U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                  FORM 10-SB/A2


              GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
                                BUSINESS ISSUERS

       Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934


                                MINERA ANDES INC.
               --------------------------------------------------
                 (Name of Small Business Issuer in its charter)

            Alberta, Canada                                  None
- ---------------------------------------         ------------------------------
    (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                 Identification Number)

         3303 North Sullivan Road
           Spokane, Washington                               99216
- ---------------------------------------         ------------------------------
(Address of principal executive offices)                   (zip code)

                                 (509) 921-7322
                         -----------------------------
                            Issuer's telephone number


        Securities to be registered pursuant to Section 12(b) of the Act:

                                      None


        Securities to be registered pursuant to Section 12(g) of the Act:

                                  Common Shares
                         -----------------------------
                                (Title of Class)

                                TABLE OF CONTENTS

Item of Form 10-SB                                                          Page

PART I

     Item 1     Description of Business                                        4

     Item 2     Management's Discussion and Analysis of                       13
                  Financial Condition and Results of Operations

     Item 3     Description of Properties                                     16

     Item 4     Security Ownership of Certain Beneficial Owners               51
                  and Management

     Item 5     Directors, Executive Officers, Promoters and                  53
                  Control Persons

     Item 6     Executive Compensation                                        55

     Item 7     Certain Relationships and Related Transactions                59

     Item 8     Description of Securities                                     60


PART II

     Item 1     Market Price of and Dividends on the Registrant's             61
                  Common Equity and Other Shareholder Matters

     Item 2     Legal Proceedings                                             62

     Item 3     Changes in and Disagreements with Accountants                 62

     Item 4     Recent Sales of Unregistered Securities                       62

     Item 5     Indemnification of Directors and Officers                     64

PART F/S        Consolidated Financial Statements                            F-1

                                        2

PART III

     Item 1     Exhibits                                                   III-1

                                        3

                                     PART I

Preliminary Note Regarding Forward-Looking Statements; Currency Disclosure

     The information set forth in this report in Item 1 - "Description of
Business" and in Item 2 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations" includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The safe harbor provisions of those sections do
not apply to this registration statement. However, certain factors that
realistically could cause results to differ materially from those projected in
the forward-looking statements are set forth in Item 1 - "Considerations Related
to Minera Andes' Business."

     All currency amounts in this report are stated in U.S. dollars unless
otherwise indicated. On May 8, 1997, the late New York trading rate of exchange,
as reported by The Wall Street Journal for conversion of United States dollars
into Canadian dollars was U.S. $1.00 = Cdn $1.386 or Cdn $1.00 = U.S. $0.721.

ITEM 1.  DESCRIPTION OF BUSINESS

     Minera Andes Inc. ("Minera Andes" or the "Corporation") is engaged in the
exploration and development of mineral properties located in the Republic of
Argentina. The Corporation's objective is to identify and acquire properties
with promising mineral potential, explore them to an advanced stage or to the
feasibility study stage, and then, if warranted, to pursue development of the
properties, typically through joint ventures or other collaborative arrangements
with partners that have expertise in mining operations.

     The Corporation's business grew out of a program begun by N.A. Degerstrom,
Inc., a contract mining company based in Spokane, Washington ("Degerstrom"), to
identify properties in Argentina that possessed promising mineral potential.
Based on the study of available remote sensing satellite data and experience
gained from drilling work performed by Degerstrom, beginning in 1991 Degerstrom
identified a number of areas which it believed had exploration potential and
began the process of filing applications for exploration concessions with the
provincial governments in Argentina and negotiating option agreements with
private landowners. Degerstrom conveyed these property interests to the
Corporation in 1995. See "Description of Properties - The Degerstrom Agreement"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

     The Corporation's current properties and projects consist of mineral rights
and applications for mineral rights covering approximately 210,000 hectares in
six provinces. The lands comprise option to purchase contracts, exploration and
mining agreements and direct interests through the Corporation's filings for
exploration concessions. The Corporation's properties are all early stage
exploration prospects. No proven or probable reserves have yet been identified.
See "Description of Properties."

                                        4

Operating Structure

     The Corporation is the product of an amalgamation in November 1995 of
Minera Andes and Scotia Prime Minerals, Incorporated, a then inactive Alberta
corporation which had previously had its Common Shares listed for trading on The
Alberta Stock Exchange ("ASE"). The Corporation's interests in its Argentina
properties are held through two Argentinean subsidiaries: Minera Andes S.A.
("MASA") and NAD S.A. ("NADSA"). MASA was incorporated under the laws of the
Republic of Argentina in September 1994. NADSA was incorporated under the laws
of the Republic of Argentina in July 1994.

     The corporate structure of Minera Andes is as follows:

                            |----------------------|
                            |   Minera Andes Inc.  |
                            |----------------------|
                                        |
                        95%--------------------------91.6%
                         |                            |
                         |                            |
                    |---------|                       |
                    |  Minera |                  |-----------|
                    |  Andes  |                  | NAD S.A.  |
                    |  S.A.   |                  |-----------|
                    |---------|

     The Corporation holds 19 of the 20 issued and outstanding shares of MASA
and 11 of the 12 issued and outstanding shares of NADSA as well as an
irrevocable transferrable option to purchase the one remaining MASA share and an
irrevocable transferrable option to purchase the one remaining NADSA share. Each
of those single shares are held by a natural person shareholder as required by
local law.

     Degerstrom provides management services to the Corporation and acts as
operator of the Corporation's properties and projects pursuant to an operating
agreement entered into in March 1995 ("Operating Agreement"). Under the
Operating Agreement, Degerstrom operates and manages the exploration program on
all properties and provides related offsite administrative assistance as
required. This agreement allows the Corporation to minimize its overhead by
providing for reimbursement to Degerstrom of direct out of pocket and certain
allocated indirect costs and expenses and the payment of a management fee of
15%. See "Description of Properties - the Degerstrom Agreement" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

                                       5

     Degerstrom is principally involved in contract mining and operates its own
independently owned mines and mines in joint venture with other mining
companies. Degerstrom provides a full range of contract services including
geological studies, site drilling, metallurgical analysis, and engineering of
pit, process and recovery systems.

     The head office and principal business address of the Corporation is 3303
North Sullivan Road, Spokane, Washington, 99216. The registered address of the
Corporation is 1600, 407 2nd Street S.W., Calgary, Alberta, T2P 2Y3 Canada.

Considerations Related to Minera Andes' Business

     Ownership of the Corporation's Common Shares involves a high degree of
risk. Shareholders should consider, among other things, the following factors
relating to the Corporation's business and properties and its present stage of
development:

     Risks Inherent in Minerals Exploration. There are a number of uncertainties
inherent in any exploration or development program, including location of
economic ore bodies, the development of appropriate metallurgical processes, and
the receipt of necessary governmental permits. Substantial expenditures may be
required to pursue such exploration and, if warranted, development activities.
Assuming discovery of an economic ore body and depending on the type of mining
operation involved, several years may elapse from the initial stages of
development until commercial production is commenced. New projects frequently
experience unexpected problems during exploration and development stages and
frequently result in abandonment of the properties as potential development
projects. Most exploration projects do not result in the discovery of minable
deposits of ore. There can be no assurance that the Corporation's exploration
efforts will yield reserves or result in any commercial mining operations.

     Many of the properties that the Corporation intends to explore in Argentina
are the subject of applications for concessions, many of which have not yet been
granted. The filing of an application for concession grants the holder the
exclusive right to obtain the concession conditioned on the outcome of the
approval process. The approval process is an administrative procedure under the
authority of the Province in which the property is located. The process includes
a public notice and approval procedure allowing third parties to give notice of
opposition or prior claim, if any, before the title to the concession is
granted. The approval process may take many months to complete. Although the
Corporation believes that it has taken all necessary steps with respect to the
application, approval and registration process for the property concessions it
has currently applied for and property transactions to which it is a party,
there is no assurance that any or all applications will result in issued
concessions or that the public registrations will be timely approved.

     Risks Inherent in the Mining Industry. Exploration, development and mining
operations are subject to a variety of laws and regulations relating to
exploration, development, employee safety and environmental protection; mining
activities are subject to substantial operating

                                       6

hazards including rock bursts, cave-ins, fires and flooding, some of which are
not insurable or may not be insured for economic reasons. The Corporation
currently has no insurance against such risks. The Corporation may also incur
liability as a result of pollution and other casualties involved in the drilling
and mining of ore. There may be limited availability of water and power, which
are essential to mining operations; and interruptions may be caused by adverse
weather conditions.

     The Corporation or joint venture or investment partners must obtain
necessary governmental approvals and make necessary capital expenditures before
production may commence on most of its projects. Significant capital
expenditures will also be required to bring them into production. The
Corporation may obtain funds for a portion of these capital expenditures from
joint venture or investment partners. However, there can be no assurance that
such joint venture or investment partners will provide such funds or that such
project financing will be available to the Corporation on acceptable terms. The
number of potential sources of third-party project financing for mining projects
is limited.

     Minera Andes is subject to additional risks, including that a large number
of companies, many of which are significantly larger and have greater financial
and technical resources than Minera Andes, compete in the acquisition,
exploration and development of mining properties; mining projects are highly
speculative and involve substantial risks, even when conducted on properties
known to contain significant quantities of mineralization.

     Need for Additional Capital. The exploration and, if warranted, development
of Minera Andes' properties will require substantial financing. The
Corporation's ability to obtain additional financing will depend, among other
things, on the price of gold, silver, copper and other metals and the industry's
perception of their future price. Therefore, availability of funding depends
largely on factors outside of the Corporation's control, and cannot be
accurately predicted. Failure to obtain sufficient financing could result in
delay or indefinite postponement of exploration, development or production on
any or all of Minera Andes' projects or loss of properties. For example, certain
of the agreements pursuant to which the Corporation has the right to conduct
exploration activities carry work commitments which, if not met, could result in
the Corporation losing its right to acquire an interest in the subject property.
There can be no assurance that additional capital or other types of financing
will be available when needed or that, if available, the terms of such financing
will be favorable to Minera Andes.

     Competitive Business Conditions. The exploration and development of mineral
properties in the Republic of Argentina is a highly competitive business. A
large number of companies compete with the Corporation in the acquisition,
exploration and development of mining properties. Many of these competing
companies are significantly larger than the Corporation and have substantially
greater economic and technical resources than the Corporation. While the
Corporation seeks to compete by identifying properties for exploration,
acquiring exclusive rights to conduct such exploration and carrying out
exploration and development of the

                                       7

properties with joint venture or investment partners, there can be no assurance
that the Corporation will be successful in any of these efforts.

     Foreign Operations. All of Minera Andes' properties are located in
Argentina. Argentina has recently emerged from periods of political and economic
instability. While current indications are that such instability is diminishing,
there are no guarantees that this will continue. Foreign properties, operations
and investments may be adversely affected by local political and economic
developments, including nationalization, exchange controls, currency
fluctuations, taxation and laws or policies as well as by laws and policies of
the United States and Canada affecting foreign trade, investment and taxation.
It is important that the Corporation maintain good relationships with the
governments in Argentina. The Corporation may not be able to maintain such
relationships if the governments change. Argentina has and is developing new
bodies of law that will impact the conduct of business generally and mining
operations in particular. Future laws (including tax laws) could adversely
affect the conduct of business and mining operations.

     Difficulties in Developing Remote Areas. Many of the areas in which the
Corporation is conducting exploration and, if warranted, development activities
are in particularly remote and mountainous regions, with limited infrastructure
and limited access to essential resources. Exploration or development projects
in these areas may require the Corporation or its joint venture partners to
develop power sources, transportation systems and communications systems, and to
secure adequate supplies of fuel, machinery, equipment and spare parts.
Consequently, exploration and development in these areas is particularly
difficult, requiring significant capital expenditures, and may be subject to
cost over-runs or unanticipated delays.

     Fluctuation in the Price of Minerals. The market price of minerals is
volatile and beyond the control of the Corporation. If the price of a mineral
should drop dramatically, the value of the Corporation's properties which are
being explored or developed for that mineral could also drop dramatically and
the Corporation might not be able to recover its investment in those properties.
The decision to put a mine into production, and the commitment of the funds
necessary for that purpose, must be made long before the first revenues from
production will be received. Price fluctuations between the time that such a
decision is made and the commencement of production can change completely the
economics of the mine. Although it is possible to protect against price
fluctuations by hedging in certain circumstances, the volatility of mineral
prices represents a substantial risk in the mining industry generally which no
amount of planning or technical expertise can eliminate.

     Environmental and Other Laws and Regulations. Mining operations and
exploration activities in Argentina are subject to various federal, provincial
and local laws and regulations governing mineral rights, exploration,
development and mining, exports, taxes, labor, protection of the environment and
other matters. Compliance with such laws and regulations may necessitate
significant capital outlays, materially affect the economics of a given project,
or cause material changes or delays in the Corporation's intended activities.
Minera Andes has obtained or is in the process of obtaining authorizations
currently required to conduct its

                                       8

operations. New or different standards imposed by governmental authorities in
the future or amendments to current laws and regulations governing operations
and activities of mining companies or more stringent implementation thereof
could have an adverse impact on Minera Andes' activities.

     Control by Single Shareholder; Conflicts of Interest. Degerstrom
beneficially owns approximately 26% of the outstanding voting securities of the
Corporation and therefore can exert significant influence in the election of the
Corporation's directors and have substantial voting power with respect to other
matters submitted to a vote of the shareholders. The interests of Degerstrom
with respect to any transaction involving actual or potential change in control
of the Corporation or other transactions may differ from those of the
Corporation's other shareholders.

     Certain directors and officers of the Corporation are also directors,
officers or employees of the Corporation's majority shareholder, Degerstrom and
of other natural resource and mining companies. As a result, conflicts may arise
between the obligations of these directors to the Corporation and to these other
entities. Certain directors and officers of the Corporation have other full time
employment or other business or time restrictions placed on them and
accordingly, these directors and officers may not be able to devote full time to
the affairs of the Corporation.

     Transactions With Degerstrom; Dependence on Key Personnel. The Corporation
has entered into an Operating Agreement with Degerstrom. See "Description of
Properties - The Degerstrom Agreement." This agreement is not the result of
arm's-length negotiations between independent parties. There can be no assurance
that the Operating Agreement or any future agreements will be effected on terms
comparable to those that would have resulted from negotiations between
unaffiliated parties. Such agreements may be amended by the Corporation and
Degerstrom, by mutual agreement. Degerstrom is not required to devote its
personnel and resources exclusively to, or for the benefit of, the Corporation.
There can be no assurance that the services to be provided by Degerstrom will be
available to the Corporation at all times. Moreover, the Corporation's success
will be dependent upon the services of certain executive officers, including
Allen Ambrose and Brian Gavin, who are also employees of Degerstrom. Degerstrom
pays compensation and provides other benefits to these individuals. Minera Andes
does not have employment contracts with nor does it maintain key person life
insurance for Mr. Ambrose or Mr. Gavin.

     Liquidity; Limited Trading Market. There currently is a limited trading
market for the Corporation's securities. There is no assurance that an active
trading market will ever develop. Investment in the Corporation is not suitable
for any investor who may have to liquidate such investment on a timely basis and
should only be considered by investors who are able to make a long-term
investment in the Corporation.

                                       9

Glossary of Geologic and Mining Terms; Statement of Abbreviations and Conversion
Factors

     "anomalous" means either a geophysical response that is higher or lower
than the average background or rock samples that return assay values greater
than the average background;

     "Bankable Feasibility Study" means the study, prepared to industry
standards, based upon which a bank or other lending institution may loan the
Corporation, MASA or NADSA funds for production development on the Claims;

     "breccia" means a course grained rock, composed of angular broken rock
fragments held together by a finer grained matrix;

     "Cateo" means an exploration concession for mineral rights granted to an
individual or company in the Republic of Argentina, as defined by the Republic
of Argentina Mining Code, as amended;

     "Claims" means the Cateos, Manifestacion de Descubrimiento, Mina, Estaca
Mina (as defined by the Republic of Argentina Mining Code, as amended) described
herein issued to NADSA, MASA or the Corporation by the government of Argentina
or any provincial government;

     "Estaca Mina" means areas granted to extend the area covered by existing
Minas;

     "grab sample" means one or more pieces of rock collected from a mineralized
zone that when analyzed do not represent a particular width of mineralization
nor necessarily the true mineral concentration of any larger portion of a
mineralized area;

     "igneous rock" means a rock formed by the cooling of molten rock either
underground or at the surface of the earth;

     "intrusive rock" means an igneous rock that, when in the molten or
partially molten state, penetrated into or between other rocks, but cooled
beneath the surface.

     "Manifestacion de Descubrimiento" (literally, manifestation of discovery)
means the intermediate stage between the exploration phase and exploitation
phase of development;

     "metamorphic rock" means an igneous or sedimentary rock that has been
altered by exposure to heat and pressure (resulting from deep burial, contact
with igneous rocks, compression in mountain building zones or a combination of
these factors) but without complete melting. Metamorphosis typically results in
partial recrystallization and the growth of new minerals. "Metasediment" refers
to metamorphosed sedimentary rock. "Metavolcanics" refers to metamorphosed
volcanic rock.

                                       10

     "Mina" means an exploitation grant based on Manifestacion de
Descubrimiento;

     "net smelter return royalty" is a form of royalty payable as a percentage
of the value of the final product of a mine, after deducting the costs of
transporting ore or concentrate to a smelter, insurance charges for such
transportation, and all charges or costs related to smelting the ore. Normally,
exploration, development and mining costs are not deducted in calculating a net
smelter return royalty. However, such royalties are established by contract or
statute (in the case of property owned by governments), and the specific terms
of such contracts or statutes govern the calculation of the royalty.

     "net profits royalty" is a form of royalty payable as a percentage of the
net profits of a mining operation. In contrast to net smelter return royalties,
costs relating to exploration, development and mining may be deducted from the
net proceeds of the operation in calculating the royalty. However, such
royalties are established by contract or statute (in the case of property owned
by governments), and the specific terms of such contracts or statutes govern the
calculation of the royalty.

     "porphyry" means an igneous rock of any composition that contains
conspicuous large mineral crystals in a fine-grained groundmass;

     "Underlying Royalty" means any royalties on the Claims that are part of the
lease, purchase or option of said Claim from the owner or any royalties that may
be imposed by the provincial government;

     "vein" means a mineral filling of a fault or fracture in the host rock,
typically in tabular or sheetlike form;

     "VLF-EM" means a very low frequency electromagnetic geophysical instrument
used in exploration to measure variances of conductivity in surficial sediments
and bedrock;

     "volcanic rock" (basalt, pillowed-flows, rhyolite) means an igneous rock
that has been poured out or ejected at or near the earth's surface;

     "volcanoclastic rock" (wacke, tuff, turbidite) means a sedimentary rock
derived from the transportation and deposition of volcanic rock fragments by air
(tuff) or water (wacke or turbidite)

     The following is a list of abbreviations used throughout this Report for
technical terms:

              Ag                silver
              Au                gold
              As                arsenic
              Cu                copper

                                       11

              g/t Au            grams per tonne gold
              g/t Ag            grams per tonne silver
              g/t               grams per tonne
              ha                hectare(s)
              Hg                Mercury
              IP/RES            induced polarization and resistivity (survey)
              kg                kilogram(s)
              km                kilometre(s)
              m                 metre(s)
              Mo                molybdenum
              NSR               Net Smelter Return
              oz                ounce
              Pb                lead
              ppb               parts per billion
              ppm               parts per million
              Sb                antimony
              sq.               square
              VLF-EM            very low frequency electromagnetic (survey)
              Zn                zinc

     The following table sets forth certain standard conversions from Standard
Imperial units to the International System of Units (or metric units).

To Convert From Imperial        To metric                 Multiply by

acres                           hectares                  0.404686

feet                            metres                    0.30480

miles                           kilometres                1.609344

tons                            tonnes                    0.907185

ounces (troy)/ton               grams/tonne               34.2857


1 mile = 1.609 kilometres
1 yard = 0.9144 metres
1 acre = 0.405 hectares
2,204.62 pounds = 1 metric ton = 1 tonne
2,000 pounds (1 short ton) = 0.907
tonnes 1 ounce (troy) = 31.103 grams
1 ounce (troy)/ton = 34.2857 grams/tonne

                                       12

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with the
Corporation's audited consolidated financial statements for the years ended
December 31, 1996 and 1995, and the unaudited consolidated financial statements
for the six months ended June 30, 1997 and 1996 included elsewhere in the
report. The Corporation's financial condition and results of operations are not
necessarily indicative of what may be expected in future years.

Overview

     The principal business of the Corporation is the exploration and
development of mineral properties located in the Republic of Argentina. The
Corporation carries out its business by acquiring, exploring and evaluating
mineral properties through its ongoing exploration program, and either joint
venturing or developing these properties further, or disposing of them if the
properties do not meet the Corporation's requirements.

     The Corporation's current properties and projects consist of mineral rights
and applications for mineral rights covering approximately 210,000 hectares in
six provinces. The lands comprise option to purchase contracts, exploration and
mining agreements and direct interests through the Corporation's filings for
exploration concessions. The Corporation's properties are all early stage
exploration prospects. No proven or probable reserves have yet been identified.
See "Description of Properties."

     The Corporation was incorporated in Alberta in July 1994. In November 1995,
the Corporation effected an amalgamation with Scotia Prime Minerals,
Incorporated, also an Alberta corporation, which at that time was an inactive
corporation that previously had been a reporting issuer under Alberta law and
had its common shares traded on The Alberta Stock Exchange. The business
combination between Minera Andes and Scotia Prime Minerals was accounted for
using the purchase method of accounting. Under this method of accounting, Minera
Andes is identified as the acquiror. See "Note 2 of Notes to Consolidated
Financial Statements."

Plan of Operations

     The Corporation has budgeted and plans to spend approximately $2.7 million
for mineral property and exploration activities on its properties in Argentina
through the end of the 1997/1998 field season, which the Corporation expects
will end near the end of May 1998. See "Description of Properties - Planned
Exploration and Development Program - Summary." The Corporation believes that
its existing funds and projected sources of funds will be sufficient to finance
this planned exploration and the related operating activities for this future
period. If the Corporation were to determine to develop a property or group of
properties beyond the Phase I and Phase II levels described in this Report,
substantial additional financing would be necessary. Such financing would likely
be in the form of equity, debt or a combination of equity and debt.

                                       13

The Corporation has no current plan to seek such financing and there is no
assurance that such financing, if necessary, would be available to the
Corporation on favorable terms.

Results of Operations

     Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996

     The Corporation had a net loss of $0.73 million for the six months ended
June 30, 1997 compared with a net loss of $0.37 million for the six months ended
June 30, 1996. This increase in net loss resulted primarily from an increase in
general and administrative expenses and office overhead incurred as a result of
the Corporation's financing and investor relations activities and expanded
operations. These additional expenses were offset by interest income of $87,000
earned on invested balances received as a result of the Company's 1996 equity
financings. The Corporation had no interest income in the comparable period in
1996. See "Liquidity and Capital Resources."

     1996 Compared to 1995

     The Corporation had a net loss of $1.2 million in 1996 compared with a net
loss of $1.5 million in 1995. The reduction in the loss for the year was a
function of higher general and administrative expenditures, more than offset by
a reduced write-off of deferred expenditures in connection with the abandonment
of certain property interests.

     General and administrative expenses increased from $0.5 million to $0.75
million primarily because 1996 was the Corporation's first full year as a
Canadian reporting company. Legal and travel expenses in 1996 reflected the
financing activity undertaken during the year, which included two special
warrant financings. Office overhead costs also increased as a result of the
Corporation's leasing of additional office space in Mendoza, Argentina, printing
and copying expenses and the costs of preparing shareholder reports and investor
relations materials.

     The write-off of mineral property and deferred exploration costs was $0.5
million in 1996, compared with $1.0 million in 1995. The Corporation's
exploration program involves nearly continuous prospecting, acquisition,
exploration and evaluation of property interests. If a property does not meet
the Corporation's requirements, costs associated with the abandonment of the
property will result in a charge to operations. The Company expects to incur
additional write-offs in future periods, although the amounts of such write-offs
are difficult to predict as they will be determined by the results of future
exploration activities.

     Total mineral property costs and exploration costs were $2.1 million in
1996 and in 1995, but there were some significant differences within categories
of expenditure in 1996 compared to 1995. In 1996 the Corporation reached a more
advanced stage of work on several properties. As a result, the Corporation
incurred greater expenses in 1996 than in 1995 for construction, trenching and
drilling, with the bulk of these expenses being incurred on the 100%

                                       14

owned La Horqueta property. Proceeds were received from the mineral property
options granted to Newcrest Resources, Inc., a subsidiary of Newcrest Mining
Ltd. of Australia ("Newcrest") (on Agua Blanca), and Cominco Ltd. ("Cominco")
(on Santa Clara and Pino Andino), which offset deferred acquisition and
exploration costs. Under the terms of the agreement with Cominco, 25% of the
amount received from the Cominco private placement was spent during 1996 on
continuing exploration and road building at the Santa Clara and Pino Andino
properties. After the effect on operations of the write-offs described above and
the offsetting impact of option payments, deferred expenditures related to
mineral properties and exploration increased from $2.5 million in 1995 to $3.4
million in 1996.

Liquidity and Capital Resources

     Due to the nature of the mining business, the acquisition, exploration and
development of mineral properties requires significant expenditures prior to the
commencement of production. To date, the Corporation has financed its activities
through the sale of equity securities and joint venture arrangements. The
Corporation expects to use similar financing techniques in the future.

     The Corporation's exploration and development activities and funding
opportunities, as well as those of its joint venture partners, may be materially
affected by precious and base metals price levels and changes in those levels.
The market prices of precious and base metals are determined in world markets
and are affected by numerous factors which are beyond the Corporation's control.

     At June 30, 1997 the Corporation had cash and cash equivalents of $6.5
million, compared to cash and cash equivalents of $3.5 million as of June 30,
1996. This significant increase in the Company's cash and equivalents position
is due to the receipt of proceeds from the Corporation's 1996 equity financings.
Working capital at June 30, 1997 was $6.5 million.

     Net cash used in operating activities during 1996 was $0.7 million,
compared with $0.5 million in 1995. This reflects the additional general and
administrative expenditures as a result of the Corporation being a Canadian
reporting company for the full 1996 year.

     Financing activities during the six months ended June 30, 1997 and during
1996 included two equity private placements, principally in Canada, the Cominco
private placement and the issuance of Common Shares upon exercise of warrants.
See "Properties - Santa Clara Project Summary." Funds received from the
Corporation's December 1996 private placement are shown as subscriptions
received at year end given that the Common Shares were not issued until the
second quarter of 1997 following Canadian regulatory approval of the related
Prospectus. Funds received during the six months ended June 30, 1997 totaled
$1.7 million as a result of the exercise of previously issued warrants. The
Corporation's working capital improved during 1996 also as a result of the
Corporation's satisfaction of a debt of $1.14 million owing to Degerstrom in
connection with a private issuance of Common Shares to Degerstrom. See "Certain
Relationships and Related Transactions."

                                       15

     Net cash used in investing activities during 1996 was $1.5 million,
compared to $2.1 million for 1995. This reflects a relatively comparable level
of mineral property and exploration expenditures during 1996 and 1995, with the
advantage in 1996 of the Corporation receiving $0.7 million from mineral
property option proceeds.

ITEM 3.     DESCRIPTION OF PROPERTIES

     The principal business of the Corporation is the exploration and
development of mineral properties ("Claims") located in the Republic of
Argentina. The Corporation's interests in the Claims are held through MASA and
NADSA. MASA holds properties and is the company in which the daily business
operations are conducted. NADSA holds properties and drilling equipment under a
temporary importation permit. MASA and NADSA were formed and registered as
mining companies in order for the Corporation to receive the benefits of the new
mining laws in Argentina. The principal properties of the Corporation are
described under the heading "Principal Properties" below.

The Degerstrom Agreement

     A number of the Claims were originally held by Degerstrom. Pursuant to the
March 1995 Asset and Share Acquisition Agreement to which the Corporation, MASA,
NADSA and Degerstrom are parties (the "Degerstrom Agreement"), Degerstrom
transferred its interest in those Claims to NADSA and MASA in consideration for
a royalty. Degerstrom also conveyed the MASA and NADSA capital stock it held to
the Corporation. In consideration for those shares, Minera Andes (i) issued to
Degerstrom 4,000,000 Common Shares and the right to acquire an additional
1,213,409 Common Shares if any of the properties comprising the Claims became
the subject of a Bankable Feasibility Study, (ii) agreed to pay a royalty on any
existing or future properties held by the Corporation or its affiliates as
described below, and (iii) agreed to pay the aggregate amount of the cost and
expenses incurred by Degerstrom on behalf of the Corporation from July 1, 1994
through March 15, 1995. Minera Andes also acquired from Brian Gavin, an officer
of the Corporation, the shares he held in MASA.

     The royalty payable to Degerstrom by both NADSA and MASA will be a
percentage of the net smelter return earned on those Claims or any future Claims
acquired by those parties. The Claims are subject to a royalty equal to the
difference between 3 percent and the Underlying Royalty, subject to a maximum
royalty of 2 percent. If any party acquires all or part of the Underlying
Royalty, the royalty payable, if any, to Degerstrom will not increase. If
Degerstrom collects a royalty on any of the Claims held by the parties, each
party shall at any time have the option, upon giving notice to Degerstrom, to
repurchase up to one-half of the royalty payable to Degerstrom upon payment of
$1,500,000, for each one percent of the royalty repurchased.

     NADSA, MASA, Degerstrom and the Corporation also entered into an Operating
Agreement, appointing Degerstrom as operator of the Claims and any future Claims
acquired in Argentina. Under the terms of the Operating Agreement, Degerstrom
operates and manages the

                                       16

exploration program on all properties and provides related offsite
administrative assistance as required. In consideration for these operating
services, Degerstrom is entitled to reimbursement for its costs of labor,
materials and supplies incurred in connection with its services plus an
additional 15% of such costs as a management fee. Included in the Operating
Agreement are fixed rates for the equipment owned by Degerstrom. Degerstrom has
the right to terminate the Operating Agreement if the Corporation does not
maintain a program and budget in excess of Cdn $300,000 per year. If the
Corporation elects to develop a property and contract with a third party for
development or production, the Corporation must give notice to Degerstrom of the
terms and conditions of the proposed arrangement. Degerstrom has the right for a
period of 30 days to meet the contract bid by a third party.

                              PRINCIPAL PROPERTIES

Recent Mining and Economic History in Argentina

     Argentina is the second largest country in South America, over 2.7 million
square kilometres in area. In 1983, Argentina returned to a multi-party
democracy, which brought to an end nearly a half century of military
intervention and political instability. The country then began to stabilize;
however, it was not until 1989, with the election of the current government
under president Carlos Menem, that Argentina's economy began to improve. Menem
initiated serious economic reforms that included the privatization of many state
companies and the implementation of the Convertibility Plan, which fixed the
Argentine peso to the US dollar at par, fully backed by reserves of foreign
exchange, gold and dollar-denominated bonds of the Central Bank of Argentina.
Results of the reforms have been positive; Argentina's gross domestic product
grew at up to 8% per annum in the early 1990's and inflation has dropped to
between 1 and 3% per annum. However, Argentina is currently recovering from a
recession. The government is focused on diversifying the economy to increase
exports and decrease Argentina's dependency on imports. The country is
encouraging foreign investment.

     The government is actively revitalizing the mineral sector. In 1993, the
Mining Investments Act instituted a new system for mining investment to
encourage mineral exploration and foreign investment in Argentina. Key
incentives provided by the Act include: guaranteed tax stability for a 30 year
period, 100% income tax deductions on exploration costs, accelerated
amortization of investments in infrastructure, machinery and equipment, and the
exemption from import duties on capital goods, equipment and raw materials used
in mining and exploration. Repatriation of capital or transfer of profits are
unrestricted. Argentina's mineral resources, owned by its 23 provinces, are
subject to a provincial royalty capped at 3% of the "mouth of mine" value of
production, although provinces may opt to waive their royalties.

     Argentina's mineral potential is largely unknown, particularly in
comparison to that of its immediate neighbors. Until recently, Argentina has
been relatively underexplored and, as a consequence, there is a lack of
information pertaining to the country's resource base. Copper and gold
mineralization discovered to date occurs predominantly in the southern Andean
copper belt which extends over 1,000 km through northwestern Argentina. Deposits
that are currently

                                       17

under development include the Bajo de la Alumbrera, Agua Rica and El Pachon
deposits. In addition, gold deposits are concentrated in the Argentine portion
of the Central Andes' Maricunga-El Indio gold belts and in the newly discovered
Santa Cruz gold belt in southern Patagonia.

     In 1989, fewer than a dozen foreign exploration companies had offices in
Argentina; currently there are approximately 60 such companies. Exploration
expenditures have grown from $5 million in 1991 to over $90 million in 1995.

     The Corporation initiated gold exploration in Argentina in 1991, in
conjunction with Degerstrom. As of May 1997, the Corporation had Argentine
landholdings totalling 209,377 hectares ("Ha") in six Argentine provinces
(Figure 1). The Corporation's exploration efforts initially focused on
evaluating prospects generated by 1960's United Nations development exploration
programs and on targets generated by satellite image analysis. The Corporation
developed techniques of processing and interpreting satellite imagery to assist
in identifying promising exploration targets. Currently, the Corporation is
completing exploration work that includes geophysical surveys, mechanical
trenching and reverse circulation drilling on the most advanced targets in their
property portfolio, and conducting grassroots exploration to evaluate their
other properties and to generate new targets.

Property And Title

     The laws, procedures and terminology regarding mineral title in Argentina
differ considerably from those in the United States and in Canada. Mineral
rights in Argentina are separate from surface ownership and are owned by the
federal government or the provinces, depending on the territory in which they
are located. Mineral rights are administered by the provinces. The following
summarizes some of the Argentinean mining law terminology in order to aid in
understanding the Corporation's land holdings in Argentina.

1. Cateo: A cateo is an exploration concession which does not permit mining but
gives the owner a preferential right to a mining concession for the same area.
Cateos are measured in 500 Ha unit areas. A cateo cannot exceed 20 units (10,000
Ha). No person may hold more than 400 units in a single province. The term of a
cateo is based on its area: 150 days for the first unit (500 Ha) and an
additional 50 days for each unit thereafter. After a period of 300 days, 50% of
the area over 4 units (2,000 Ha) must be dropped. At 700 days, 50% of the area
remaining must be dropped. Time extensions may be granted to allow for bad
weather, difficult access, etc. Cateos are identified by a file number or
"expediente" number.

Cateos are awarded by the following process:

     (a)  Application for a cateo covering a designated area. The application
          describes a minimum work program for exploration;
     (b)  Approval by the province and formal placement on the official map or
          graphic register;

                                       18

     (c)  Publication in the provincial official bulletin;
     (d)  A period following publication for third parties to oppose the claim.
     (e)  Awarding of the cateo.

The length of this process varies depending on the province, and commonly takes
up to 2 years. Accordingly, cateo status is divided into those that are in the
application process and those that have been awarded. If two companies apply for
cateos on the same land, the first to apply has the superior right. During the
application period, the first applicant has rights to any mineral discoveries
made by third parties in the cateo without its prior consent. While it is
theoretically possible for a junior applicant to be awarded a cateo, because
applications can be denied, the Corporation knows of no instances where this has
happened.

     Applicants for cateos may be allowed to explore on the land pending formal
award of the cateo, with the approval of the surface owner of the land. The time
periods after which the owner of a cateo must reduce the quantity of land held
does not begin to run until 30 days after a cateo is formally awarded. The
Corporation's goal is to determine whether its cateos contain commercial grade
ore deposits before portions of the cateos must be relinquished. The
Corporation's ability to do so is dependent upon adequate financing for
exploration activities. It is likely that several of the Corporation's cateos
will be relinquished after preliminary exploration because no promising mineral
deposits have been discovered.

     Until August 1995, a "canon fee", or tax, of $400 per unit was payable upon
the awarding of a cateo. A recent amendment to the mining act requires that this
canon fee be paid upon application for the cateo.

2. Mina: To convert an exploration concession to a mining concession, some or
all of the area of a cateo must be converted to a "mina". Minas are mining
concessions which permit mining on a commercial basis. The area of a mina is
measured in "pertenencias". Each mina may consist of two or more pertenencias.
"Common pertenencias" are six Ha in size and "disseminated pertenencias", 100 Ha
(relating to disseminated deposits of metals rather than discrete veins). The
mining authority may determine the number of pertenencias required to cover the
geologic extent of the mineral deposit in question. Once granted, minas have an
indefinite term assuming exploration development or mining is in progress. An
annual canon fee of $80 per pertenencia is payable to the province.

Minas are obtained by the following process:

     (a)  Declaration of manifestation of discovery ("MD"), in which a point
          within a cateo is nominated as a discovery point. The MD is used as a
          basis for location of pertenencias of the sizes described above. MD's
          do not have a definite area until pertenencias are proposed. Within a
          period following designation of an MD, the claimant may do further
          exploration, if necessary, to determine the size and shape of the
          orebody.

                                       19

     (b)  Survey ("mensura") of the mina. Following a publication and opposition
          period and approval by the province, a formal survey of the
          pertenencias (together forming the mina) is completed before the
          granting of a mina. The status of a surveyed mina provides the highest
          degree of mineral land tenure and rights in Argentina.

3. Estaca Minas: These are six-Ha extensions to existing surveyed minas that
were granted under previous versions of the mining code. Estaca minas are
equivalent to minas. Estaca minas were eliminated from the mining code in August
1996.

4. Provincial Reserve Areas: Provinces are allowed to withdraw areas from the
normal cateo/mina process. These lands may be held directly by the province or
assigned to provincial companies for study or exploration and development.

     All mineral rights described above are considered forms of real property
and can be sold, leased or assigned to third parties on a commercial basis.
Cateos and minas can be forfeited if minimum work requirements are not performed
or if annual payments are not made. Generally, notice and an opportunity to cure
defaults is provided to the owner of such rights.

     Grants of mining rights include water rights, subject to the rights of
prior users. Further, the mining code contains environmental and safety
provisions, administered by the provinces. Prior to conducting operations,
miners must submit an environmental impact report to the provincial government,
describing the proposed operation and the methods to be used to prevent undue
environmental damage. The environmental impact report must be updated
biennially, with a report on the results of the protection measures taken. If
protection measures are deemed inadequate, additional environmental protection
may be required. Mine operators are liable for environmental damage. Violators
of environmental standards may be caused to shut down mining operations.

General Discussion of Andean Geology as it Relates to Mineral Deposits

     The Andes Mountain Range running along the western edge of South America,
including the western portions of Argentina, is a dynamic portion of the earth's
crust. Conditions there have been favorable for the formation of metal ore
deposits for the past 100 million years. Since the late 1960's geologists around
the world have realized that the continents and ocean floors of the earth's
crust consist of many individual plates which move against each other, more or
less "floating" on the next deeper layer of the earth, referred to as the
mantle. Where these crustal plates rub against each other, earthquakes are
common. Where one plate is overridden by another (referred to as a "subduction
zone"), the lower plate may partially melt, causing liquid rock to rise through
the plates.

     In particular, along the western edge of South America, the Pacific Ocean
floor is being overridden by South America, creating many folds and faults in
the edge of the continent, with attendant earthquakes. As the ocean floor is
pushed under the continent, parts of the slab (up to

                                       20 

70 km thick) are melted and rise upward, intruding into the crust of South
America. Some of this melted rock cools underground, creating bodies of granite.
The granite may later be exposed by erosion of the mountain ranges. Other
portions of the molten rock reach the surface and form the volcanoes of the
Andes. With the molten rock come superheated fluids that carry sulphur and
metals such as copper and gold. These minerals are deposited in and around the
intrusive and volcanic rocks. Persistent hot springs, as in Yellowstone National
Park, may concentrate deposits of metals. Weathering of ore deposits can cause
metals in the rock and soil to dissolve and be concentrated at lower levels.

     There has been relatively continuous intrusive and volcanic activity along
the Andean chain for over 100 million years, creating a very good environment
for metal deposits. As explained above, while numerous gold and copper deposits
have been developed in the Andes Mountains in neighboring Chile, the similar
terrain in Argentina has only recently been opened to exploration. Minera Andes
was one of the first companies to obtain valuable exploration rights in
Argentina, and has a substantial number of promising properties which it is
systematically exploring for metal deposits.

                                       21

Minera Andes Properties

     The sections that follow discuss certain of the properties that are or have
been the subject of joint venture agreements with third parties or which have
been more intensively explored by the Corporation.

                                    Figure 1

           [Map illustrating Minera Andes current projects and mines]


                                       22

A.   Santa Clara Project Summary

     1.   Santa Clara Project Location

     The Santa Clara project area is located in northwest Mendoza Province,
approximately 63 km west of the city of Tupungato, at latitude 33(degree)12'00"S
and longitude 69(degree)37'00"W. Good road access exists to the project area and
a 25 km gravel road was recently constructed to fully access the property.
Elevations at Santa Clara range from 2,500 m to 4,600 m with moderate to rugged
relief. The climate permits exploration work for approximately eight months of
the year, as snow and cold temperatures hinder working in the winter months.

     2.   Santa Clara Project Exploration

     The Santa Clara project was first explored in the 1960's under the United
Nations-Argentine Government Plan Cordillerano. The property was recognized as
hosting porphyry copper potential and an exploration campaign consisting of
geological mapping, geochemical surveys (stream sediment, soil and rock chip)
and an induced polarization geophysical survey was completed. In addition, a
total of 2,037 m of diamond drilling was completed in 28 holes to depths ranging
from 70 m to 110 m). In 1982-83, Fabricaciones Militares, the mining branch of
the Argentine military, explored the Quebrada del Medio area, south of Tres
Quebradas, for molybdenum. The work consisted of geologic mapping, planimetric
surveys, an induced polarization geophysical survey and two drill holes, drilled
to depths of 210 m and 250 m. The holes intersected granitic porphyry, with
argillic alteration and disseminated pyrite, traces of chalcopyrite, molybdenite
and chalcocite. None of the samples collected during these periods of
exploration were analyzed for precious metal content.

     Phase I work on the Santa Clara Project consists of road construction and
diamond drilling, and has been partially completed. Phase II work at Santa Clara
is projected to consist of additional road construction and 5,000 meters of
reverse circulation drilling at Quebrada del Azufre, contingent upon Phase I
work producing reasonable indications of potentially economic quantities and
concentrations of copper (with or without gold, silver or molybdenum) sufficient
to justify additional work. Phase II work also includes road building, geologic
and geophysical surveys at Quebrada del Norte and Tres Quebradas.

     3.   Santa Clara Project Geology

     The Santa Clara project is located within metamorphic and intrusive rocks
of the Frontal Cordillera. Basement rocks at Santa Clara comprise metasediments
and igneous rocks and volcanic sediments ranging in age from billions of years
old to about 300 million years old. These rocks are intruded by granite and
other intrusive and volcanic rocks with ages ranging from 200 million years old
to the present. These igneous rocks are being generated as the Pacific Ocean
floor is continually thrust under South America, into the

                                       23

earth's upper mantle. Portions of the descending ocean floor melt and rise
beneath the Andes, producing intrusive rocks and volcanoes. These molten rocks
also bring superheated fluids containing sulphur and metals such as copper and
gold. The superheated fluids contribute to the formation of ore deposits.

     4.   Summary of Work Completed

     In 1994, Minera Andes initiated an aggressive exploration program to
evaluate the Santa Clara property's potential of hosting gold mineralization
associated with, or peripheral to, the copper porphyry system. The initial work
included property-wide prospecting and stream sediment sampling survey.
Analytical results clearly defined the porphyry copper center at Tres Quebradas
and its associated base-metal zonation. In addition, four areas of anomalous
gold values were outlined; Tres Quebradas (north of the copper zone), Quebrada
del Norte, Quebrada del Azufre and Arroyo Metales. Each of these targets was
systematically explored by detailed mapping and sampling in subsequent
exploration programs. A total of 1200 rock samples were collected and analyzed.

     Phase I work has consisted of road construction and diamond drilling and
was partially completed by Cominco. The construction of 25 km of road to better
access the Santa Clara property was completed in July 1996. The current focus of
exploration at Santa Clara is the evaluation of the area's porphyry copper
potential.

     5.   Cominco Agreement

     The Corporation signed a Memorandum of Understanding in March 1996 with
Cominco providing for a joint venture on the Santa Clara and Pino Andino
properties. Cominco had an option to earn a 51% interest in the Santa Clara
property by making cash payments of $250,000 and funding exploration over four
years up to $5,000,000 and paying all associated option and land payments.
However, after compiling and evaluating data on the Santa Clara and Pino Andino
properties during the first six months of 1997, Cominco terminated the
Memorandum of Understanding with respect to Pino Andino in February 1997 and
with respect to Santa Clara in July 1997.

     As part of the Memorandum of Understanding, Cominco purchased from the
Corporation 877,194 Units (the "Cominco Units") for a price of Cdn $3,000,003.
Each Cominco Unit consists of one Common Share and one warrant to purchase
Common Shares. Two Cominco Warrants entitle Cominco to purchase one Common Share
at a per share price of Cdn $3.98 until May 10, 1998. See "Description of
Securities." The Corporation used twenty-five percent of the Cdn $3,000,003 for
exploration of Santa Clara and Pino Andino.

     Through April 1, 1997, the Corporation and Cominco expended a total of
$841,809 at the Santa Clara project. The Corporation is currently evaluating the
results of recent work at Santa Clara and continues to believe that the
prospects for Santa Clara are promising.

                                       24

     6.   Santa Clara Project Ownership

     The Santa Clara project comprises at total of 26,720 Ha in 8 cateos and 14
manifestations of discovery. All landholdings are currently held by MASA under
an option to purchase agreement, or directly.

     MASA is party to an option-to-purchase agreement with Carotti and
Giustozzi, of the city of Mendoza. MASA can earn 100% interest in the property
by making payments totalling $1,950,000 by October, 1998. The property is
subject to a 0.5% net smelter return royalty to the owner or, in the case of
their cateo being superseded by a manifestation of discovery from an adjacent
cateo belonging to MASA, a 2.5% net smelter royalty on ore mined from their
cateo capped at the total option price. MASA may also exercise the Santa Clara
option at any time by paying the balance in five semi-annual payments from the
date of exercise.

     On June 30, 1995, the owners and the Corporation signed a complementary
agreement to the option to purchase agreement postponing all but $5,000 of the
scheduled $35,000 payment due on July 5, 1995 to December 15, 1995. On December
13, 1995, a second complementary agreement was signed which extended the term of
option to purchase agreement from May 12, 1998 to October 15, 1998 and
rescheduled the payments due under the option to purchase contract. This was
done because two of the seven cateos and one of the twelve manifestations of
discovery were pending in a provincial park boundary dispute which could have
affected a portion of the property. The boundaries of the Volcan Tupungato
Provincial Park were extended in April 1994 to cover sixty percent of the
pre-existing mineral rights at Santa Clara. This status would have prohibited
mining. The provincial mining authorities confirmed the validity of the mining
rights at Santa Clara in January 1996, and permission was received for continued
exploration in March 1996. Provincial Law 6459 was passed on January 2, 1997 to
exclude existing mineral properties from the provincial park.

     Through April 1, 1997, option payments totalling $175,000 have been made
and the Corporation expects to make approximately $125,000 in additional
payments over the next twelve month period.

     Canon fees due on these Santa Clara properties in 1997 total $12,280. Mina
survey costs are estimated at $30,000 for 1997. Mendoza province has waived its
rights to a royalty.

                                       25

B.   Pino Andino Project Summary

     1.   Pino Andino Project Location

     The Pino Andino project property package currently consists of three
individual contiguous properties: the Pino Andino reserve area, the Mulichinco
cateo and the Dos Guanacos properties.

     The Pino Andino Project is located 250 km northwest of the city of Neuquen,
in Neuquen Province at latitude 38(degrees)02'00"S and longitude
70(degrees)29'00"W. Year-round access is provided to the property by well-
maintained gravel roads from the city of Loncopue, located 20 km west of the
project area. A network of smaller roads accesses most of the property.
Topography in the area consists of gentle rolling hills; elevations range from
900 m to 2,300 m. Outcrop is limited to hills and drainages. The climate is
arid, with hot, dry summers and mild winters that allow for year-round
exploration. Basic supplies can be purchased in Loncopue.

     2.   Pino Andino Project Exploration

     Phase I work at Pino Andino consisting of road construction (2 km) and 1000
m of reverse circulation drilling was completed in May 1997. Assessment of the
results of this work is currently in progress. A Phase II program of road
construction, 2,000 m of reverse circulation drilling and associated geologic
studies is planned, contingent on the results of Phase I work demonstrating a
reasonable potential of economic quantities and concentrations of gold and/or
copper on the property.

     3.   Pino Andino Project Geology

     The Pino Andino project area is principally underlain by Jurassic
sedimentary rocks that dip gently to the east into the Neuquen Basin. The
Jurassic sequence comprises black shales and lesser sandstone, tuffaceous
sandstone, tuffs and limestones. Bedded anhydrite occurs in the uppermost
Jurassic rocks. Cretaceous diorite and granodiorite intrudes the Jurassic
sequence in the western property area. The stocks are part of an extensive
north-south belt of intrusions, and possibly are apophyses of a large batholith
at depth. Late Tertiary to Quaternary tuffs occur in the extreme west. This
unit, and the basalt remnants that occur at high elevations in the center of the
property, are manifestations of recent volcanic activity that occurred to the
west, in the principal cordillera.

                                       26

     A high angle fault (or faults) is interpreted to occur along the western
margin of the project area and forms the eastern boundary of the Loncopue
graben. Poorly defined, high angle splays of this fault have been identified on
satellite images of the area.

     4.   Summary of Work Completed

     Since the acquisition of the property in 1994, MASA has completed
property-scale and detailed exploration work at Pino Andino, including a 10 hole
reverse circulation drill program in 1995 and ground geophysical surveys in
1996. Results outlined a zone of gold mineralization and a potentially large
zone of copper porphyry mineralization. The nature of the topography at Pino
Andino hinders exploration as only limited outcrop occurs. The following is a
summary of work completed to date on the project.

     In 1994, the regional geology of the area was compiled at 1:50,000 using
satellite images, air photos and field investigation. A 400-sample regional
stream sediment sampling program was completed, the results of which defined an
area anomalous in gold, copper, arsenic and mercury north of Arroyo Mulichinco
at Barite Hill.

     Follow-up examination of the stream sediment anomaly located the area of
historic barite prospecting at Barite Hill. Barite veins, to 1 m widths, occur
in Jurassic sandstones, tuffaceous sandstones and conglomerates which are
intruded and hydrothermally altered by Cretaceous granodiorite to diorite
intrusions. Quartz-barite-pyrite veins occur in a zone of structurally
disturbed, silicified and sericitized tuffaceous sandstones over an area 2 km by
4 km in size. A thin bed of silica-barite replacing limestone occurs in the
northeastern part of Barite Hill.

     A program comprising soil sampling and rock chip sampling was completed
over the Barite Hill area on a 2 km2 grid of 100 m line spacings and 50 m
station intervals. In addition, channel sampling was completed on the east side
of Barite Hill. A total of 730 soil samples and 287 rock chip samples were
collected. Results outline a broad gold-copper soil anomaly (greater than 30 ppb
Au, greater than 30 ppm Cu) over a 1.5 km x 2 km area. Within this zone, strong
gold and copper soil anomalies (50-500 ppb Au, 50-500 ppm Cu) occur in the
southwest, northwest and east. The strongest gold anomalies are associated with
zones of sericitization, silicification and quartz-pyrite-barite veining. The
southwest gold and copper soil anomaly terminates at the contact of Tertiary
unlithified tuffs. The anomaly may persist in Jurassic rocks that underlie the
Tertiary deposits.

     Rock chip sample results returned anomalous gold and copper values (greater
than 100 ppb Au, greater than 500 ppm Cu), commonly in the areas of anomalous
soil samples. Twenty six samples returned gold values greater than 1 g/t Au and
91 samples greater than 100 ppb Au. A sample of silicified, tuffaceous sandstone
returned 5,411 ppb Au. Anomalous gold values are associated with zones of
silicification, sericitization and/or quartz-barite-pyrite veins.

                                       27

     Anomalous copper values (1,000 ppm - 7,000 ppm Cu) occur in rocks in the
southwest area, at Copper Canyon, and in the center of the Barite Hill area (500
ppm to 1,500 ppm Cu). Copper mineralization is associated with sericitization
and potassic alteration.

     In late 1995, a 10 hole, 1,005 m reverse circulation drill program was
completed at Pino Andino. The holes were targeted to test soil geochemical
anomalies in an area of relatively sparse outcrop. Eight of 10 holes returned
significant intercepts of copper and/or gold mineralization. Hole PA-3
intersected hydrothermally altered tuffaceous sediments that ran 1.2 g/t Au over
55 ft. Hole PA-5 intersected 0.32% Cu over 305 ft., hosted in argillically
altered tuffaceous sediments and diorite. A 190 ft. intercept in PA-9 returned
0.38% Cu, including 45 ft. of 0.52% Cu and 35 ft. of 0.51% Cu. The best
intersections in PA-7 and PA-8 were 60 ft. of 0.32% Cu, 0.20 g/t Au and 35 ft.
grading 0.29% Cu, 0.15 g/t Au respectively. Gold values ranged to 10 ft. of 0.87
g/t Au in PA-8 and 5 ft. of 0.98 g/t Au in PA-9. Hole PA-10 did not intersect
significant mineralization.

     In 1996, with Cominco as operator of the joint venture a topographic map
was prepared for the Pino Andino area. An exploration program including
geophysical surveys and reverse circulation ("RC") drilling was initiated.
Approximately 37.5 km of induced polarization and 55.3 km of ground magnetic
survey were completed. The results of these surveys indicate the presence of two
strong chargeability anomalies; one in the area of 1995's drilling and having
characteristics consistent with the signature of Cu-Au porphyry mineralization,
the other 1 km to the southwest that may represent a structurally controlled
zone of gold mineralization peripheral to a porphyry system. Magnetic survey
data indicates that zones of magnetic lows coincide with the chargeability
anomalies, and may represent the destruction of magnetite in an altered
intrusion. In addition, 113 rock chip samples were collected and alteration
mapping was done over a 10 sq. km area.

     Also in 1996, Cominco planned and executed a campaign of RC drilling (10
holes totalling 2,000 m). Five holes tested I.P./Resistivity anomalies
coincident with magnetic lows, four holes tested geological targets and one hole
tested a combined geological/geochemical target. The drill holes intersected
mostly pyritic mineralization (1-5 vol%) with local traces of chalcopyrite,
chalcocite and sphalerite hosted in sericitically altered tuffaceous sandstones.
Mineralized intersections are summarized in the table below. Enrichment appears
to be poorly developed. Cominco concluded that within the drill zone there is
little possibility of encountering an open pittable economic reserve (i.e. in
the top 200 m). Work by Cominco did not include additional exploration of the
gold mineralization encountered in drill holes PA-1, 2 and -3. Cominco
terminated the Memorandum of Understanding with regard to Pino Andino in
February 1997.

     The Corporation recently completed a drilling program on the gold targets
at Pino Andino and results are pending.

                                       28

     5.   Pino Andino Project Ownership

     The Pino Andino Project is comprised of three individual contiguous
properties:

     a.   Pino Andino Reserve Area

     The Pino Andino reserve area was acquired under an October 1994 exploration
contract with a mining option from CORMINE S.E.P., a provincial corporation.
Terms of the agreement call for MASA to make monthly exploration payments of
$0.07 per hectare. Work commitments total $850,000 over four years and a 2% net
smelter return royalty from production is payable. Rental payments for 1997
amount to $10,511.

     The land originally contracted from CORMINE was reduced from 29,840 Ha to
10,163 Ha. and subsequently amplified to 12,513 Ha. Areas evaluated and deemed
without exploration potential were returned to reduce land holding costs.

     Province of Neuquen presently has no net smelter royalty in place on
mineral properties.

     b.   Dos Guanacos (Gonzalez)

     MASA has entered into a four-year option-to-purchase contract dated March
30, 1995, with Gonzalez et al. on a group of minas within the reserve area and
the Mulichinco cateo (see below). Under the terms of the contract MASA can earn
a 100% interest in the properties by making quarterly rental payments of $6,000
totalling $96,000 over four years with an option-to-purchase of $200,000. This
is all subject to a 1% net smelter return royalty. Rental payments for 1997
total $24,000 on the minas. The contracted land consists of 410 hectares.

     c.   Mulichinco

     The Mulichinco makes up the remainder of the property in the Neuquen
project area and consists of a cateo and a manifestation of discovery owned 100%
by MASA. The cateo has been granted and there are no holding costs. Holding
costs for the manifestation is $80 per year. Survey costs for converting the
manifestation of discovery to a mina are estimated at $10,000.

     Total area of lands under option or owned directly in the Pino Andino
project area is 14,570 hectares.

                                       29

C.   San Juan Project Summary

     1.   San Juan Project Location

     The San Juan Province Project comprises nine properties, located in the
southwestern province area. Access to the cateos is limited to all terrain
vehicles, mules or helicopter support. The general area is rugged, with
elevation ranges from 2,500 m to 5,500 m and moderate to high relief. Vegetation
is minimal and water runs only in the major drainages. The climate is typical of
mountainous terrain; cold and snowy winters limit exploration from June to
September.

     2.   San Juan Project Exploration

     No formal records of previous exploration in the project area exist. The
area's proximity to the Chilean border, where numerous Cu-Pb-Zn-Mo-Au showings
occur, is evidence that the Argentine side of the border must have been
prospected historically by both Argentines and Chileans. Evidence of prospecting
(small trenches or holes) exists on some of the cateos. The area is currently
active with predevelopment at the El Pachon copper deposit and advanced
exploration at the Araya (Cu), Los Piuquenes (Cu), Cenicero (Au) and La Poposa
(Au) projects.

     Through May 1997, Degerstrom and the Corporation have evaluated and dropped
eleven cateos in the San Juan Project area.

     MASA personnel are assessing their extensive landholdings within the San
Juan area. Results through May 1997 indicate that Los Chonchones has significant
gold/copper porphyry potential and merits detailed exploration. Phase I work
consisting of detailed geologic mapping, soil and talus sampling and a magnetic
survey is planned for the Los Chonchones property. Similar work, with the
addition of IP geophysical surveys, is planned for the Los Azules property. Also
included in Phase I is preliminary evaluation and/or follow-up mapping and
sampling of other Corporation properties. A Phase II program of road building,
trenching and 2,000 m of reverse circulation drilling is planned for one or more
of the properties shown by Phase I work to have reasonable potential for
economic quantities and concentrations of gold and/or copper.

     Through April 1, 1997, the Corporation has expended $363,994 on the San
Juan Project.

     3.   San Juan Area Project Geology

     The project area extends from the western margin of the Cordillera Frontal
to the Cordillera Principal. The area is principally underlain by Permo-Triassic
Choiyo Group volcanic rocks, a multiphase igneous sequence comprising volcanic
breccias, ignimbrites, tuffs and rhyolites, intruded by granites and overlain by
extrusive acidic volcanic rocks.

                                       30

Jurassic continental, marine and volcanic derived sedimentary rocks
unconformably overly Permo-Triassic rocks. The youngest rocks in the project
area comprise Tertiary volcanic and intrusive rocks, which are common hosts of
epithermal gold mineralization as evidenced by deposits in the Chilean Andes.

     4.   Summary of Work Completed

     The San Juan Province Project is a regional reconnaissance program, focused
on epithermal gold and gold porphyry targets in the eastern cordillera. Work
through June 1997 is divided into two categories: a) Work on lands controlled by
the Corporation; and, b) Generative work on lands being considered for
acquisition.

     a.   The Corporation Lands

     All of the cateos in the project were staked based on the results of
satellite image analysis which indicated the presence of colour anomalies,
possibly representing zones of hydrothermal alteration, in each of the areas.
Through June 1997, seven of the nine cateos in the project have been visited. A
preliminary field examination, including rock chip sampling and property-wide
stream sediment sampling was completed at each.

     The Los Chonchones property returned the most interesting results in the
project's preliminary survey and a second exploration program was completed on
the property in April 1996. The program included reconnaissance scale geologic
mapping and geochemical surveys. Mapping determined that Los Chonchones is
underlain by a thick sequence of Permo-Triassic andesites and tuffs, overlain by
a complex sequence of Tertiary tuffaceous andesites and rhyolites. Hornblende
diorite and porphyritic quartz latite intrude the sequence as dykes and sills.
Argillic alteration and iron oxide staining are widespread on the property and
correspond to the area of the satellite image colour anomalies. Sericitization
and silicification occur locally. Quartz veining, quartz stock working and
disseminated pyrite occur locally in the altered sequence. Potassic alteration,
with intense magnetite veinleting and traces of chalcopyrite mineralization,
occurs in the southwestern colour anomaly. A total of 53 rock chip, 69 stream
sediment and 9 sets of drainage samples (stream sediment, bulk extractable
leached gold and pan concentrates) were collected at Los Chonchones in 1995 and
1996. Results returned a number of anomalous gold and/or copper values in all
sample types, scattered throughout the colour anomalies and concentrating in the
center of the southwest anomaly. Several major mining companies are looking at
Los Chonchones for a possible joint venture.

     b.   Generative Program

     Due to the intense competitor activity in western San Juan province
generative work is concentrated on evaluating available third-party properties.
A large number of property submittals are under review by the Corporation.

                                       31

     To date, preliminary target generation and evaluation has discovered a zone
of hydrothermal alteration with anomalous copper and gold values at the Los
Chonchones property. Exploration work on this project has been limited to
property-scale mapping and sampling. The alteration and mineralization may be
indicative of a weak porphyry system. Additional work, consisting of detailed
(1:1000) mapping, grid sampling and a magnetometer survey should be completed in
order to establish the size and tenor of the mineralized system. A program of
preliminary field evaluation of the four cateos that have not yet been visited
and follow-up programs of mapping and sampling is planned for the other
properties in the project portfolio. Phase I generative work will continue and
will include additional satellite image processing and the acquisition of
geophysical data that has recently become available for the area.

     5.   San Juan Area Project Ownership

     The cateos, at present, are not subject to a royalty, however, the
government of San Juan has not waived its rights to retain up to a 3% "mouth of
mine" royalty from production. Property canons for all properties are $40,201
per annum. Mina survey costs are estimated to be $30,000.

D.   Agua Blanca Project Summary

     1.   Agua Blanca Project Location

     The Agua Blanca project is located approximately 220 km northwest of the
city of San Juan in San Juan Province, at latitude 30(degree)08'00"S, longitude
69(degree)45'00"W . The property lies in the southeastern extension of the El
Indio Gold Belt which hosts the El Indio, Tambo and Pascua (Nevada) epithermal
Au-Ag deposits. Agua Blanca is accessed by paved Provincial Route 436 to the
town of Las Flores, 180 km northwest of San Juan, and from there by 25 km of
gravel road to the base of the Quebrada Mondaca. A rough, four wheel drive road
continues 25 km up the quebrada to reach the center of the property. The city of
San Juan offers the most complete range of services and camp supplies.

     Elevations on the property range from 3,300 m to 5,300 m, with moderate
relief that permits foot access to most areas of the property. Vegetation is
limited to altiplano-type grasses and lichens. Water is plentiful in most of the
areas major drainages, but freezes in winter months. The climate is consistent
with semi-arid to arid Andean locations, hot dry days and cool nights for much
of the year. Winter months are snowy with sub-zero temperatures, which limits
exploration activity from June to September.

     2.   Agua Blanca Project Exploration

     Between 1985 and 1994, a number of limited prospecting and sampling
excursions were conducted in the Agua Blanca property area by the Asociacion
Cooperadora Instituto de Investigaciones Mineras ("ACIIM") in conjunction with
the property owner, Adonis Cantoni.

                                       32

Their work succeeded in outlining zones of intense hydrothermal alteration with
anomalous values of gold and silver, occurring in a quartz stock work and narrow
veinlets. Analytical results reported from their sampling include values from
0.4 g/t Au to 5.1 g/t Au in stockwork mineralization and 1.8 g/t Au to 12.0 g/t
Au in veinlets. ACIIM and Cantoni also examined the potential of alluvial gold
deposits in the area.

     Phase I work, consisting of road building and 5,000 m of reverse
circulation drilling, is planned to test areas of high potential recognized in
previous work and as yet untested targets. Phase II work of trenching, road
building and 10,000 m of reverse circulation drilling is planned contingent upon
Phase I work demonstrating a reasonable potential for economic quantities and
concentrations of gold and/or copper on the property.

     3.   Agua Blanca Project Geology

     The eastern portion of the property is underlain by Agua Blanca Formation
sedimentary rocks that are assigned a Carboniferous age, and by extensive
outcropping of the Permo-Triassic Colanguil Batholith granitoids. To the west,
volcanic rocks of probable Tertiary age predominate. The sequence of volcanic
rocks ranges in composition from andesite to rhyolite and includes flows, tuffs
and, possibly, volcanoclastic rocks. The stratigraphy strikes northerly and dips
gently to the east. A number of diorite plugs, which range from coarse grained
to porphyritic in texture, intrude the volcanic package.

     Exploration to date has focused on the Tertiary sequence in two main areas,
Quebrada Mondaca and Arroyo del Agua Blanca, where numerous zones of intense
hydrothermal alteration occur that are also visible on satellite images of the
area. Argillic (kaolinite) and sericitic alteration predominates in volcanic
rocks; intense potassic alteration occurs in diorite. Silicification occurs
locally in all rock types and magnetite veining to magnetite breccias occur
extensively throughout the dioritic unit. Weak, propylitic alteration is
widespread on the property. Disseminated pyrite mineralization occurs variably
throughout the zones of alteration. Minor chalcopyrite and arsenopyrite
mineralization occur locally, associated with potassic alteration and
silicification respectively.

     4.   Newcrest Joint Venture

     The Corporation signed an agreement in April 1996 with Newcrest creating a
joint venture relating to the Agua Blanca property. Newcrest was given the
option to earn a 51% interest in the joint venture by making exploration
expenditures of $3,800,000 over four years, paying all associated land and
option payments, and making cash payments totalling $350,000 during the first
year. Newcrest made a $100,000 cash payment to the Corporation upon formation of
the joint venture. After conducting a drilling program during 1996, Newcrest
elected to return the property to the Corporation in March 1997. The Corporation
is now responding to expressions of interest from other mining companies who
wish to 

                                       33

participate in exploration of the property. Management believes that the results
on the property to date justify further exploration expenditures.

     5.   Summary of Work Completed

     Since 1994, MASA has completed three exploration programs at Agua Blanca to
explore the Quebrada Mondaca and Arroyo del Agua Blanca areas. In 1995, MASA
constructed a 25 km road to access the property from the head of Quebrada
Mondaca drainage. Exploration efforts have included property-scale geologic
mapping, prospecting and detailed sampling. Results indicate that a gold or
copper-gold porphyry system of mineralization may exist in the area of the
Quebrada Mondaca headwaters where numerous rock chip samples returned anomalous
copper and/or gold values. The occurrence of arsenic, mercury and gold anomalies
peripheral to the Quebrada Mondaca headwaters may indicate epithermal gold-type
mineralization in that area. A total of 532 rock chip, talus and stream sediment
samples have been collected on the property.

     During the 1996 Newcrest evaluation period, the following work was
completed:

     a) Geologic mapping (1:5,000) and rock chip sampling in the target area at
the headwaters of Quebrada Mondaca. Some 330 rock chip samples and 144 trench
samples were collected. Geologic and alteration mapping was done over 24 sq km.

     b) Completion of 32 line kilometres of ground magnetics and 29 line
kilometres of I.P. Geophysical results were interpreted and integrated on-site
with magnetic susceptibility measurements and outcrop geology. A strong, EW
magnetic high defines the limits of known potassic altered intrusive outcrops,
whereas individual magnetic highs correlate with quartz-magnetite stock work
zones. Areas with magnetic signatures indicative of more consistent magnetic
character and deeper magnetic roots have been prioritized as drill targets.

     Chargeability anomalies identified by gradient I.P. surveys flank the
magnetic high, and appear to correspond in part to outcropping phyllic
(quartz-sericite-pyrite) alteration, and in part to propylitic assemblages which
also contain some disseminated pyrite. Overall, there remains the clear
suggestion of strong structural control on the distribution of alteration and
mineralization.

     c) Construction of approximately five kilometres of bulldozer access roads
and drill pads.

     d) In March 1997 Newcrest completed a 12-hole, 2819 meter RC drilling
program, which showed the area to be widely mineralized in both gold and copper.
Gold mineralization is present in both potassically altered rock, and, at higher
concentrations, in zones of phyllic alteration. The grade tends to improve with
depth. Potassic alteration, including zones of quartz-magnetite stockwork, and
phyllic alteration, are mapped as 

                                       34

scattered occurrences over an area in excess of ten square kilometers, and
extend from the site of the current drilling in Quebrada Mondaca into the
adjacent Quebrada Agua Blanca drainage. Additional drilling, particularly to
target the phyllic alteration zones, appears to be warranted.

     As of April 1, 1997, the Corporation had spent $532,012 on Agua Blanca.
Newcrest paid all expenditures on the project between April 1996 and March 1997,
and incurred expenses of approximately $429,000 during that time.

     6.   Agua Blanca Project Ownership

     The Agua Blanca is currently held by MASA under a four year
option-to-purchase with Adonis Cantoni dated June 21, 1995. This
option-to-purchase calls for option payments totalling $920,000 and a final buy
out of $1,080,000 to earn 100% interest in the property claims. The property is
subject to a net smelter royalty equal to the difference between 4.5% and the
amount charged by the province, with a maximum of 3% to the owner. Option
payments for 1997 amount to $115,000.

E.   Mendoza Project Summary

     The Mendoza Project is a regional program focused on epithermal,
porphyry-related, or skarn gold mineralization.

     1.   Mendoza Project Location

     The Mendoza Project consists of four MASA properties and a generative
program targeting the western or Andean part of Mendoza province. Access to the
properties is generally by pack animal as helicopter services are scarce and
unreliable at present. Most of the properties are workable on a seasonal basis
as they are located at elevations greater than 3000 metres in generally rugged
terrain with limited water and minimal vegetation.

     2.   Mendoza Project Exploration

     The cordilleran part of Mendoza Province was explored in the late 1960's
and early 1970's under the Plan Cordillerano of the United Nations and the
Argentine government. That program identified skarn copper and iron occurrences
as well as several significant copper and/or molybdenum resources and prospects.
The area of the Mendoza Project has historically been explored by individual
prospectors and small companies, and international mining and exploration
companies have acquired extensive land holdings in the past five years.

     Phase I work on the Mendoza project will consist of preliminary evaluation
and/or follow-up mapping and sampling of properties controlled by the
Corporation and a generative, reconnaissance program to identify lands for
acquisition. A Phase II program of 

                                       35

geologic and geophysical surveys, road building, trenching and 2,000 m of
reverse circulation drilling is planned for one or more of the properties shown
by Phase I work to have reasonable potential for economic quantities and
concentrations of gold and/or copper. Generative reconnaissance exploration to
identify lands for acquisition is projected to continue as part of Phase II work

     3.   Mendoza Project Geology

     The Mendoza project is focused on those areas of Cordilleran Mendoza that
are underlain by a generally north-trending fold and thrust belt Mesozoic
sedimentary rocks. The sediments include Jurassic, Cretaceous, and lesser lower
Tertiary units of marine and continental origin such as sandstones, siltstones,
limestones, and evaporites. These units host the numerous known skarn
occurrences in western Mendoza and are permissive for sediment-hosted epithermal
gold deposits.

     The Mesozoic sediments overlie a basement of Paleozoic metasedimentary and
igneous rocks, and were intruded by Tertiary stocks, dykes, and sills that are
generally of dioritic composition. The sediments are locally overlain by
Tertiary volcanics that are mostly andesitic and constitute possible hosts for
epithermal gold, and some cover is formed by Quaternary basalts.

     4.   Summary of Work Completed

     Work to date has consisted of evaluation of lands held by MASA and
generative exploration efforts.

     a.   MASA Properties

     Cateos held or controlled by MASA were selected on the basis of satellite
image anomalies, compilation of available geologic information, and/or the
presence of known alteration or mineralization. Evaluations conducted in 1995
and 1996 have led to the retention of two of six cateos previously held by MASA.
At the Palau Mahuida property, limited sampling to date in an area of silicified
and quartz-veined limestone identified an anomalous Au-As + Zn-Ag-Sb metal
association with up to 230 ppb Au. A colour anomaly near the Chilean border is
to be evaluated on the Paso Pehuenche property. Work in late 1996 identified a
large altered area and led to staking the Cerro de la Laguna cateo where sample
results to date show an extensive Hg anomaly that may represent the upper levels
of a gold-bearing epithermal system.

     b.   Generative Work.

     Generative work was started in November 1996 in areas of the Mesozoic
sedimentary belt that have open land, and this work will continue in conjunction
with evaluation of 

                                       36

property submittals. Other third-party properties have been examined for
possible acquisition, including San Ramon, where work to date has shown stream
sediments gold anomalies that will be followed up. Periodic review of the land
status in Cordilleran Mendoza will enable identification of additional
opportunities.

     Through April 1, 1997, the Corporation has expended a total of $321,741 on
Mendoza. The Mendoza Province Project has met with some encouragement in the
limited work that has been completed on the project. The area has demonstrated
potential of hosting epithermal gold, skarn type deposits due to the widespread
occurrence of carbonate rocks, or structurally controlled mineralization in
sedimentary rocks. A detailed Phase I exploration program would include mapping
(1:1000) and grid sampling and continued generative work, utilizing enhanced
satellite imagery and the acquisition of geophysical data that is available for
the area planned.

     5.   Mendoza Project Ownership

     The Mendoza project area properties are held as three applications for
cateos comprising 18,000 hectares owned by MASA. Land holding fees and
acquisition costs for 1997 are budgeted at $30,000.

F.   Santa Cruz Project Summary

     1.   Santa Cruz Project Location

     MASA's cateos in the province of Santa Cruz are located along the eastern
margin of the Andean Cordillera, near the Chilean-Argentine border. Access to
the properties varies considerably, and ranges from road access to the periphery
of the Bella Vista cateo to mule or helicopter access at Cerro Iwan, Rio Late
and San Lorenzo. Topography in this part of the province is rugged with areas of
moderate to intense relief, from 500 m to 3,000 m in elevation; a glacier caps
the mountain at San Lorenzo. The climate is cool and minor precipitation occurs
throughout the year. Vegetation consists of small shrubs, brush and grasses.
Water runs throughout the year in the area's larger streams and rivers. There
are numerous large lakes in the area.

     2.   Santa Cruz Project Exploration

     Until recently, the province of Santa Cruz was one of Argentina's
lesser-explored provinces. The area was included in the Argentine
government-United Nations' regional exploration Plan Patagonia-Comahue of the
1970's. In addition, FOMICRUZ, S.E., (Fomento Minero de Santa Cruz, Sociedad del
Estado), a government organization created in 1988 to develop and set guidelines
for mining and exploration in the province, also completed reconnaissance
surveys in the province to delineate areas of interest for mineral reserves.

                                       37

     The recent discovery of the Cerro Vanguardia epithermal gold deposit in
eastern Santa Cruz and the commencement of production at the Fachinal epithermal
gold deposit located immediately over the border in Chile, have instigated a
flurry of exploration activity in the province.

     The Corporation has expended approximately $160,000 through April 1, 1997,
on the Santa Cruz Project. The potential of discovering epithermal or
mesothermal precious metal deposits in the province of Santa Cruz is high,
attested to by the recent discoveries at Cerro Vanguardia and Fachinal. Phase I
work on the Santa Cruz Project consists of preliminary evaluation and/or
follow-up mapping and sampling of Corporation properties and a generative,
reconnaissance program to identify lands for acquisition. Preliminary evaluation
of the Santa Cruz cateos is completed and the Corporation is evaluating the
results. A Phase II program of geologic and geophysical surveys, road
construction, trenching and 2,000 m of reverse circulation drilling is planned
for one or more of the properties shown by Phase I work to have reasonable
potential for economic quantities and concentrations of gold and/or copper.
Generative reconnaissance exploration to identify lands for acquisition will
continue as part of Phase II work.

     3.   Santa Cruz Project Geology

     The Rio Late cateo is underlain by quartz-mica schists of the Paleozoic Rio
Lacteo Formation, silicic pyroclastic rocks of the Jurassic El Quemado
formation, and granodiorite of the Creteceous-Tertiary San Lorenzo complex
(Granodiorita Penitentes). The El Pluma I, El Pluma II, and Cerro Saavedra
cateos are underlain by andesitic to rhyolitic pyroclastic rocks of the Jurassic
Bahia Laura Group. The Bahia Laura Group rocks host the Cerro Vanguardia
epithermal gold deposit and are the target of MASA's generative program in Santa
Cruz province.

     4.   Santa Cruz Project Ownership

     The Santa Cruz project area is made up of four applications for cateos
totaling 29,332 hectares. The cateos are located in the western half of the
province of Santa Cruz.

     All of the cateos are presently controlled 100% by MASA subject to the
Degerstrom Agreement and may be subject to a provincial royalty. Holding costs
for 1997 are $8,000.

G.   Chubut Project Property Summary

     1.   Chubut Project Location

     A province-wide reconnaissance program is planned for the province of
Chubut. Currently, exploration in Chubut province is quite active. The base and
precious metal potential of the United Nations prospects are being reevaluated
by a number of major mining companies. Several hundred thousand acres of land
have been applied for in the province. 

                                       38

The Corporation does not have any cateos in Chubut province at the present time
as it abandoned its recent landholdings based on an exploration program
completed in 1995 and the first quarter of 1996.

     2.   Chubut Project Exploration

     Until recently, the province has received little exploration. The province
was included in the United Nations and Argentina government's Plan
Patagonia-Comahue in the 1960's and 1970's. Their work consisted of air photo
interpretation to outline areas of potential alteration, followed by regional
silt sampling and mapping programs. This campaign succeeded in delineating
several prospects that demonstrated weak to moderate base metal anomalies. The
samples collected during this period of exploration were not analyzed for their
precious metal content. The area remained dormant until the early 1990's, when
revisions to Argentina's mining regulations provided more favourable conditions
for exploration.

     The Corporation has expended $37,115 through April 1, 1997, on the Chubut
Project. The Chubut province hosts potential for precious and base metal
mineralization in Jurassic to Cretaceous rocks located on the eastern margin of
the Andean Cordillera. Phase I work on the Chubut Project will consist of
preliminary evaluation and/or follow-up mapping and sampling of properties
controlled by the Corporation and a generative, reconnaissance program to
identify lands for acquisition. A Phase II program of geologic and geophysical
surveys, road construction, trenching and 2,000 m of reverse circulation
drilling is planned for one or more of the properties shown by Phase I work to
have reasonable potential for economic quantities and concentrations of gold
and/or copper. Generative reconnaissance exploration to identify lands for
acquisition will continue as part of Phase II work.

     3.   Chubut Project Geology

     Jurassic-Cretaceous volcanic terranes have been the focus of exploration in
the southern Chilean Cordillera over the past decade. These rocks are potential
hosts of epithermal gold and gold rich replacement deposits attested to by the
discoveries, in Chile, at Fachinal (epithermal Au-Ag) and El Toque (base metal,
strata bound replacement deposit with a minor precious metal credit). In
Argentina, rocks of the same age and type occur in both Andean and extra-Andean
Patagonia which are relatively unexplored.

     Due to their genesis in both arc/subduction and extensional tectonic
environments and in their extrusion into both subaerial and submarine
depositional environments, the Jurassic-Cretaceous volcanic rocks of Argentine
Patagonia are prospective hosts of an array of mineral deposit types including
volcanogenic massive sulphides, volcanic and sediment hosted epithermal gold,
and mesothermal gold. In addition, potential exists for skarn-type
mineralization where subvolcanic intrusions occur in carbonate rocks.

     Work to date consists in the following:

                                       39

     Cordilleran Region: Evaluation of the north-south-trending belt of
intrusion-related gold-copper occurrences. Regional reconnaissance for other
styles of gold deposits.

     North Patagonian Massif: Exploration for epithermal gold deposits in
Jurassic volcanic terranes. Preliminary evaluation of the region's potential is
presently being undertaken.

     4.   Chubut Project Ownership

     The Corporation currently neither owns nor controls land in the province of
Chubut.

H.   Rio Negro Project Summary

     1.   Rio Negro Project Location

     A province-wide reconnaissance program is planned for the province of Rio
Negro. Two geologic terranes will be explored: The Northern Patagonian Massif
and Cordilleran Region.

     The Cordilleran Region encompasses the Andean mountain chain and its
eastern foothills and runs from approximately the city of Bariloche in Rio Negro
province southward to the border with Chubut. The western-most portions of this
mountainous area shared with Chile, consists of a rugged high relief terrain
(200-2,500 m) covered extensively by southern beech forests. Eastward, the
pre-cordilleran area consists of a basin and range type topography possessing an
extremely arid climate. Access to most of the region is excellent, with the
exception of the area immediately adjacent to the Chilean border, which is
largely roadless and heavily vegetated. The working season generally runs from
November to April. A paved highway runs the length of the region and both the
Atlantic and Pacific oceans are within a half-day drive. Electric and natural
gas lines serve the area. The southern-most passenger train in the world runs
from Ingeniero Jacobacci in Rio Negro to Esquel.

     The North Patagonia Massif is a vast region that encompasses a major
portion of the southern half of Rio Negro province, east of the Cordillera.
Geographically, the region is characterized by a relatively high base level (900
m) above which rise isolated subdued mountain ranges. The climate is dry and
cool; vegetation is sparse. The general working season runs from October to May
but can be year round in some locations. Vehicular access is generally good. The
region possesses an infrastructure of deep water Atlantic ocean ports on its
eastern border, a rail road on its northern border, and a system of paved roads
around its perimeter.

                                       40

     2.   Rio Negro Project Exploration

     Some of the areas have had small scale prospecting by individuals. At
present, exploration in the province is being done by Pegasus Gold, Rio Tinto
Zinc and others who have focused their attention on the area's epithermal gold
potential.

     To date, work by the Corporation in the area has been restricted to
air-photo interpretation and compilation of geologic data and field evaluation
of the following cateos: Cisneros, Puesto Flores, La Horqueta, Paja Alta, La
Veranada, Estancia Rio Chico and Arroyo Salado. All were dropped due to negative
results. Through April 1, 1997, the Corporation has spent $58,319 on the Rio
Negro Project. Geologic potential for epithermal gold mineralization exists in
the province of Rio Negro. A regional, Phase I reconnaissance program will be
undertaken to generate targets in Rio Negro province. This program would include
prospecting, regional mapping and stream sediment sampling. If targets are
generated, a Phase II campaign, consisting of geologic studies, mechanical
trenching and reverse circulation drilling, would follow. Generative
reconnaissance exploration to identify lands for acquisition is projected to
continue as part of Phase II work.

     3.   Rio Negro Project Geology

     Three distinct, mostly Mesozoic, volcanic terranes are the target of nearly
all gold exploration in the region. These are 1) The Lonco Trapial Formation and
equivalents of southernmost central Rio Negro, 2) The Marifil Formation of
eastern Rio Negro, and 3) The Los Menucos Formation of south-central Rio Negro.

     The Lonco Trapial Formation is comprised of Jurassic-age intermediate to
mafic-pyroclastic rocks with some intercalated sedimentary rocks. Gold is hosted
by epithermal quartz veins, stock works, and breccia fillings emplaced within
regionally extensive fault zones. Most mineralization is polymetalic, such as
that of Mina Angela, an underground mine near Gastre in northern-most central
Chubut once mined by Noranda.

     The Marifil Formation is also Jurassic in age, but is comprised almost
exclusively of rhyolitic ignimbrite flows and subvolcanic intrusions. Gold is
hosted in epithermal quartz veins and silicified zones that may be associated
with rhyolite domes and caldera structures. Recent exploration activity is
centered in historical flourite, barite, and manganese mining.

     The Los Menucos Formation is older than the above formations, with
estimated ages being Permo-Triassic to Triassic-Jurassic. The formation is
comprised of extrusive and intrusive silicic quartz porphyries and is loosely
correlated with the Choiyoi group rocks that crop out extensively in the
cordillera of central Argentina.

     The geology of the cordillera of southern-most Rio Negro provinces is
complex. Rocks range in age from Precambrian to Quaternary and consist of an
array of igneous, metamorphic, and sedimentary lithologies. Igneous rocks were
generated by several 

                                       41

overlapping Mesozoic and Tertiary magmatic events. By far the most important
host to known gold mineralization is the predominately silicic pyroclastic rocks
of the Jurassic Lago La Plata Formation. Potential to host a world class gold
deposit is not limited to the Jurassic volcanics. Indeed, Cretaceous volcanic,
subvolcanic, and granitic rocks, along with Mesozoic and Paleozoic sedimentary
and metasedimentary rocks host known occurrences and have good potential to host
future discoveries. Age of hydrothermal mineralization in this region is not
well constrained but probably spans the age of Mesozoic and Tertiary magmatic
activity.

     4.   Rio Negro Project Ownership

     The Corporation neither owns nor controls land in the province of Rio
Negro.

     Generative work to date consists of the following:

     a) Cordilleran Region: Regional reconnaissance exploration for porphyry
gold-copper deposits and volcanic-hosted epithermal gold deposits is presently
being conducted.

     b) North Patagonian Massif: Exploration for epithermal gold deposits in
Jurassic volcanic terranes. Preliminary field evaluation of the Los Menucos,
Valcheta, and Sierra Grande districts was completed in September 1996. Further
reconnaissance of these districts was undertaken and is now being evaluated from
the 1996/1997 field season.

I.   La Horqueta Project Summary

     1.   La Horqueta Project Location

     The La Horqueta Project is located in central Mendoza province,
approximately 200 km south of the city of Mendoza, at latitude 34(degree)36'00"S
and longitude 68(degree)55'00"W. Access is provided to the project by paved road
from Mendoza to the city of San Rafael, and then by approximately 85 km of paved
and gravel roads that pass the Rio Diamante dam. Dirt roads and quebradas
provide access to the cateo areas. Topography in the project area is
characterized by low relief plateaus that are sharply incised to the river
drainages; elevations range from 1,150 m to 1,600 m. Semi-arid type grasses and
small plants comprise the local vegetation. The climate consists of hot, dry
summers and mild winters, permitting year round exploration. Water flows
throughout the year in the major drainages. The city of San Rafael can provide
goods and services necessary for exploration.

     2.   La Horqueta Project Exploration

     A number of very small adits and trench-like excavations are present on the
La Horqueta cateo which attest to the historical exploitation of narrow fluorite
veins. In the 1980's Anglo American visited the area and collected 8 rock
samples. Analytical results 

                                       42

from these samples included one value of 1.35 g/t Au. The current owner
prospected and collected a number of samples at La Horqueta in 1994, the results
of which are not locatable. No previous exploration work is known at Cerro
Colorado or Los Alamos.

     3.   La Horqueta Project Geology

     The project area is underlain by a Precambrian and Paleozoic sequence of
marine sediments and Carboniferous sedimentary and volcanic rocks and
pyroclastics in the San Rafael Block.

     Geologic mapping completed by MASA on the La Horqueta cateo has determined
that the property straddles the contact between Precambrian La Horqueta
Formation metasediments (phyllites and schists) and Carboniferous Lower Imperial
Group sediments (feldspathic sandstones, argillites and quartzites), which have
a shallow northwesterly dip. A dacitic, quartz-feldspar phyric porphyry stock is
exposed in the central property area and has been assigned a Tertiary age,
although the stock may be as old as Permian.

     A westerly trending zone of intense alteration and mineralization occurs in
the porphyry in the central property area, characterized by light tan to white
coloured low lying outcrops. Alteration is clearly evident on a satellite image
of the area. The zone measures approximately 400 m x 1,500 m in size and widens
to the southwest. The zone is open to the west, where it may continue under
talus and the overlying quartzites. Alteration consists of widespread argillic
alteration and local zones of (quartz) sericite-pyrite alteration or intense
silicification or stock working of quartz veins. Disseminated pyrite
mineralization occurs in variable amounts throughout the zone.

     A number of distinct structural trends occur on the property, the most
prominent of which are two ring structures that occur in the central property
area. East-northeast and northwest trending structures are also prominent
features. The zone of alteration and mineralization is controlled by some of
these structures and localizes in the area of the ring structures. Anomalous
gold mineralization trends westerly along N70(degree)E and N70(degree)W
structures and occurs in zones of intense fracturing associated with phyllic
alteration and quartz-pyrite veins and stock works.

     4. Summary of Work Completed

     In 1995, the Corporation completed mapping and sampling programs to
evaluate the La Horqueta cateo property-wide and a detailed program that focused
on the central area. Over 300 rock chip and stream sediment samples were
collected property-wide. Detailed mapping was completed at 1:2500 scale in the
central cateo area and soil sampling was completed at 50 m stations on lines
spaced at 100 m intervals over a 2 km by 2 km grid. Results of soil samples
outline a zone of anomalous gold values (greater than 20 ppb Au) that coincides
with the altered porphyry intrusive. Rock chip sample results also returned many
anomalous 

                                       43

gold values (greater than 500 ppb Au) in the same area. Elevated silver and
arsenic values occur in the central property area. The following table details
significant rock chip sample results.

     In July 1996, a campaign of detailed structural mapping, induced
polarization and ground magnetic geophysical surveys and mechanical trenching
was completed. Ground magnetic and gradient array induced polarization surveys
were completed over 45 line kilometres of grid in the central area and
dipole-dipole induced polarization was conducted in areas of gradient array
anomalies. Preliminary field data indicates the presence of two chargeability
anomalies and two chargeability-resistivity anomalies, each of which is at least
1 km x 0.2 km in size. Two of the anomalies extend beyond the limits of the grid
surveyed. Three km of road access and 1.2 km of trenching were completed in the
central basin area between geophysical anomalies. A total of 557 five-metre
continuous chip samples were collected from the six trenches and road cuts. An
additional 137 rock chip samples were collected property-wide. Trench and road
cut samples returned anomalous gold values of 1.51 g/t Au over 25 m, 35 m of
0.40 g/t Au and 0.41 g/t Au over 20 m.

     In late 1996, a 17-hole reverse-circulation reconnaissance drilling program
totalling 2,260 metres tested portions of the 1500 x 400 metre altered zone with
coincident geophysical and geochemical anomalies.

     As of April 1, 1997 the Corporation had expended $984,494 on the property.
The Corporation continues to be optimistic about the potential for finding a
commercial ore deposit at La Horqueta. The Corporation's work plan for La
Horqueta includes a Phase I program of geophysical (dipole-dipole IP) and
geologic studies to further assess the porphyry copper potential at La Horqueta.
A Phase II program, contingent upon positive results from Phase I would consist
of additional geologic studies and a 2,500 m program of diamond drilling.

     5.   La Horqueta Project Ownership

     The La Horqueta project comprises 23,296 Ha in three property packages as
follows.

     a) Three cateos and three manifestations of discovery ("MD"), which lie
within the La Horqueta cateo. MASA currently holds the La Horqueta cateo under
an option-to-purchase agreement with Carlos Giustozzi of Mendoza. MASA can earn
a 100% interest in the cateo by making cash payments totalling $1.8 million by
May 25, 1999. Payments totalling $314,500 must be made over the first four
years, $52,500 has been paid to date and a further $45,000 is due over the next
year. The property is subject to a 1% net smelter return royalty, payable to the
owner, and the Province of Mendoza has waived its right to a provincial royalty.

     b) Two applications for cateos, Cerro Colorado and Los Alamos (15,880 Ha),
are owned by NADSA.

                                       44

     c) One cateo of 3,350 hectares is held by MASA under an agreement with Mr.
Izuel of San Rafael, Mendoza. The agreement calls for quarterly payments over
four years totalling $300,000 with a final purchase price of $1,500,000. The
$300,000 payments are to be deducted from the $1,500,000 price and $1,200,000 of
the price will be deducted from the royalties paid to the owner. The royalty
payable to the owner is 3.5% less any royalty payable to the province with a
maximum of 1% net smelter royalty to the owner.

J.   Arroyo Nuevo Project Summary

     1.   Arroyo Nuevo Project Location

     The Arroyo Nuevo Project is located 35 km west of the town of Chos Malal,
in northwest Neuquen Province at latitude 37(degree)17'00"S, longitude
70(degree)40'00"W. Good road access is provided to the property area by a
combination of paved highway and gravel road. Local topography is of moderate
relief with elevation ranges from 900 m to 2,100 m. A moderate, semi-arid
climate permits year round exploration. Water is abundant and runs throughout
the year in the Rio Neuquen. Vegetation is minimal.

     2.   Arroyo Nuevo Project Exploration

     At the turn of the century, placer gold mining operations were working
drainages in the project area and numerous small trenches and old workings
attest to the historical exploitation of narrow, polymetallic veins. At Arroyo
Nuevo, a small barite mine has been in operation since the 1970's. Between 1993
and 1995, Placer Dome completed an exploration program over a large area of
reserve land leased from CORMINE S.E.P. that included the Arroyo Nuevo project
area.

     3.   Arroyo Nuevo Project Geology

     The area is underlain by a sequence of gently dipping Jurassic
volcano-sedimentary rocks intruded by small stocks of Cretaceous-Tertiary
porphyritic dacite. Tertiary andesite and basalt flows cap the sequence.
Jurassic rocks include tuffaceous sandstone, pyroclastic tuff breccias,
quartzite, shale and carbonate rocks. Steeply dipping, northeast trending faults
and structures predominate in the property area. In the mine area, flat lying
barite veins to 5 m in thickness occur along bedding-parallel faults within a
large zone of weakly silicified and pyritized sedimentary rocks. Carbonate rocks
are locally jasperoidal.

     4.   Summary of Work Completed

     In 1994, MASA investigated the Arroyo Nuevo project area in a regional
reconnaissance program. Anomalous gold and silver values were returned from the
rock samples collected and an exploration program was initiated to follow up the
results. The program focused on the barite mine area and included 1:1250 scale
mapping, rock chip 

                                       45

sampling and soil sampling over the carbonate-jasperoid unit. A total of 27 rock
chip and 67 soil samples were collected.

     Results of the program outlined a zone of jasperoid in carbonate rocks over
1,000 m along strike, with a strong multi-element (Au, Ag, Zn, As) soil anomaly.
Gold values in soil samples range from 14 ppb to 485 ppb Au. Several jasperoid
rock samples returned significant gold assays, including values of 3.0 g/t and
9.0 g/t Au. A sample collected from Agua Mallin drainage returned a gold value
of 291.4 g/t.

     In addition to the work completed by MASA, drainages in the Arroyo Nuevo
project area were sampled in a regional program conducted by previous operators
(Placer Dome), the data of which was published by CORMINE. A total of 54 stream
sediment and bulk extractable leached gold ("BLEG") samples were collected.
Results indicate the drainages influenced by the northwest and southeast
property area are highly anomalous in gold and returned values to 1,860 ppb Au
in stream sediment and 284 ppb Au in BLEG samples.

     In 1996, 57 additional rock samples collected by the Corporation in the
barite mine area included jasperoid rocks along silicified, northeast-trending
structures. Anomalous gold values were between 60 and 249 ppb.

     In Arroyo Agua Mallin, rock samples contained gold values between 414 and
748 ppb. One sample collected from a dump in this area assayed 2.3 oz/ton gold.

     As of April 1, 1997 the Corporation has expended approximately $148,797 on
the property. The Arroyo Nuevo Project hosts a Carlin-type gold target.
Preliminary work at Arroyo Nuevo has demonstrated that gold mineralization
occurs on the property in a Carlin-type environment. Phase I exploration will
include data compilation, satellite image analysis and the establishment of a
grid over the entire property for mapping (1:2500, 1:1000), soil sampling and
geophysical surveys. Phase II of exploration is projected to consist of
mechanical trenching, road building and 2,000 m of reverse circulation drilling
and is contingent upon Phase I work demonstrating a reasonable potential for
economic quantities and concentrations of gold and/or copper on the property.

     5.   Arroyo Nuevo Project Ownership

     The Arroyo Nuevo project comprises a total of 4,958 Ha under two titles;
Cura Mallin, a provincial mineral reserve leased from CORMINE S.E.P.(Corporacion
Minera del Neuquen, Sociedad del Estado Provincial) and 13 minas held under a
option-to-purchase agreement with Sapag Hermanos S.A. of the city of Zapala.
Details pertinent to the project properties are outlined below. Neuquen Province
has waived its right to a net smelter return royalty.

     a)   Provincial Mining Reserve

                                       46

     The Cura Mallin reserve area comprises 4,700 Ha, acquired in 1997 under an
exploration contract, with a mining option, from CORMINE S.E.P. The contract
requires MASA to make monthly exploration payments of $0.40 per hectare, cash
payments of $205,000 and a total of $1,075,000 in work expenditures over four
years. A 2% net smelter return royalty is payable to CORMINE upon production.
Cash payments to CORMINE are considered advance royalty payments. Payments of
$37,560 are due over the next year.

     b)   Sapag Option

         On September 30, 1996, MASA entered an option-to-purchase agreement
with Sapag Hnos S.A. on 13 minas that comprise 258 Ha within the Cura Mallin
Reserve Area. MASA can earn 100% interest in the minas by making quarterly
payments totalling $350,000 over four years with a final purchase price of
$2,000,000. These payments are considered advance royalty payments. The
agreement is subject to a 2% net smelter return royalty.
Annual holding costs for the minas total $2380.

K.   Los Bueyes Project Summary

     1.   Los Bueyes Project Location

     The Los Bueyes Project is located 250 km northwest of the city of Neuquen
in Norquin department at 70(degree)24'W and 37(degree)43'S. Elevations range
from 1,300 to 2,248 metres above sea level. The property can be accessed, by
mule, throughout the year. Vegetation consists of grass and desert scrub.

     2.   Los Bueyes Project Previous Exploration

     Stream sediment, soil and rock chip geochemical sampling and geologic
mapping have been completed by MASA at Los Bueyes. Numerous stream sediment
samples from drainages at Los Bueyes are anomalous in gold (up to 1,036 ppb) and
soil samples range up to 145 ppb gold. Results of the soil surveys show a 200 m
by 200 m zone anomalous in copper at the 100 ppm level with values up to 14,240
ppm copper.

     A Phase I program of geologic studies and dipole-dipole induced
polarization is planned for Los Bueyes in order to further assess the porphyry
copper potential of the property. A Phase II program, contingent upon positive
results of Phase I work, would consist of road building, reconnaissance reverse
circulation drilling (2,000 m) and geologic studies. The Los Bueyes project may
be offered for joint venture in the short term.

     3.   Los Bueyes Project Geology

     The Los Bueyes Project area is underlain by a thick section of Mesozoic
sediments intruded by Tertiary porphyritic sill and dykes. Hydrothermal
alteration/mineralization occurs over 2.5 square kilometre zone of highly
fractured, pyritized, silicified, and 

                                       47

argillized feldspathic sandstones. Barite veins also occur in the region.
Jasperoid bodies within altered sandstone are some of the most strongly
mineralized samples (Au up to 65 ppb, Cu up to 0.15%, Zn up to 1,200 ppm, and As
up to 9,000 ppm). Stream sediment sampling on a portion of the property have
anomalous concentrations of Cu, Zn, As, and Sb. The main target on this project
is an unexposed porphyry copper target.

     4.   Los Bueyes Project Ownership

     The Los Bueyes project consists of two manifestations of discovery
controlled by MASA. Up to 1,000 Ha. can be claimed with a manifestation.
Maintenance costs are currently $160 per year.

L.   Northwest Argentina Project Summary

     1.   Northwest Argentina Project Location

     The Northwest Argentina Project includes the provinces of La Rioja,
Catamarca, Salta, Jujuy and Tucuman. Located in northwestern Argentina these
provinces cover a variety of physiographic and geologic terrains ranging from
the high desert of the Puna region of Jujuy and Salta to the principal
cordillera of La Rioja. The region has a moderately good road access in the east
and a poorly developed network of roads in the more mountainous west. Work can
be conducted all year except at extreme elevations.

     2.   Northwest Argentina Project Exploration

     Long a target for exploration, the region has received renewed interest in
recent years with the development of the Bajo de la Alumbrera copper-gold
deposit and the delineation of a significant copper-gold-molybdenum resource at
Agua Rica in Catamarca province, and the discovery of new porphyry copper
targets at Taca Taca and Cerro Samenta in Salta province. Additionally, the
frontier region of Catamarca and La Rioja provinces shares a similar geologic
and metallogenic environment with Chile's Maricunga gold belt which hosts over
10 million ounces of gold.

     Phase I exploration in this region will consist of generative
reconnaissance exploration, satellite image analysis and evaluation of airborne
geophysical data and property submittals. Phase II exploration is contingent
upon the recognition and availability for acquisition and subsequent exploration
of lands demonstrating reasonable indications of potentially economic quantities
and concentrations of gold and/or copper.

     3.   Northwest Argentina Project Geology

     The westernmost geologic terrane, extending from northeastern Salta to
western La Rioja consists of the Andean Cordillera (up to 100 km wide), the
crest of which forms the physiographic divide with Chile. This mountain range,
formed by magmatism and uplift 

                                       48

along a convergent plate margin since Jurassic time, is product of subduction of
the Nazca plate beneath the South American continent. Igneous rocks of Permian
to Triassic age form the basement of this mountain chain. Average elevation of
the Andean Cordillera is 4,600 m.

     To the east of the Andean Cordillera is the Puna, the southern continuation
of the Bolivian Altiplano. The Puna is a coherent basement block studded with
active volcanoes. The plateau (average 4,000 m in elevation) is dissected by
young faults that form numerous closed basins and low mountain ranges with 300
to 400 m relief.

     The Pre Cordillera flanks the Puna to the east and is a belt about 250 km
wide that underwent large-scale tectonic compression since the Jurassic, and was
subsequently modified by extension since mid-Miocene. Locally it is similar to
the Basin and Range extensional regime in the western United States.
Extension-related Cenozoic volcanism is manifested as numerous calc-alkaline to
alkaline volcanic centers, such as Cerro Galan and Cerro Bonete.

     To the east of the Pre Cordillera in Tucuman are the Pampean and
Transpampean ranges. These ranges are almost entirely composed of Precambrian
and Paleozoic granitic and metamorphic rocks, sparsely covered by Paleozoic and
Triassic continental sedimentary rocks. Uplift along Laramide-style high angle
reverse faults formed these mountains. The terrane has been extended an
undetermined amount, and may contain metamorphic core complexes. The Pampean
ranges degrade topographically to the east and south into Argentine Pampa.

     4.   Northwest Argentina Project Ownership

     The Corporation neither currently owns nor controls land in the project
area.

Planned Exploration and Development Program - Summary

     The Corporation's exploration programs are divided into two stages for each
project: Phase I, and Phase II. Phase II exploration is dependant on the results
of prior Phase I exploration. Land and option payments are contingent on
continued interest in the properties, or, in the case of generative exploration,
on the availability of properties judged suitable for acquisition.
Reconnaissance and detailed exploration typically consist of geological mapping
and geochemical sampling programs that generally consist of rock, soil, and
stream sediment sampling. Geophysical surveys may be used to further define
targets when it appears that trenching and drilling are warranted. In the event
exploration projects do not warrant detailed exploration, excess funds remaining
may be allocated to other projects on a priority basis. In addition, no more
than approximately 50% of the Corporation's projects will reach the drilling
stage of exploration.

     Factors outside the control of the Corporation which may affect the timing
of the work program are weather conditions, lack of adequately trained
personnel, unavailability of 

                                       49

drill equipment and supplies, delays caused by regulatory authorities regarding
land ownership or environmental issues. In addition, projects may be dropped
before they reach the trenching and drilling stage of exploration if they do not
meet the Corporation's exploration criteria.

     The planned expenditures on the Corporation's properties and projects,
phased as discussed above, are summarized as follows:



     PROJECT                      PHASE ONE                                     PHASE TWO

                    Exploration        Land        Total         Exploration         Land          Total
                                                                                   
Santa Clara            $137,500     $42,280     $179,780            $500,000     $125,000       $625,000

Pino                    102,416      16,007      118,423             250,000       17,255        267,255
Andino

San Juan                275,000      50,000      325,000             350,000       50,000        400,000

Agua                    500,000     180,000      680,000           1,000,000      240,000      1,240,000
Blanca

Mendoza                  75,000      30,000      105,000             350,000       75,000        425,000

Santa Cruz               75,000      30,000      105,000             350,000       75,000        425,000

Chubut                  175,000      25,000        200,000           350,000       50,000         400,000

Rio Negro               175,000      25,000        200,000           350,000       50,000         400,000

La                      100,000      45,000        145,000           500,000       87,500         587,500
Horqueta

A. Nuevo                130,000      11,280        141,280           300,000       73,560         373,560

Los Bueyes              100,000      20,000        120,000           250,000            0         250,000

Los                      35,000      25,000         60,000           350,000       35,000         385,000
Reyunos

NW Arg                  200,000      50,000        250,000           200,000      100,000         300,000

TOTAL                $2,044,916    $524,267     $2,569,483        $4,750,000     $943,315      $6,398,315


     The Phase I work summarized above is planned to be completed by May 30,
1998. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Plan of Operations."  All budgets include amounts for
property maintenance, and, in the case of projects with a generative component,
amounts for property acquisition.

                                       50

ITEM 4.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT

     The following table sets forth certain information regarding the beneficial
ownership, as of September 11, 1997 of the Common Shares by (i) each person
known by the Corporation to own beneficially more than 5% of the Common Shares,
(ii) each director of the Corporation, (iii) the Chief Executive Officer and
each other officer named in the Summary Compensation Table and (iv) all
directors and executive officers as a group. Except as otherwise noted, the
Corporation believes the persons listed below have sole investment and voting
power with respect to the Common Shares owned by them.



                                                      Shares
                                                 Beneficially                  Percentage of
Name and Address                                    Owned (1)              Common Shares (1)
- ----------------                                    ---------              -----------------
                                                                                  
Named Executive Officers and Directors

Allen Ambrose                                     429,900 (2)                          2.25%
3303 North Sullivan Road
Spokane, WA 99216

Armand Hansen                                     296,000 (3)                          1.55
3303 North Sullivan Road
Spokane, WA 99216

John Johnson Crabb                                150,000 (3)                          0.78
3303 North Sullivan Road
Spokane, WA 99216

Brian Gavin                                       435,400 (2)                          2.27
3303 North Sullivan Road
Spokane, WA 99216

A.D. (Darryl) Drummond                            100,000 (4)                          0.52
3303 North Sullivan Road
Spokane, WA 99216

Bonnie L. Kuhn                                     61,000 (5)                          0.32
1600 Canada Place
407 - 2nd Street S.W.
Calgary, Alberta
T2P 2Y3

Allan J. Marter                                   100,000 (4)                          0.52
4828 W. Fair Place
Littleton, CO 80123

5% or Greater Shareholders

Neal A. and Joan L. Degerstrom                  5,000,000 (6)(7)                      26.12
3303 North Sullivan Road
Spokane, WA 99216

                                       51

Cominco Ltd.                                    1,315,791 (8)(9)                       6.87
120 Adelaide St. W., Suite 2200
Toronto, Ontario
M5H 1T1

All directors and
  executive officers
  as a group (8 persons)                        1,572,300                              8.21

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

Notes:

(1)  Shares which the person or group has the right to acquire within 60 days
     after May 8, 1997 are deemed to be outstanding in determining the
     beneficial ownership of he person or group and in calculating the
     percentage ownership of the person or group, but are not deemed to be
     outstanding as to any other person or group.

(2)  Includes stock options entitling the holder to acquire 50,000 shares upon
     payment of Cdn $1.44, 110,000 shares upon payment of Cdn $2.18, or 80,000
     shares upon payment of Cdn $2.00.

(3)  Includes stock options entitling the holder to acquire 20,000 shares upon
     payment of Cdn $1.44, 60,000 shares upon payment of Cdn $2.18, or 40,000
     shares upon payment of Cdn $2.00.

(4)  Includes stock options entitling the holder to acquire 60,000 shares upon
     payment of Cdn $2.18, or 40,000 shares upon payment of Cdn $2.00.

(5)  Includes stock options entitling the holder to acquire 60,000 shares upon
     payment of Cdn $1.73.

(6)  The Common Shares are owned beneficially by Mr. and Mrs. Degerstrom by
     virtue of their combined majority control of the record owner, N.A.
     Degerstrom, Inc.

(7)  Does not include 1,213,409 Common Shares reserved for issuance to
     Degerstrom upon the satisfaction of certain performance criteria. See
     "Description of Properties - the Degerstrom Agreement."

(8)  Includes 438,597 Common Shares reserved for issuance to Cominco upon the
     exercise of the Cominco Warrants at a price of Cdn $3.98. See " Description
     of Securities."

(9)  The Chairman of the Board of Cominco Ltd. is Norman B. Keevil and the
     President and Chief Executive Officer is David A. Thompson. Cominco. Ltd.
     is a public corporation.


                                       52

ITEM 5.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
            PERSONS

     Information with respect to the directors, executive officers and
significant employees of the Corporation is set forth below.



       Name                     Age        Positions Held
       ----                     ---        --------------

                                     
Allen Ambrose                   40         President and Director

Brian Gavin                     43         Vice-President of Exploration and
                                           Director of MASA

Allan J. Marter                 49         Chief Financial Officer and Director

Jorge Vargas                    55         Director and President of MASA &
                                           NADSA

Armand Hansen                   60         Director

John Johnson Crabb              70         Director

A.D. (Darryl) Drummond          59         Director

Bonnie L. Kuhn                  31         Director


     Allen Ambrose has been President and a Director of the Corporation since
November 1995. Mr. Ambrose also serves as an Exploration Manager/Geologist for
Degerstrom. He has 17 years of experience in the mining industry including
extensive experience in all phases of exploration, project evaluation and
project management. He has worked as a geologist consultant in the U.S.,
Venezuela and most recently Argentina. He holds a B.Sc. degree in Geology from
Eastern Washington University. Mr. Ambrose also is a member of the board of
directors of Cadre Resources Ltd., a company with mining interests in Venezuela.

     Brian Gavin has been the Vice President of Exploration and a director of
MASA since 1994. He has 17 years of experience in exploration geology, including
experience in all phases of exploration, project evaluation and project
management. Mr. Gavin has worked in the field as project manager and consultant
in the U.S., Mexico, Nigeria and most recently, in Argentina. He holds a B. Sc.
(Honours) degree in Geology from the University of London and an M.S. degree in
Geology and Geophysics from the University of Missouri. From 1991 to 1994, he
was a consultant with Ernst K. Lehman & Associates, which is a geological mining
consulting firm. Since 1994, he also has been employed by Degerstrom.

                                       53

     Allan J. Marter has been Chief Financial Officer and director of the
Corporation since June 1997. Mr. Marter has been a financial advisor in the
mining industry and Principal of Waiata Resources, from April 1996 to present
and has provided financial advisory services to the Corporation since April 30,
1996. Mr. Marter is a finance professional with 20 years of experience in the
mining industry. From 1992 through 1996 he was employed as a director of
Endeavor Financial Inc., a mining financial advisory firm. Mr. Marter also
serves as a Director of Addwest Minerals International, Ltd.

     Jorge Vargas has been the President and a director of NADSA and MASA since
July 1994 and September 1994, respectively. Mr. Vargas received his law degree
in 1967 from the National University of Buenos Aires, Argentina, and has been in
private practice since 1967. Mr. Vargas also studied mining law at the Law
Faculty of the University of Mendoza and was on the organizing committee of the
First International Water Rights Conference in Mendoza in 1968. Mr. Vargas is a
registered attorney in the provinces of Mendoza and San Juan, and at the Federal
level in Argentina.

     Armand Hansen has been a director of the Corporation since November 1995.
Mr Hansen has served as Vice-President of Operations for Mining Contracting for
Degerstrom for the past 15 years. His responsibilities include managing 350
employees at various job sites throughout the U.S. and Latin America. Mr. Hansen
has also served as Vice-President and a director of Aresco Inc., a manufacturing
company conducting speciality fabrication of mining equipment since 1989.

     John Johnson Crabb has been a director of the Corporation since November
1995. From 1985 to November 1995 Mr. Crabb served as a mining executive and
geologist for and as a director of Inland Resources, Inc. From April 1995 to
March 1996 Mr. Crabb was a director of Cadre Resources Ltd. Mr Crabb was also a
director of Pegasus Gold Inc. from 1984 until 1991. Mr. Crabb graduated from the
University of British Columbia in 1951 with an M.Sc. in Geology.

     A.D. (Darryl) Drummond has been a director of the Corporation since June
1996. Since 1981 Dr. Drummond has been a principal and President of D.D.H.
Geomanagement, a mineral exploration firm concentrating on all aspects of
mineral deposit evaluation covering precious metal, base metal and industrial
mineral types in such countries as Argentina, Canada, Chile, China, Costa Rica,
Ecuador, Guyana, Mexico, Philippines, the U.S. and Venezuela. Dr. Drummond has
also served as a director of The Quinto Mining Corporation since September 1996,
of International All-North Resources Ltd. since July 1996, of All- North
Resources Ltd. from May 1995 to July 1996, and of Cadre Resources Ltd. from
November 1994 to February 1995. Dr. Drummond graduated from the University of
British Columbia with a B.A.Sc. in Geological Engineering in 1959 and with an
M.A.Sc. in 1961. He obtained his Ph.D. in 1966 from the University of California
at Berkeley. He is a member of the Society of Economic Geology and a member of
the Geology Section of the Canadian Institute of Mining and Metallurgy.

                                       54

     Bonnie L. Kuhn has been a director of the Corporation since June 1997. She
has been a solicitor with the firm Ogilvie and Company, Barristers and
Solicitors, Calgary, Alberta, since January 1994. From August 1993 to December
1994 Ms. Kuhn was a Crown prosecutor with the Government of Alberta, Department
of Justice. From July 1990 to June 1993, Ms. Kuhn was an associate with Howard,
Mackie, Barristers and Solicitors. Ms. Kuhn is a member of the Law Society of
Alberta and the Canadian Bar Association. She obtained her LLB from the
University of Manitoba in 1989. Ms. Kuhn currently practices law in the areas of
natural resources, corporate and commercial and securities laws.

     The Corporation has six directors, three of whom are executive officers.
Directors serve terms of one year or until their successors are elected or
appointed. No remuneration of any kind has been paid to any director, in his
capacity as such, and there is no intention that they will be remunerated in
that capacity in the immediate future. Expenses incurred by directors in
connection with their activities on behalf of the Corporation are reimbursed by
the Corporation.

ITEM 6.     EXECUTIVE COMPENSATION

     Summary of Executive Compensation. The following table sets forth
compensation paid, directly or indirectly, by Minera Andes in each of the last
two years for services rendered by Allen Ambrose, President, and for services
rendered by each other executive officer whose compensation in the most recent
fiscal year was $100,000 or more ("Named Executives").



                                 Summary Compensation Table

                                                                          Long Term
                                       Annual Compensation               Compensation
                                    --------------------------      ---------------------
                                                  Other Annual
                  Fiscal             Salary       Compensation      Securities Underlying
                   Year                ($)             ($)            Options/SARs (#)
                  ------             ------       ------------      ---------------------
                                                                    
Allen Ambrose(1)   1996              70,503       9,464 (1)(2)              160,000

Brian Gavin(1)     1996             129,553      13,625 (1)(3)              160,000

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

Notes:

(1)  Allen Ambrose and Brian Gavin, as employees of Degerstrom, provided
     services under the Operating Agreement (See "Description of the Business")
     which services were invoiced to the Corporation under the Operating
     Agreement.

                                       55

(2)  During the 1996 fiscal year, the following benefits were provided to Mr.
     Ambrose by Degerstrom and invoiced to the Corporation:
         401K Base                     3,813
         401K Match                    1,271
         Medical Insurance             4,380

(3)  During the 1996 fiscal year, the following benefits were provided to Mr.
     Gavin by Degerstrom and invoiced to the Corporation:
         401K Base                     6,934
         401K Match                    2,311
         Medical Insurance             4,380


                                       56

     Stock Options Granted in 1996. The following table sets forth certain
information concerning individual stock options granted to the Named Executives
during the year ended December 31, 1996.



                    Option Grants in the Last Fiscal Year (1)

                                  Percentage of
                                  Total Options
                                    Number of           Granted to      Exercise
                              Securities Underlying    Employees in      Price          Expiration
                               Options Granted (#)     Fiscal Year     (Cdn $/Sh)          Date
                              ---------------------    ------------    ----------    -----------------
                                                                         
Allen Ambrose....................... 50,000                5.6%           $1.44      January 10, 1998

                                    110,000               12.3%           $2.18      August 16, 1999

Brian Gavin......................... 50,000                5.6%           $1.44      January 10, 1998

                                    110,000               12.3%           $2.18      August 16, 1999
- --------------

Notes:

(1)  The options granted to Mr. Ambrose and Mr. Gavin to purchase shares at Cdn
     $1.44 per share vested as follows: a) 50% vested 60 days from the date of
     the grant; and (b) 50% vested 120 days from the date of the grant. The
     options granted to Mr. Ambrose and Mr. Gavin to purchase shares at Cdn
     $2.18 per share vested immediately on grant.


     Aggregated Option Exercises. The following table sets forth certain
information concerning the number of shares covered by both exercisable and
unexercisable stock options as of December 31, 1996. Also reported are values of
"in-the-money" options that represent the positive spread between the respective
exercise prices of outstanding stock options and the fair market value of the
Corporation's Common Shares as of December 31, 1996.

                                       57



                          Fiscal Year-End Option Values

                                              Number of                         Value of Unexercised
                                         Unexercised Options                    In-the-Money Options
                                        at Fiscal Year-End (#)               at Fiscal Year-End ($)(1)(2)
                                   --------------------------------       ----------------------------------
                                   Exercisable        Unexercisable       Exercisable          Unexercisable
                                   -----------        -------------       -----------          -------------
                                                                                        
Allen Ambrose .....................  160,000                0             $ 76,066.00               $0
Brian Gavin........................  160,000                0             $ 76,066.00               $0

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

Notes:

(1)  The value of unexercised in-the-money options was calculated using the
     closing price of common shares on The Alberta Stock Exchange on December
     31, 1996, less the exercise price of in-the-money stock options. On
     December 31, 1996 the closing price of the Common Shares on the Alberta
     Stock Exchange was Cdn $2.60.

(2)  The currency exchange rate applied in calculating the value of unexercised
     in-the- money options was the late New York trading rate of exchange for
     December 31, 1996 as reported by the Wall Street Journal for conversion of
     United States dollars into Canadian dollars was U.S. $1.00 = Cdn $1.37 or
     Cdn $1.00 = U.S. $0.73.


Stock Option Plan

     The Board of Directors has adopted a stock option plan (the "Plan") which
was approved with amendments by the shareholders of the Corporation at the
Annual and Special Meeting of Shareholders held on June 26, 1996. The purpose of
the Plan is to afford the persons who provide services to the Corporation or any
of its subsidiaries or affiliates, whether directors, officers or employees of
the Corporation or its subsidiaries or affiliates, an opportunity to obtain a
proprietary interest in the Corporation by permitting them to purchase Common
Shares of the Corporation and to aid in attracting, as well as retaining and
encouraging the continued involvement of such persons with the Corporation.
Under the terms of the Plan, the board of directors has full authority to
administer the Plan in accordance with the terms of the Plan and at any time
amend or revise the terms of the Plan provided, however, that no amendment or
revision shall alter the terms of options already granted. The aggregate number
of shares to be delivered upon exercise of all options granted under the Plan
shall not exceed 10% of the Corporation's issued and outstanding Common Shares
up to a maximum of 2,000,000 shares. No participant may be granted an option
under the Plan which exceeds the number of shares permitted to be granted
pursuant to rules or policies of any stock exchange on which the Common Shares
is then listed.

                                       58

     Under the Plan, the exercise price of the shares covered by each option
shall be determined by the directors and shall be not less than the closing
price of the Corporation's shares on the stock exchange or stock exchanges on
which the shares are listed on the last trading day immediately preceding the
day on which the stock exchange is notified of the proposed issuance of option,
less any discounts permitted by the policy or policies of such stock exchange or
stock exchanges. If an option is granted within six months of a public
distribution of the Corporation's shares by way of prospectus, then the minimum
exercise price of such option shall, if the policy of such stock exchange or
stock exchanges requires, be the greater of the price determined pursuant to the
provisions of the Plan and the price per share paid by the investing public for
shares of the Corporation acquired by the public during such public
distribution, determined in accordance with the policy of such stock exchange or
stock exchanges. Options granted under the Plan will not be transferable and, if
they are not exercised, will expire one (1) year following the date the optionee
ceases to be director, officer, employee or consultant of the Corporation by
reason of death, or ninety (90) days after ceasing to be a director, officer,
employee or consultant of the Corporation for any reason other than death.

     As of September 12, 1997, an aggregate of 1,501,000 stock options had been
granted under the Plan. To date, 75,000 options granted under the Plan have been
exercised at an exercise price of Cdn $1.44 per share.

ITEM 7.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Corporation, MASA, NADSA and Degerstrom are party to an Operating
Agreement whereby Degerstrom operates and manages the exploration program
relating to the Corporation Claims in return for a management fee and certain
other consideration. See "Description of Properties - The Degerstrom Agreement."

     Allen Ambrose and Brian Gavin both serve as employees of Degerstrom and
receive all of their compensation for management services provided to the
Corporation under the Operating Agreement from Degerstrom. Neither Mr. Ambrose
nor Mr. Gavin perform any services as employees of Degerstrom other than in
their capacities as President and Vice President of Exploration of the
Corporation respectively. All of the compensation paid to Messrs. Ambrose and
Gavin has been invoiced back to the Corporation by Degerstrom. See "Description
of the Business - Operating Structure" and "Executive Compensation."

     In 1996 the Corporation entered into a Debt Restructuring Agreement with
Degerstrom in connection with the issuance of Common Shares to Degerstrom in a
private placement. From June 30, 1994 through March 31, 1995, Degerstrom had
spent approximately $1,505,000 on Argentinean exploration on the Corporation's
behalf. Under the terms of a Debt Restructuring Agreement dated January 11,
1996, as amended on May 13, 1996, the Corporation agreed to repay the sum plus
interest. On January 11, 1996, the Corporation and Degerstrom also entered into
a subscription agreement whereby Degerstrom subscribed for 500,000 units of the
Corporation at a price of Cdn $1.44 per unit.

                                       59

Each unit consisted of one share of the Corporation's Common Shares and a
warrant to purchase an additional share at a price of Cdn $1.75. On July 8,
1996, Degerstrom received 500,000 units from the Corporation and exercised the
500,000 warrants. The funds received from Degerstrom pursuant to the
subscription and the exercise of the warrants were used to retire the debt
outstanding under the Debt Restructuring Agreement.

ITEM 8.     DESCRIPTION OF SECURITIES

     The authorized capital stock of the Corporation consists of an unlimited
number of Common Shares and an unlimited number of Preferred Shares. As of June
13, 1997, there were 19,141,050 Common Shares issued and outstanding. No
Preferred Shares are issued and outstanding.

Common Shares

     The holders of Common Shares are entitled to receive notice of and to
attend any meeting of the shareholders of the Corporation and are entitled to
one vote for each share held (except at meetings at which only the holders of
another class of shares are entitled to vote). The directors may from time to
time declare a dividend and the Corporation shall pay the dividend out of the
money of the Corporation properly applicable to the payment of the dividend.
Such dividend payment is subject to the rights, privileges, restrictions and
conditions attached to any Preferred Shares of the Corporation. The holders of
the Common Shares are entitled to share equally in the distribution of the
assets of the Corporation in the event of liquidation, dissolution or winding-up
of the Corporation or upon any distribution of the assets of the Corporation
among its shareholders, subject to the rights, privileges, restrictions and
conditions attached to any Preferred Shares of the Corporation.

Preferred Shares

     Preferred Shares may be issued from time to time in one or more series. The
designation, rights, privileges, restrictions and conditions including, but not
limited to, the voting rights, the rate or amount of dividends or the method of
calculating dividends, the dates of payment therefore, the terms and conditions
of redemptions, purchase and conversion if any, and any sinking funds or other
provisions shall be determined by the resolution of the directors in their sole
discretion, except as required by law. The Preferred Shares rank prior to the
Common Shares with respect to distribution in the event of liquidation,
dissolution or winding-up of the Corporation.

Warrants

Cominco Warrants

     In connection with the 1996 Cominco Private Placement, the Corporation
issued to Cominco 877,194 Warrants to purchase Common Shares (the "Cominco
Warrants"). Two

                                       60

Cominco Warrants entitle Cominco to acquire one Common Share at any time on or
before May 10, 1997, at an exercise price of Cdn $3.98 per share. The
Corporation and Cominco subsequently agreed to extend the date for exercise of
the Cominco Warrants to May 10, 1998. The Cominco Warrants contain anti-dilution
provisions which provide that in the event of any subdivision, consolidation,
reclassification of the Common Shares or in the event of the amalgamation,
merger or other business combination of the Corporation with another company, a
proportionate adjustment or change will be made in the number and kind of
securities issuable on the exercise of the Cominco Warrants. The Cominco
Warrants are non assignable and non transferable.

Placement Warrants

     In connection with a 1996 special warrant placement, the Corporation issued
to investors and financial advisors 3,710,901 warrants to purchase Common Shares
("Placement Warrants"). Two Placement Warrants entitle the holder to acquire one
Common Share at an exercise price of Cdn $2.50 per share if exercised on or
before December 13, 1997, or at an exercise price of Cdn $2.88 per share if
exercised after December 13, 1977 but on or before December 13, 1998. In the
event of any subdivision, consolidation or reclassification of the Common Share
or in the event of the amalgamation, merger, capital reorganization, or other
business combination of the Corporation with another company, a proportionate
adjustment or change will be made in the number and kind of securities issuable
on the exercise of the Warrants.

Transfer Agent and Registrar

     The Registrar and Transfer Agent for the Common Shares is the Montreal
Trust Company of Canada.

                                     PART II

ITEM 1.     MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
            COMMON EQUITY AND OTHER SHAREHOLDER MATTERS

     The Corporation's Common Shares are traded on The Alberta Stock Exchange
("ASE") under the trading symbol MAI. The closing trading price for the Common
Shares on June 13, 1997, was Cdn $2.20. The high and low closing bid prices for
the Common Shares reported by The Alberta Stock Exchange for the period from the
date the stock was first listed on the ASE, December 20, 1995 and for the
quarters during 1996 and for the first two quarters of the current fiscal year
are set forth in the table below.

                                       61



         Quarter                                   High (Cdn $)      Low (Cdn $)
                                                                  
December 20, 1995 - December 31, 1995                 1.55             1.30

January - March 1996                                  3.15             1.35

April - June 1996                                     3.75             2.45

July - September 1996                                 2.90             1.90

October - December 1996                               2.95             1.75

January - March 1997                                  3.40             2.06

April - June 1997                                     3.30             2.00

July through September 11, 1997                       2.60             2.00


     As of June 13, 1997 there were approximately 140 holders of Common Shares
of the Corporation. No dividends have ever been paid on the Common Shares of the
Corporation, and the Corporation intends to retain its earnings for use in the
business and does not expect to pay dividends in the foreseeable future.

ITEM 2.     LEGAL PROCEEDINGS

     The Corporation is not currently aware of any material legal proceeding,
actual, contemplated or threatened, to which the Corporation is party or of
which any of its property is the subject.

ITEM 3.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

     On recommendation of the Board of Directors and by resolution of the
Shareholders of the Corporation, dated June 19, 1997, the Corporation replaced
its auditors, MacKay & Partners, Chartered Accountants, of Vancouver, British
Columbia, with Coopers & Lybrand, L.L.P., of Spokane, Washington, effective
until the next annual general meeting of the Shareholders of the Corporation or
until a successor is appointed. There have been no disagreements, or unresolved
issues on any matter of accounting principles or practices, financial
statements, disclosure or auditing scope or procedure during the period in which
MacKay & Partners have been auditing the financial statements of the
Corporation. MacKay & Partners were initially appointed auditors of the
Corporation in November 1994.

ITEM 4.     RECENT SALES OF UNREGISTERED SECURITIES.

1.   From June through October 1995, the Corporation issued 3,199,000 Common
     Shares to eight individual accredited investors at a price of Cdn $1.00 per
     share. In 

                                       62

     September 1995, the Corporation also issued 345,094 Common Shares to nine
     individual investors at a price of Cdn $0.40 per share. The purchasers in
     these transactions were either accredited investors or non-accredited
     investors who possessed the sophistication and experience necessary to
     evaluate fully the merits and risks of an investment in the Common Shares.

2.   In November 1995, the Corporation issued 11,030,992 Common Shares at a
     price of Cdn $1.00 per share in the amalgamation of the Corporation and
     Scotia Prime Minerals, Inc. In the amalgamation, the Common Shares of the
     Corporation were issued to the holders of the amalgamating Alberta
     corporation upon conversion (in the amalgamation) of those shares into the
     right to receive Common Shares of the Corporation. The amalgamation and the
     issuance of Common shares was approved in a fairness hearing pursuant to
     Section 186 of the Business Corporations Act (Alberta).

3.   In February 1996, the Corporation issued 1,523,733 warrants to purchase
     Common Shares to institutional investors and financial advisors at a price
     of Cdn $1.50 per warrant. In July 1996, the Corporation issued Common
     Shares and warrants upon exercise of the February 1996 warrants. The
     purchasers of these securities were accredited investors who possessed the
     knowledge and sophistication necessary to evaluate fully the merits and
     risks of an investment in the Common Shares.

4.   In May 1996, the Corporation issued 877,194 Common Shares and 877,194
     warrants to purchase Common Shares to Cominco Ltd. at a price of Cdn $3.42
     per share. The sale to Cominco, a multi-national, publicly held mining
     company, was negotiated as part of Cominco's negotiation of a potential
     joint venture with respect to the Corporation's Santa Clara and Pino Andino
     properties.

5.   In July 1996, the Corporation issued 500,000 Common Shares and 500,000
     warrants to purchase Common Shares to Degerstrom at a price of Cdn $1.44
     per share. Also in July 1996, the Corporation issued 500,000 additional
     Common Shares to Degerstrom at a price of Cdn $1.75 upon exercise of the
     earlier-issued warrants. Degerstrom, the principal shareholder of the
     Corporation and the entity which provides management and operating services
     to the Corporation, is an accredited investor with many years of experience
     conducting and investing in mining and exploration projects. Degerstrom had
     this preexisting business relationship with the Corporation at the time of
     the purchase of the Common Shares.

6.   In December 1996 and in January and February 1997, the Corporation issued
     200,000 Common Shares to institutional investors at a price of Cdn $1.80
     per share upon exercise by the investors of previously issued warrants. The
     purchasers of these securities were accredited investors who possessed the
     knowledge and sophistication necessary to evaluate fully the merits and
     risks of an investment in the Common Shares.

                                       63

7.   In December 1996, the Corporation issued warrants to purchase 3,710,901
     Common Shares and warrants to institutional investors at a price of Cdn
     $2.10 per share. In February and May 1997, the Corporation issued the
     Common Shares and warrants to the investors upon exercise of the
     previously-issued warrants. The purchasers of these securities were
     accredited investors who possessed the knowledge and sophistication
     necessary to evaluate fully the merits and risks of an investment in the
     Common Shares.

The sale and issuance of the Common Shares and the warrants described in
paragraphs 1, 3, 4, 5, 6 and 7 were exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act and Regulation D
thereunder in that they did not constitute a public offering and, in certain
cases, pursuant to Regulation S under the Securities Act. The purchasers in
these transactions acquired the Common Shares in a private placement from the
Corporation which did not involve general solicitation or advertising and in
which the investors, primarily persons with whom the Corporation had
pre-existing business relationships, represented that they were acquiring the
shares with the understanding that the Common Shares were restricted securities
and with the representation that they had no intention to dispose of or
otherwise transfer or re-sell the shares, other than in a transaction registered
under the Securities Act or pursuant to an exemption therefrom. The sale and
issuance of Common Shares described in paragraph 2 was exempt from registration
under the Securities Act pursuant to Section 3(a)(10) thereof.

ITEM 5.     INDEMNIFICATION OF DIRECTORS AND OFFICERS

     The Bylaws of the Corporation provide that no director or officer shall be
personally liable for acts or omissions in the exercise of the powers and
discharge of the duties of his or her office, excluding liability arising from
such director's or officer's wilful neglect. In addition, the Bylaws provide
that the Corporation shall indemnify a director or officer, former director or
officer, and persons acting as director or officer of another corporation in
which the Corporation is a shareholder at the request of the Corporation,
against all monetary liabilities arising with respect to any action or
proceeding to which such director or officer is a party, provided that the
director or officer acted honestly and in good faith with a view to the best
interests of the Corporation, and in the event of a criminal proceeding, that
the director or officer had reasonable grounds for believing that his or her
conduct was lawful. The Bylaws also provide that the Corporation may purchase
and maintain insurance for the benefit of officers or directors against
liabilities arising as a result of the Corporation's indemnification
obligations. The limits on director and officer liability, the indemnification
of directors and officers, and the purchase of insurance against indemnification
liabilities provided for in the Bylaws of the Corporation are all subject to
restrictions under the Alberta Business Corporations Act, as amended.

                                       64

                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Item                                                                    Page No.

AUDITORS' REPORT............................................................F-3

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1996
AND 1995....................................................................F-4

CONSOLIDATED STATEMENTS OF OPERATIONS AND
ACCUMULATED DEFICIT FOR THE YEARS ENDED
DECEMBER 31, 1996 AND 1995 AND FOR THE PERIOD
JULY 1, 1994 (commencement) THROUGH DECEMBER 31, 1996.......................F-5

CONSOLIDATED STATEMENTS OF MINERAL PROPERTIES
AND DEFERRED EXPLORATION COSTS FOR THE YEARS
ENDED DECEMBER 31, 1996 AND 1995 AND FOR THE PERIOD
JULY 1, 1994 (commencement) THROUGH DECEMBER 31, 1996.......................F-6

CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL
POSITION FOR THE YEARS ENDED DECEMBER 31, 1996 AND
1995 AND FOR THE PERIOD JULY 1, 1994 (commencement)
THROUGH DECEMBER 31, 1996...................................................F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR
THE YEARS ENDED DECEMBER 31, 1996 AND 1995 AND FOR
THE PERIOD JULY 1, 1994 (commencement) THROUGH
DECEMBER 31, 1996...........................................................F-8

CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1997
AND DECEMBER 31, 1996 (UNAUDITED)...........................................F-19

CONSOLIDATED STATEMENTS OF OPERATIONS AND
ACCUMULATED DEFICIT FOR THE SIX MONTHS
ENDED JUNE 30, 1997 AND JUNE 30, 1996 AND FOR
THE PERIOD JULY 1, 1994 (commencement) THROUGH
JUNE 30, 1997 (UNAUDITED)...................................................F-20

                                       F-1

Item                                                                    Page No.

CONSOLIDATED STATEMENTS OF MINERAL PROPERTIES
AND DEFERRED EXPLORATION COSTS FOR THE SIX
MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996
AND FOR THE PERIOD JULY 1, 1994 (commencement)
THROUGH JUNE 30, 1997 (UNAUDITED)...........................................F-21

CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL
POSITION FOR THE SIX MONTHS ENDED JUNE 30, 1997
AND JUNE 30, 1996 AND FOR THE PERIOD JULY 1, 1994
(commencement) THROUGH JUNE 30, 1997 (UNAUDITED)............................F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR
THE SIX MONTHS ENDED JUNE 30, 1997 AND JUNE 30,
1996 AND FOR THE PERIOD JULY 1, 1994 (commencement)
THROUGH JUNE 30, 1997 (UNAUDITED)...........................................F-23

                                       F-2

                                AUDITORS' REPORT



To the Shareholders of
Minera Andes Inc.:

We have audited the consolidated balance sheets of Minera Andes Inc. (an
exploration stage corporation) as at December 31, 1996 and 1995 and the
consolidated statements of operations and accumulated deficit, mineral
properties and deferred exploration costs, and changes in financial position for
the years then ended and for the period from the date of commencement (July 1,
1994) through December 31, 1996. These consolidated financial statements are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Corporation as at December 31,
1996 and 1995 and the results of its consolidated operations and the changes in
its financial position for the years then ended and for the period from the date
of commencement (July 1, 1994) through December 31, 1996 in accordance with
generally accepted accounting principles.


                                       MacKay & Partners
Vancouver, B.C.                        Chartered Accountants
February 20, 1997,
except for Note 13
which is as at
June 16, 1997

                                      F-3



                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                           CONSOLIDATED BALANCE SHEETS
                                 (U.S. Dollars)


                                                                December 31,      December 31,
                                                                       1996              1995
                                                               ------------      ------------
                                                                                    
                                     ASSETS
Current:
     Cash                                                      $  6,660,633      $    528,020
     Receivables                                                    167,110                 0
                                                               ------------      ------------
                                                                  6,827,743           528,020
Mineral properties and deferred
  exploration costs (Note 5)                                      3,440,879         2,534,970
Capital assets (Note 6)                                              48,575                 0
                                                               ------------      ------------
                                                               $ 10,317,197      $  3,062,990
                                                               ============      ============

                                   LIABILITIES
Current:
     Accounts payable and accruals                             $    227,829      $     30,318
     Due to related party (Note 9)                                        0         1,278,181
                                                               ------------      ------------
                                                                    227,829         1,308,499
                                                               ------------      ------------

                              SHAREHOLDERS' EQUITY
Share capital (Note 7)                                           13,365,014         3,552,517
Accumulated deficit                                              (3,275,646)       (1,798,026)
                                                               ------------      ------------
                                                                 10,089,368         1,754,491
                                                               ------------      ------------
                                                               $ 10,317,197      $  3,062,990
                                                               ============      ============

Agreements, commitments and contingencies (Note 8)

Subsequent events (Note 12)


        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                      F-4



                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
          CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
                                 (U.S. Dollars)


                                                                                                    Period from
                                                                Years Ended                         July 1, 1994
                                                   ------------------------------------            (commencement)
                                                    December 31,            December 31,                 through
                                                           1996                    1995         December 31,1996
                                                   ------------            ------------         ----------------
                                                                                                    
Administration fees                                $     27,205            $     59,676             $     86,881
Audit & accounting                                       37,629                   9,751                   47,380
Consulting fees                                         149,121                 129,700                  278,821
Equipment rental                                          1,192                   1,735                    2,927
Foreign exchange (gain) loss                            (62,736)                 11,185                  (51,551)
Legal                                                    77,779                  35,022                  112,801
Materials & supplies                                     13,559                  21,628                   35,187
Office overhead                                         249,535                  28,531                  278,066
Telephone                                                54,158                  73,479                  127,637
Transfer agent                                                0                  21,744                   21,744
Travel                                                   91,696                   5,841                   97,537
Wages & benefits                                        184,250                 102,217                  286,467
Write-off of deferred expenditures                      494,492               1,034,155                1,528,647
                                                   ------------            ------------             ------------
Total expenses                                        1,317,880               1,534,664                2,852,544
Interest income                                         (69,204)                 (4,600)                 (73,804)
                                                   ------------            ------------             ------------
Loss for the year                                     1,248,676               1,530,064                2,778,740
Accum. deficit, beginning of the period               1,798,026                  21,702                        0
Share issue costs                                       228,944                 229,045                  479,691
Deficiency on acquisition of subsidiary                       0                  17,215                   17,215
                                                   ------------            ------------             ------------
Accumulated deficit, end of the period             $  3,275,646            $  1,798,026             $  3,275,646
                                                   ============            ============             ============

Loss per common share                              $       0.10            $       0.20              $      0.31
                                                   ============            ============              ===========

Weighted average shares outstanding                  12,722,871               7,772,569                8,994,053
                                                   ============            ============              ===========

        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                      F-5



                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                  CONSOLIDATED STATEMENTS OF MINERAL PROPERTIES
                         AND DEFERRED EXPLORATION COSTS
                                 (U.S. Dollars)


                                                                                                    Period from
                                                                Years Ended                         July 1, 1994
                                                   ------------------------------------            (commencement)
                                                    December 31,            December 31,                 through
                                                           1996                    1995         December 31,1996
                                                   ------------            ------------         ----------------
                                                                                                    
Administration fees                                $     61,760            $     80,094             $    256,876
Assays & analytical                                     127,511                 179,592                  336,378
Construction & trenching                                254,349                 154,626                  408,975
Consulting fees                                          70,175                  73,842                  470,807
Depreciation                                             14,784                       0                   14,784
Drilling                                                205,900                  19,345                  225,245
Equipment rental                                         63,242                  75,199                  168,675
Geology                                                 606,239                 555,896                1,162,135
Geophysics                                               75,536                   1,266                   76,802
Insurance                                                38,327                  35,912                   74,239
Legal                                                    64,129                 108,813                  268,633
Maintenance                                              37,347                  22,702                   60,049
Materials & supplies                                     89,692                 118,236                  242,068
Project overhead                                         38,811                  13,164                  162,113
Property & mineral rights                               111,763                 354,583                  566,416
Telephone                                                 6,452                   3,787                   24,957
Travel                                                  120,773                 120,769                  270,285
Wages & benefits                                        113,611                 178,232                  303,950
                                                   ------------            ------------             ------------

Costs incurred during the period                      2,100,401               2,096,058                5,093,387

Deferred costs, beginning of the period               2,534,970               1,473,067                        0

Deferred costs, acquired                                      0                       0                  576,139

Deferred costs written off                             (494,492)             (1,034,155)              (1,528,647)

Mineral property option proceeds                       (700,000)                      0                 (700,000)
                                                   ------------            ------------             ------------

Deferred costs, end of the period                  $  3,440,879            $  2,534,970             $  3,440,879
                                                   ============            ============             ============

        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                      F-6



                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
            CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
                                 (U.S. Dollars)


                                                                                                    Period from
                                                                Years Ended                         July 1, 1994
                                                   ------------------------------------            (commencement)
                                                    December 31,            December 31,                 through
                                                           1996                    1995         December 31,1996
                                                   ------------            ------------         ----------------
                                                                                           
Operating Activities
    Loss for the period                            $ (1,248,676)           $ (1,530,064)            $ (2,778,740)
    Non-cash items:
         Write-off of incorporation costs                     0                     665                      665
         Write-off of deferred expenditures             494,492               1,034,155                1,528,647
         Depreciation                                    14,784                       0                   14,784
                                                   ------------            ------------             ------------
                                                       (739,400)               (495,244)              (1,234,644)
    Net changes in non-cash working capital items        30,401                  (7,655)                  60,721
                                                   ------------            ------------             ------------
       Cash used in operating activities               (708,999)               (502,899)              (1,173,923)
                                                   ------------            ------------             ------------

Financing Activities
       Shares issued for cash                         4,939,161               2,976,977                7,916,139
       Share subscription received                    4,873,336                 (57,069)               4,873,336
       Shares issued for subsidiaries                         0                       0                  575,537
       Advances from related parties                 (1,278,181)                396,345                        0
       Share issue costs                               (228,944)               (229,045)                (479,691)
                                                   ------------            ------------             ------------
       Cash provided by financing activities          8,305,372               3,087,208               12,885,321
                                                   ------------            ------------             ------------

Investing Activities
       Incorporation costs                                    0                       0                     (665)
       Purchases of capital assets                      (63,359)                      0                  (63,359)
       Mineral properties and deferred expl.         (2,100,401)             (2,096,058)              (5,093,387)
       exploratio
       costs
       Acquisition of subsidiaries                            0                 (17,215)                (593,354)
       Mineral property option proceeds                 700,000                       0                  700,000
                                                   ------------            ------------             ------------
       Cash used in investing activities             (1,463,760)             (2,113,273)              (5,050,765)
                                                   ------------            ------------             ------------

Increase in cash                                      6,132,613                 471,036                6,660,633
Cash, beginning of the period                           528,020                  56,984                        0
                                                   ------------            ------------             ------------
Cash, end of the period                            $  6,660,633            $    528,020             $  6,660,633
                                                   ============            ============             ============

        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                      F-7

                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (U.S. Dollars)


1.   NATURE OF OPERATIONS

The Corporation is in the business of acquiring, exploring and evaluating
mineral properties, and either joint venturing or developing these properties
further or disposing of them when the evaluation is completed. At December 31,
1996, the Corporation was in the exploration stage and had interests in 35
properties in six provinces in the Republic of Argentina, including three
properties which were joint ventured.

The recoverability of amounts shown as mineral properties and deferred
exploration costs is dependent upon the existence of economically recoverable
reserves, the ability of the Corporation to obtain necessary financing to
complete their development, and future profitable production or disposition
thereof.

2.   ORGANIZATION

The Corporation, Minera Andes Inc., was incorporated in Alberta on July 19,
1994, although operations are considered to have commenced on July 1, 1994, the
effective date of the acquisition of the Argentine properties (see Note 4a). On
November 6, 1995, the amalgamation of Minera Andes Inc. with Scotia Prime
Minerals, Incorporated (Scotia), a reporting issuer, pursuant to section 186 of
the Business Corporations Act (Alberta), became effective. The business
combination was accounted for using the purchase method of accounting. Under
this method of accounting, Minera Andes Inc. has been identified as the acquiror
and accordingly, the comparative figures are those of Minera Andes Inc.

3.   SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements are prepared in accordance with
accounting principles generally accepted in Canada. The statements are expressed
in United States dollars because the majority of the exploration activities are
incurred in U.S. dollars and the majority of the cash reserves are held in U.S.
dollars.

     a)   Consolidation/Reporting These consolidated financial statements
          include the accounts of Minera Andes Inc. and its wholly-owned
          subsidiaries (see Note 4a), Minera Andes S.A. (MASA) and NAD S.A.
          (NADSA), both Argentine corporations. All significant intercompany
          transactions and balances have been eliminated from the consolidated
          financial statements.

     b)   Foreign Currency Translation The Corporation's consolidated operations
          are integrated and balances denominated in currencies other than U.S.
          dollars are translated into U.S. dollars using the temporal method.
          This method translates monetary balances at the rate of exchange at
          the balance date, non-monetary balances at historic exchange rates and
          revenues and expense items at average exchange rates. The resulting
          gains and losses are included in the statement of operations in the
          reporting period.

     c)   Mineral Properties and Deferred Exploration Costs Mineral properties
          consist of exploration and mining concessions, options and contracts.
          Acquisition and leasehold costs and exploration costs are capitalized
          and deferred until such time as the property is put into production or
          the properties are disposed of either through sale or abandonment. If
          put into production, the costs of acquisition and exploration will be
          written off over the life of the property, based on estimated economic
          reserves. Proceeds received from the sale of any interest in a
          property will first be credited against the carrying value of the
          property, with any excess included in operations for the

                                      F-8

                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (U.S. Dollars)


          period. If a property is abandoned, the property and deferred
          exploration costs will be written off to operations.

     d)   Capital Assets and Depreciation Capital assets are recorded at cost,
          and depreciation is provided on a declining balance basis over their
          estimated useful lives at an annual rate of 40% up to a residual value
          of 10%.

     e)   Share Issue Costs Commissions paid to underwriters on the issuance of
          the Corporation's shares are charged directly to share capital. Other
          share issue costs, such as legal, accounting, auditing and printing
          costs, are charged to accumulated deficit.

     f)   Loss per Share Loss per common share is computed based on the weighted
          average number of common shares outstanding during each period. Due to
          the net losses incurred during each of the periods presented, common
          stock equivalents are anti-dilutive and have been excluded from the
          computation.

4.   ACQUISITION OF SUBSIDIARIES

     a)   Pursuant to an agreement dated March 8, 1995, the Corporation acquired
          on March 15, 1995, 95% (19 of the 20 shares issued) of MASA and 91.66%
          (11 of the 12 shares issued) of NADSA in exchange for the issue of
          4,000,000 shares, an additional bonus issue of shares payable if any
          of the properties reach bankable feasibility (which shall be 11% or
          1,213,409 shares of the issued and outstanding common shares of the
          Corporation after the amalgamation--see Note 2), a royalty on all
          existing and future properties equal to the difference between 3% and
          any underlying royalties subject to a maximum of 2%, and reimbursement
          of all property costs incurred from July 1, 1994. An additional $602
          was paid in cash to certain minority shareholders of MASA and NADSA.
          Concurrent with the agreement, the Corporation also entered into
          option agreements, having an initial term of four years each and
          renewable every four years to acquire the remaining shares of MASA and
          of NADSA for an exercise price of $100 per share. For accounting and
          reporting purposes, MASA and NADSA are considered to be wholly-owned
          subsidiaries of the Corporation.

          MASA and NADSA have no assets or liabilities other than mineral
          property rights which had been purchased or directly staked. The
          deemed value of the 4,000,000 shares issued was equal to the
          accumulated property acquisition costs and exploration expenditures
          acquired by MASA and NADSA effective July 1, 1994, which totaled
          $575,537. The acquisition was accounted for using the purchase method
          with an effective date of July 1, 1994, being the date from which the
          Corporation agreed to reimburse the property costs incurred.

     b)   As disclosed in Note 2, the business combination of Minera Andes Inc.
          and Scotia, which was made effective November 6, 1995, has been
          accounted for using the purchase method whereby Minera Andes Inc.
          acquired all of the issued and outstanding shares of Scotia. The
          acquisition has been recorded as follows:

               Assets acquired                                    $     1,986
               Less: liabilities assumed                               19,201
                                                                  -----------
               Net assets acquired                                    (17,215)

                                      F-9

                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (U.S. Dollars)


               Asset deficiency allocated to accumulated deficit       17,215
                                                                  -----------
               Purchase price                                     $         0
                                                                  ===========
               Consideration given: 336,814 common shares         $         0
                                                                  ===========

          As a result of the acquisition (amalgamation), Minera Andes Inc.
          became a reporting issuer. All fees paid with respect to the
          amalgamation (legal, audit, accounting, printing) were considered to
          be share issue costs. Scotia was an inactive company which from
          December 31, 1994 to the date of acquisition had only the following
          transactions: general and administrative expenses of $6,248,
          forgiveness of indebtedness owed of $13,391 and the issue of shares to
          settle debts of $20,000.

5.   MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS

At December 31, 1996, the Corporation, through its subsidiaries, held interests
in a total of 277,399 hectares of mineral rights and mining lands in six
Argentine provinces: San Juan, Mendoza, Neuquen, Rio Negro, Chubut and Santa
Cruz. Under its present acquisition and exploration programs, the Corporation is
continually acquiring additional mineral property interests and exploring and
evaluating its properties. If, after evaluation, a property does not meet the
Corporation's requirements, then the property and deferred exploration costs are
written off to operations. All properties are subject to a royalty agreement as
disclosed in Note 8b. Mineral property costs and deferred exploration costs are
as follows:



Table 1 of 2
===========================================================================================
                                                   Exploration                             
                            Deferred  Acquisition          and                     Deferred
                            December        Costs     Overhead     Write-Offs      December
Province     Property       31, 1994         1995         1995           1995      31, 1995
===========================================================================================
                                                                      
San Juan     Agua Blanca  $        0  $   111,591  $   393,464    $         0    $  505,055
             ------------------------------------------------------------------------------
             Cateos          468,713       17,061      168,477       (402,932)      251,319
- -------------------------------------------------------------------------------------------
Mendoza      Santa Clara     348,444       37,479      173,683              0       559,606
             ------------------------------------------------------------------------------
             La Horqueta           0       20,732      194,595              0       215,327
             ------------------------------------------------------------------------------
             Cateos          425,996      101,382      181,262       (631,223)       77,417
- -------------------------------------------------------------------------------------------
Neuquen      Pino Andino     227,427       48,514      428,276              0       704,217
             ------------------------------------------------------------------------------
             Cateos                0            0            0              0             0
- -------------------------------------------------------------------------------------------
Santa Cruz   Cateos                0        1,349       69,185              0        70,534
- -------------------------------------------------------------------------------------------
Rio Negro    Cateos                0        2,915       15,475              0        18,390
- -------------------------------------------------------------------------------------------
Chubut       Cateos            2,487       13,560      117,058              0       133,105
- -------------------------------------------------------------------------------------------
Northern     Cateos                0            0            0              0             0
- -------------------------------------------------------------------------------------------
TOTAL                     $1,473,067  $   354,583   $1,741,475    $(1,034,155)   $2,534,970
===========================================================================================




Table 2 of 2
==========================================================================
                          Exploration                 Mineral
             Acquisition          and                  Option     Deferred
                   Costs     Overhead  Write-Offs    Proceeds     December
Province            1996         1996        1996        1996     31, 1996
==========================================================================
                                                        
San Juan     $         4  $    26,678  $        0   $(100,000)  $  431,737
             -------------------------------------------------------------
                  25,015      123,420    (164,647)          0      235,107
- --------------------------------------------------------------------------
Mendoza            1,201      280,702           0    (250,000)     591,509
             -------------------------------------------------------------
                  37,988      659,753           0           0      913,068
             -------------------------------------------------------------
                   7,207      166,156     (16,693)          0      234,087
- --------------------------------------------------------------------------
Neuquen            8,136      424,603           0    (350,000)     786,956
             -------------------------------------------------------------
                  20,000       58,080           0           0       78,080
- --------------------------------------------------------------------------
Santa Cruz           500      114,545     (97,012)          0       88,567
- --------------------------------------------------------------------------
Rio Negro          4,414       42,726     (25,333)          0       40,197
- --------------------------------------------------------------------------
Chubut             7,266       60,879    (190,807)          0       10,443
- --------------------------------------------------------------------------
Northern              32       31,096           0           0       31,128
- --------------------------------------------------------------------------
TOTAL        $   111,763  $ 1,988,638  $ (494,492)  $(700,000)  $3,440,879
==========================================================================


     a)   Agua Blanca Project
          The Agua Blanca project is located approximately 220km northwest of
          the city of San Juan in San Juan Province. Agua Blanca is currently
          held by the Corporation under a four year option-to-purchase
          agreement, dated June 21, 1995, which calls for option payments
          totaling $920,000 and a final buy-out payment of $1,080,000 to earn a
          100% interest in the property claims.

                                      F-10

                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (U.S. Dollars)


          The Corporation signed a letter agreement dated April 4, 1996 with
          Newcrest Resources, Inc. with respect to a joint venture on the Agua
          Blanca property. Newcrest may earn a 51% interest in the joint venture
          through exploration expenditures over four years of $3,800,000, paying
          all associated land and option payments, and making cash payments
          totaling $350,000 during the first year. Newcrest may earn an
          additional 14% interest by spending an additional $6,500,000 by year
          six and completing a bankable feasibility study. The Corporation will
          have a 49% participating interest, or may reduce to a 35%
          participating interest and will be required to contribute to
          exploration and development work on a pro rata basis or dilute its
          interest. Should the Corporation's participating interest dilute to
          10%, it will convert to a 10% deferred carried interest and the
          Corporation would have no further obligation to contribute until a
          decision to mine is made.

     b)   Santa Clara and Pino Andino Projects
          The Santa Clara project is located in northwest Mendoza Province,
          approximately 63km west of the city of Tupungato. The bulk of the
          property is held by the Corporation under an option-to-purchase
          agreement, whereby the Corporation can earn a 100% interest in the
          property by making option payments totaling $1,950,000 by October,
          1998. During 1995, the Corporation negotiated and received a four
          month extension of the option-to-purchase agreement to allow for
          resolution of the provincial park boundary dispute. Approximately 70%
          of the area of the optioned property lies within the disputed boundary
          of the park. The provincial mining authorities confirmed the validity
          of the mining rights at Santa Clara in January, 1996, and in January,
          1997 a provincial law was passed excluding existing mineral properties
          from the provincial park.

          The Pino Andino project consists of three contiguous properties
          approximately 250km northwest of the city of Neuquen and 20km east of
          the city of Loncopue in Neuquen Province. The individual properties
          include: a reserve area acquired under an exploration contract with a
          mining option from CORMINE S. E. P., a provincial corporation; a
          four-year option-to-purchase contract; and a cateo and manifestation
          of discovery owned by the Corporation.

          In March, 1996, the Corporation signed a Memorandum of Understanding,
          subject to due diligence, with Cominco Ltd. regarding a joint venture
          on the Santa Clara and Pino Andino properties. Under this agreement,
          Cominco may earn a 51% interest in each of the properties by making
          cash payments and exploration expenditures of $5,000,000 at each
          property over four years, in addition to paying all associated option
          payments and land costs. The cash payments made, after Cominco's due
          diligence and as evidence of their election to proceed, were $250,000
          in the case of the Santa Clara property and $350,000 in the case of
          the Pino Andino property. Once Cominco has earned a 51% interest in
          either of the properties, a joint venture will be formed and, at the
          Corporation's option, Cominco may earn up to a further 11% interest by
          completing a feasibility study and spending up to an additional
          $22,000,000 (with its interest increasing 1% for each $2,000,000
          spent, up to a maximum of the 11%). Consequently, the Corporation will
          have a 49% participating interest or may elect to reduce to a 38%
          participating interest and will be required to contribute to
          exploration and development work on the property on a pro rata basis
          or dilute its interest. Should the Corporation's participating
          interest dilute

                                      F-11

                                                                       Exhibit E
                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (U.S. Dollars)


          to 20%, it will convert to a 20% deferred carried interest and the
          Corporation would be entitled to receive an advance royalty from net
          production proceeds of 2% net smelter returns to a maximum of $500,000
          per year.

          The Memorandum of Understanding included Cominco subscribing to a
          private placement in the Corporation. The subscription totaled 877,194
          units, each unit comprising a common share and a common share purchase
          warrant, at Cdn$3.42 per unit for an aggregate subscription of
          Cdn$3,000,003. Two warrants will entitle Cominco to purchase one
          common share at a price per share of Cdn$3.98 prior to May 10, 1997.

     c)   La Horqueta Project
          The La Horqueta project is located 200km south of the city of Mendoza
          and 95km from the city of San Rafael in central Mendoza Province. The
          property comprises cateos wholly-owned by the Corporation in addition
          to two separate four-year options to purchase. The Corporation can
          earn 100% of the individual properties under the options-to-purchase
          by making cash payments totaling $1,800,000 and $1,500,000. To date,
          the Corporation has paid all option payments and carried out and
          funded all exploration costs on the La Horqueta project.

     d)   Write Down of Mineral Property and Exploration Costs
          The Corporation has acquired exploration concessions, entered into
          option agreements and contracts, and carried out exploration on
          certain properties where it has determined that it would be unlikely
          that additional work would result in the discovery of economic ore
          reserves. Accordingly, any acquisition payments and the accumulated
          cost of exploration on those properties, totaling $494,492 in 1996 and
          $1,034,155 in 1995 have been written off to operations.

6.   CAPITAL ASSETS

                                December 31, 1996              December 31, 1995
                                -----------------              -----------------
                                   Accumulated
                      Cost        Depreciation        Net             Net
                   -----------------------------------------   -----------------
     Vehicles      $ 63,359        $ 14,784         $ 48,575        $ Nil
                   ========        ========         ========        =====

7.   SHARE CAPITAL

     a)   Authorized
          The Corporation has authorized capital of an unlimited number of
          common shares, with no par value, and an unlimited number of preferred
          shares, with no par value.

                                      F-12

                                                                       Exhibit E
                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (U.S. Dollars)


     b)   Issued, Allotted and/or Subscribed:



                                                                              Number of
                                                                                 Shares                Amount
                                                                         --------------        --------------
                                                                                                     
          Common shares issued:
            Issued for cash on incorporation                                          1        $            1
            Allotted for acquisition of subsidiaries
            (Issued March 15, 1995-see Note 4)                                4,000,000               575,537
            Subscriptions received for private placement                              0                57,069
                                                                         --------------        --------------
          Balance, December 31, 1994                                          4,000,001               632,607
            Issued for cash (Cdn$0.10 each)                                   1,000,000                70,850
            Issued for cash (Cdn$0.40 each)                                   2,345,094               669,058
            Issued for cash (Cdn$1.00 each)                                   3,031,000             2,237,071
            Issued for finder's fee                                             150,000                     0
            Issued for services                                                 168,000                     0
            Issued for subsidiary (see Note 4)                                  336,814                     0
            Subscriptions applied                                                     0               (57,069)
                                                                         --------------        --------------
          Balance, December 31, 1995                                         11,030,909              3,552,517
            Issued for cash (Cdn$1.50 each)                                   1,433,333              1,535,553
            Issued for broker special warrants                                   90,400                      0
            Issued for cash (Cdn$3.42 each)                                     877,194              2,174,388
            Issued to N.A. Degerstrom, Inc.
              For cash (Cdn$1.44 each)                                          500,000                514,608
              For cash on exercise of warrants (Cdn$1.75 each)                  500,000                625,392
            Issued for cash on exercise of warrants (Cdn$1.80 each)              67,500                 89,220
            Subscriptions received for private placement                              0              4,873,336
                                                                         --------------     ------------------
          Balance, December 31, 1996                                         14,499,336            $13,365,014
                                                                         ==============     ==================


          i)   In February, 1996, the Corporation concluded a private placement
               of 1,433,333 special warrants at a price of Cdn$1.50 per special
               warrant for total gross proceeds of Cdn$2,150,000 (US$1,565,265).
               Each special warrant comprised a unit consisting of one common
               share and one share purchase warrant. Each warrant entitles the
               holder to purchase one additional common share at any time over a
               twelve month period at a price of Cdn$1.80 per share. The

                                      F-13

                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (U.S. Dollars)


               agents received 90,400 broker special warrants (each convertible
               into one common share and one share purchase warrant), cash
               commission of Cdn$25,650, Cdn$15,000 as a corporate finance fee
               and a finder's fee of Cdn$16,500 was also paid.

          ii)  In May, 1996, the Corporation concluded the Cominco private
               placement (see Note 5b) with the issuance of 877,194 common
               shares and 877,194 Cominco warrants at a price of Cdn$3.42 for
               gross proceeds of Cdn$3,000,003 (US$2,174,388). Two Cominco
               warrants will entitle Cominco to acquire one additional common
               share at any time on or before May 10, 1997 at a price of
               Cdn$3.98 per share.

          iii) Following regulatory and shareholder approval, in July, 1996 the
               Corporation issued 500,000 units under the Degerstrom
               Subscription Agreement (see Note 9b) at a price of Cdn$1.44 per
               unit. Each unit was comprised of one common share and one share
               purchase warrant. Each warrant entitled the holder, N. A.
               Degerstrom, Inc. (NAD), to purchase one additional common share
               for Cdn$1.75 at any time until January 11, 1998. The warrants
               were also exercised in July, 1996.

          iv)  On December 13, 1996 and December 19, 1996, the Corporation
               raised gross proceeds of Cdn$7,078,010 (US$5,197,540) in
               aggregate by way of a private placement of special warrants at a
               price of Cdn$2.10 per unit. Each unit comprised one common share
               and one share purchase warrant. Two warrants will entitle the
               holder to purchase one additional common share at a price of
               Cdn$2.50 per share if exercised on or before December 13, 1997 or
               at a price of Cdn$2.88 if exercised before December 13, 1998. In
               connection with the private placement, the Corporation granted
               140,420 broker special warrants for commission, 200,000 broker
               special warrants for a corporate finance fee (with each broker
               special warrant convertible into a broker share purchase
               warrant), and cash commissions totaling Cdn$441,501. The
               Corporation intends to file a prospectus to qualify the shares
               and warrants on the exercise of the special warrants and the
               warrants on exercise of the broker special warrants by February
               28, 1997. After receiving final approval of the prospectus and
               upon the exercise of the special warrants the Corporation expects
               to issue 3,370,481 common shares. If a final receipt for the
               prospectus is not received by May 12, 1997, the Corporation will
               issue 1.1 common shares and 1.1 warrants for each common share
               and warrant comprising part of the special warrant unit.

     c)   Stock Options
          As at December 31, 1996, there were options held by directors,
          officers and employees of the Corporation for the purchase of common
          shares as follows:



               Number of Shares        Exercise Price         Expiry Date
               ----------------        --------------         -----------
                                                      
                   285,000                Cdn$1.44          January 10, 1998
                   610,000                Cdn$2.18          August 16, 1999
                  --------
                   895,000
                  ========


                                      F-14

                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (U.S. Dollars)


     d)   Warrants
          As at December 31, 1996, the following warrants were outstanding:



               Number of Shares        Exercise Price         Expiry Date
               ----------------        --------------         -----------
                                                      
                  1,365,833               Cdn$1.80          February 28, 1997
                     90,400               Cdn$1.80          February 28, 1997
                    877,194               Cdn$3.98          May 10, 1997
                  ---------
                  2,333,427


     e)   Escrow
          As at December 31, 1996 there were 2,666,667 common shares held in
          escrow. These common shares will be released from escrow upon
          obtaining the consent of The Alberta Stock Exchange, at the earn-out
          rate of Cdn$0.375 per share of deferred expenditures as defined in the
          Escrow Agreement, with a maximum of one-third of the escrowed
          securities to be released in any one year.

8.   AGREEMENTS, COMMITMENTS AND CONTINGENCIES

     a)   Mineral rights in Argentina are owned by the federal government and
          administered by the provinces. The provinces can levy a maximum 3%
          "mouth of mine" (gross proceeds) royalty. The provinces of Mendoza and
          Neuquen have waived their right to a royalty. The provinces of Rio
          Negro, San Juan, Santa Clara and Chubut have not yet established a
          policy regarding the royalty.

     b)   While the operating agreement between the Corporation and NAD is in
          effect (see Note 9a), a net smelter royalty on all existing and future
          properties is payable to NAD equal to the difference between 3% and
          any underlying royalties, subject to a maximum of 2% payable to NAD.
          The Corporation may purchase up to one half of the royalty upon
          payment of $1,500,000 per percent purchased.

     c)   Under the terms of the acquisition agreement disclosed in Note 4a, the
          Corporation may be obligated to issue additional common shares as
          consideration for the acquisition of its subsidiaries. The number of
          shares to be issued to NAD upon a property reaching bankable
          feasibility shall be 1,213,409 common shares of the Corporation.

9.   RELATED PARTY TRANSACTIONS

     a)   Concurrent with the acquisition of the Corporation's wholly-owned
          subsidiaries as disclosed in Note 4a, the Corporation also entered
          into an operating agreement effective March 15, 1995 with the vendor,
          NAD. As a result of the acquisition agreement, NAD is currently the
          controlling shareholder of the Corporation. Under the terms of the
          operating agreement, NAD will operate and manage the exploration
          program on all properties and provide related off-site administrative
          assistance, as required. Consideration will be 15% of the costs
          incurred by NAD on behalf of the Corporation. Costs paid directly by
          the Corporation are not subject to the fee. Included in the agreement
          are fixed rental rates for equipment owned by NAD. 

                                      F-15

                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (U.S. Dollars)


          If NAD elects to terminate the agreement within two years, the
          Corporation may elect to purchase the shares owned by NAD for
          $1,200,000. Expenditures incurred prior to March 15, 1995 by NAD
          include a 15% administration fee to cover NAD's internal overhead
          (accounting, legal and secretarial service) costs.

          During the years ended December 31, 1996 and 1995, administrative fees
          were paid to NAD of $65,646 and$139,769, on total costs incurred by
          the Corporation of $437,640 and $931,793, respectively. Equipment
          rentals of $67,060 and $60,350 were included in the total costs for
          1996 and 1995, respectively.

     b)   On November 6, 1995, the debt the Corporation had with NAD was
          formalized into a promissory note. Terms of payment to NAD called for
          $365,000 to be paid on November 15, 1995, and this payment was made as
          specified. The remainder of the debt, $1,140,000, was carried as a
          convertible interest bearing note. The Corporation and NAD entered
          into a Debt Settlement Agreement on January 11, 1996 and an amendment
          dated May 13, 1996, whereby a promissory note dated May 13, 1996
          replaced the earlier note. Under the May 13, 1996 promissory note, the
          Corporation agreed to make payments of Cdn$720,000 by July 15, 1996
          and Cdn$875,000 by August 15, 1996. As per Note 7b(iii) above, under
          the terms of the Degerstrom Subscription Agreement, in July 1996, the
          Corporation issued 500,000 units to NAD and NAD exercised the 500,000
          warrants it received. The funds received from NAD on the Degerstrom
          Private Placement were used to repay the debt outstanding, pursuant to
          the Debt Settlement Agreement, as amended.

10.  INCOME TAXES

Due to the losses incurred by the Corporation, there is no income tax provision
or benefit recorded for all periods presented. The Corporation has Canadian
non-capital losses available to carry forward to apply against future taxable
income of approximately $2,386,000, expiring at various dates through the year
2003.

11.  COMPARATIVE FIGURES

Certain financial statement line items from the prior years have been
reclassified to conform with the current year's presentation.

12.  SUBSEQUENT EVENTS

Subsequent to December 31, 1996, the following occurred:

     a)   Warrants were exercised to purchase 175,320 common shares for gross
          proceeds of Cdn$315,576 (US$233,760).

     b)   The Corporation granted options, subject to regulatory approval,
          whereby directors and employees can acquire up to 561,000 shares at
          Cdn$2.00 per share, up to February 17, 2000.

                                      F-16

                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (U.S. Dollars)


13.  DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
     ACCOUNTING PRINCIPLES

As discussed in Significant Accounting Policies, these consolidated financial
statements are prepared in accordance with accounting principles generally
accepted in Canada.

Differences in accounting principles as they pertain to these consolidated
financial statements are as follows:

     a)   Accounting for Share Issue Costs All costs related to the issuance of
          shares are offset against proceeds under U.S. GAAP and the net amount
          is credited to share capital.

     b)   Earnings Per Share In February, 1996, the Financial Accounting
          Standards Board (FASB) issued Statement of Financial Accounting
          Standards No.128 (SFAS 128), "Earnings per Share". For U.S. GAAP, SFAS
          128 simplified the existing standards and will require a basic and
          diluted earnings per share (EPS), unless the effect of including
          common stock equivalents is anti-dilutive. The application of this new
          standard will not have a material effect on the presentation of EPS
          for U.S. GAAP purposes, and the calculation of EPS under SFAS 128 will
          more closely approximate EPS under Canadian GAAP.

     c)   Non-Cash Issuance of Common Shares Under U.S. GAAP, value is assigned
          to issuances of common shares for non-cash consideration and the basis
          for valuing the consideration is stated.

          i)   During 1995, the Corporation issued 150,000 common shares as a
               finder's fee and 168,000 common for services, in connection with
               a financing. Under U.S. GAAP, these issuances would be valued at
               Cdn$1.00 per share or $110,710 and $123,995, respectively, being
               the fair market value of the shares issued.

          ii)  During 1996, the Corporation issued 90,400 common shares for
               broker special warrants, in connection with a financing. Under
               U.S. GAAP, these shares would be valued at Cdn$1.50 per share or
               $96,847, being the fair market value of the shares issued.

          iii) These share issuance costs are offset against share proceeds
               resulting in no net change to share capital.

     d)   Acquisition of Scotia

          During 1995, the Corporation issued 336,814 commons shares for the
          acquisition of Scotia (see note 4b). Under U.S. GAAP, these shares
          would be valued at $248,590, the fair market value of the shares
          issued. This value, plus the $17,215 of net liabilities of Scotia
          assumed by the Corporation, would have been recorded as goodwill and
          expensed immediately at the acquisition date under U.S. GAAP.

                                      F-17

     e)   Impact on Consolidated Financial Statements
          The impact of the above on the consolidated financial statements is as
          follows:



                                                       Years Ended
                                             --------------------------------
                                             December 31,         December 31,
                                                    1996                 1995
                                             -----------          -----------
                                                                    
Accumulated deficit, end of period
per Canadian GAAP                             $3,275,646           $1,798,026

Adjustments for acquisition of Scotia            248,590              248,590

Adjustment for share issue costs                (479,691)            (250,747)
                                             -----------          -----------
Accumulated deficit, end of period,
per U.S. GAAP                                 $3,044,545           $1,795,869
                                              ==========           ==========


                                             December 31,         December 31,
                                                    1996                 1995
                                             -----------          -----------
Share capital, per Canadian GAAP             $13,365,014          $ 3,552,517

Adjustment for acquisition of Scotia             248,590              248,590

Adjustments for share issue costs              (479,691)            (250,747)
                                             -----------          -----------
Share capital, per U.S. GAAP                 $13,133,913          $ 3,550,360
                                             ===========          ===========

                                                                  Period from
                                                                 July 1, 1994
                                                                (commencement)
                                              Year Ended              through
                                             December 31,         December 31,
                                                    1995                 1996
                                             -----------          -----------
Loss for the year, per Canadian GAAP         $ 1,530,064          $ 2,778,740
Adjustment for acquisition of Scotia             248,590              248,590
                                             -----------          -----------
Loss for the year, per U.S. GAAP             $ 1,778,654          $ 3,027,330
                                             ===========          ===========
Loss per common share, per U.S. GAAP         $      0.23          $      0.34
                                             ===========          ===========


                                      F-18



                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                           CONSOLIDATED BALANCE SHEETS
                                 (U.S. Dollars)


                                                                           June 30,        December 31,
                                                                              1997                1996
                                                                      ------------        ------------
                                                                        (Unaudited)
                                                                                             
                                     ASSETS
Current:
     Cash                                                             $  6,475,708        $  6,660,633
     Receivables                                                             9,078             167,110
                                                                      ------------        ------------
                                                                         6,484,786           6,827,743
Mineral properties and deferred exploration costs                        4,689,471           3,440,879
Capital assets                                                              44,693              48,575
                                                                      ------------        ------------
                                                                      $ 11,218,950        $ 10,317,197
                                                                      ============        ============
                                   LIABILITIES
Current:
     Accounts payable and accruals                                    $    253,331        $    227,829
                                                                           253,331             227,829
                                                                      ------------        ------------

                              SHAREHOLDERS' EQUITY
Share Capital                                                           15,054,116          13,365,014
Accumulated deficit                                                     (4,088,497)         (3,275,646)
                                                                      ------------        ------------
                                                                        10,965,619          10,089,368
                                                                      ------------        ------------
                                                                      $ 11,218,950        $ 10,317,197
                                                                      ============        ============


                 The accompanying notes are an integral part of
                    these consolidated financial statements


                                      F-19



                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
          CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
                            (U.S. Dollars-Unaudited)

                                                                                                                        Period from
                                                  Three Months     Three Months       Six Months       Six Months      July 1, 1994
                                                         Ended            Ended            Ended            Ended     (commencement)
                                                       June 30,         June 30,         June 30,         June 30,          through
                                                          1997             1996             1997             1996     June 30, 1997
                                                  ------------     ------------     ------------     ------------     -------------
                                                                                                                 
Administration fees                               $      9,333     $      5,713     $     16,420     $     11,638     $     103,301

Audit & accounting                                      11,081            9,155           28,882           24,516            76,262

Consulting fees                                         48,304           34,483           92,144           52,552           370,965

Depreciation                                               635                0              635                0               635

Equipment rental                                             0                0                0              942             2,927

Foreign exchange (gain) loss                            85,312          (21,486)          90,038          (30,206)           38,487

Legal                                                   67,637           24,770           97,671           33,654           210,472

Materials & supplies                                        12            2,329               12           13,052            35,199

Office overhead                                        242,873           91,590          324,380          130,950           602,446

Telephone                                               12,181           10,778           32,289           21,972

Transfer agent                                               0                0                0                0            21,744

Travel                                                  16,224           10,598           24,620           25,537           122,157

Wages & benefits                                        61,267           40,215          110,084           80,971           396,551

Write-off of deferred expenditures                           0                0                0                0         1,528,647
                                                  ------------     ------------     ------------     ------------     -------------
Total expenses                                         554,859          208,145          817,175          365,578         3,669,719

Interest income                                        (46,563)               0          (87,335)               0          (161,139)

Loss for the period                                    508,296          208,145          729,840          365,578         3,508,580

Accumulated deficit, beginning of the period         3,547,548        2,006,462        3,275,646        1,798,026                 0

Share issue costs                                       32,653           36,328           83,011           87,331           562,702

Deficiency on acquisition of subsidiary                      0                0                0                0            17,215
                                                  ------------     ------------     ------------     ------------     -------------

Accumulated deficit, end of the period            $  4,088,497     $  2,250,935     $  4,088,497     $  2,250,935     $   4,088,497
                                                  ============     ============     ============     ============     =============

Loss per common share                             $       0.03     $      0 .02     $       0.05     $       0.03     $        0.34
                                                  ============     ============     ============     ============     =============

Weighted average shares outstanding                 17,438,389       11,522,523       16,217,254       11,276,716        10,186,935
                                                  ============     ============     ============     ============     =============

                   The accompanying notes are an integral part
                  of these consolidated financial statements.


                                      F-20



                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                  CONSOLIDATED STATEMENTS OF MINERAL PROPERTIES
                         AND DEFERRED EXPLORATION COSTS
                            (U.S. Dollars-Unaudited)


                                                                                                                        Period from
                                                  Three Months     Three Months       Six Months       Six Months      July 1, 1994
                                                         Ended            Ended            Ended            Ended     (commencement)
                                                       June 30,         June 30,         June 30,         June 30,          through
                                                          1997             1996             1997             1996     June 30, 1997
                                                  ------------     ------------     ------------     ------------     -------------
                                                                                                                 
Administration fees                               $      7,304     $      7,698     $     14,741     $     17,230     $     271,617

Assays & analytical                                     67,690           24,266          137,801           45,464           474,179

Construction & trenching                                15,669          177,998           27,987          177,998           436,962

Consulting fees                                         31,494            9,075           48,371           25,233           519,178

Depreciation                                             4,857            2,112            9,715            2,112            24,499

Drilling                                                54,805                0           54,805              550           280,050

Equipment rental                                        18,180           18,180           38,959           31,960           207,634

Geology                                                215,808          168,360          457,786          253,879         1,619,921

Geophysics                                                   0           33,398                0           33,398            76,802

Insurance                                               13,995           12,910           15,689           15,188            89,928

Legal                                                   18,464           15,503           38,787           25,435           307,420

Maintenance                                              7,117            8,884           15,062           12,538            75,111

Materials & supplies                                    15,579           22,197           33,298           32,129           275,366

Project overhead                                        10,058            8,830           20,177           10,467           182,290

Property & mineral rights                               94,081          (32,102)         176,664           38,804           743,080

Telephone                                                2,034            1,284            3,040            1,628            27,997

Travel                                                  60,146           25,075           97,230           43,616           367,515

Wages & benefits                                        29,933           33,130           58,480           65,681           362,430
                                                  ------------     ------------     ------------     ------------     -------------
Costs incurred during the period                       667,214          536,798        1,248,592          833,310         6,341,979

Deferred costs, beginning of period                  4,022,257        2,831,482        3,440,879        2,534,970                 0

Deferred costs acquired                                      0                0                0                0           576,139

Deferred costs written off                                   0                0                0                0        (1,528,647)

Mineral property option proceeds                             0         (650,000)               0         (650,000)         (700,000)
                                                  ------------     ------------     ------------     ------------     -------------
Deferred costs, end of the period                 $  4,689,471     $  2,718,280     $  4,689,471     $  2,718,280     $   4,689,471
                                                  ============     ============     ============     ============     =============


                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                      F-21



                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
            CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
                            (U.S. Dollars-Unaudited)


                                                                                                                        Period from
                                                  Three Months     Three Months       Six Months       Six Months      July 1, 1994
                                                         Ended            Ended            Ended            Ended     (commencement)
                                                       June 30,         June 30,         June 30,         June 30,          through
                                                          1997             1996             1997             1996     June 30, 1997
                                                  ------------     ------------     ------------     ------------     -------------
                                                                                                                 
Operating Activities
  Loss for the period                             $   (508,296)    $   (208,145)    $   (729,840)    $   (365,578)    $  (3,508,580)
  Non-cash items:
       Write-off of incorporation costs                      0                0                0                0               665
       Write-off of deferred expenditures                    0                0                0                0         1,528,647
       Depreciation                                      5,492            2,112           10,350            2,112            25,134
                                                  ------------     ------------     ------------     ------------     -------------
                                                      (502,804)        (206,033)        (719,490)        (363,466)       (1,954,134)
  Net changes in non-cash working
    capital items                                      126,700           (4,647)         183,534           16,599           244,255
                                                  ------------     ------------     ------------     ------------     -------------
  Cash (used in) operating activities                 (376,104)        (210,680)        (535,956)        (346,867)       (1,709,879)
                                                  ------------     ------------     ------------     ------------     -------------

Financing Activities
  Shares issued for cash                                     0        3,708,831        1,689,102        3,708,831         9,605,241
  Share subscription received                                0       (1,534,443)               0                0         4,873,336
  Shares issued for subsidiaries                             0                0                0                0           575,537
  Advances from related parties                              0         (130,558)               0        (104,031)                 0
  Share issue costs                                    (32,653)         (36,328)         (83,011)         (87,331)         (562,702)
                                                  ------------     ------------     ------------     ------------     -------------
  Cash (used in) provided by
    financing activities                               (32,653)       2,007,502        1,606,091        3,517,469        14,491,412
                                                  ------------     ------------     ------------     ------------     -------------

Investing Activities
  Incorporation costs                                        0                0                0                0              (665)
  Purchases of capital assets                             (540)         (63,359)          (6,468)         (63,359)          (69,827)
  Mineral properties and deferred
    exploration costs                                 (667,214)        (536,798)      (1,248,592)        (833,310)       (6,341,979)
  Acquisition of subsidiaries                                0                0                0                0          (593,354)
  Mineral property option proceeds                           0          650,000                0          650,000           700,000
                                                  ------------      -----------     ------------     ------------     -------------
  Cash (used in) provided by
    investing activities                              (667,754)          49,843      (1,255,060)         (246,669)       (6,305,825)
                                                  ------------      -----------     -----------      ------------     -------------

Increase (decrease) in cash                         (1,076,511)       1,846,665       (184,925)         2,923,933         6,475,708
Cash, beginning of the period                        7,552,219        1,605,288       6,660,633           528,020                 0
                                                  ------------      -----------     -----------      ------------     -------------
Cash, end of the period                           $  6,475,708      $ 3,451,953     $ 6,475,708      $  3,451,953     $   6,475,708
                                                  ============      ===========     ===========      ============     =============


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-22

                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (U.S. Dollars-Unaudited)


1. ACCOUNTING POLICIES

The accompanying consolidated financial statements of Minera Andes Inc. (the
"Corporation") for the three month and six month periods ended June 30, 1997 and
1996 and for the period from commencement (July 1, 1994) through June 30, 1997
have been prepared in accordance with accounting principles generally accepted
in Canada which differ in certain respects from principles and practices
generally accepted in the United States, as described in Note 3. Also, they are
unaudited but, in the opinion of management, include all adjustments, consisting
only of normal recurring items, necessary for a fair presentation. Interim
results are not necessarily indicative of results which may be achieved in the
future. The December 31, 1996 financial information has been derived from the
Corporation's audited consolidated financial statements.

These consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended December
31, 1996. The accounting policies set forth in the audited annual consolidated
financial statements are the same as the accounting policies utilized in the
preparation of these consolidated financial statements, except as modified for
appropriate interim presentation.

2. SUBSEQUENT EVENTS

Santa Clara Project
The Santa Clara property was subject to a joint venture with Cominco Ltd., under
the terms of a Memorandum of Understanding signed between the Corporation and
Cominco in March, 1996. Subsequent to June 30, 1997, Cominco advised the
Corporation that they would be terminating the Memorandum of Understanding with
respect to Santa Clara during the third quarter of 1997 (after giving the
required 60 days notice). This also terminates the relationship between the
Corporation and Cominco.

3. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
   PRINCIPLES

Differences between Canadian and U.S. generally accepted accounting principles
as they pertain to the Corporation relate to accounting for share issue costs,
earnings per share, non-cash issuance of common shares and the acquisition of
Scotia, and are described in Note 13 to the Corporation's consolidated financial
statements for the year ended December 31, 1996.

The impact of the above on the interim consolidated financial statements is as
follows:

                                      F-23



                                MINERA ANDES INC.
                       "An Exploration Stage Corporation"
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
                            (U.S. Dollars-Unaudited)


                                                            Three Months Ended      Six Months Ended
                                              June 30, 1997      June 30, 1996         June 30, 1997       June 30, 1996
                                              -------------      -------------      ----------------       -------------
                                                                                                         
Accumulated deficit, end of period,
per Canadian GAAP                                $4,088,497         $2,250,935            $4,088,497          $2,250,935

Adjustment for acquisition of Scotia                248,590            248,590               248,590             248,590

Adjustment for share issue costs                   (562,702)          (338,078)             (562,702)           (338,078)
                                              -------------      -------------      ----------------       -------------

Accumulated deficit, end of period, per
U.S. GAAP                                        $3,774,385         $2,161,447            $3,774,385          $2,161,447
                                              =============      =============      ================       =============


                                                    June 30,       December 31,
                                                       1997               1996
                                              -------------      -------------
Share capital, per Canadian GAAP                $15,054,116        $13,365,014
Adjustment for acquisition of Scotia                248,590            248,590
Adjustment for share issue costs                   (562,702)          (479,691)
                                              -------------      -------------
Share capital, per U.S. GAAP                    $14,740,004        $13,133,913
                                              =============      =============


                                               Period from
                                              July 1, 1994
                                             (commencement)
                                                   through
                                             June 30, 1997
                                              ------------
                                                    
Loss for the period, per Canadian GAAP        $  3,508,580

Adjustment for acquisition of Scotia               248,590
                                              ------------
Loss for the period, per U.S. GAAP            $  3,767,170
                                              ============
Loss per common share, per U.S. GAAP          $       0.37
                                              ============


                                      F-24

                                    PART III

                                Index to Exhibits

Exhibit
Number      Description
- ------      -----------

 2.1        Asset and Share Acquisition Agreement between MASA, NADSA, the
            Corporation Degerstrom, Brian Gavin, Jorge Vargas and Enrique Rufino
            Marzari Elizalde, dated March 8, 1995, as amended on April 19, 1996.

 2.2        Arrangement between the Corporation and Scotia Prime Minerals, Inc.

 3.1        Articles of Incorporation

 3.2        Bylaws

 4.1        Warrant Certificate describing the rights of Broker Special
            Warrants.

 4.2        Warrant Certificate describing the rights of Cominco Warrants.

10.1        Conveyance Agreement between MASA and N.A. Degerstrom, Inc., dated
            July 1, 1994.

10.2        Conveyance Agreement between NADSA and N.A. Degerstrom, Inc., dated
            July 1, 1994.

10.3        Operating Agreement between the Corporation and N.A. Degerstrom,
            Inc. dated March 15, 1995.

10.4        Share Option Agreement between the Corporation and Jorge Vargas,
            dated March 15, 1995.

10.5        Share Option Agreement between the Corporation and Enrique Rufino
            Marzari Elizalde, dated March 15, 1995.

10.6        Memorandum of Understanding between the Corporation and Cominco Ltd.
            dated March 12, 1996, as amended March 19, 1996. (Deleted by
            amendment.)

10.7        Option to Purchase (Santa Clara) between the N.A. Degerstrom, Inc.
            and Martin Antonio Carotti and Carlos Giustozzi, dated May 12, 1994,
            as amended on June 30, 1995 and again on December 13, 1995.

10.8        Exploration and Prospecting Contract with Option to Purchase (Pino
            Andino - Dos Guanacos) between MASA and Oscar Horacio Gonzalez et
            al., dated March 30, 1995.

10.9        Letter Agreement (Agua Blanca) between the Corporation and Newcrest
            Minera Argentina S.A., dated April 4, 1996.

10.10       Option to Purchase (Agua Blanca) between MASA and Adonis Cantoni,
            dated June 21, 1995.

10.11       Option to Purchase (La Horqueta) between MASA and Carlos Giustozzi,
            dated June 23, 1995, as amended on June 30, 1995.

                                      III-1

10.12       Exploration Contract with Option of Concession for Exploitation in
            the "Andacollo" Area (Arroyo Nuevo - Cura Mallin Reserve Area)
            between MASA and CORMINE S.E.P., dated February 25, 1997.

10.13       Contract of Exploration and Prospecting with Option to Purchase
            (Arroyo Nuevo - Cura Mallin Reserve Area) between MASA and Sapag
            Hnos S.A., dated September 30, 1996.

10.14       Contract of Exploration and Prospecting with Option to Purchase (Los
            Reyunos) between MASA and Carlos Giustozzi, dated February 28, 1997.
            (Deleted by amendment).

10.15       Debt Restructuring Agreement between the Corporation and N.A.
            Degerstrom, Inc., dated January 11, 1996, as amended May 13, 1996.

10.16       Escrow Agreement between the Corporation, N.A. Degerstrom, Inc. and
            Montreal Trust Company of Canada, dated November 30, 1995.

10.17       Agency Agreement between the Corporation, C.M. Oliver & Company
            Limited and Majendie Charlton Securities Ltd., dated November 22,
            1996.

10.18       Special Warrant Indenture between the Corporation and Montreal Trust
            Company of Canada, dated December 13, 1996.

10.19       Purchase Warrant Indenture between the Corporation and Montreal
            Trust Company of Canada, dated December 13, 1996.

10.20       Agreement dated April 30, 1996 between the Corporation and Waiata
            Resources for the provision of financial advisory services.

10.21*      Amended Stock Option Plan, dated June 26, 1996.

10.22*      Contract of Exploration with Option for Exploitation of Mineral
            Reserve Areas (Pino Andino) between N.A. Degerstrom, Inc. and
            CORMINE, S.E.P., dated October 25, 1994.

11.1        Statement regarding the computation of per share loss.

21.1        Description of MASA and NADSA.

23.1        Consent of MacKay & Partners

27.1        Financial Data Schedule

99.1*       Letter of agreement of MacKay & Partners regarding disclosure of the
            change of the Corporation's auditors.

- -----------------------
*filed by amendment


                                      III-2

                                    SIGNATURE

     In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this amendment to this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                       MINERA ANDES INC.
                                       ------------------------------------
                                       (Registrant)


                                        By: /s/ ALLEN V. AMBROSE
                                            -------------------------------
                                                Allen V. Ambrose, President



Dated:  September 18, 1997

                                      III-3