production target in
the range of 350,000 to 400,000 oz of gold per annum.

In order to achieve these objectives, Miramar needs to, among other
things, successfully complete the current permitting process for the
Doris North project, to advance Phase 2 to completion of a positive
feasibility study in 2006 in order to initiate a permitting process for
these developments, while continuing to advance all aspectsof Phase 3,
and to delineate sufficient resources of appropriate grade to support
feasibility studies for phases 2 and 3.

In parallel with these development oriented activities, Miramar intends
to continue the exploration programs at Hope Bay to discover new
deposits to contribute to a sustained intermediate production profile,
while conducting grassroots exploration in cooperation with strategic
partners.

Phase 1: Doris North

As announced January 9, 2003, Miramar completed an independent
feasibility study for the development of the high grade Doris North
deposit. The study outlined plans for a 690 tonne per day operation to
mine, mill and recover approximately 311,000 ounces of gold over a two
year period, at estimated cash costs of US$109 per ounce. Capital costs
were estimated in the feasibility study at C$39.3 million and the
project was forecast to generate a net, pre-tax cash flow, after capital
payback (in 6.6 months), of C$69.3 million (a 136% rate of return) at a
gold price of US$325 (C$512) per ounce. The feasibility study was
undertaken by independent consultants Bateman Engineering, SRK
Consulting and Nuna Logistics.

As announced March 25, 2004, additional work completed since the
feasibility study suggests a number of potential opportunities to
optimize the Doris North project, and a review of costs indicates that
increases in the prices of fuel, steel and other commodities will not
materially increase the capital and operating costs. Initial capital
costs are expected to remain within the feasibility study parameters of
plus or minus 15% of the C$39.3 million estimated, while operating costs
are expected to remain within approximately 20% of the US$109 per ounce
cash cost estimate, with fuel price increases and a stronger Canadian
dollar proving to be the principal factors varying from feasibility cost
estimates. These cost increases are expected to be more than offset by
an increase in the price of gold, which is currently trading at
approximately US$440 (C$530) per ounce and the inclusion of an
additional 30,000oz of resources not previously incorporated in the
feasibility study but identified at Doris North, which is expected to
increase total production of the Doris North project.

Miramar's short term goal is to pursue a new application for the
development of the Doris North project, following the Nunavut Impact
Review Board's ("NIRB") decision in 2004 that the project should not
proceed to permitting because insufficient information was provided to
NIRB. Miramar made a new application to NIRB in February 2005 and NIRB
has recommended to the Minister of Indian and Northern Affairs Canada
that the project should be reviewed under Part 5 of the Nunavut Land
Claims Agreement. NIRB is awaiting a response to its recommendation. If
a positive decision is received from the Minister, Miramar will work
with NIRB and the various interveners and other interested parties in
the project to ensure all required information is made available and is
acceptable, and to set a timetable for the permitting process.

Phase 2: 200,000 oz Annual Production

Assuming Phase 1 plans are successfully implemented, Miramar's medium
term objective is to boost production to approximately 200,000oz of gold
per year on a sustained basis. To support this objective, Miramar
believes it is on track to complete a feasibility study by the end of
2006 demonstrating potential for sustained mining operations beyond the
life of the proposed Doris North mine. The study will focus on the
delivery of ores that will match the facilities designed for Doris North
with modest upgrades and expansion. This is expected to include higher
grade mill feed from Doris Central, western Madrid and the upper
portions of the Boston deposit. Target production levels are expected to
be in the range of 200,000oz per year at a mill throughput of
1,500-2,000 tonnes per day. At this stage, the study will not be looking
at delivery of a large scale operation, although the scoping studies
will examine larger scale operations to ensure that mining methods
chosen do not sterilize potential future operations.

Miramar's objective is to minimize capital costs in the transition to
Phase 2 by taking advantage of the milling facilities and infrastructure
proposed to be established for the Phase 1 Doris North operations,
including mill, camp, power plant, tailings disposal facility and other
assets, as well as the 2,700m ramp already constructed at Boston.
Additional development requirements are expected to be kept to a minimum
by focusing only on thenear surface, higher grade resources. Taking
advantage of one infrastructure centre for the belt should reduce
capital costs and overall environmental impact. The cash flow projected
to be generated from Phase 1, the Doris North project, is expected to be
sufficient to fund the development of Phase 2. Miramar hopes to be
permitting Phase 2 during the construction and operation of Phase 1.

Phase 3: Intermediate Producer Status

While Phase 2 is expected to make Miramar a significant gold producer,
it would not maximize the production potential of the Hope Bay belt,
where total gold resources exceed 6.4 million oz, comprised of measured
and indicated resources of 2.1 million oz at a grade of 9.6g/t gold and
an additional 4.3 million oz of inferred resources at a grade of 7.0g/t
gold.

The Madrid resource is open to expansion in a number of areas and will
likely continue to expand with further drilling. Given the very
substantial resources, and thicknesses averaging approximately 25m, in
the Madrid deposit, Miramar has set a longer term goal of ramping up
production to upwards of 350,000 to 400,000oz of gold per annum by
blending higher grade output from the remainder of the Boston and Doris
deposits with a substantial base load provided by the Madrid deposit.
While conceptual at the current time, Miramar contemplates mill capacity
could be expanded to 4,000 to 6,000 tonnes per day, with the majority of
tonnage being provided by low cost bulk mining activities (open pit
and/or underground) in the Madrid area, and the overall mill feed grade
boosted by higher grade production from Doris and Boston.

The capital requirements to achieve Phase 3, if implemented, will be
significant, given the scale of the mill expansion and the likely
development of shafts at Boston and Madrid. However Phase 2 operations,
if implemented as discussed, should by then be generating sustained,
significant gold production and cash flow.

Year End Financial Results

During the fourth quarter, the Company ceased its mining operations. As
a result, the Company has recorded an increase of $10.5 million to the
provision for site reclamation for the estimated costs in 2005 and 2006
related to the reclamation of roaster tailings at the Con Mine in
Yellowknife. Arsenic contained within this material is rendered inert by
a process which utilizes the pressure oxidation circuit at the Con Mine.
The Company's consolidated net loss was $32.5 million or $0.21 per share
for the year ended December 31, 2004 including write downs of $15
million (which were comprised of $10.5 million adjustment noted above
for site reclamation and $4.5 million for equipment and inventories at
the Con Mine), closure costs of $1.6 million for severance and
settlement of gold option contracts and a gain related to future income
taxes of $3.9 million. The loss primarily resulted from significant
under performance of gold production from the Con and Giant mines during
the year, which resulted in their closure. In 2003, the Company reported
a net loss of $18.5 million of $0.14 per share, including a write down
of $7.8 million and closure costs of $5.0 million for the Con Mine and a
future income tax gain of $5.7 million.

Although the ultimate cost of reclamation for the Con Mine is uncertain,
the liability for retirement and remediation has been estimated on an
undiscounted basis, before inflation and market risk premium as set out
in the table below, including the increase of $10.5 for estimated costs
in 2005 and 2006 described above.



----------------------------------------------------------------
Direct costs for pressure oxidation 2005-2006 $ 8,630
Contractor mark-up 1,878
--------
Subtotal 10,508
--------
Direct costs for site reclamation 8,434
----------------------------------------------------------------
Total $ 18,942
----------------------------------------------------------------
----------------------------------------------------------------


The Company expects to use its employees for the pressure oxidation
process, however, it has included a contractor mark-up in the
reclamation estimate in accordance with the new provisions of the
Canadian Institute of Chartered Accountants' Handbook Section 3110
"Asset Retirement Obligations". At December 31, 2004, the Company had a
total of $10 million on deposit in two reclamation security trusts that
will be applied to, in part, offset the reclamation costs as they are
incurred.

As a result of adopting new accounting standards with respect to asset
retirement obligations and stock-based compensation on a retroactive
basis, prior period losses have been restated. The loss for 2003 was
restated from $17.6 million to $18.5 million after recognizing a charge
of $0.9 million.

The Company ended the year with working capital of $25.4 million,
including cash of $30.2 million and excluding cash collateral deposits
of $14.7 million securing reclamation obligations at its various sites.
Subsequent to December 31, 2004, the Company received proceeds of
approximately $10 million for the assignment of the Back River option to
Dundee Precious Metals Inc.

All amounts in this news release are in Canadian dollars unless
otherwise stated.

Operating Results

For 2004 the Con and Giant mines produced and shipped 15,818 ounces of
gold compared with 89,269 ounces of gold in 2003. Revenue from gold
sales was $7.6 million compared to $42.6 million in 2003. All mining
operations in Yellowknife ceased in 2004 and the Con Mine was placed on
care and maintenance while it is being prepared for full abandonment and
restoration. Effective July 10, 2004, formal notice was given to the
Department of Indian and Northern Affairs ("DIAND"), as prescribed in
the Company's agreement with DIAND, that the Company would return the
Giant Mine property to DIAND six months from the date of the notice,
however, the Company and DIAND subsequently agreed that the property
will be returned effective June 30, 2005, to which time the Company with
provide care and maintenance services for a fee.

Gold Sales & Hedging

During 2004, the realized gold price in Canadian dollar terms was $478
compared to $532 per ounce on the spot market and $505 realized in the
same period of 2003.

Miramar Mining Corporation

Miramar is a Canadian gold exploration and development company that
controls the Hope Bay project, believed to be the largest, best-grade
undeveloped gold deposits in Canada. The Hope Bay project extends over
1,000 sq. km. and encompasses one of the most prospective undeveloped
greenstone belts in Canada.

Miramar's goal is to build an intermediate gold production profile by
maximizing the development potential of the substantial gold resources
defined on the Hope Bay belt while continuing to increase the total gold
resources on the belt through the expansion of the known deposits and
discoveries of new ones.

Any options for extending and expanding the life of the Doris North
operation would be subject to the successful completion of additional
drilling, economic studies and permitting procedures.

For more information on Miramar Mining Corporation and its projects,
visit our website at www.miramarmining.com.

Forward Looking Statements

Statements relating to exploration work at the Hope Bay project and the
expected results of this work are forward-looking statements within the
meaning of the United States Private Securities Litigation Reform Act of
1995. Forward looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
"expects", "plans", "anticipates", "believes", "intends", "estimates",
"projects", "satisfies", "potential", "goal", "objective",
"prospective", and similar expressions, or that events or conditions
"will", "would", "may", "can", "could" or "should" occur. Information
inferred from the interpretation of drilling results and information
concerning mineral resource estimates may also be deemed to be forward
looking statements, as it constitutes a prediction of what might be
found to be present when and if a project is actually developed. These
forward-looking statements are subject to a variety of risks and
uncertainties which could cause actual events or results to differ
materially from those reflected in the forward-looking statements,
including, without limitation: risks related to fluctuations in gold
prices; uncertainties related to raising sufficient financing to fund
the planned work in a timely manner and on acceptable terms; changes in
planned work resulting from weather, logistical, technical or other
factors; the possibility that results of work will not fulfill
expectations and that the actual results of work will not identify
mineral deposits that will permit satisfaction of Miramar's objectives
and goals, or realize the perceived potential of the Company's
properties; uncertainties involved in the interpretation of drilling
results and other tests and the estimation of gold reserves and
resources; the possibility that required permits may not be obtained on
a timely manner or at all; the possibility that capital and operating
costs may be higher than currently estimated and may preclude commercial
development or render operations uneconomic; risk of accidents,
equipment breakdowns and labour disputes or other unanticipated
difficulties or interruptions; the possibility of cost overruns or
unanticipated expenses in the work program; the risk of environmental
contamination or damage resulting from Miramar's operations and other
risks and uncertainties, including those described in the Miramar's
Annual Report on Form 40-F for the year ended December 31, 2003 and
Reports on Form 6-K filed with the Securities and Exchange Commission.

Forward-looking statements are based on the beliefs, estimates and
opinions of Miramar's management on the date the statements are made.
Miramar undertakes no obligation to update these forward-looking
statements if management's beliefs, estimates or opinions, or other
factors, should change.

All resource estimates reported in this disclosure are calculated in
accordance with the Canadian National Instrument 43-101 and the Canadian
Institute of Mining and Metallurgy Classification system. These
standards differ significantly from the requirements of the United
States Securities and Exchange Commission, and resource information
reported in this disclosure may not be comparable to similar information
reported by United States companies. The terms "Resource(s)" does not
equate to "reserves" and normally may not be included in documents filed
with the Securities and Exchange Commission.

This news release has been authorized by the undersigned on behalf of
Miramar Mining Corporation.

Anthony P. Walsh, President & CEO

Miramar Mining Corporation



Consolidated Financial Statements of

MIRAMAR MINING CORPORATION

Years ended December 31, 2004 and 2003


AUDITORS' REPORT TO THE SHAREHOLDERS

We have audited the consolidated balance sheets of Miramar Mining
Corporation as at December 31, 2004 and 2003 and the consolidated
statements of operations and deficit and cash flows for the years then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly,
in all material respects, the financial position of the Company as at
December 31, 2004 and 2003 and the results of its operations and its
cash flows for the years then ended in accordance with Canadian
generally accepted accounting principles.

Chartered Accountants

Vancouver, Canada

February 25, 2005



MIRAMAR MINING CORPORATION
Consolidated Balance Sheets
(expressed in thousands of Canadian dollars)



As at December 31, 2004 and 2003

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

2004 2003(1)
(restated)
--------------------------------------------------------------------

Assets

Current assets:
Cash and cash equivalents $ 30,215 $ 69,921
Accounts receivable 2,340 1,577
Inventory (note 6) 7,178 6,443
Prepaid expenses 267 554
--------------------------------------------------------------------
40,000 78,495

Note receivable (note 4) - 9,592
Power credits receivable (note 4) 1,945 4,345
Property, plant and equipment (note 7) 165,769 135,270
Cash collateral deposits (note 8) 14,674 6,274
Investment in Northern Orion
Explorations Ltd. (note 3) 9,182 10,112
Other assets (note 9) 707 394
--------------------------------------------------------------------

$ 232,277 $ 244,482
--------------------------------------------------------------------
--------------------------------------------------------------------

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued
liabilities $ 7,131 $ 9,621
Current portion of site reclamation
and closure costs (note 10) 7,485 -
--------------------------------------------------------------------
14,616 9,621

Deferred gain (note 4) 1,945 4,345
Provision for site reclamation and
closure costs (note 10) 12,274 8,528
Future income tax liability (note 12) 19,120 17,881
--------------------------------------------------------------------
47,955 40,375

Shareholders' equity
Share capital (note 11) 380,734 371,309
Contributed surplus 5,025 1,776
Deficit (201,437) (168,978)
--------------------------------------------------------------------
184,322 204,107
--------------------------------------------------------------------

$ 232,277 $ 244,482
--------------------------------------------------------------------
--------------------------------------------------------------------

Nature of operations (note 1)
Commitments and contingencies (note 16)
Subsequent event (note 17)

See accompanying notes to consolidated financials statements.


ON BEHALF OF THE BOARD:

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

(1) Notes 2(g) and 2 (i)


MIRAMAR MINING CORPORATION
Consolidated Statements of Operations and Deficit
(expressed in thousands of Canadian dollars,
except per share amounts)


Years ended December 31, 2004 and 2003


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

2004 2003(1)
(restated)
--------------------------------------------------------------------

Revenue
Sales $ 7,567 $ 42,552
Other income (note 4) 4,698 4,325
--------------------------------------------------------------------
12,265 46,877

Expenses
Cost of sales 22,872 46,907
Depreciation, depletion and accretion 1,979 5,248
General and administration 4,112 4,222
Stock-based compensation (note 11 (c)) 2,250 868
Foreign exchange 39 69
Severances and closure (note 7) 1,583 4,995
Write-down of assets (note 7) 4,515 7,780
Write-down of asset retirement
obligation (note 7) 10,508 -
--------------------------------------------------------------------
47,858 70,089
--------------------------------------------------------------------

Loss from operations before items
noted below (35,593) (23,212)

Equity loss (294) (509)
--------------------------------------------------------------------

Loss before income taxes (35,887) (23,721)

Income taxes: (note 12)
Current (431) (436)
Future 3,859 5,692
--------------------------------------------------------------------
3,428 5,256
--------------------------------------------------------------------

Loss for the period (32,459) (18,465)

Deficit, beginning of the period
as previously reported (169,383) (151,828)
Adjustment for site reclamation and
closure costs (note 2(g)) 1,666 1,708
Adjustment for stock based compensation
(note 2(i)) (1,261) (393)
--------------------------------------------------------------------
Deficit, beginning of the year as
restated (168,978) (150,513)
--------------------------------------------------------------------

Deficit, end of the year $ (201,437) $ (168,978)
--------------------------------------------------------------------
--------------------------------------------------------------------

Basic and diluted loss per share $ (0.21) $ (0.14)

Weighted average number of common
shares outstanding 153,524,708 132,508,456
--------------------------------------------------------------------
--------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

(1) Notes 2(g) and 2(i)


MIRAMAR MINING CORPORATION

Consolidated Statements of Cash Flows

(expressed in thousands of Canadian dollars)

Years ended December 31, 2004 and 2003

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

2004 2003(1)
(restated)
--------------------------------------------------------------------

Cash provided by (used in):

Operations:
Loss for the year $ (32,459) $ (18,465)
Items not involving cash:
Depreciation, depletion and accretion 1,979 5,248
Gain on sale of assets - (45)
Write-down of assets 15,023 7,780
Equity loss 294 509
Stock-based compensation 2,250 868
Future income tax (3,859) (5,692)
Other (408) (256)
Net change in non-cash working capital:
Accounts receivable (763) (420)
Inventory (2,225) 1,960
Prepaid expenses 287 (392)
Accounts payable and accrued liabilities (3,063) (3,117)
--------------------------------------------------------------------
(22,944) (12,022)
--------------------------------------------------------------------

Investments:
Expenditures on plant, equipment
and deferred exploration (34,295) (24,931)
Sale of short term investments - 23,694
Net proceeds on sale of Northern
Orion shares (note 3) 900 5,062
Purchase of collateral deposits, net (8,400) 64
--------------------------------------------------------------------
(41,795) 3,889
--------------------------------------------------------------------

Financing:
Issue of common shares for cash 15,033 61,969
Proceeds from note receivable (note 4) 10,000 -
--------------------------------------------------------------------
25,033 61,969
--------------------------------------------------------------------
--------------------------------------------------------------------

Increase (decrease) in cash
and cash equivalents (39,706) 53,836

Cash and cash equivalents,
beginning of the year 69,921 16,085
--------------------------------------------------------------------

Cash and cash equivalents,
end of the year $ 30,215 $ 69,921
--------------------------------------------------------------------
--------------------------------------------------------------------

Supplementary information
Income taxes paid $ 431 $ 436
Non-cash investing and financing
activities
Fair value of note receivable,
received on sale of assets (note 4) - 9,267
Sale of assets (note 4) - 8,898
Fair value of stock options allocated
to shares issued on exercise 89 230
Stock-based compensation included
in deferred exploration 1,087 -
--------------------------------------------------------------------
--------------------------------------------------------------------

See accompanying notes to the consolidated financial statements.

(1) Notes 2(g) and 2 (i)


MIRAMAR MINING CORPORATION
Notes to the Consolidated Financial Statements
(Tabular doller amounts expressed in thousands of Canadian dollars)

Years ended December 31, 2004 and 2003


1. Nature of operations:

Miramar Mining Corporation (the "Company") was incorporated under the
laws of the Province of British Columbia. In December, 2004, the Company
made the decisions to terminate all mining activities at its Con and
Giant mine operations and to commence planned reclamation activities.
Therefore, at December 31, 2004 the Company's principal business
activity is the exploration and development of mineral property
interests. The Company's principal mineral property interests are the
Hope Bay Project and Back River Project (note 17) located in Nunavut,
Canada.

The Company is in the process of exploring its mineral property
interests and has not yet determined whether its mineral property
interests contain economically recoverable mineral reserves. The
underlying value and the recoverability of the amounts shown for mineral
properties are entirely dependent upon the existence of economically
recoverable mineral reserves, the ability of the Company to obtain the
necessary financing to complete the exploration and development of the
mineral properties, and future profitable production or proceeds from
the disposition of the mineral property interests.

2. Significant accounting policies:

a) Basis of preparation:

These financial statements have been prepared in accordance with
Canadian generally accepted accounting principles ("GAAP"). These
consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All material inter-company balances
and transactions have been eliminated.

b) Cash and cash equivalents:

Cash and cash equivalents include investments with terms to maturity of
90 days or less when purchased.

c) Short-term investments:

Short-term investments with terms to maturity of greater than 90 days
but not more than one year are recorded at the lower of cost and market
determined on an aggregate portfolio basis.

d) Revenue recognition and inventory:

Prior to January 1, 2004, GAAP for mining companies permitted the
recognition of revenue upon production. Under the Canadian Institute of
Chartered Accountants' ("CICA") Emerging Issues Committee Abstract 141
Revenue Recognition, which for the Company is effective January 1, 2004,
the recognition of sales under GAAP was harmonized with accounting
principles generally accepted in the United States of America. Effective
January 1, 2004, the Company retroactively adopted the change in
accounting policy for revenue recognition, however the adoption of this
accounting policy had no material impact on the Company's consolidated
financial statements. Revenue from sale of the Company's product is now
recorded when pervasive evidence of an arrangement exists, delivery has
occurred and the sales price is fixed and determinable. Product
inventories are valued at the lower of net realizable value and cost.
Materials and supplies inventory are valued at average cost less
appropriate allowances for obsolescence.

e) Property, plant and equipment:

Property, plant and equipment, which includes mine plant and equipment
and mineral properties, is recorded at the lower of cost and estimated
net recoverable amount. Buildings and equipment are depreciated over
their estimated useful lives, not to exceed the estimated proven and
probable ore reserves. Mining equipment and vehicles are depreciated on
a straight-line basis over estimated useful lives of two to 15 years.
Office furniture and computer equipment are depreciated using the
declining balance method at 20% and 30%, respectively. The cost of
mineral properties and related exploration and development costs are
deferred until the properties are placed into production, sold or
abandoned. Capitalized costs are amortized over the estimated useful
life of the properties following the commencement of production or
written off if the properties are sold, allowed to lapse or abandoned.

f) Impairment of long-lived assets:

Effective January 1, 2004, the Company adopted the CICA's Handbook
Section 3063, "Impairment of Long-Lived Assets" ("HB 3063"). HB 3063
requires the Company to assess the impairment of long-lived assets,
which consist primarily of property, plant and equipment, whenever
events or changes in circumstances indicate that the carrying value of
an asset may not be recoverable. Recoverability of assets to be held and
used are measured by a comparison of the carrying value of the asset to
future undiscounted net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the amount of the
impairment is measured by the amount by which the carrying amount of the
asset exceeds its fair value. Prior to adoption of HB 3063, the amount
of the impairment was measured as the difference between the carrying
value and undiscounted cash flows. The recommendations of HB 3063 were
adopted prospectively and accordingly, prior periods were not affected
There was no impact on adoption of HB 3063.

g) Provision for site reclamation and closure costs:

Effective January 1, 2004, the Company retroactively adopted the new
provisions of the CICA's Handbook Section 3110,"Asset Retirement
Obligations". Under this standard, future costs to retire an asset
including dismantling, remediation and ongoing treatment and monitoring
of the site have been recognized and recorded as a liability at fair
value, assuming a credit adjusted risk-free discount rate of 9.8% and an
inflation factor of 2.0%. The liability is accreted over time through
periodic charges to operations. In addition, the asset retirement cost
is capitalized as part of the asset's carrying value and amortized over
the asset's useful life. Previously, the Company accrued these costs on
a units-of-production basis over the life of the asset. Prior year
financial statements have been restated to apply the provisions of the
new accounting policy for site reclamation and closure costs. On
adoption of the new standard, at December 31, 2003, the Company
increased property, plant and equipment by $0.4 million, decreased the
provision for site reclamation and closure costs by $1.3 million and
recorded a $1.7 million reduction to deficit, for the difference between
the above amounts and amounts previously recorded in the Company's
financial statements. The net loss for the year ended December 31, 2003
has been increased by $0.9 million as a result of this change.

Under the standard, future asset retirement obligations are not recorded
where timing or amount of remediation costs cannot be reasonably
estimated. The cost and timing of asset retirement obligations for the
Company's mines and exploration sites can be estimated and provisions
are recorded for each of these sites.

h) Pension expenses and obligation:

The Company maintains defined benefit pension plans and provides certain
non-pension post-retirement benefits consisting of extended health and
other benefits. The cost of providing pension and other post-retirement
benefits is actuarially determined and charged to operations using the
projected unit credit actuarial method based upon management's best
estimate assumptions. Pension fund assets are valued at fair value. The
pension expense for the year includes adjustments for plan amendments,
curtailments, experience gains and losses, and changes in assumptions
that are being amortized on a straight-line basis over the expected
average remaining service lives of the plan members. Any differences
between the cumulative amounts expensed and the funding contributions
are reflected as either an asset or a liability.

i) Stock-based compensation plan:

The Company's has a stock-based compensation plan which is described in
note 11 (c). Effective January 1, 2004, the Company retroactively
adopted the new provisions of the CICA's Handbook Section 3870 on
"Stock-Based Compensation and other Stock-Based Payments", which now
requires companies to adopt the fair value based method for all
stock-based awards granted on or after January 1, 2004. As a result, the
Company is required to expense the fair value of stock options issued to
employees, directors and non-employees over the vesting period.
Previously, the Company was only required to disclose the pro forma fair
value effect of stock options issued to employees and directors in the
notes to the financial statements.

Prior year financial statements have been restated to apply the
provisions of the new accounting policy for stock based compensation. On
adoption of the new standard, at December 31, 2003 the Company recorded
a cumulative increase of $1.3 million to the deficit, an increase to
contributed surplus of $1.1 million and an increase to share capital of
$0.2 million with respect to stock options granted to employees and
directors in 2002 and 2003. Additionally, for the year ended December
31, 2003 the loss for the year increase by $0.87 million.

j) Translation of foreign currency:

The accounts of foreign operations are translated into Canadian dollars
as follows:

- monetary assets and liabilities at the rates of exchange prevailing at
the balance sheet date

- other assets and liabilities at applicable historical exchange rates

- revenues and expenses at the average rate of exchange for the period
covering the statement of operations except for expenses related to
non-monetary assets which are at the rates used for the translation of
the related assets.

Translation gains and losses are included in earnings.

k) Derivative financial instruments:

The Company has used forward sales agreements and options for the
purpose of managing price and currency exposures on its anticipated gold
sales. The Company assesses, both at the hedge's inception and on an
ongoing basis, whether the derivatives that are used in hedging
transactions are highly effective. Gains and losses relating to such
instruments are recorded in income the same period as gold is produced
to meet the hedged commitment. Realized and accumulated unrealized gains
or losses associated with derivative instruments which have been
terminated or cease to be effective prior to maturity, are deferred
under other current, or non-current, assets or liabilities on the
balance sheet and recognized in income in the period in which the
underlying transaction is recognized. In the event a designated hedged
item is sold, extinguished or matures prior to the termination of the
related derivative instrument, any realized or unrealized gain or loss
on such derivative instrument is recognized in income at that time. The
fair value changes in ineffective hedges are recognized in the statement
of operations.

The Company sells written call options. For written call options sold
subsequent to October 24, 2000, the premiums received at the inception
of the written call options are recorded as a liability. Changes in the
fair value of the liability are recognized in the statement of
operations at each reporting period. For written call options sold prior
to October 24, 2000 changes in fair value are recognized in the
statement of operations when settled.

l) Income taxes:

The Company uses the asset and liability method of accounting for future
income taxes. Under the asset and liability method, future income tax
assets and liabilities are determined based on differences between the
financial statement carrying values of existing assets and liabilities
and their respective income tax bases (temporary differences) and loss
carry forwards. Future income tax assets and liabilities are measured
using the substantively enacted tax rates expected to be in effect when
the temporary differences are likely to reverse. The effect on future
income tax assets and liabilities of a change in tax rates is included
in the results of operations in the period in which the change is
substantively enacted. Future income tax assets also result from unused
loss carry forwards, resource related pools and other deductions. The
amount of future tax assets recognized is limited to the amount that
management considers more likely than not to be realized.

m) Loss per share:

Basic loss per share is calculated by dividing loss available to common
shareholders by the weighted average number of common shares outstanding
in the period. For all periods presented loss available to common
shareholders equals the reported loss. Diluted loss per share is
calculated by the treasury stock method. Under the treasury stock
method, the weighted average number of common shares outstanding for the
calculation of diluted loss per share assumes that the proceeds to be
received on the exercise of dilutive stock options are applied to
repurchase common shares at the average market price for the period.

For the year ended December 31, 2004, diluted loss per share is the same
as basic loss per share as the affect of all outstanding options and
warrants would be anti-dilutive.

n) Estimates:

The preparation of financial statements requires management to make
estimates that affect the reported values of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant areas requiring the use of
management estimates relate to the determination of impairment of
assets, site reclamation and closure obligations, assumptions used in
determining stock-based compensation, future income taxes and rates for
amortization of property, plant and equipment. Actual results could
differ from these estimates.

o) Comparative figures:

Certain of the prior year comparative figures have been restated to
conform to the presentation adopted for the current year.

3. Investment in Northern Orion Explorations Ltd.:

At January 1, 2004, the Company had 450,247 shares of Northern Orion
Explorations Ltd. ("Northern Orion") and a net proceeds interest royalty
("NPI") in certain Northern Orion mineral properties which it acquired
pursuant to a restructuring agreement with Northern Orion. The NPI
entitles the Company to receive the economic equivalent of a 2.5% net
smelter return on certain of Northern Orion's mineral properties as well
as 50% of the proceeds from the disposition of certain Northern Orion
mineral properties, all to a maximum of $15 million. During 2004, the
Company sold a total of 250,000 shares of Northern Orion and recorded
the proceeds as a reduction of the carrying value. Recovery of the
remaining carrying value of the combined investment amounting to $9.2
million is dependant upon the sale of Northern Orion shares and receipt
of net proceeds from eventual production from the properties or their
sale by Northern Orion.

4. Sale of Bluefish:

On April 4, 2003, the Company completed the sale of the Bluefish
hydroelectric power plant ("Bluefish") to Northwest Territories Power
Corporation. Bluefish is a 7.0 mega volt-ampere hydroelectric power
generating facility, located 25 miles northwest of Yellowknife, which
supplies power to the Company's Con mine. Sale consideration included a
non-interest bearing note for $10 million which was paid on December 31,
2004, the supply of power to the Con mine, free of charge, equal to the
historic generation profile of Bluefish until December 31, 2004 and the
supply of power to the Con mine, free of charge, at an annual rate of 5
million kilowatts and 18,000 kilo volt-ampere of demand for a five year
period from 2005 to 2009, (the "Power Credits"). The $10 million note
receivable and the Power Credits were recorded at their fair values of
$9.3 million and $7.0 million respectively. In addition, the Company
recorded a deferred gain of $7.0 million relating to the fair value
consideration of the Power Credits. As the Power Credits are consumed,
the Company recognizes a corresponding gain in the statement of
operations. During the year ended December 31, 2004, approximately $2.4
million of the fair value of the Power Credits were consumed and has
been recorded in cost of sales and a corresponding $2.4 million gain has
been recorded in other income.

For accounting purposes, the note receivable on the sale of Bluefish was
accreted to its face value of $10 million over the period to its
maturity. During 2004, the Company accreted interest of approximately
$0.3 million which has been recorded in other income. On December 31,
2004, the Company received payment on the note receivable and the funds
were deposited into reclamation security trusts for the reclamation of
the Con Mine (note 8).

5. Related Parties:

The Company holds 38.3% of Sherwood Mining Corporation ("Sherwood"). The
Company supplied services on a cost recovery basis to Sherwood totalling
$366,799 (2003 - $123,526) during the year ended December 31, 2004 and
as at December 31, 2004, the Company had received advances of $nil (2003
- $9,496) related to planned exploration program.

The Company holds 6.1% of Maximus Ventures Ltd ("Maximus"), a company
related by virtue of common directors, as part of a transaction
described in note 7. The Company supplied services on a cost recovery
basis to Maximus totalling $516,123 (2003 - nil) during the year ended
December 31, 2004.



6. Inventory:

--------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------

Gold and silver $ 1,570 $ 2,774
Materials and supplies (note 6) 5,608 3,669
--------------------------------------------------------------------
$ 7,178 $ 6,443
--------------------------------------------------------------------
--------------------------------------------------------------------

7. Property, plant and equipment:

--------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------

Producing:
Property, plant and equipment $ 58,453 $ 58,330
Deferred exploration and development 51,393 51,367
Accumulated depreciation, depletion
and write-downs (107,548) (103,517)
--------------------------------------------------------------------
2,298 6,180
--------------------------------------------------------------------
Non-Producing:
Property, plant and equipment 1,808 2,199
Mineral properties 162,948 127,937
Accumulated depreciation and depletion (1,285) (1,046)
--------------------------------------------------------------------
163,471 129,090
--------------------------------------------------------------------
$ 165,769 $ 135,270
--------------------------------------------------------------------
--------------------------------------------------------------------


On June 10, 2004, the Company announced its decision to terminate mining
from its Giant Mine in July 2004 due to the continued under performance
of gold production. As a result, the Company recorded a write down on
assets of $4.5 million and severance and closure costs of $1.6 million.
The write down was comprised of $3.0 million for property, plant and
equipment and $1.5 million for gold and supplies inventory. The
severance and closure costs relate to severance payments which will be
paid to mine employees and an unrealized loss on gold forward contracts
and gold call option contracts.

In December 2004, the Company suspended its gold recovery operations
from historic mill tailings due to lower than planned gold production.
Consequently, the Company recorded an increase of $10.5 million to the
provision for site reclamation and closure to reflect the change in
estimated future costs related to the reclamation of these mill tailings
and the corresponding write down of the resulting asset. The reclamation
of certain contaminated soils contained in the mill tailings is planned
to be stabilized by a process which utilizes the pressure oxidation
circuit at the Con Mine which was expected to be cash flow neutral due
to the planned gold recovery from the tailings.

On September 20, 2004, the Company completed an option agreement with
Maximus whereby Maximus can earn a 75% interest in the Eastern Contact
and Twin Peaks areas of Hope Bay by spending $7.5 million scheduled over
a three year period. In consideration for entering the option agreement,
Maximus will pay the Company five million shares of Maximus as repayment
for expenditures on the properties, issued over a three-year period.
Additional shares could also be issued to the Company at specific
resource milestones. On December 31, 2004, the Company had 1.5 million
shares of Maximus which it has recorded at a nominal amount.

8. Cash collateral deposits:

The Company has established the following cash deposits with chartered
banks to serve as collateral for letters of credit pledged in favour of
various governmental agencies and others under several water licenses
and mineral exploration and mining agreements. The Company has also
established two reclamation security trusts for the reclamation of the
Con Mine. The deposits are invested in guaranteed investment
certificates and bear interest at market rates. These funds will be
returned to the Company upon completion of reclamation of the property
to which they relate.



--------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------

Con Mine reclamation security trust
(note 16(d)) $ 10,000 $ 1,500
Bluefish water license - 100
Giant Mine water license 200 200
Con Mine road permit 50 50
Golden Eagle reclamation 341 341
Talapoosa reclamation 233 233
Hope Bay water licenses and land permits 3,850 3,850
--------------------------------------------------------------------
$ 14,674 $ 6,274
--------------------------------------------------------------------
--------------------------------------------------------------------


9. Other assets:

--------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------

Investments $ 134 $ 100
Investment in Sherwood (note 5) - 294
Pension asset (note 13) 573 -
--------------------------------------------------------------------
$ 707 $ 394
--------------------------------------------------------------------
--------------------------------------------------------------------


10. Site closure and reclamation:

--------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------

Balance, beginning of year $ 8,528 $ 8,041
Liabilities incurred in the current
year (note 7) 10,508 -
Site closure and reclamation costs incurred - (172)
Accretion expense 723 659
--------------------------------------------------------------------
Balance, end of year $ 19,759 $ 8,528
--------------------------------------------------------------------
--------------------------------------------------------------------

Allocated between:
Current portion 7,485 -
Non-current portion 12,274 8,528
--------------------------------------------------------------------
Balance, end of year $ 19,759 $ 8,528
--------------------------------------------------------------------
--------------------------------------------------------------------


The Company's operations are affected by federal and local laws and
regulations concerning environmental protection. Under current
regulations, the Company is required to meet performance standards to
minimize environmental impact and to perform site restoration and other
closure activities. The Company's provisions for future site closure and
reclamation costs are based on known requirements. It is not currently
possible to estimate the impact on financial results, if any, of future
legislative or regulatory developments.

Assumptions used in the determination of the site closure and
reclamation liabilities include estimated costs of $17.7 million
expected to be expended from 2005 to 2018, a discount rate of 9.6% and
inflation factor of 2.0%.



11. Share capital:

(a) Authorized:

500,000,000 common shares without par value.

(b) Issued:
--------------------------------------------------------------------
Common shares
Number of shares Amount
--------------------------------------------------------------------
Balance December 31, 2002 123,143,673 $ 313,808
--------------------------------------------------------------------
Issued:
Common shares, net of costs 25,923,574 58,598
Future income tax effect of
flow through shares - (4,698)
On exercise of warrants 724,946 1,090
On exercise of stock options 1,842,700 2,281
--------------------------------------------------------------------

Balance December 31, 2003 as
previously reported 151,634,893 371,079
Adjustment for stock-based compensation
(note 2(i)) - 230
--------------------------------------------------------------------
Balance December 31, 2003, restated 151,634,893 371,309
--------------------------------------------------------------------
Issued:
Common shares, net of costs 7,600,000 14,271
Future income tax effect of flow
through shares - (5,696)
On exercise of warrants 211,437 412
On exercise of stock options 328,500 438
--------------------------------------------------------------------
Balance December 31, 2004 159,774,830 $ 380,734
--------------------------------------------------------------------
--------------------------------------------------------------------


On June 25, 2003, the Company completed a private placement of 3,572,000
flow-through common shares at a price of $2.10 per common share. The
underwriter for the flow though share offering received commissions of
$0.4 million on closing and an option to purchase 208,500 common shares
at $2.10 per share that expired on June 25, 2004. The fair value of
these options at the grant date was $0.1 million and has been shown on a
net basis in share capital.

On August 14, 2003, the Company completed a public offering of
16,700,000 common shares at a price of $2.10 per share for gross
proceeds of $35.1 million. The underwriters received commissions of $1.8
million and an option to purchase 835,000 common shares at $2.10 per
share which expired on February 14, 2005. The fair value of these
options at the grant date was $0.4 million and has been shown on a net
basis in share capital.

On December 10, 2003, the Company completed a private placement of
4,151,574 flow-through common shares at a price of $3.65 per common
share and 1,500,000 units at a price of $3.05 per unit for gross
proceeds totalling $19.7 million. Each unit consisted of one common
share and one-half of one common share purchase warrant. In
consideration for their services the underwriters received commission of
$0.9 million and broker warrants exercisable to purchase 265,000 common
shares at $3.05 per common share until June 10, 2005. The fair value of
these warrants at the grant date was $0.2 million and has been shown on
a net basis in share capital.

On October 18, 2004, the Company completed a private placement of
7,600,000 flow-through common shares at a price of $2.00 per common
share for gross proceeds of $15.2 million. In consideration for their
services the underwriters received commission of $0.8 million and
brokers' warrants exercisable to purchase 375,000 common shares at $2.00
per common share until October 18, 2005. The fair value of these
warrants at the grant date was $0.1 million and has been shown on a net
basis in share capital. The Company must incur Canadian exploration
expenditures as defined in the Income Tax Act (Canada) in the amount of
$15,200,000 by December 31, 2005.

(c) Stock options:

Stock options are granted at the closing market price of the common
shares on the last trading day before the date of grant. Options have a
maximum term of ten years and usually terminate 30 days following the
termination of the optionee's employment. The vesting periods of stock
options granted vary with terms determined by the Board of Directors. At
December 31, the Company had stock options outstanding as follows:



--------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------
Shares Average Shares Average
options exercise options exercise
price price
--------------------------------------------------------------------

Outstanding,
beginning of year 4,107,339 $ 1.54 4,273,721 $ 1.25
Granted 3,273,060 2.96 1,730,318 1.94
Exercised (328,500) 1.07 (1,842,700) 1.24
Forfeited or expired (788,321) 2.55 (54,000) 1.20
--------------------------------------------------------------------
Outstanding, end of year 6,263,578 $ 2.18 4,107,339 $ 1.54
--------------------------------------------------------------------
Exercisable 5,483,578 $ 2.02 3,807,339 $ 1.49
--------------------------------------------------------------------
--------------------------------------------------------------------


The stock-based compensation costs reflected in the consolidated
financial statements were estimated using the Black-Scholes option
pricing model with the following weighted average assumptions: a
risk-free interest rate of 3.4% (2003 - 4.3%), a dividend yield of 0%
(2003 - 0%), an expected volatility of 55% (2003 - 55%) and expected
lives of stock options of 4.3 years (2003 - 5 years). The weighted
average fair value of options granted in 2004 was $1.55 (2003 - $0.68).



As at December 31, 2004, 5,483,578 options were fully vested and
expire as follows:
---------------------------------------------------------------------
Year Number Exercise price
---------------------------------------------------------------------
2005 747,600 1.77
2006 1,289,021 1.17
2007 516,000 1.22
2008 809,897 1.96
2009 2,121,060 2.85
---------------------------------------------------------------------
---------------------------------------------------------------------


(d) Warrants and brokers compensation options:

At December 31, the Company had warrants and brokers' compensation
options outstanding as follows:
---------------------------------------------------------------------
2004 2003
---------------------------------------------------------------------
Average Warrants Average
Warrants exercise and excersise
and options price options price
---------------------------------------------------------------------
Outstanding,
beginning of year 1,361,204 $ 2.26 10,479,539 $ 6.13
Granted 375,000 2.00 1,308,500 2.29
Exercised (211,437) 1.95 (724,946) 1.51
Forfeited or expired (208,500) 2.10 (9,701,889) 6.50
---------------------------------------------------------------------

Outstanding,
end of year 1,316,267 $ 2.26 1,361,204 $ 2.26
---------------------------------------------------------------------
---------------------------------------------------------------------


12. Income and resource taxes:

At December 31, 2004 the Company has unused tax loss carry forwards in
Canada of $42.5 million (2003 - $33.8 million) expiring between the
years 2005 and 2014 which are available to reduce taxable income and
capital losses of $55.6 million (2003 - $59.7 million) which are
available indefinitely, but can only be utilized against capital gains.
The tax effect of the significant components within the Company's future
tax asset (liability) at December 31 was as follows:



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

2004 2003
--------------------------------------------------------------------

Loss carry-forwards $ 15,284 $ 11,791
Capital losses 9,896 10,590
Property, plant and equipment 16,081 15,253
Canadian resource deductions 4,458 2,137
Reclamation liabilities 6,664 2,854
Equity investment - 730
Other 4,535 4,006
--------------------------------------------------------------------
56,918 47,361
Valuation allowance (54,875) (47,361)
--------------------------------------------------------------------
Net future tax asset 2,043 -
--------------------------------------------------------------------

Future income tax liability of
Hope Bay Gold (8,382) (8,293)
Future income tax liability on
flow-through shares (12,781) (9,588)
--------------------------------------------------------------------
Net future income tax liability $ (19,120) $ (17,881)
--------------------------------------------------------------------
--------------------------------------------------------------------


The income tax expense differs from the amounts computed by applying the
combined federal and provincial income tax rate of 34.1% (2003 - 34.1%)
to pre-tax losses as a result of the following:



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

2004 2003
--------------------------------------------------------------------

Earnings (losses) before equity loss
and income taxes $ (35,593) $ (23,212)
--------------------------------------------------------------------

Computed "expected" tax expense
(recovery) $ (12,137) $ (7,915)
Adjustment to income taxes resulting
from change in valuation allowance 7,514 (9,502)
Adjustment to future tax assets and
liabilities for enacted changes in
tax rates - (5,483)
US losses not recognized - 3,229
Canadian mining royalty pools not
recognized - 14,232
Share issue costs (331) (1,263)
Losses expired - 1,960
Capital taxes 431 436
Other 1,095 (950)
--------------------------------------------------------------------

Income taxes $ (3,428) $ (5,256)
--------------------------------------------------------------------
--------------------------------------------------------------------


13. Pension plan and other post-retirement benefits:

The Company has four defined benefit pension plans covering
substantially all of the employees at the Con Mine and the Giant Mine.
These plans are funded on an ongoing basis, based on periodic actuarial
valuations and statutory requirements. In addition, the Company, by
practice, provides for other post-retirement benefits. The ultimate
liability for these benefits is estimated for accounting purposes on an
ongoing basis using periodic actuarial calculations.



Summary information related to the defined benefit pension plans and
other benefits are as follows:
--------------------------------------------------------------------
Pension benefit plans Other benefit plans
2004 2003 2004 2003
--------------------------------------------------------------------

Accrued benefit
obligation $ 17,182 $ 16,621 $ 158 $ 142
Fair value of plan
assets 16,280 14,927 - -
--------------------------------------------------------------------

Funded status surplus
(deficit) (902) (1,694) (158) (142)
Unamortized past
service costs 1,681 1,878 (138) (328)
Unamortized experience
loss (gain) 90 202 - -
--------------------------------------------------------------------

Accrued benefit asset
(liability) $ 869 $ 386 $ (296) $ (470)
--------------------------------------------------------------------
--------------------------------------------------------------------

Reconciliation of accrued benefit obligation:
--------------------------------------------------------------------
Pension benefit plans Other benefit plans
2004 2003 2004 2003
--------------------------------------------------------------------

Balance, beginning
of year $ 16,621 $ 16,393 $ 142 $ 1,010
Current service cost 275 670 - 27
Interest cost 1,024 1,099 7 68
Benefits paid (1,243) (1,122) (73) (68)
Actuarial gains
(losses) 981 633 82 3
Gain due to curtailment (476) (1,052) - (898)
--------------------------------------------------------------------
Accrued benefit
obligation, end
of year $ 17,182 $ 16,621 $ 158 $ 142
--------------------------------------------------------------------
--------------------------------------------------------------------

Reconciliation of plan assets:
--------------------------------------------------------------------
Pension benefit plans Other benefit plans
2004 2003 2004 2003
--------------------------------------------------------------------

Fair value,
beginning of year $ 14,927 $ 12,968 $ - $ -
Expected return
on plan assets 1,109 1,727 - -
Employer
contributions 952 1,354 - -
Benefits paid (1,243) (1,122) - -
Actuarial
gains/losses 537 - - -
--------------------------------------------------------------------
Fair value of
plan assets,
end of year $ 16,282 $ 14,927 $ - $ -
--------------------------------------------------------------------
--------------------------------------------------------------------

Pension expense during the year for the pension plans was $469,000
(2003 - $1,984,000). Other benefit plans recovery for the year is
$101,300 (2003 - $970,300). Pension expense for the year was
comprised of the following:

--------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------

Current service cost $ 275 $ 670
Interest cost 1,024 1,099
Expected return on plan assets (1,109) (981)
Amortization of experience gains/(losses) 165 542
Amortization of past service costs 89 294
Loss due to curtailment 26 360
--------------------------------------------------------------------

$ 469 $ 1,984
--------------------------------------------------------------------
--------------------------------------------------------------------


In two (2003 - two) of the defined benefit pension plans, the accrued
benefit obligation exceeds the fair value of plan assets at year-end by
$2,443,400 (2003 - $2,829,000). The measurement date for the plan assets
and the benefit obligation was December 31, 2004. Payments are being
made to fund the excess of the accrued benefit obligation over the fair
value of plan assets in accordance with applicable legislation. For
purposes of measuring other benefits, benefits are assumed to
termination in two years due to mine closure. In two of the plans the
effective date of the last actuarial valuation was January 1, 2004 and
the next valuation will be January 1, 2005. In one plan the effective
date of the last actuarial valuation was January 1, 2005, and this plan
was terminated on December 31, 2004; therefore no subsequent valuation
is expected.

The significant actuarial assumptions used in 2004 and 2003 in the
measurement of the Company's benefit obligation are shown in the
following table:



--------------------------------------------------------------------
Pension Other
benefits benefits
--------------------------------------------------------------------

Discount rate used for accrued benefit obligation 6.25% 6.25%
Discount rate used for benefit costs 6.00% 6.00%
Expected long-term rate of return on plan assets 7.50% n/a
Weighted average rate of compensation increase n/a n/a
--------------------------------------------------------------------
--------------------------------------------------------------------


--------------------------------------------------------------------
The actual allocation of plan assets is shown in the following table:
--------------------------------------------------------------------
2004 2003
--------------------------------------------------------------------
Cash & short term $ 129 $ 157
Bonds 5,980 5,375
Canadian Equity Pension Trust 2,967 6,107
Dividend Income Fund 6,942 3,018
Overseas Equities 262 270
--------------------------------------------------------------------
$ 16,280 $ 14,927
--------------------------------------------------------------------
--------------------------------------------------------------------


14. Business segments:

(a) Reportable Segments - Mining operations were terminated during
fiscal 2004. The Company's previously operating mines produced gold and
were located in Canada. Hope Bay is an exploration stage gold property
located in Canada. Reportable assets and revenues do not differ
materially from the amounts disclosed in these consolidated financial
statements, as there are no material inter-segment sales.

(b) Geographic Segments - The Company operates in Canada.

The Company's property, plant and equipment and expenditures, revenues
and loss before equity loss and income taxes by operating and geographic
segment are as follows:



--------------------------------------------------------------------
12 months ended Expenditures
December 31, 2004 on Loss
Property, property, before equity
plant and plant and loss and
equipment equipment Revenues income taxes
--------------------------------------------------------------------
Gold operations $ 2,298 $ 149 $ 10,974 $ (29,999)
Gold exploration 162,949 34,712 - -
Other 522 521 1,291 (5,594)
--------------------------------------------------------------------

$ 165,769 $ 35,382 $ 12,265 $ (35,593)
--------------------------------------------------------------------
--------------------------------------------------------------------

--------------------------------------------------------------------
12 months ended Expenditures
December 31, 2003 on Loss
Property, property, before equity
plant and plant and loss and
equipment equipment Revenues income taxes
--------------------------------------------------------------------
Gold operations $ 6,144 $ 3,908 $ 45,602 $ (19,486)
Gold exploration 128,024 20,911 - -
Other 1,102 112 1,275 (3,726)
--------------------------------------------------------------------

$ 135,270 $ 24,931 $ 46,877 $ (23,212)
--------------------------------------------------------------------
--------------------------------------------------------------------


15. Financial instruments:

Fair value estimates are made at the balance sheet date, based upon
relevant market information and information about the financial
instrument. These estimates are subjective in nature and involve
uncertainties in significant matters of judgment. Changes in assumptions
and market conditions could significantly affect these estimates. The
carrying values of all financial instruments approximate fair values,
except the investment in Sherwood, Maximus and derivative instruments.
In addition, the fair value of the investment in Northern Orion is
undeterminable due to the inherent difficulty in the determination of
the fair value of such an instrument.

The fair value of derivative instruments and the fair values based on
the quoted market values and carrying values of the investment in
Sherwood, Maximus and other assets, at December 31 are as follows:



--------------------------------------------------------------------
2004 2003
Carrying Fair Carrying Fair
value value value value
--------------------------------------------------------------------
Investment in
Sherwood $ - $ 2,300 $ 294 $ 3,350
Other assets 134 1,730 100 1,500
Derivatives:
Gold forward sales
contracts - - - (1,270)
Gold calls sold - - (1,742) (2,596)
--------------------------------------------------------------------
--------------------------------------------------------------------


16. Commitments and contingencies:

(a) Miramar Con Mine Ltd. ("MCML") is committed to the purchase of
$780,000 of liquid oxygen per annum through 2007 subject to an ongoing
purchase option in the Company's favour at the discounted value of the
remaining payments.

(b) As part of the arrangement to sell Bluefish described in note 4, the
Company has entered into an indemnity agreement with NERCO Minerals
Company ("NERCO"), the previous owners of the Con Mine, in which the
Company agrees to hold NERCO harmless against any future third party
claims that relate to environmental conditions of the Con Mine. The
terms of the indemnity agreement provide for no limitation to the
maximum potential future payments under the guarantee. The Company has
not provided for any current carrying amount of the liability,
contingent or otherwise, for the obligations under the guarantee. The
Company has granted the indemnification in order to allow NERCO to
release a similar guarantee provided by Red Lion Management Ltd. ("Red
Lion") in connection with the acquisition of the Con Mine. Red Lion held
a security interest in all the assets of the Con Mine, including the
Bluefish assets, as collateral for the indemnity against environmental
liability given to NERCO. As security for the indemnification given to
NERCO, the Company has granted a security interest on the Con Mine
assets to NERCO and agreed that the net proceeds from the sale of these
assets will be placed in a reclamation security trust, to be used to pay
for the eventual reclamation of the mine.

(c) As a condition of the acquisition of the Giant Mine assets, Miramar
Giant Mine Ltd. ("MGML") has established cash collateral security of
$200,000 (note 8) and has issued promissory notes payable in the total
amount of $6.8 million as security under the existing water licence. The
promissory notes are secured solely by the Giant Mine assets and are due
only from MGML upon default of the Reclamation Security Agreement
("RSA"). No value has been ascribed to this security interest in the
consolidated financial statements. The amendment to the RSA completed in
November 2001 provided that MGML continue to operate the mine and hold
the property in compliance with environmental requirements for an
indefinite term. In compensation for environmental and holding costs,
MGML will be reimbursed $300,000 monthly by Department of Indian Affairs
and Northern Development ("DIAND"). Termination of the RSA agreement by
MGML requires written notice one month prior to termination date. On
June 10, 2004, the Company gave notice under the RSA of its intention to
terminate operation of the Giant Mine and the Company will maintain the
Giant property on care and maintenance for a period of six months as
contemplated in the RSA after which the Company would return the Giant
property to DIAND on January 10, 2005. However, the Company and DIAND
have subsequently agreed that the property will be returned effective
June 30, 2005. During the period which the Company holds the property on
care and maintenance, DIAND will reimburse the Company for all holding
costs incurred plus a fee for the services.

(d) On August 8, 2000, MCML received a renewal water licence for the Con
Mine issued under the Northwest Territories Waters Act. This licence
expires on July 29, 2006. As a condition of a water license held by the
MCML, the Company maintains security deposits for the cost of future
reclamation. In 2004, the Company completed an agreement with DIAND to
fund security deposits by depositing the proceeds from a $10 million
receivable from the Northwest Territories Power Corporation (note 4) in
connection with the sale of Bluefish into two reclamation security
trusts established by the Company. The reclamation security trusts will
be used to fund the reclamation of the site on completion of operations.

(e) In 1995, the Company entered into a joint exploration transaction
with an investor that resulted in the sale of an interest in the assets
comprising the Con Mine. The transaction was based upon an independent
valuation prepared for the Company. In 2000, Canada Revenue Agency
("CRA") issued a re-assessment notice challenging the valuation that
formed the basis for this transaction. This re-assessment does not give
rise to any taxes payable by the Company. However, as part of the
transaction in 1995, the Company agreed to compensate the investor for
any shortfall in the value of the assets transferred to a maximum of
$2.7 million plus accrued interest, which amounts to approximately $2.1
million at December 31, 2004, such amounts to be payable should a ruling
denying the transfer of certain tax pools be made against the Company.
The Company has received notification that CRA has recently reviewed the
re-assessment and re-confirmed the original re-assessment. As a result,
the Company intends to file a notice of appeal in March 2005. While
management intends to strenuously defend the independent valuation, the
outcome of this issue is not yet determinable. No provision for these
costs has been recorded at December 31, 2004.

(f) The Company has a long-term lease for office space for its corporate
and exploration office. The Company has minimum commitments under
operating leases for its premises totalling approximately $225,000 per
annum until 2012. The Company has a number of operating leases for
mobile and other equipment used at its exploration properties, which in
aggregate result in commitments of $537,000 per annum and lease terms
ranging from one to three years.

17. Subsequent event:

On November 17, 2003, the Company entered into a letter agreement with
Kinross Gold Corporation ("Kinross") whereby the Company has the option
to earn a 60% interest in the Back River project in Nunavut. Under the
terms of the letter agreement, the Company would earn a 60% interest in
the properties and related rights and facilities by spending a total of
$25 million over a 30 month period. As at December 31, 2004 the Company
had capitalized approximately $9.8 million in inventory and mineral
property costs with respect to the Back River project. Subsequent to
December 31, 2004, the Company completed an assignment to Dundee
Precious Metals Inc. of its option to purchase from Kinross. The Company
received approximately $10 million representing the reimbursement of
costs incurred by the Company on the Back River Project plus 5%. Dundee
will also issue to the Company 150,000 common shares, or the cash
equivalent, if either (i) the total mineral resources on the Goose Lake
property are increased to 1,500,000 ounces of gold or (ii) a decision is
made to place a mine into commercial production on any of the Properties
and Dundee will issue to a further 187,500 common shares of Dundee, or
the cash equivalent, if Dundee exercises its option on the Back River
project.

MIRAMAR MINING CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

The Management's Discussion and Analysis ("MD&A") provides an analysis
of the financial results of Miramar Mining Corporation (the "Company")
for the year ended December 31, 2004, and compares it with those of the
previous two years. In order to better understand the MD&A, it should be
read in conjunction with the Consolidated Financial Statements and its
related notes. The Company's consolidated financial statements are
prepared in accordance with Canadian generally accepted accounting
principles ("GAAP") and expressed in thousands of Canadian dollars,
except share amounts. In addition, the Company files annual reports on
Form 40-F with the United States Securities and Exchange Commission,
which includes the Company's consolidated financial statements and a
reconciliation discussing the material differences between Canadian GAAP
and United States GAAP, and their effect on the Company's financial
information. This MD&A is made as of March 24, 2005. All amounts are
expressed in Canadian dollars, except as otherwise indicated.

OVERVIEW

The Company's mining and exploration assets are primarily gold assets in
Canada's Arctic-North. The Company has developed considerable experience
in operations, exploration and logistics in the Canadian Arctic-North
where the Company has focused its activities for more than ten years. In
2004, the Company determined that gold production was no longer
economically viable at its Con and Giant mines and terminated all mining
activities at the mines. In 2004, the Company acquired an option to earn
a 60% interest in the Back River project. However, subsequent to
December 31, 2004, the Company assigned the option on the Back River
project to a third party. The Company's business focus is the
exploration and development of the Hope Bay project in Nunavut.

The Company's goal is to build an intermediate gold production profile
through the phased development of its Arctic-North gold assets as
follows:

Phase 1: Short-term: Development of a small scale, high grade gold mine
at Doris North to commence production as expeditiously as possible, with
the expectation of generating cash flow to pay for the mining
infrastructure and to fund the continued exploration and development of
the Hope Bay belt.

Phase 2: Medium-term: To extend and expand production levels by
developing the higher grade, more accessible areas of the Boston, Doris
and Madrid deposits, with a target production level of approximately
200,000 ounces of gold per annum, generating cash flow to complete phase
three;

Phase 3: Longer-term: To further expand gold production by maximizing
the potential of the very large Madrid deposit, and the remainder of the
Boston and Doris deposits, to generate sustained targeted production in
the range of 350,000 to 400,000 ounces of gold per annum.

In order to achieve these objectives, the Company needs to successfully
complete the current permitting process for the Doris North project, to
complete a positive feasibility study in 2006, to place Doris North into
production and to complete further exploration and development of the
Boston, Doris and Madrid deposits.

In parallel with these development oriented activities, the Company
intends to continue the exploration programs at Hope Bay to discover new
deposits to contribute to a sustained intermediate production profile,
while conducting grassroots exploration in cooperation with strategic
partners.

2004 Highlights

- Hope Bay:

- $26.7 million of exploration and development programs completed.

- Drilling at the Madrid deposit increased resources by more than 1
million ounces, a 48% increase over 2003, comprised of a 273,000 ounce
increase in the indicated category and 716,000 ounce increase in the
inferred category.

- Results of the deep drilling program at Boston yielded encouraging
grade intercepts which indicate the potential for resource expansion at
depth.

- Nunavut Impact Review Board ("NIRB") issued its report on the Doris
North Gold Mine project following public hearings deciding that the
project should not proceed on the basis of the existing application.
NIRB invited the Company to submit a new application focusing on certain
issues before it could complete its review of the project.

- Back River:

- $9.8 million of exploration and other programs focused on the Goose
Lake deposit were completed.

- Positive drilling results indicate potential of near surface higher
grade hinge zone.

- Subsequent to December 31, 2004, the Company assigned to Dundee
Precious Metals Inc. its option from Kinross to acquire a 60% interest
in the Back River project for proceeds of $10 million. This transaction
will provide additional funding for the Company's primary project at
Hope Bay.

- Consolidated net loss of $32.5 million or $0.21 per share, including
write-downs of $15.0 million ($10.5 million for asset retirement
obligation and $4.5 million on the gold and supplies inventory at the
Con Mine), closure costs of $1.6 million for severance and settlement
costs for gold option contracts and a gain on future income taxes of
$3.9 million.

Highlights of exploration activities at Hope Bay in 2004 include:

Madrid Deposit: Drill programs for Madrid had two priorities: first, to
infill drill new mineralization discovered during the first phase of the
program on approximately 50 meter centers to support the calculation of
a new resource and, second, to further expand the known mineralization.
Results were positive, with certain holes returning grade and widths
better than previous results and demonstrating the continuity of the
mineralization and at least doubling the area of the previously known
mineralization. On February 25, 2005, the Company announced new resource
totals for the Hope Bay belt incorporating an updated estimate for the
Madrid deposit. Using the same cut-off grades as in 2003, more than one
million ounces were added to the Madrid resource during 2004,
representing an increase of 48% over 2003 resources, comprised of a
273,000 ounce increase in the indicated category and a 716,000 ounce
increase in the inferred category.

Boston deposit: Drill programs for Boston had three objectives: to
upgrade the confidence level of the existing inferred resource, to
expand the limits of that resource and to continue to evaluate the
potential to expand the resource at depth. The deep drilling program of
wide-spaced holes continues to demonstrate potential to extend this
mineralized system to greater depths than the current resource estimate,
while the discovery of a possible new zone of mineralization offers an
opportunity to add shallow resources in close proximity to the existing
ramp infrastructure. Results of the in-fill drilling program were within
expectations. The Company has begun the process of evaluating mining
options for alternate approaches to mining, including both high-grade
selective and bulk mechanized mining methods. Bulk mining methods may
result in a lower grade than previously announced due to dilution, but
could allow for more cost efficient resource extraction.

Back River Project: In 2004, the Company acquired an option to earn a
60% interest in the Back River project. Highlights of the exploration
activities at Back River in 2004 included delineation of significant
gold mineralization in the hinge area of the folded iron formation units
and new resource additions within the sedimentary greywacke units
located on the core of the fold structure. Subsequent to December 31,
2004, the Company assigned to Dundee Precious Metals Inc. ("Dundee") its
option on the Back River project. The Company received approximately $10
million representing the reimbursement of costs incurred on the Back
River Project plus 5%.

Con Mine and Giant Mine Closures: In Yellowknife mining operations at
the Giant Mine were terminated on July 10th as a result of continued
production shortfalls. Total gold production was 15,818 ounces during
the year which was a combination of gold recovered from processing
arsenic tailings at Con Mine and ore from Giant Mine. During December,
due to poor gold recovery from arsenic tailings, gold processing was
terminated at the Con Mine and activities transitioned into reclamation
of the property.

EARNINGS AND CASH FLOW

For the year ended December 31, 2004, the net loss was $32.5 million or
$0.21 per share including write-downs of $15.0 million, which were
comprised of $10.5 million to adjust the asset retirement obligation and
$4.5 million for equipment and inventories at the Con Mine, closure
costs of $1.6 million for severance and settlement of gold option
contracts, and a gain on future income taxes of $3.9 million. In 2003,
the Company reported a net loss of $18.5 million or $0.14 per share.
Included in the 2003 results was a write-down of $7.8 million and
severance and closure costs of $5.0 million for the Con Mine and a
future income tax gain of $5.7 million.

In the second quarter of 2003, the Company elected to terminate
underground mining at the Con Mine in Yellowknife and continue to mine
solely at Giant Mine. However, gold production at the Giant Mine did not
meet the Company's expectations and as a result, mining activity at
Giant Mine was terminated effective July 10, 2004. During December 2004,
due to poor gold recovery from mill tailings, all gold processing was
terminated at the Con Mine and activities transitioned into reclamation
of the property. Consequently, the Company recorded an increase of $10.5
million to the provision for site reclamation and closure to reflect the
change in estimated future costs related to the reclamation of these
mill tailings and the corresponding write-down of the resulting asset.
Certain contaminated soil contained in the mill tailings is planned to
be rendered inert by a process which utilizes the pressure oxidation
circuit at the Con Mine. Although the ultimate cost to be incurred for
reclamation is uncertain and there can be no assurance that estimated
costs will be accurate, the liability for retirement and remediation has
been estimated on an undiscounted basis before inflation and market risk
premium, as follows:



-------------------------------------------------------
Direct costs for 2005-2006,
(primarily pressure oxidation) $ 8,630
Contractor markup 1,878
---------
Subtotal 10,508
---------
Direct costs for site reclamation 8,434
-------------------------------------------------------
Total $ 18,942
-------------------------------------------------------
-------------------------------------------------------


The Company expects to use its employees for the pressure oxidation
process, however, has included a contractor mark-up in the reclamation
estimate in accordance the new provisions. The Company has $10 million
on deposit in Con Mine reclamation security trusts that will be applied
to, in part, offset the reclamation costs as they are incurred.

As a result of adopting new accounting standards with respect to asset
retirement obligations and stock-based compensation on a retroactive
basis, prior period losses have been restated. The loss for 2003 was
restated from $17.6 million to $18.5 million after recognizing a charge
of $0.9 million new accounting standards.

Selected Financial Data



The following table summarizes total revenue and loss over the last
three fiscal years.

2004 2003 2002
---------------------------------
Total Revenue $ 12,265 $ 46,877 $ 54,067
Loss (1) $ (32,459) $ (18,465) $ (163)
Per Share (1) $ (0.21) $ (0.14) $ 0.00

The following tables summarize total revenue and income (loss) over
the last eight fiscal quarters.

2004 2004 2004 2004
Q4 Q3 Q2 Q1
---------------------------------------------
Total Revenue $ 1,670 $ 2,570 $ 4,057 $ 3,968
Loss (1) $ (12,278) $ (6,259) $ (6,868) $ (7,054)
Per Share (1) $ (0.07) $ (0.04) $ (0.05) $ (0.05)


2003 2003 2003 2003
Q4 Q3 Q2 Q1
---------------------------------------------
Total Revenue $ 9,513 $ 11,905 $ 9,782 $ 15,677
Loss (1) $ (4,263) $ (6,207) $ (7,186) $ (809)
Per Share (1) $ (0.03) $ (0.04) $ (0.06) $ (0.01)

(1) Loss and loss per share figures have been restated to reflect the
changes in accounting for site reclamation and closure costs and
stock-based compensation, disclosed in note 2 to the consolidated
financial statements.


OPERATIONS OVERVIEW

Revenue

For the year ended December 31, 2004, the Company produced 15,818
ounces of gold compared to 84,269 ounces in 2003. Revenue from gold
sales was $7.6 million compared to $42.6 million in 2003.

2004 2003
---------------------
Gold $ 7,452 $ 40,387
Effects of hedging (2) 115 2,165
---------------------
Total gold sales 7,567 42,552
---------------------

Interest and other income 4,698 4,325
---------------------
Revenue $ 12,265 $ 46,887
---------------------
---------------------
(2) Excludes the hedging component of closure costs described in
the Earnings and Cash Flow section.


During 2004, the realized gold price in Canadian dollar terms was $478
compared to $532 per ounce on the spot market and $505 realized in 2003.
Other income was $4.7 million in 2004 compared to $4.3 million in 2003.
Other income includes interest earned on short-term cash investments of
$1.8 million (2003 - $1.6 million) income of $2.4 million (2003 - $2.7
million) on the realization of a portion of the gain on the power
credits which were received as part of the sale of the Bluefish
hydroelectric facility as described in note 4 to the annual consolidated
financial statements and income of $0.5 million (2003 - nil) for
management fees charged to the Department of Indian and Northern Affairs
("DIAND") related to services provided in relation to Giant Mine.

Mining Operations

In Yellowknife, mining operations were terminated at Giant Mine
effective July 10 (note 16 (c) of the financial statements). Formal
notice was given on June 10 to the DIAND, as prescribed in the Company's
agreement with DIAND, that the Company would return the Giant Mine
property to DIAND on January 10, 2005. However, the Company and DIAND
have subsequently agreed that the property will be returned effective
June 30, 2005, to which time the Company will provide care and
maintenance services for a fee and the Company will have no ongoing
reclamation obligations with respect to Giant Mine.

During December, due to poor gold recovery from mill tailings at Con
Mine, all gold processing was terminated and activities transitioned
into reclamation of the property at the Con Mine. As all mining and
processing activities are terminated at the site, all other outstanding
reclamation will be commenced as part upon approval of the abandonment
and restoration plan, with physical site reclamation to be completed
over a three to four year period. It has been estimated that ongoing
water treatment and monitoring of the site could continue for up to 20
years. The reclamation is anticipated to be funded by approximately $10
million held in trust (notes 16 (b) and (d)).

Operating Costs

The cost of sales in 2004 was $22.9 million compared to $46.9 million in
the same period of 2003. The decrease in the cost of sales resulted from
the decrease in gold production. General and administrative expenses in
2004 were $4.1 million compared to $4.2 million in the same period of
2003. Stock-based compensation of $2.3 million in 2004 compared to $0.9
million in 2003 increased due to increased quantity of share options
issued at a higher average value per share. Depreciation, depletion and
accretion expense in 2004 was $2.0 million compared to $5.3 million in
the same period of 2003 as restated. The decrease reflects the reduced
carrying value of mine assets and corresponding depreciation due to
write-downs during 2003 and 2004. As a result of the decision to
terminate mining activities at Giant Mine and the cessation of gold
processing from mill tailings at Con Mine, the Company recorded
write-downs of $15.0 million and incurred severance and closure costs of
$1.6 million. At December 31, 2004 approximately $0.5 million was
outstanding for severance liabilities which are expected be paid in
2005. (See discussion of write downs in the Earnings and Cash Flow
section above.)

Exploration and Development Activities

The focus for the Company continues to be on the Hope Bay project. The
Company is committed to a strategy of advancing the Hope Bay project to
a production decision while continuing to expand gold resources. The
development strategy is to focus first on the high grade gold Doris
North project, generating cash flow to pay for the mining infrastructure
and to fund the continued exploration and development of the Hope Bay
belt. The Company plans to pursue extension and expansions to the Doris
North mine operating life through the mining of other substantial
resources on the Hope Bay belt. The exploration strategy is to focus on
the discovery of new gold resources by expanding the existing deposits
and search for new deposits in order to support a sustained intermediate
production profile and conduct grassroots exploration in cooperation
with strategic partners. In order to achieve these objectives, the
Company needs to successfully complete the current permitting process
for the Doris North project, to complete a positive feasibility study in
2006, to place Doris North into production and to complete further
exploration and development of the Boston, Doris and Madrid deposits.

In 2004, expenditures at Hope Bay totaled $26.7 million for the
advancement of permitting and engineering for the Doris North project,
44,023 meters of core drilling and 1,707 meters of reverse circulation
drilling. Highlights of the exploration activities at Hope Bay in 2004
include drill programs in the Madrid deposit. This drilling had two
priorities: first, to in-fill drill the new mineralization discovered
during the first phase of the program on approximately 50 meter centers
to support the calculation of a new resource and, second, to further
expand the known mineralization. Results were positive, with certain
holes returning grade and widths better than previous results and
demonstrating the continuity of the western Madrid mineralization and at
least doubling the area of the previously known mineralization. On
February 25, 2005, the Company announced new resource totals for the
Hope Bay belt incorporating an updated estimate for the Madrid deposit.
Using the same cut-off grades as in 2003, more than one million ounces
were added to the Madrid resource during 2004, representing an increase
of 48% over 2003 resources, comprised of a 273,000 ounce increase in the
indicated category and a 716,000 ounce increase in the inferred category.

As part of the 2004 work program, the Company initiated a drill program
designed to upgrade portions of the inferred resource at the Boston
deposit to the indicated resource category. The objective of this
program, which includes the in-fill drilling and engineering studies, is
to demonstrate the Boston deposit's potential to support an extended
production life at Hope Bay.

The Company continues to work towards obtaining permits for the Doris
North project. In July 2004, NIRB held public hearings to discuss the
permitting of the Doris North Project in four communities in Nunavut. In
August 2004, NIRB issued its report to the Minister of DIAND deciding
that the project should not proceed on the basis of the existing
application. NIRB invited a new application focusing on certain issues
before it could complete its review of the project. The work to address
these items commenced in 2004. The Company filed a new preliminary
project description with NIRB in February 2005 to commence a new
application. Assuming a positive decision from NIRB and that permits are
obtained in a timely manner and a final production decision is made by
mid-2006, start-up of the mine could commence in late 2007.

Highlights of the exploration activities at Back River in 2004, where
activities were focused at Goose Lake, were the delineation of gold
mineralization found in the hinge zone and, in the greywackes,
sedimentary units within the core of the banded iron formation fold.
Subsequent to December 31, 2004, the Company assigned to Dundee its
option from Kinross to earn a 60% interest in the project. The Company
received approximately $10 million, representing the reimbursement of
costs incurred by the Company on the Back River Project plus 5%. Dundee
is required to issue to the Company 150,000 common shares, or pay the
cash equivalent, if either (i) the total mineral resources on the Goose
Lake property are increased to 1,500,000 ounces of gold or (ii) a
decision is made to place a mine into commercial production and Dundee
is required to issue to a further 187,500 common shares of Dundee, or
pay the cash equivalent, if Dundee exercises the option to earn a 60%
interest in the Back River project. This transaction will allow the
Company to focus on opportunities at Hope Bay which is 100% owned by the
Company and by investing the funds from this transaction at Hope Bay,
the Company can also reduce potential future dilution to its
shareholders.

Capital Programs

During 2004, the Company had capital expenditures of $34.7 million for
exploration and project activities at Hope Bay and Back River (as
described above) compared to expenditures of $20.9 million in 2003 all
at Hope Bay.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the Company's consolidated financial statements
requires management to make estimates and assumptions. These estimates
and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities as well as the
reported expenses during the reporting period. The most critical
accounting policies upon which the Company depends are those requiring
estimates of gold reserves and resources and future recoverable gold
ounces and assumptions of future gold prices. Such estimates and
assumptions affect the determination of the potential impairment of
long-lived assets as well as value of product inventory and the rate in
which depreciation and amortization are charged to the earnings,
estimated costs associated with reclamation and closure of mining
properties assumptions in determining stock-based compensation and
future income taxes. Management re-evaluates its estimates and
assumptions on an ongoing basis; however, due to the nature of
estimates, actual amounts could differ.

Accounting for Exploration and Development Cost

Exploration expenditures related to mineral properties are deferred only
if it is probable that these costs will be recovered from future
operations. The carrying values of the mineral properties are assessed
at balance sheet date to determine whether any persuasive evidence
exists that the properties may be permanently impaired. The Company's
progress in its development activities towards its planned operations is
a key factor to be considered as part of the ongoing assessment of the
recoverability of the carrying amount of capital assets and deferred
development and pre-operating costs. If there is persuasive evidence of
impairment, the asset is written down to its estimated net recoverable
value. Deferred exploration expenditures totals $154.8 million and $8.2
million for Hope Bay and Back River properties respectively at December
31, 2004 and $127.0 million for Hope Bay at December 31, 2003 (see note
7 of the consolidated financial statements). In addition to exploration
expenditures of $8.2 million for Back River, the Company incurred $1.6
million for supply inventory for a total expenditure of $9.8 million for
Back River.

Asset Retirement Obligation

Effective January 1, 2004, the Company adopted the new accounting
standard on asset retirement obligations. Under this standard, asset
retirement obligations are recognized for the estimated costs associated
with exit activities and recorded as a liability at fair value. The
liability is accreted over time through periodic charges to earnings. In
addition, the asset retirement cost is capitalized as part of the
asset's carrying value at its initial discounted value and is amortized
over the asset's useful life. This change in accounting policy has been
applied retroactively and has resulted in a decrease in long-term
liability of $1.3 million, an increase in property, plant and equipment
of $0.4 million and a decrease to opening deficit of $1.7 million at
January 1, 2004.

In December 2004, the Company suspended its gold recovery operations
from historic mill roaster tailings due to lower than planned gold
production. Consequently, the Company recorded an increase of $10.5
million to the provision for site reclamation and closure for the
estimated costs in 2005 and 2006 related to the reclamation of these
roaster tailings. Arsenic contained within this material is rendered
inert by a process which utilizes the pressure oxidation circuit at the
Con Mine. Although the ultimate amount to be incurred is uncertain, the
liability for retirement and remediation has been estimated on an
undiscounted basis before inflation and market risk premium, as follows:



---------------------------------------------------------------
Direct costs for 2005-2006, primarily
pressure oxidation $ 8,630
Contractor markup 1,878
Subtotal 10,508
Direct costs for site reclamation 8,434
---------------------------------------------------------------
Total $ 18,942
---------------------------------------------------------------


The Company expects to use its employees for the pressure oxidation
process, however, has included a contractor mark-up in the reclamation
estimate in accordance the new provisions. The Company has $10 million
on deposit in Con Mine reclamation security trusts that will be applied
to, in part, offset the reclamation costs as they are incurred.

In the event the actual cost of reclamation exceeds the Company's
estimates, the additional liability for retirement and remediation costs
may have an adverse effect on the Company's future results of operations
and financial condition.

Stock-based Compensation

The CICA Accounting Standards Board has amended CICA Handbook Section
3870 - Stock-based Compensation and Other Stock-based Payments - to
require entities to account for employee stock options using the fair
value based method, beginning January 1, 2004. Under the fair value
based method, compensation cost is measured at fair value of the options
at the date of grant and is expensed over the award's vesting period. In
accordance with one of the transitional options permitted under amended
Section 3870, the Company has retroactively applied the fair value based
method to all employee stock options granted on or after January 1,
2002, and has restated prior periods. The effect of retroactively
adopting the fair value based method is to decrease net income by $0.4
million and $0.9 million for the years ended December 31, 2002 and 2003,
respectively, to increase deficit by $1.3 million as at December 31,
2003 ($0.4 in 2002), to increase contributed surplus by $1.1 million as
at December 31, 2003 ($0.4 million in 2002) and increase share capital
by $0.2 million as at December 31, 2003 (nil in 2002). The effect of the
change on basic and diluted earnings per share was immaterial.

FINANCING AND LIQUIDITY

At December 31, 2004, the Company had consolidated working capital of
$25.4 million compared to $68.9 million at the end of 2003. Of the $25.4
million working capital, $30.2 million was cash and cash equivalents
compared to $69.9 million at the end of 2003. In addition to working
capital, at December 31, 2004 the Company had $14.7 million in cash
collateral deposits for reclamation bonds, compared to $6.3 million at
December 31, 2003.

During the first quarter of 2004, the Company negotiated a $4 million
line of credit with a financial institution. Amounts drawn on this line
of credit will be used for expenditures related to the feasibility and
construction of the Doris North Mine. No amounts have been drawn down
from this credit line to-date.

During the first quarter of 2004, the Company sold a portion of its
shares in Northern Orion Exploration Ltd. ("Northern Orion") for
proceeds of $0.9 million. No further sales were made in 2004 and at
December 31, 2004 the Company owned approximately 200,000 Northern Orion
shares. The Company also retains a net proceeds royalty interest with
Northern Orion as described in note 3 to the annual consolidated
financial statements.

On October 18, 2004, the Company completed a private placement of
7,600,000 flow-through common shares at a price of $2.00 per share for
gross proceeds of $15,200,000 (of which $15,000,000 was underwritten and
the balance was sold by the Company directly). In consideration for
their services, the underwriters received $750,000 and brokers' warrants
exercisable to purchase 375,000 common shares at $2.00 per common share
until October 18, 2005.

On February 26, 2004, the Company entered into an agreement with Kinross
for an option to earn a 60% interest in the Back River project in
Nunavut for expenditures of C$25 million over a thirty month period.
Subsequent to December 31, 2004, the Company assigned to Dundee its
option from Kinross to earn a 60% interest in the Back River project.
The Company received approximately $10 million representing the
reimbursement of costs incurred by the Company on the Back River Project
plus 5%. Dundee is required to issue to the Company 150,000 common
shares, or pay the cash equivalent, if either (i) the total mineral
resources on the Goose Lake property are increased to 1,500,000 ounces
of gold or (ii) a decision is made to place a mine into commercial
production on the Back River project and Dundee is required to issue to
a further 187,500 common shares of Dundee, or pay the cash equivalent,
if Dundee exercises its option to earn a 60% interest on the Back River
project.

On September 20, 2004, the Company entered into an option agreement with
Maximus Ventures Ltd. ("Maximus") whereby Maximus can earn a 75%
interest in the Eastern Contact and Twin Peaks areas of Hope Bay by
spending $7.5 million over a three year period. In consideration for the
option, Maximus will issue five million shares to the Company over a
five year period as repayment for the Company's expenditures on the
properties. Additional shares could also be issued to the Company at
specific resource milestones.

The Company believes it has sufficient cash resources and liquidity to
sustain its planned activities for the near term. The ongoing
exploration and development of the Hope Bay project will require the
Company to raise additional capital through a combination of project
debt and equity financings. The Company's strategy is to use equity
financing for exploration activities and to maximize project debt to
build mining infrastructure until sufficient cash flow is generated from
mining production.

Liabilities and Contingencies

As a condition of a water license held by the Con Mine, the Company
maintains security deposits for the cost of future reclamation. On
December 31, 2004, the Company, as agreed with DIAND, deposited $9
million of the $10 proceeds from the sale of Bluefish into a reclamation
security trust. The reclamation security trust will be used to fund the
reclamation activities other than arsenic stabilization of historic
roaster tailings. The cost of reclamation has been estimated by the
Company on the basis of a draft remediation plan which had been
submitted to the McKenzie Valley Water Board in February 2003. The final
plan is currently under review by the Water Board and any changes to the
plan could result in an increase to the estimated liability. The actual
reclamation costs could exceed these estimates and the amounts held in
the reclamation security trusts.

In 1995, the Company entered into a joint exploration transaction with
an investor that resulted in the sale of an interest in the assets
comprising the Con Mine. The transaction was based upon an independent
valuation prepared for the Company. In 2000, Canada Revenue Agency
("CRA") issued a re-assessment notice challenging the valuation that
formed the basis for this transaction. This re-assessment does not give
rise to any taxes payable by the Company. However, as part of the
transaction in 1995, the Company agreed to compensate the investor for
any shortfall in the value of the assets transferred, to a maximum of
$2.7 million plus accrued interest, which amounts to approximately $2.1
million, such amounts to be payable should a ruling denying the transfer
of certain tax pools be made against the Company. The Company has
received notification that CRA has recently reviewed the re-assessment
and re-confirmed the original re-assessment. As a result, the Company
intends to file a notice of appeal in March 2005. While management
intends to strenuously defend the independent valuation, the outcome of
this issue is not yet determinable. No provision for these costs has
been recorded at December 31, 2004.

Contractual Obligations

The following table summarizes the annual contractual obligations for
the next five years and amounts due thereafter are presented in total.



2005 2006 2007 2008 Thereafter
----------------------------------------------
Oxygen plant 780 1020 - - -
Office lease costs 228 228 236 236 718
Exploration equipment 450 257 30 - -
Site reclamation 7,485 3,145 - - -


The Company is obligated to fund reclamation and closure costs for its
mining and exploration operations as a condition of associated water
licenses, however the timing of those specific payments has not been
determined and as such only a portion of the obligation has been shown
in the table above. The Company is in the processing of finalizing its
abandonment and restoration plan with regulatory agencies for the Con
Mine which will establish the extent and timing of reclamation
activities. Additionally, to the extent that the Company continues to be
engaged in active exploration activities, reclamation of exploration
sites will be deferred.

For additional information related to the Company's obligations and
commitments see note 16 in the consolidated financial statements.

Off Balance Sheet Arrangements

The Company does not have any off balance sheet arrangements other than
the pension obligations which are described in note 13 of the
consolidated financial statements.

OUTLOOK

The longer term outlook for the Company continues to be dependent on the
successful exploration and development of the Hope Bay project. The
Company owns 100% of the Hope Bay project, which has measured and
indicated resources of 2.1 million ounces of gold and an inferred
resource of a further 4.3 million ounces of gold.

The Company plans to continue to work towards making a development
decision on the Doris North project, including advancement of the
permitting process. If the permitting process is successfully completed,
the Company will make the final decision on commitment to the
construction process. If approved by the Company, production could
commence by late 2007. There can be no assurance that the permitting
process will be completed as planned or that the Company will develop
Doris North as anticipated.

As part of the Company's development strategy for Hope Bay, programs
will be initiated in 2005 designed to deliver a feasibility study in
2006 to demonstrate the opportunity for the development of significant
sustained gold production to follow on the Doris North project, a
smaller scale, high grade mining operation currently in the permitting
process. Included in these programs will be infill drilling at Doris
Central, western Madrid and Boston.

As a result of the termination of all mining activities at Con and Giant
mines, the Company does not expect to generate revenue in 2005. The
Company anticipates that final approval for the Con Mine abandonment and
restoration plan will be received in 2005 which will permit the Company
to conduct final reclamation activities in subsequent periods. The
Company does not have any ongoing reclamation obligations for the Giant
Mine.

In 2005, the Company expects to have ongoing operating expenses relating
to general and administration, stock-based compensation and accretion of
its asset retirement obligations.

RISKS AND UNCERTAINITIES

The Company will require additional capital to pursue its exploration
and development work at Hope Bay. Given the nature of capital market
demand for speculative investment opportunities, there is no assurance
that additional financing will be available for the appropriate amounts
and at the times required. The Company has developed a cash management
plan that will enable it to invest on a priority basis in projects
likely to generate favourable results in the near-to-medium term. The
impact of fluctuations in the price of gold is a risk to the Company's
ability to develop its properties as well as future profitability and
cash flow. As the gold market price is denominated in U.S. currency, the
Company is also at financial risk as the currency exchange rate between
Canadian and U.S. dollars can fluctuate and impact the reported earnings
and resulting cash flow. As the Canadian dollar strengthens compared to
the U.S. dollar, revenue from gold sales, which is generated in U.S.
dollars, would convert to fewer Canadian dollars available to pay for
operating costs that are almost entirely incurred in Canadian dollars.
Permitting mining projects such as the Doris North project requires the
input and approval of regulatory agencies which are beyond the Company's
control. As a result, the receipt of approval for the project and the
timing of grant of necessary permits are inherently uncertain.

FORWARD LOOKING STATEMENTS

Statements relating to exploration work at the Hope Bay project and the
expected results of this work, statements related to analyses of
financial condition, future results of operations and other information
that are based on forecasts of future results, estimates of amounts not
yet determinable and assumptions of management are forward-looking
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995. Forward looking statements are statements
that are not historical facts and are generally, but not always,
identified by the words "expects", "plans", "anticipates", "believes",
"intends", "estimates", "projects", "satisfies", "potential", "goal",
"objective", "prospective", and similar expressions, or that events or
conditions "will", "would", "may", "can", "could" or "should" occur.
Information inferred from the interpretation of drilling results and
information concerning mineral resource estimates may also be deemed to
be forward looking statements, as it constitutes a prediction of what
might be found to be present when and if a project is actually
developed. These forward-looking statements are subject to a variety of
risks and uncertainties which could cause actual events or results to
differ materially from those reflected in the forward-looking
statements, including, without limitation: risks related to fluctuations
in gold prices; uncertainties related to raising sufficient financing to
fund the planned work in a timely manner and on acceptable terms;
changes in planned work resulting from weather, logistical, technical or
other factors; the possibility that results of work will not fulfill
expectations and realize the perceived potential of the Company's
properties; uncertainties involved in the interpretation of drilling
results and other tests and the estimation of gold reserves and
resources; the possibility that required permits may not be obtained on
a timely manner or at all; the possibility that capital and operating
costs may be higher than currently estimated and may preclude commercial
development or render operations uneconomic; risk of accidents,
equipment breakdowns and labour disputes or other unanticipated
difficulties or interruptions; the possibility of cost overruns or
unanticipated expenses in the work program; the risk of environmental
contamination or damage resulting from Miramar's operations and other
risks and uncertainties, including those described in the Miramar's
Annual Report on Form 40-F for the year ended December 31, 2004 and
Reports on Form 6-K filed with the Securities and Exchange Commission.

Forward-looking statements are based on the beliefs, estimates and
opinions of Miramar's management on the date the statements are made.
Miramar undertakes no obligation to update these forward-looking
statements if management's beliefs, estimates or opinions, or other
factors, should change.

All resource estimates contained in this AIF are calculated in
accordance with National Instrument 43-101, Standards of Disclosure for
Mineral Projects ("NI 43-101") of the Canadian Securities Administrators
and the Canadian Institute of Mining, Metallurgy and Petroleum, as the
CIM Standards on Mineral Resources and Reserves Definitions and
Guidelines adopted by CIM Council on August 20, 2000. These standards
differ from the requirements of the United States Securities and
Exchange Commission (the "SEC"). Accordingly, resource and reserve
information in this AIF may not be comparable to similar information
reported by United States companies.

The term "resource(s)" does not equate to "reserves" and normally may
not be included in documents filed with the SEC.

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