40-F

U.S. Securities and Exchange Commission

Washington D.C. 20549

Form 40-F

[Check One]
o	REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE                               SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002 Commission File Number 001-13475

Glamis Gold Ltd.

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English (if applicable))

British Columbia, Canada

(Province or Other Jurisdiction of Incorporation or Organization)

1041

(Primary Standard Industrial Classification Code Number (if applicable))

Not Applicable

(I.R.S. Employer Identification Number (if applicable))

5190 Neil Road, Suite 310, Reno, Nevada 89502
(775) 827-4600

(Address and telephone number of Registrant’s principal executive offices)

Charles A Jeannes, Esq.
Senior Vice President, Administration, General Counsel and Secretary
Glamis Gold Ltd.
5190 Neil Road, Suite 310, Reno, Nevada 89502
(775) 827-4600

(Name, address (including zip code) and telephone number (including area code) of
agent for service in the United States)

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

Title of each class	Name of each exchange on which registered
Common Shares	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of he Act.

None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None
(Title of Class)

For annual reports, indicate by check mark the information filed with this Form:

x  Annual information form x   Audited annual financial statements

     Indicate the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of the period covered by the annual report.

125,978,115 Common Shares

     Indicate by check mark whether the Registrant by filing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the filing number assigned to the Registrant in connection with such Rule.

Yes     o No     x

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

Yes      x No     o

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

A. Undertaking

     Glamis Gold Ltd. (the “Company”) undertakes to make available, in person or by telephone, representatives to respond to inquires made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

B. Consent to Service of Process

     The Company filed an Appointment of Agent for Service of Process and Undertaking on Form F-X on November 13, 2002 with respect to the class of securities in relation to which the obligation to file the Form 40-F arises, which Form F-X is incorporated herein by reference.

CONTROLS AND PROCEDURES

     Within the 90 day period prior to the filing of this report, the Company carried out an evaluation, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the United States Securities Exchange Act of 1934 (“Exchange Act”). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in United States Securities and Exchange Commission rules and forms.

     Subsequent to the date of their evaluation, there have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls.

     The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

SIGNATURES

     Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

Date: March 31, 2003	GLAMIS GOLD LTD.
	By: /s/ C. Kevin McArthur
	C. Kevin McArthur       Chief Executive Officer

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CERTIFICATIONS

I, C. Kevin McArthur, certify that:

1.     I have reviewed this annual report on Form 40-F of Glamis Gold Ltd.;

2.     Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

     b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

     c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (and persons performing the equivalent function):

     a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the issuer’s auditors any material weaknesses in internal controls; and

     b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 31, 2003	By: /s/ C. Kevin McArthur
	C. Kevin McArthur       Chief Executive Officer

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CERTIFICATIONS

I, Cheryl S. Maher, certify that:

1.     I have reviewed this annual report on Form 40-F of Glamis Gold Ltd.;

2.     Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

     b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

     c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (and persons performing the equivalent function):

     a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the issuer’s auditors any material weaknesses in internal controls; and

     b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 31, 2003	By: /s/ Cheryl S. Maher
	Cheryl S. Maher       Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Document
1	Annual Information Form for the year ended December 31, 2002
2	Audited Comparative Consolidated Financial Statements of Glamis Gold Ltd., including the notes thereto, as of December 31, 2002 and 2001 and for each of the years in the three year period ended December 31, 2002, including a reconciliation to United States generally accepted accounting principles, together with the auditor’s report thereon, and Management’s Discussion and Analysis of Financial Condition and Results of Operations the fiscal year ended December 31, 2002,
3	Information Circular and Proxy Statement dated March 14, 2003
4	Appointment of Agent for Service of Process and Undertaking on Form F-X (previously filed on November 13, 2002 and incorporated herein by reference thereto)
5	Consent of KPMG LLP, Chartered Accountants
6	Consent of Mine Reserves Associates, Inc., Professional Engineers
7	Consent of Mine Development Associates, Inc., Professional Engineers
8	Consent of James S. Voorhees, Professional Engineer
99.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – C. Kevin McArthur
99.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Cheryl S. Maher

5 EX-1 3 o09429aexv1.htm ANNUAL INFORMATION FORM

EXHIBIT 1

GLAMIS GOLD LTD.
5190 Neil Rd. Suite 310
Reno, NV 89523

ANNUAL INFORMATION FORM

For the year ended December 31, 2002

Dated March 31, 2003

TABLE OF CONTENTS

	Page
ITEM 1 – Cover page		1
GLOSSARY		3
CURRENCY AND FINANCIAL INFORMATION		5
ITEM 2 – CORPORATE STRUCTURE		6
ITEM 3 – GENERAL DEVELOPMENT OF THE BUSINESS		6
ITEM 4 NARRATIVE DESCRIPTION OF THE BUSINESS		8
USES OF GOLD		8
GOLD SALES		8
RISK FACTORS		8
OTHER CONSIDERATIONS		16
SUMMARY OF RESERVES AND OTHER MINERALIZATION		17
OPERATING SUMMARY		21
PRODUCING PROPERTIES		24
RECLAMATION PROJECTS		27
OTHER PROJECTS		28
EXPLORATION PROJECTS		31
ITEM 5-SELECTED CONSOLIDATED FINANCIAL INFORMATION		31
ITEM 6-MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		37
ITEM 7-MARKETS FOR SECURITIES		37
ITEM 8-DIRECTORS AND OFFICERS		37
ITEM 9-ADDITIONAL INFORMATION		38

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GLOSSARY

Contained Ounces:	The ounces of metal in reserves obtained by multiplying tonnage by grade.
Cut-off Grade:	The grade below which mineralized material will be considered waste rather than ore.
Development:	The preparation of a known commercially mineable deposit for mining.
Doré:	A precious metals smelter product in bar or bullion form that is subsequently refined to high purity gold and silver.
Geochemical Survey:	The sampling of rocks, stream sediments, and soils in order to locate anomalous concentrations of metallic elements or minerals. The samples are usually assayed by various methods to determine the quantities of elements or minerals in each sample.
Geophysical Survey:	The exploration of an area in which physical properties relating to geology are used. Geophysical methods include seismic, magnetic, gravity and induced polarization techniques.
Gold Equivalent Ounces	The number of ounces of gold that is represented by an amount of silver based on the ratio of the price of an ounce of silver to the price of an ounce of gold.
Indicated Mineral Resource(1):	That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
Inferred Mineral Resource(1):	That part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
Measured Mineral Resource(1):	That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
Mineralized:	Mineral-bearing; the metallic minerals may have been either a part of the original rock unit or injected at a later time.
Net Smelter Returns:	Gross sales proceeds received from the sale of production obtained from a property, less the costs of insurance, smelting, refining (if applicable) and the cost of transportation of production from the mine or mill to the point of sale.

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Ore:	A metal or mineral or a combination of these of sufficient value as to quality and quantity to enable it to be mined and processed at a profit.
Ore Body:	The portion of a mineralized deposit that can be economically mined and processed for a profit.
Probable Mineral Reserve(1):	The economically mineable part of an indicated and in some circumstances a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.
Proven Mineral Reserve(1):	The economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.
Oz/t:	Troy ounces of metal per ton of material. One oz/t is equivalent to 31.103 grams per ton or 34.286 grams per tonne.
Patented Mining Claim:	A mineral claim which has been surveyed, and which grants ownership of the land within the surveyed area to the grantee.
Recovery Rate:	The percentage of metals or minerals which are recovered from ore during processing.
Reserves:	Combined proven and probable mineral reserves.
Stripping Ratio:	The ratio of waste rock to ore that will be experienced in mining an ore body.
Unpatented Mining Claim:	A mineral claim located on land owned by the United States which grants the exclusive possession of the minerals in place within the claim area to the recorded owner.

⁽¹⁾ The definitions of proven and probable mineral reserves, and measured, indicated and inferred mineral resources are set forth in National Instrument 43-101, Standards of Disclosure for Mineral Projects of the Canadian securities regulators which contains the parameters of disclosure for issuers engaged in significant mining operations. A reader in the United States should be aware that the definition standards enunciated in National Instrument 43-101 differ in certain respects from those set forth in SEC Industry Guide 7.

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ITEM 1: CURRENCY AND FINANCIAL INFORMATION

All currency amounts in this Annual Information Form are expressed in United States dollars, unless otherwise noted.

The financial information included herein is presented in accordance with accounting principles generally accepted in Canada. Differences between accounting principles generally accepted in Canada and those in the United States, as applicable, are explained in Note 16 of the Notes to the Consolidated Financial Statements of the Company. Reference is made to pages 21 through 40 of the 2002 Annual Report to Shareholders, which is incorporated herein by reference.

Forward-Looking Statements

Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995: Except for the statements of historical fact contained herein, the information presented constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes”, or variation of such words and phrases that refer to certain actions, events or results to be taken, occur or achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the actual results of exploration activities, actual results of reclamation activities, the estimation or realization of mineral reserves and resources, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, requirements for additional capital, future prices of gold, possible variations in ore grade or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labor disputes and other risks of the mining industry, delays in obtaining governmental approvals, permits or financing or in the completion of development or construction activities, the Company’s hedging practices, currency fluctuations, title disputes or claims limitations on insurance coverage and the timing and possible outcome of pending litigation, as well as those factors discussed under Item 4 in the section entitled “Risk Factors”. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

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ITEM 2: CORPORATE STRUCTURE

Glamis Gold Ltd. (the “Company”) was incorporated under the laws of the Province of British Columbia on September 14, 1972 under the name Renniks Resources Ltd. (N.P.L.). Since incorporation, the Company has undergone several capital reorganizations and on December 12, 1977 the name of the Company was changed to Glamis Gold Ltd.

The Company’s principal and executive offices are located at 5190 Neil Road, Suite 310, Reno, Nevada, USA 89502. The Company’s registered address is 1500-1055 West Georgia St., P.O. Box 11117, Vancouver, British Columbia, Canada V6E 4N7.

The Company’s operations are conducted through several subsidiaries, all of which are wholly-owned. The significant subsidiaries are shown below:

Name	Jurisdiction of Incorporation
Entre Mares de Guatemala S.A	Guatemala
Glamis de Mexico, S.A. de C.V	Mexico
Glamis Exploración, Inc.	Mexico
Glamis Guatemala Holdings Ltd.	Cayman Islands
Glamis Gold, Inc.	Nevada
Glamis Honduras Holdings Ltd	Cayman Islands
Glamis Holdings (Cayman) Ltd.	Cayman Islands
Glamis Imperial Corporation	Nevada
Glamis Marigold Mining Company	Nevada
Glamis Rand Mining Company	Nevada
International Mineral Finance Corporation	Barbados
Minas de la Alta Pimeria, S.A. de C.V.	Mexico
Minerales Entre Mares de Honduras S.A.	Honduras
Montana Exploradora de Guatemala S.A.	Guatemala

In this Annual Information Form, unless the context indicates otherwise, the term the “Company” refers to the Company together with all of its subsidiaries.

ITEM 3: GENERAL DEVELOPMENT OF THE BUSINESS

Summary of Business

The Company is engaged in exploration, mine development, and the mining and extraction of precious metals, primarily gold.

The Company’s general approach to the acquisition of mining properties has generally been to review undeveloped precious metal properties that others have explored in sufficient detail to demonstrate that the properties have significant potential gold mineralization or to review companies which own such properties. In 1998, a strategic plan was adopted to seek out growth opportunities to take advantage of lower acquisition costs available as a result of the lower gold price and weak junior share market conditions at that time. To that end, the Company completed the acquisition of Mar-West Resources Ltd. in October 1998, the acquisition of Rayrock Resources Inc. in February 1999, the acquisition of Cambior de Mexico S.A. de C.V. in May 2000 (discussed below), and the acquisition of Francisco Gold Corp. in July 2002 (discussed below).

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Effective May 9, 2000, the Company acquired 100% of the issued and outstanding shares of Cambior de Mexico S.A. de C.V., subsequently renamed Glamis de Mexico S.A. de C.V. (“Glamis de Mexico”), from Cambior Inc. for $7.2 million in cash. The Company also acquired a crushing system from Cambior Inc. for an additional $2.5 million in cash that was intended for use at the Cerro San Pedro Project, which was subsequently disposed of. Other cash transaction costs associated with this acquisition totaled $0.3 million. In addition, in consideration for advisory services rendered to the Company in connection with the acquisition, the Company granted to its investment advisor warrants to purchase up to 0.3 million shares of the Company’s common stock at an exercise price of $2.00 per share. The warrants were exercisable at any time until June 25, 2003, and all were exercised in 2002. Glamis de Mexico has interests in a number of mineral properties in Mexico, the most advanced of which is the Cerro San Pedro Project in San Luis Potosi State, in which the Company held a 50% interest. Subsequent to December 31, 2002, the Company agreed to sell its interest in the Cerro San Pedro Project to Metallica Resources Inc. (“Metallica”) for proceeds of up to $18.0 million and a net smelter return royalty of up to 2%, depending on the price of gold.

On July 16, 2002, the Company completed the acquisition by way of a plan of arrangement of Francisco Gold Corp. (“Francisco”), a British Columbia, Canada public company. Francisco’s principal assets are the El Sauzal gold project in Chihuahua, Mexico and the Marlin gold project in Guatemala.

Under the plan of arrangement, each issued Francisco share was exchanged for 1.55 common shares of the Company, one share in Chesapeake Gold Corp. (“Chesapeake”), a new exploration company formed by Francisco, and a right to receive an additional fraction of a Company common share upon the cancellation of certain Company common shares that are held in escrow. In addition, prior to closing of the transaction, Francisco transferred to Chesapeake cash of Cdn.$1.50 per share for each issued share of Francisco (Cdn.$25.0 million), certain early stage Nicaraguan exploration assets and a 2% net smelter return royalty on Francisco’s Guatemalan projects outside the Marlin project area. The Company retained a right to acquire a 5% stake in Chesapeake (based on its initial capitalization) through a three year share purchase warrant.

The Company issued 25,843,808 common shares to the shareholders of Francisco under the terms of the plan of arrangement and issued 1,674,000 stock options to directors, officers and employees of Francisco exercisable at prices between Cdn.$3.07 and Cdn.$4.04 per share in exchange for their existing Francisco stock options. The Company accounted for this acquisition using the purchase method.

In 2002, the Company produced gold from the Rand Mine, located in California, the Marigold Mine, located in Nevada and the San Martin Mine, located in Honduras. See Item 4, “Producing Properties”, for a description of the mines and processing facilities. The Company has other properties under development. In addition to the El Sauzal Project and the Marlin Project, the Company holds a 100% interest in a property located in Imperial County, California (the “Imperial Project”), and the Cerro Blanco Project in Guatemala, that may be available for future mining activities. See “Other Projects” under Item 4 for a description of these projects.

Based on the ounces of gold contained in the proven and probable mineral reserves as at December 31, 2002 on the properties in which the Company has an interest, and the Company’s ownership interests and rights in such properties, the Company estimates its proven and probable mineral gold reserves to be approximately 4.9 million contained ounces. For a more detailed description of the reserves see “Summary of Reserves and Other Mineralization – Proven and Probable Mineral Reserves” under Item 4.

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ITEM 4: NARRATIVE DESCRIPTION OF THE BUSINESS

The Company is engaged in exploration, mine development, and the mining and extraction of precious metals. At the Company’s operating mines, the primary method used is open-pit mining with heap leach extraction. The Company initiated heap leaching in California in 1981 and considers itself a leader in the use of this process. See Item 4, “Operating Summary — Processing”, for a description of the heap leaching process. The Company has operating mines in Nevada and California, U.S.A. and in Honduras, and development projects in Mexico and Guatemala. Information regarding operating segments and geographic information can be found in Note 14 “Segmented Information” of the Notes to the Consolidated Financial Statements that are incorporated herein by reference.

Uses of Gold

Gold bullion is used as an investment as well as in product fabrication, primarily carat jewelry, but with additional applications in electronics, dentistry, official coins, medallions, and other miscellaneous industrial uses.

Gold Sales

The doré produced by the Rand and Marigold mines and gold precipitates produced at the San Martin Mine are further refined by third parties before being sold as bullion (99.99% pure gold). The gold bullion is either sold at the spot price for delivery two days later or delivered against an existing forward sales or option contract to one of various precious metal merchants for delivery to the London, U.K. market. For more information on the Company’s hedging policy see the discussion under “Risk Factors – Gold price volatility” below.

The average London Bullion Market price for 2002 was $310 per ounce of gold, compared to $271 and $279 per ounce for each of 2001 and 2000, respectively. The following table sets forth for the calendar years indicated the annual high and low gold prices per troy ounce on the London Bullion Market.

	London Bullion Market P.M. Fixing
Calendar Year	High		Low
2002	$	349.30	$	281.65
2001		293.25		255.95
2000		312.70		263.80
1999		326.25		252.80
1998		312.90		273.40
1997		366.55		283.00
1996		414.80		367.40
1995		396.95		372.40
1994		396.25		369.65
1993		406.60		325.20

The London P.M. fixing price for gold on December 30, 2002 was $347.20 per ounce and on March 31, 2003 the London P.M. fixing price was $334.85 per ounce.

Risk Factors

The Company’s mining operations are subject to the normal risks of mining, and its profits are subject to numerous factors beyond the Company’s control. Certain of these risk factors are discussed below.

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Gold price volatility

Gold prices historically have fluctuated widely and are affected by numerous factors outside of the Company’s control including industrial and retail demand, central bank lending, sales and purchases of gold, forward sales of gold by producers and speculators, levels of gold production, short-term changes in supply and demand because of speculative hedging activities, confidence in the global monetary system, expectations of the future rate of inflation, the strength of the U.S. dollar (the currency in which the price of gold is generally quoted), interest rates and global or regional political or economic events.

The profitability of the Company’s operations is directly related to the market price of gold. If gold prices decline for a substantial period below the cost of production of any or all of the Company’s operations, it may not be economically feasible to continue production at such sites. This would materially and adversely affect production, earnings and the Company’s financial position. A decline in the market price of gold may also require the Company to write-down its mineral reserves which would have a material and adverse effect on its earnings and financial position. Should any significant writedown in reserves be required, material writedowns of the Company’s investment in the affected mining properties and increased amortization, reclamation and closure charges may be required.

The Company’s current hedging policy, approved by the Board of Directors, gives management the discretion to commit up to 60% of planned production for up to five years. Management is authorized to use any combination of spot, forward, spot deferred forwards and put or call options. Although this is the approved policy, management’s current practice is to not hedge any part of the Company’s gold production and the Company currently has no hedging contracts in place. Since the Company does not currently engage in gold hedging activities, the Company’s exposure to the impact of gold price volatility is higher.

Further, if revenue from gold sales declines, the Company may experience liquidity difficulties. This may reduce its ability to invest in exploration and development which would materially and adversely affect future production, earnings and the Company’s financial position.

Production estimates

The Company prepares estimates of future gold production for its various operations. The Company cannot give any assurance that it will achieve its production estimates. The failure of the Company to achieve its production estimates could have a material and adverse effect on any or all of its future cash flows, results of operations and financial condition. These production estimates are dependent on, among other things, the accuracy of mineral reserve estimates, the accuracy of assumptions regarding ore grades and recovery rates, ground conditions and physical characteristics of ores, such as hardness and the presence or absence of particular metallurgical characteristics and the accuracy of estimated rates and costs of mining and processing.

The Company’s actual production may vary from its estimates for a variety of reasons, including, actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; short-term operating factors such as the need for sequential development of ore bodies and the processing of new or different ore grades from those planned; mine failures, slope failures or equipment failures; industrial accidents; natural phenomena such as inclement weather conditions, floods, blizzards, droughts, rock slides and earthquakes; encountering unusual or unexpected geological conditions; changes in power costs and potential power shortages; shortages of principal supplies needed for operation, including explosives, fuels, chemical reagents, water, equipment parts and lubricants; labor shortages or strikes; civil disobedience and protests; and restrictions or regulations imposed by government agencies or other changes in the regulatory environments. Such occurrences could result in damage to mineral properties, interruptions in

9

production, injury or death to persons, damage to property of the Company or others, monetary losses and legal liabilities. These factors may cause a mineral deposit that has been mined profitably in the past to become unprofitable, forcing the Company to cease production. Each of these factors also applies to the Company’s sites not yet in production and to operations that are to be expanded. In these cases, the Company does not have the benefit of actual experience in verifying its estimates, and there is a greater likelihood that actual production results will vary from the estimates.

It is not unusual in new mining operations to experience unexpected problems during the start-up phase. Depending on the price of gold or other minerals, the Company may determine that it is impractical to commence or, if commenced, to continue commercial production at a particular site.

Mine development

The Company’s ability to sustain or increase its present levels of gold production is dependent upon the successful development of new producing mines and/or identification of additional reserves at existing mining operations. If the Company is unable to develop new ore bodies, it will not be able to sustain present production levels. Reduced production could have a material and adverse impact on future cash flows, results of operations and financial condition.

Feasibility studies are used to determine the economic viability of a deposit. Many factors are involved in the determination of the economic viability of a deposit, including the achievement of satisfactory mineral reserve estimates, the level of estimated metallurgical recoveries, capital and operating cost estimates and the estimate of future gold prices. Capital and operating cost estimates are based upon many factors, including anticipated tonnage and grades of ore to be mined and processed, the configuration of the ore body, ground and mining conditions, expected recovery rates of the gold from the ore and anticipated environmental and regulatory compliance costs. Each of these factors involves uncertainties and as a result, the Company cannot give any assurance that its development or exploration projects will become operating mines. If a mine is developed, actual operating results may differ from those anticipated in a feasibility study.

Mineral reserves and resources estimates

The figures presented for both mineral reserves and mineral resources herein and in the documents incorporated herein by reference are only estimates. The estimating of mineral reserves and mineral resources is a subjective process and the accuracy of reserve and resource estimates is a function of the quantity and quality of available data and the assumptions used and judgments made in interpreting engineering and geological information. There is significant uncertainty in any reserve or resource estimate, and the actual deposits encountered and the economic viability of mining a deposit may differ materially from the Company’s estimates.

Estimated mineral reserves or mineral resources may have to be recalculated based on changes in gold prices, further exploration or development activity or actual production experience. This could materially and adversely affect estimates of the volume or grade of mineralization, estimated recovery rates or other important factors that influence reserve or resource estimates. Market price fluctuations for gold, increased production costs or reduced recovery rates, or other factors may render the present proven and probable mineral reserves of the Company uneconomical or unprofitable to develop at a particular site or sites. A reduction in estimated reserves could require material writedowns in the Company’s investment in the affected mining properties and increased amortization, reclamation and closure charges.

Competition for mining claims and mining assets

The Company competes with other mining companies and individuals for mining claims and leases on exploration properties and the acquisition of gold mining assets. Some of the companies with which the Company competes have significantly greater financial, management and technical

10

resources than the Company, and may use these resources to their advantage when competing with the Company for such opportunities. The Company cannot give any assurance that it will continue to be able to compete successfully with its competitors in acquiring attractive mineral properties and assets.

Exploration projects

Gold exploration is highly speculative in nature. The Company’s exploration projects involve many risks and success in exploration is dependent upon a number of factors including, but not limited to, quality of management, quality and availability of geological expertise and availability of exploration capital. The Company cannot give any assurance that its future exploration efforts will result in the discovery of a mineral reserve or resource, or that its current and future exploration programs will result in the expansion or replacement of current production with new proven and probable mineral reserves. The Company cannot give assurance that its exploration programs will be able to extend the life of its existing properties or result in the discovery of new producing mines.

Future capital requirements

As of December 31, 2002, the Company had cash and cash equivalents of approximately $160.0 million and working capital of approximately $169.1 million. The Company intends to use its working capital together with its future cash flows to finance the initial capital costs of the El Sauzal Project and the Marigold Millennium Expansion Project, to fund exploration and development work on the Marlin Project and for general corporate purposes. The Company estimates that capital expenditures related to the purchase of mining and processing equipment, project development and pre-stripping for the El Sauzal Project will be approximately $101 million, including a $10 million contingency reserve pending completion of final design. The Company estimates that capital expenditures for all projects and funds for exploration during 2003 will be approximately $58.4 million. The Company may have further capital requirements to the extent it decides to develop a mine at the Marlin Project or other properties or to take advantage of opportunities for acquisitions, joint ventures or other business opportunities that may be presented to it. In addition, the Company may incur major unanticipated liabilities or expenses.

The Company’s ability to continue its planned exploration and development activities also depends in part on its ability to generate free cash flow from its Rand, Marigold and San Martin mines. The Company may be required to obtain additional financing in the future to fund future exploration and development activities or acquisitions of additional properties or other interests that may be appropriate to enhance the Company’s financial or operating interests. The Company has historically raised capital through equity financing and in the future may raise capital through equity or debt financing, joint ventures, production sharing arrangements or other means. There can be no assurance that the Company will be able to obtain necessary financing in a timely manner on acceptable terms, if at all.

Government regulations

The Company’s mining operations and exploration and development activities are subject to extensive laws and regulations governing health and worker safety, employment standards, waste disposal, protection of the environment, protection of historic and archeological sites, mine development and protection of endangered and protected species and other matters. Each jurisdiction in which the Company has properties, including the United States, Mexico, Honduras and Guatemala, regulates mining activities. The Company generally requires permits from authorities in these jurisdictions to authorize the Company’s operations. These permits relate to virtually every aspect of the Company’s exploration, development and production activities. It is possible that future changes in applicable laws, regulations or changes in their enforcement or regulatory interpretation could result in changes in legal requirements or in the terms of existing permits applicable to the Company or its properties which could have a significant adverse impact on the

11

Company’s current operations or planned development projects, including the Marigold Millennium Expansion Project, and the development of the El Sauzal Project and the Marlin Project.

Obtaining necessary permits can be a complex, time consuming process and the Company cannot predict whether necessary permits will be obtainable on acceptable terms, in a timely manner or at all. The costs and delays associated with obtaining necessary permits and complying with these permits and applicable laws and regulations could stop or materially delay or restrict the Company from proceeding with the development of a project or the operation or further development of a mine. Any failure to comply with applicable laws and regulations or permits, even if inadvertent, could result in interruption or closure of exploration, development or mining operations or material fines, penalties or other liabilities.

Title matters

Acquisition of title to mineral properties in all jurisdictions where the Company operates is a very detailed and time-consuming process. The Company has acquired substantially all of its mineral properties through acquisitions. Although the Company has investigated title to all of its mineral properties, the Company cannot give any assurance that title to such properties will not be challenged or impugned. The properties may have been acquired in error from parties who did not possess transferable title, may be subject to prior unregistered agreements or transfers, and title may be affected by undetected defects or aboriginal, indigenous peoples or native land claims.

Portions of the Company’s mineral reserves come from unpatented mining claims in the United States. There is a risk that any of the Company’s unpatented mining claims could be determined to be invalid, in which case the Company could lose the right to mine mineral reserves contained within those mining claims. Unpatented mining claims are created and maintained in accordance with the General Mining Law of 1872. Unpatented mining claims are unique U.S. property interests, and are generally considered to be subject to greater title risk than other real property interests due to the validity of unpatented mining claims often being uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations under the General Mining Law of 1872. Unpatented mining claims are always subject to possible challenges of third parties or contests by the federal government. The validity of an unpatented mining claim, in terms of both its location and its maintenance, is dependent on strict compliance with a complex body of federal and state statutory and decisional law.

In recent years, the U.S. Congress has considered a number of proposed amendments to the General Mining Law of 1872. If adopted, such legislation, among other things, could impose royalties on gold production from unpatented mining claims located on U.S. federal lands, result in the denial of permits to mine after the expenditure of significant funds for exploration and development, reduce estimates of mineral reserves and reduce the amount of future exploration and development activity on U.S. federal lands all of which could have a material and adverse affect on the Company’s cash flows, results of operations and financial condition.

In Honduras, site of the San Martin Mine, all mineral resources are owned by the state. Title to minerals can be held separately from title to the surface. Rights to explore for and to extract minerals are granted by the state through issuance of mining concessions. The Company has received its mining concessions for the San Martin Mine. The term of these concessions is indefinite, remaining in force as long as the Company meets its legal obligations. The Company has also acquired surface rights from private owners in the mining and processing areas at the San Martin site. However, there are few surveys and many of the tracts of land have no written title documents. Accordingly, there is a risk that the Company may not own good and marketable title to the surface rights necessary to conduct operations at the San Martin site.

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In Mexico, site of the El Sauzal and the Glamis de Mexico properties, all mineral resources are owned by the state. Title to minerals can be held separately from title to the surface. Mining rights take precedence over surface rights. Rights to explore for and to extract minerals are granted by the state through issuance of mining concessions. Exploration concessions are granted for six years. Exploitation concessions are granted for a period of 50 years.

In Guatemala, site of the Marlin and Cerro Blanco properties, mineral rights are held by the state, and surface rights can be privately held. The government grants exploration concessions of up to 100 square kilometers for a term of three years, with 2 two-year extensions available. Exploitation concessions are granted for 25 years, with one additional extension of 25 years available.

Environmental risks

Mining operations have inherent risks and liabilities associated with pollution of the environment and the disposal of waste products occurring as a result of mineral exploration and production. Laws and regulations involving the protection and remediation of the environment and the governmental policies for implementation of such laws and regulations are constantly changing and are generally becoming more restrictive. The Company has made, and expects to make in the future, significant expenditures to comply with such laws and regulations. The Company cannot give any assurance that notwithstanding its precautions and history of activities, environmental pollution will not materially and adversely affect its financial condition and its results from operations.

The Company’s current production is from open-pit mining and heap leach processing. The Company’s standard open-pit mining techniques have been designed to comply with reclamation requirements imposed by regulatory authorities. Such authorities generally require a mining company to return sites to safely-contoured slopes, but usually do not require backfilling of excavated areas. The Company generally is required to mitigate long-term environmental impacts by stabilizing, contouring, reshaping and re-vegetating various portions of a site once mining and processing are completed. Reclamation efforts generally must be conducted in accordance with detailed plans, which have been reviewed and approved by the appropriate regulatory agencies. Heap leaching is done with a dilute cyanide solution held within a closed circuit, which includes the leach pads and surface holding ponds. Leakage of heap leaching solutions could cause environmental damage. The old milling operations at the Company’s Dee and Marigold mines have tailing impoundments that have known leakage as detected by monitoring wells. The Company does not believe that local groundwater resources have been affected and the Company has undertaken remediation efforts as approved by the Nevada Department of Environmental Protection.

During the year ended December 31, 2002, the Company had 20 small reportable releases (hydraulic oil and process solutions) at its operations. In all cases the appropriate authorities were notified, clean-up was undertaken immediately, and no contamination of ground or surface waters occurred. Measures, including procedural changes and education, were taken to prevent re-occurrence of the incidents. No further action is expected with respect to any of the occurrences.

Reclamation costs

The Company is required to submit, for government approval, a reclamation plan that establishes the Company’s obligation to reclaim property after the minerals have been mined from the site. Reclamation by the Company of its mining sites takes place during and after the active life of the mine. In accordance with applicable laws, bonds or other forms of financial assurances have been provided by the Company for the reclamation of its mine sites. The Company may incur costs in connection with these reclamation activities in excess of such bonds or other financial assurances, which costs may have a material adverse effect on the Company’s earnings and financial condition.

13

The Company expended $2.5 million in 2002, $2.6 million in 2001 and $1.4 million in 2000 on site closure and reclamation at the Dee, Daisy and Picacho mines. During the years ended December 31, 2002, 2001 and 2000 the Company made no material capital expenditures with respect to environmental compliance except as required by permits for construction at its mining operations and for reclamation being carried out concurrently with mining operations.

The Company has established a reserve for future site closure and mine reclamation costs based on the Company’s estimate of the costs necessary to comply with existing reclamation standards. Site closure and mine reclamation costs for operating properties are reviewed annually and accrued using the unit of production method. There can be no assurance that the Company’s reclamation and closure accruals will be sufficient to cover all reclamation and closure costs.

Estimates and assumptions employed in the preparation of financial statements

The preparation of its consolidated financial statements requires the Company to use estimates and assumptions that affect the reported amounts of assets and liabilities as well as revenues and expenses. The Company’s accounting policies are described in note 2 to its consolidated financial statements. The Company’s accounting policies relating to work-in-progress inventory valuation, depreciation and amortization of property, plant and equipment and mine development costs, and site closure and reclamation accruals are critical accounting policies that are subject to estimates and assumptions regarding reserves, recovery rates, future gold prices and future mining activities.

The Company records the cost of mining ore stacked on its leach pads as work-in-progress inventory, and values work-in-progress inventory at the lower of cost or estimated net realizable value. These costs are charged to earnings and included in cost of sales on the basis of ounces of gold recovered. The assumptions used in the valuation of work-in-progress inventories include estimates of gold contained in the ore stacked on leach pads, assumptions of the amount of gold stacked that is expected to be recovered from the leach pads and an assumption of the gold price expected to be realized when the gold is recovered. If these estimates or assumptions prove to be inaccurate, the Company could be required to write-down the recorded value of its work-in-progress inventories, which would reduce the Company’s earnings and working capital.

The Company records mineral property acquisition costs and mine development costs at cost. In accordance with Canadian generally accepted accounting principles, the Company capitalizes pre-production expenditures net of revenues received, until the commencement of commercial production. A significant portion of the Company’s property, plant and equipment and mine development costs are depreciated and amortized on a unit-of-production basis. Under the unit-of-production method, the calculation of depreciation and amortization of property, plant and equipment and depletion of mine development costs is based on the amount of reserves expected to be recovered from each location. If these estimates of reserves prove to be inaccurate, or if the Company revises its mining plan for a location, due to reductions in the price of gold or otherwise, to reduce the amount of reserves expected to be recovered, the Company could be required to write-down the recorded value of its property, plant and equipment and mine development costs, or to increase the amount of future depreciation, depletion and amortization expense, both of which would reduce the Company’s earnings and net assets. In addition, generally accepted accounting principles require the Company to consider at the end of each accounting period whether or not there has been an impairment of the capitalized property, plant and equipment and mine development costs. For producing properties, this assessment is based on expected future cash flows to be generated from the location. For non-producing properties, this assessment is based on whether factors that may indicate the need for a write-down are present. If the Company determines there has been an impairment because its prior estimates of future cash flows have proven to be inaccurate, due to reductions in the price of gold, increases in the costs of production, reductions in the amount of reserves expected to be recovered or otherwise, or because the Company has determined that the deferred costs of non-

14

producing properties may not be recovered based on current economics or permitting considerations, the Company would be required to write-down the recorded value of its property, plant and equipment and mine development costs, which would reduce the Company’s earnings and net assets.

The Company has an obligation to reclaim its properties after the minerals have been mined from the site, and has estimated the costs necessary to comply with existing reclamation standards. These costs are accrued on a unit-of-production basis as gold is recovered and sold, based on the estimated amount of mineral reserves expected to be recovered from each location, with the aggregate amount accrued being reflected as a liability on the Company’s consolidated balance sheet as a reserve for future site closure and mine reclamation costs. If these estimates of costs or of recoverable mineral resources prove to be inaccurate, the Company could be required to increase the reserve for site closure and reclamation costs, increase the amount of future reclamation expense per ounce, or both, all of which would reduce the Company’s earnings and net assets.

Currency fluctuations

Currency fluctuations may affect the costs that the Company incurs at its operations. Gold is sold throughout the world based principally on a U.S. dollar price, but a portion of the Company’s operating expenses are incurred in non-U.S. dollar currencies. The appreciation of non-U.S. dollar currencies in those countries where the Company has mining operations against the U.S. dollar would increase the costs of gold production at such mining operations which could materially and adversely affect the Company’s earnings and financial condition.

Risks related to the Company’s foreign investments and operations

The Company conducts mining, development or exploration activities in countries other than Canada and the United States, including Mexico, Honduras and Guatemala. The Company’s foreign mining investments are subject to the risks normally associated with the conduct of business in foreign countries. The occurrence of one or more of these risks could have a material and adverse effect on the Company’s earnings or the viability of its affected foreign operations, which could have a material and adverse effect on the Company’s future cash flows, results of operations and financial condition.

Risks may include, among others, labor disputes, invalidation of governmental orders and permits, corruption, uncertain political and economic environments, war, civil disturbances and terrorist actions, arbitrary changes in laws or policies of particular countries, foreign taxation, delays in obtaining or the inability to obtain necessary governmental permits, opposition to mining from environmental or other non-governmental organizations, limitations on foreign ownership, limitations on the repatriation of earnings, limitations on gold exports and increased financing costs. These risks may limit or disrupt the Company’s projects, restrict the movement of funds or result in the deprivation of contract rights or the taking of property by nationalization or expropriation without fair compensation.

Insurance coverage

The mining industry is subject to significant risks that could result in damage to, or destruction of, mineral properties or producing facilities, personal injury or death, environmental damage, delays in mining and monetary losses and possible legal liability.

The Company’s policies of insurance may not provide sufficient coverage for losses related to these or other risks. The Company’s insurance does not cover all risks that may result in loss or damage and may not be adequate to reimburse the Company for all losses sustained. In addition, the Company does not have coverage for many environmental losses. The occurrence of losses or damage not covered by insurance could have a material and adverse effect on the Company’s cash flows, results of operation and financial condition.

15

Reliance on current management team

The success of the operations and activities of the Company is dependent to a significant extent on the efforts and abilities of its management including C. Kevin McArthur, President and Chief Executive Officer, James S. Voorhees, Vice-President Operations and Chief Operating Officer, Charles A. Jeannes, Senior Vice-President Administration, General Counsel and Secretary and Cheryl S. Maher, Vice-President Finance and Chief Financial Officer. Investors must be willing to rely to a significant extent on management’s discretion and judgment. The Company does not have in place formal programs for succession of management and training of management. The Company does not maintain key employee insurance on any of its employees. The loss of one or more of these key employees, if not replaced, could adversely affect the Company’s operations.

Other Considerations
Employees

At December 31, 2002, the Company employed approximately 552 persons located as follows:

Location	Number
San Martin Mine		256
Marigold Mine		113
Rand Mine		70
El Sauzal Project		10
Guatemala Projects		61
Daisy and Dee Mines (in reclamation)		10
Cerro San Pedro Project, Imperial Project, Exploration & Corporate		32
		552

The Company competes with other mining companies in connection with the recruitment and retention of qualified employees. The employees at all mines are non-union. At the present time a sufficient supply of qualified workers is available for operations at each of the Company’s mines. The continuation of such supply depends upon a number of factors, including, principally, the demand occasioned by other projects. There can be no assurance that the Company will continue to be able to retain or attract qualified employees. There is a risk that increased labor costs could have a material adverse effect on its operating costs.

Legal proceedings

The Company may become party to litigation or other adversary proceedings, with or without merit, in a number of jurisdictions. The cost of defending such claims may take away from management time and effort and if determined adversely to the Company, may have a material and adverse effect on its cash flows, results of operations and financial condition.

In Honduras, three actions are currently pending. In a civil action, a plaintiff is suing for recognition of their right of a mineral discovery in the area of the San Martin Mine. However, the alleged site is located outside the present and anticipated mining areas of the mine. In the second case, certain individuals have filed a complaint with the Honduran government challenging the issuance of the operating license to the San Martin Mine. While the case has been filed, actions required of the plaintiffs to formally commence the case have not been taken. In the third action, a criminal suit originally filed in January 2000 by the Honduran prosecutor’s office is still pending. The suit alleges illegal use of water, damage to a local river from sand and gravel extraction operations, and the removal of trees without appropriate permits. The Company has filed its responses denying the allegations and has petitioned for final dismissal of the case. The Company believes none of these actions will have a material adverse effect on the financial position or results of operations of the Company.

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Summary of Reserves and Other Mineralization
Proven and Probable Mineral Reserves

The following tables describe the Company’s proven and probable mineral reserves as at December 31, 2002, 2001, and 2000. Mineral reserves do not reflect losses in the heap leaching process, but do include allowance for dilution of ore in the mining process. Proven and probable mineral reserves as at December 31, 2002 were calculated based on a gold price of $300 per ounce. For the years ended December 31, 2001 and 2000, reserves for all properties were calculated based on a gold price of $275 per ounce. The ounces of gold that will actually be recovered from these reserves will depend on actual gold grades encountered and recovery rates achieved.

Mineral reserves and mineral resources have been calculated as at December 31, 2002 in accordance with definitions adopted in National Instrument 43-101 of the Canadian Securities Administration. For the year ended December 31, 2000, information was not available to delineate the reserves and resources using those definitions. For the year ended December 31, 2000, the reserves and resources were calculated using the definitions in SEC Industry Guide 7 and are grouped accordingly. Reference should be made to the Glossary on page 3 for a description of terms used herein The proven and probable mineral reserves as at December 31, 2002, 2001, and 2000 were determined by employees of the Company under the supervision of James S. Voorhees, P. Eng., Chief Operating Officer of the Company. With the exception of that portion of the Marigold mineral reserves associated with the “Millenium” expansion project for December 31, 2000, these proven and probable mineral reserves were verified by either Mine Development Associates, Inc. (2002) or Mine Reserves Associates, Inc. (2001 and 2000), entities that are not affiliated with the Company.

Proven and Probable Mineral Reserves

	As at December 31, 2002
	Proven				Probable				Total
	Tons		Gold Grade		Tons		Gold Grade		Tons		Gold Grade
Mine or Project	(in thousands)		(ave. oz/t)		(in thousands)		(ave. oz/t)		(in thousands)		(ave. oz/t)
San Martin Mine		23,247		0.023		10,818		0.024		34,065		0.024
Marigold Mine (66.7%)		27,717		0.027		25,012		0.024		52,729		0.026
Rand Mine		0		—		0		—		—		—
El Sauzal Project		7,679		0.108		12,810		0.092		20,489		0.098
Cerro San Pedro Project (50%)		26,382		*0.029		760		*0.014		27,142		*0.029
Totals		85,025		0.034		49,400		0.041		134,425		0.037

*Gold-equivalent ounces at a ratio of silver: gold of 70:1.

	As at December 31, 2001
	Proven				Probable				Total
	Tons		Gold Grade		Tons		Gold Grade		Tons		Gold Grade
Mine or Project	(in thousands)		(ave. oz/t)		(in thousands)		(ave. oz/t)		(in thousands)		(ave. oz/t)
San Martin Mine		26,003		0.026		12,452		0.024		38,455		0.025
Marigold Mine (66.7%)		22,836		0.029		27,509		0.025		50,345		0.027
Rand Mine		8,432		0.022		98		0.023		8,530		0.023
Cerro San Pedro Project (50%)		26,383		*0.029		760		*0.014		27,143		*0.029
Totals		83,654		0.027		40,819		0.024		124,473		0.027

*Gold-equivalent ounces at a ratio of silver: gold of 70:1.

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As at December 31, 2000

Proven

Probable

Total

Tons

Gold Grade

Tons

Gold Grade

Tons

Gold Grade

Mine or Project

(in thousands)

(ave. oz/t)

(in thousands)

(ave. oz/t)

(in thousands)

(ave. oz/t)

San Martin Mine

**

**

**

**

41,949

0.025

Marigold Mine (66.7%)

**

**

**

**

20,174

0.035

Rand Mine

**

**

**

**

11,393

0.020

Cerro San Pedro Project (50%)

**

**

**

**

27,135

*0.029

Totals

**

**

**

**

100,650

0.027

Gold-equivalent ounces at a ratio of silver: gold of 70:1.

**Information on the breakdown between proven and probable reserves for 2000 is not available.

Other mineralization

In addition to the proven and probable mineral reserves described above, the Company has delineated certain other measured mineral resource. Measured mineral resource has not been included in the proven and probable mineral reserve estimates because even though enough drilling has been performed to indicate a sufficient amount and grade to warrant further exploration or development expenditures, these resources have not been subjected to an economic feasibility analysis and therefore do not qualify as proven and probable mineral reserves. The exception to this is the mineralization at the Imperial Project which was reclassified from proven and probable mineral reserves based on the denial of mining permits in January 2001. The measured, indicated and inferred mineral resources of the Company are not yet known to contain commercially mineable ore bodies and cannot be considered such unless and until further drilling and metallurgical work have been conducted and economic and technical feasibility factors have been examined and favorably determined. Measured, indicated and inferred mineral resources have been calculated solely by the Company.

Measured, Indicated and Inferred Mineral Resources

	As at December 31, 2002
	Measured				Indicated				Total
	Tons		Gold Grade		Tons		Gold Grade		Tons		Gold Grade
Mine or Project	(in thousands)		(ave. oz/t)		(in thousands)		(ave. oz/t)		(in thousands)		(ave. oz/t)
San Martin Mine		28,369		0.023		16,602		0.022		44,971		0.023
Marigold Mine (66.7%)		37,135		0.024		42,902		0.021		80,037		0.022
El Sauzal Project		21,681		0.082		4,035		0.069		25,716		0.080
Marlin Project		29,082		*0.072		9,978		*0.074		39,060		*0.073
Imperial Project		74,800		0.017		16,400		0.015		91,200		0.017
Cerro San Pedro Project (50%)		33,964		*0.025		7,380		*0.025		41,344		*0.025
Cerro Blanco Project		—		—		17,092		*0.076		17,092		*0.076
Totals		225,031		0.034		114,389		0.035		339,420		0.034

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	As at December 31, 2002
	Inferred
	Tons		Gold Grade
Mine or Project	(in thousands)		(ave. oz/t)
San Martin Mine		38,466		0.013
Marigold Mine (66.7%)		59,170		0.014
El Sauzal Project		12,505		0.032
Marlin Project		32,125		*0.037
Imperial Project		48,300		0.012
Cerro San Pedro Project (50%)		39,635		*0.016
Cerro Blanco Project		6,813		*0.076
Totals		237,014		0.019

*Gold-equivalent ounces at a ratio of silver: gold of 70:1.

	As at December 31, 2001
	Measured				Indicated				Total
	Tons		Gold Grade		Tons		Gold Grade		Tons		Gold Grade
Mine or Project	(in thousands)		(ave. oz/t)		(in thousands)		(ave. oz/t)		(in thousands)		(ave. oz/t)
San Martin Mine		34,256		0.025		22,980		0.021		57,236		0.023
Marigold Mine (66.7%)		36,196		0.023		87,449		0.018		123,645		0.019
Rand Mine		27,741		0.020		1,367		0.020		29,108		0.020
Imperial Project		74,800		0.017		16,400		0.015		91,200		0.017
Cerro San Pedro Project (50%)		33,928		*0.027		7,372		*0.017		41,300		*0.025
Cerro Blanco Project		N/A		N/A		17,100		*0.073		17,100		*0.073
Totals		206,921		0.021		152,668		0.023		359,589		0.022

	As at December 31, 2001
	Inferred
	Tons		Gold Grade
Mine or Project	(in thousands)		(ave. oz/t)
San Martin Mine		1,159		0.013
Marigold Mine (66.7%)		14,255		0.015
Rand Mine		29,700		0.017
Imperial Project		48,300		0.012
Cerro San Pedro Project (50%)		44,000		*0.014
Cerro Blanco Project		6,800		*0.082
Totals		144,214		0.017

*Gold-equivalent ounces at a ratio of silver: gold of 70:1.

As at December 31, 2000

Measured

Indicated

Total

Tons

Gold Grade

Tons

Gold Grade

Tons

Gold Grade

Mine or Project

(in thousands)

(ave. oz/t)

(in thousands)

(ave. oz/t)

(in thousands)

(ave. oz/t)

San Martin Mine

**

**

**

**

45,700

0.028

Marigold Mine (66.7%)

**

**

**

**

33,933

0.033

Rand Mine

**

**

**

**

32,800

0.020

Imperial Project

**

**

**

**

91,200

0.017

Cerro San Pedro Project (50%)

**

**

**

**

41,300

*0.025

Totals

244,933

0.023

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	As at December 31, 2000
	Inferred
	Tons		Gold Grade
Mine or Project	(in thousands)		(ave. oz/t)
San Martin Mine		6,500		0.020
Marigold Mine (66.7%)		47,400		0.022
Rand Mine		33,400		0.017
Imperial Project		48,300		0.012
Cerro San Pedro Project (50%)		44,000		*0.014
Totals		179,600		0.016

*Gold-equivalent ounces at a ratio of silver: gold of 70:1.

**Information on the breakdown between measured and indicated resources for 2000 is not available.

Effects of Mining and Development During 2002
 
During the period January 1, 2002 to December 31, 2002 effects of mining and development at each of the Company’s mines and projects with proven and probable mineral reserves are as follows:

Rand Mine – During fiscal 2002, 6,138,800 tons of ore containing 142,028 ounces of gold were mined and placed on the heap leach pads at the Rand Mine and 66,934 ounces of gold were recovered. No ounces were added to reserves during 2002.

Marigold Mine – During fiscal 2002, 4,778,073 tons of ore containing 115,400 ounces of gold were mined and placed on the heap (100% basis), and 55,550 ounces of gold were produced for the Company’s account. The Millenium Project exploration program added approximately 75,000 contained ounces of gold to the proven and probable mineral reserves for the Company’s account.

San Martin Mine – During 2002, 6,110,224 tons of ore, containing 213,485 ounces of gold were mined and placed on the leach pad, and 129,435 ounces of gold were recovered. Approximately 54,200 contained ounces of gold were added to proven and probable mineral reserves by infill and extensional drilling and modeling work.

El Sauzal Project – The project was acquired in July 2002 as part of the Francisco merger. The project has proven and probable mineral reserves of 20.5 million tons of ore containing 2.0 million ounces of gold. No additional ounces were added by the Company during 2002.

Cerro San Pedro Project – No further development drilling was done on the project subsequent to acquisition in May 2000. At December 31, 2002, the Company’s 50% share of proven and probable mineral reserves stood at 27,142,500 tons grading 0.029 of gold equivalent ounces per ton. Subsequent to year end the Company’s share in the project was sold to Metallica Resources Inc.

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Exploration and Development Expenditures

The following table lists the amount of expenditures incurred by the Company on exploration and mine development activities during the years ended December 31, 2002, 2001, and 2000.

Exploration and Development Expenditures
(in thousands of dollars)

	Year Ended December 31,
Mine	2002		2001		2000
Rand Mine	$	—	$	4,093	$	861
Imperial Project		—		—		678
San Martin Mine		680		790		16,160
Marigold Mine		7,102		3,778		1,420
El Sauzal Project		1,679		—		—
Marlin Project		2,528		—		—
Dee Mine		—		—		297
Cerro San Pedro Project		442		1,589		989
Cerro Blanco Project, Guatemala		1,536		364		521
Panama Projects		7		199		144
Other projects: United States or Mexico		161		—		386
Other general exploration		129		423		424
	$	14,264	$	11,236	$	21,880

OPERATING SUMMARY
Production Methods

During 2002 the Company employed only open pit mining methods at its operations. The Dee Mine, which employed underground methods, was closed at the end of 2000.

Surface (Open Pit) Mining

Open pit mining is accomplished through a series of unit operations that provide for excavation of the mineral deposit. Typically, mining progresses downward in horizontal lifts or benches that vary in thickness from 20 to 40 feet, as required by the particular characteristics of the deposit. First, the ground to be excavated is drilled using large track-mounted blast hole drills. Drill cuttings are sampled and assayed to determine the areas containing ore-grade mineralization.

The blast holes are then charged with an explosive – ANFO – which is a blend of ammonium nitrate and fuel oil. Some conditions require the use of specialty blasting agents and emulsions.

Once blasted, the broken material is excavated using wheel loaders or hydraulic shovels with bucket capacities ranging between 13 and 40 cubic yards. The material is placed in off-road haul trucks with payloads varying between 85 and 190 tons. Ore is transported to specialized facilities for processing, and waste and/or overburden is transported to storage areas pending final placement.

Bulldozers, graders, and water trucks are used to develop and maintain the roads and accesses needed to support the mining operation. Dust suppression is accomplished by application of water on haul roads and at the active working faces. During and following mining activities, reclamation of disturbed areas is achieved by recontouring and re-vegetation as appropriate for the site.

Processing: Heap Leaching

The Company primarily uses the heap leach method to extract gold from low-grade ores. This process involves piling relatively coarse ore on an impervious membrane and allowing a

21

dissolving fluid (a weak cyanide solution in the case of gold recovery) to seep down through the pile. The valuable metals are contained in the leaching solution that drains from the bottom of the pile and is subsequently collected on carbon and then recovered by electrowinning and smelting.

Many aspects of ores have a large influence on the leachability or recovery of the contained precious metals. For example, the presence of certain clays may hinder the movement of solutions through the pile and lack of fractures or porosity in the ore may shield the contained metals from the leaching solution, making them largely unrecoverable. The best leaching ores are those that are fractured, oxidized, and free of chemicals that consume the cyanide.

Because of the nature of most of the ore at the Rand and Marigold Mines, crushing of low-grade ores is not currently needed. As a result, the ore is taken from the pits and unloaded directly from trucks onto leach piles. Alkalinity of the ore is controlled by adding modifying reagents. The modifying reagents are used to increase the alkalinity of the ore, because the weak cyanide leaching solution used in the process is unstable in anything but an alkaline environment. Sprinklers or drippers are placed on top of the leach pile and the leaching solution is applied. At the San Martin Mine, the ore is crushed and agglomerated with cement and lime to improve leaching characteristics. A drum system is used to agglomerate the ore which is then transported by conveyor to the heap leach pad and stacked.

Drain pipes which collect the leaching solution are buried at the base of the heap. The drainage system is usually segmented to allow parts of the piles to be leached independently. Each segment also contains a leak detection system so that if a leak in the liner occurs, the area of the leak can be isolated. Ore is piled in successive layers on the leach pad. When one layer of the pile has been adequately leached, another layer of ore is placed on top and the leaching process continues.

The gold-bearing solutions drain from the leach pile and are collected in a pregnant solution pond. From there, the solution is pumped through columns of granular, activated carbon and a gold-oxygen-cyanide complex is captured in the carbon pores. The leaching solution is then returned to the heap and utilized for further leaching. The carbon is removed and treated with a hot caustic or caustic-cyanide solution that releases the gold complex from the carbon. The solution is then passed through an electrowinning circuit where the gold is deposited on steel wool batts. The batts are removed and broken down into a sludge. At San Martin, this sludge is shipped to a refinery for processing into gold bars. At the other operations, the sludge, or the steel wool plus gold, is smelted in a crucible and poured into a mold, forming a doré bar. The doré bars are sent to a refiner for further processing.

Gold Production

The following table describes, for the years ended December 31, 2002, 2001 and 2000, gold production from the Company’s mining operations.

Gold Production (in ounces)

Mine	Year Ended December 31,
	2002		2001		2000
San Martin		129,435		114,216		3,562
Rand		66,934		59,324		99,936
Marigold (66.67%)		55,550		56,525		43,655
Dee		—		—		61,065
Daisy		—		—		8,740
Picacho		—		—		1,432
Total Production		251,919		230,065		218,390

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Production Costs per Ounce of Gold Produced

The following table describes for the years ended December 31, 2002, 2001 and 2000 the total cash cost of production per ounce related to the Company’s mining operations. Total cash cost of production includes mining, processing (including transportation and refining), costs associated with movements in production inventories net of pre-production stripping costs (which are capitalized to mine development costs), direct mine overhead costs, local production taxes and royalties, and excludes general and administrative costs at the corporate level, depreciation and depletion and end-of-mine reclamation accruals. Costs of production and revenues from the first production at the San Martin Mine during 2000 were capitalized to mine development costs.

Total Cash Cost of Production per Ounce of Gold Produced

Mine	Year Ended December 31,
	2002		2001		2000
San Martin	$	106	$	120	$	—
Rand		247		265		176
Marigold		180		179		240
Dee		—		—		287
Daisy		—		—		208
Picacho		—		—		254
Average For All Mines	$	160	$	172	$	222

Cash costs of production should not be considered as an alternative to operating profit or net profit attributable to shareholders, or as an alternative to other Canadian or U.S. generally accepted accounting principle measures and may not be comparable to other similarly titled measures of other companies. However, the Company believes that cash costs of production per ounce of gold, by mine, is a useful indicator to investors and management of a mine’s performance as it provides: (i) a measure of the mine’s cash margin per ounce, by comparison of the cash operating costs per ounce by mine to the price of gold; (ii) the trend in costs as the mine matures; and (iii) an internal benchmark of performance to allow for comparison against other mines.

The difference between cost of sales as presented in the consolidated statements of operations and cash costs of production for the Company is due to the cost of any additional ounces sold out of finished goods inventory compared to those ounces actually produced during the year. There is no significant difference in the total cash cost per ounce of production and total cash cost per ounce sold.

Total cost of production includes the total cash costs of production, as defined above, together with depreciation, depletion and end-of-mine reclamation accruals.

Total Cost of Production per Ounce of Gold Produced

Mine	Year Ended December 31,
	2002		2001		2000
San Martin	$	203	$	169	$	—
Rand		284		310		251
Marigold		257		211		290
Dee		—		—		346
Daisy		—		—		299
Picacho		—		—		275
Average For All Mines	$	236	$	216	$	288

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PRODUCING PROPERTIES:
SAN MARTIN MINE (Central Honduras)
Property

The San Martin Mine is controlled 100% by Minerales Entre Mares de Honduras and is located approximately 55 miles north of the capital city of Tegucigalpa, Honduras. Access is by way of paved and improved gravel roads. The property consists of 14,100 hectares of land around the Rosa and Palo Alto deposits. San Martin is located in an area that receives an average annual rainfall of approximately one meter.

Operations

San Martin is an open-pit heap-leach mine, designed to be a low cost operation. The Company currently expects the total tons mined per year during the first six years will vary between five and seven million tons, over 80% of which is expected to be ore. Conventional loaders and haul trucks form the primary mining fleet. Ore is crushed and agglomerated before placement on an adjacent heap leach pad for leaching. The mine commenced commercial production in January 2001. During 2002, San Martin processed 6,110,226 tons of ore and stacked 213,485 contained ounces of gold on the leach pad. The mine produced 129,435 ounces of gold at a total cash cost per ounce of $106.

Capital expenditures to acquire, develop and construct the mine totaled $52.1 million through December 31, 2000. Capital expenditures during 2001 were $5.6 million and were $4.2 million during 2002, primarily for construction of new leach pads.

Permitting

All environmental regulatory permits, licenses and authorizations required to carry out planned operations at the San Martin Mine have been obtained and are in good standing.

Exploration

Exploration activities continued in 2002 near both the Rosa and Palo Alto deposits. A total of 54,200 contained ounces of gold were added to the proven and probable mineral reserve through a combination of reverse circulation drilling and remodeling of the deposits. Drilling of the West Palo Alto zone yielded 32,370 ounces of gold. Regional exploration around San Martin continues, with reverse circulation drilling planned in 2003 for the Minitas property.

San Martin Production Results	Year Ended December 31,
	2002		2001
Ore mined (tons)		6,051,788		6,217,422
Waste mined (tons)		1,064,891		1,146,436
Stripping ratio		0.15:1		0.16:1
Average gold assay (ounces/ton)		0.035		0.030
Ounces of gold produced		129,435		114,216
Total cash cost of production per ounce	$	106	$	120

MARIGOLD MINE (Valmy, Nevada)
Property

Glamis Marigold Mining Company (“Marigold”) owns the Company’s 66 2/3% interest in the Marigold Mine. Barrick Gold Corporation holds the remaining 33 1/3 % interest. The Company is the operator of the property.

24

The mine is located in Humboldt County, 40 miles southeast of Winnemucca, Nevada at the north end of the Battle Mountain-Eureka Trend that extends through central Nevada. Located five miles south of Valmy, Nevada, the property consists of 28.9 square miles, including 13 square miles of leased patented mining claims. The remaining 15.9 square miles are unpatented mining claims, 6.1 square miles of which are not subject to royalties.

Royalty rates on leased land range from 3% to 5% of net smelter returns, with rates rising to 7% or 8% on certain parcels depending on the price of gold. The rate for the remaining life of mine is anticipated to average approximately 6.5%. Total royalty payments in 2002 were $1.8 million (Company’s share, $1.2 million).

Operations

The Marigold Mine produced 83,321 ounces of gold (100%) during 2002, at a total cash cost of production of $180 per ounce. The Company’s share of this production was 55,550 ounces of gold.

The oxide mill on the property operated during the winter months of 1998-1999 and was shut down in March 1999. After the Company acquired the Marigold Mine, it was determined that operation of the mill was not economical unless adequate mill feed becomes available to have the mill processing continuously. During 2000, 2001 and 2002, all of the production for the Company’s account came from the operation of the heap leach pads. As no new reserves had been discovered which economically justified the mill, at the end of 2000 the decision was made to write down the mill to its estimated value of $0.2 million.

The mining fleet at Marigold consists of two 40 cubic yard shovels, three 13 cubic yard front-end loaders, five 190 ton haul trucks, eleven 85-100 ton haul trucks and miscellaneous ancillary equipment. The smaller mining fleet of 13 yard loaders and 85-100 ton haul trucks will be phased out over the next two years. Ore production in 2002 came primarily from the East Hill Stage 4 pit and the Terry Zone Stage 1 pit. For 2002, the combined production from these pits was 115,400 contained ounces of gold. The average stripping ratio in 2002 was 4.0:1.

Total capital expenditures in 2002 were $26.6 million. This consisted of expenditures for five haul trucks, a new electric hydraulic shovel, and 3 blast-hole drills ($14.8 million); deferred stripping ($6.3 million) and other mine development and leach pad construction ($4.6 million). In addition a royalty on the property was bought back for $0.9 million.

Permitting

The mine has operated with a plan of operations approved by the Bureau of Land Management (“BLM”) and appropriate agencies since it began mining in 1988. This plan of operations was based on an environmental assessment at that time. In 1998, it was decided that further amendments to the plan of operation could only be achieved through the preparation of an Environmental Impact Statement (“EIS”) to cover then-anticipated future operations. The draft EIS was issued by the BLM in January 2001. The final EIS was completed in March 2001, with a record of decision issued in August 2001.

Additional permitting for the Marigold Millenium Expansion project was initiated in December 2001. A minor modification to the current plan of operations to allow deepening of the Terry Zone pit and expansion of leach pad facilities was approved on March 25, 2002. An amended plan of operations was submitted in April 2002, followed by submission of the preliminary draft Supplemental EIS (“SEIS”) in October 2002. Publication of the draft SEIS for public comment is expected in the second quarter of 2003, with final approval and publication of a Record of Decision by the end of the third quarter 2003.

25

Exploration

Exploration activities during 2002 were aimed at expanding reserves in the Millennium Project. Efforts combined a development/infill drill program utilizing reverse circulation drilling on the Millenium (southern) deposits with a development drill program using the same type of drilling to define additional ore from the 8 South pit and to refine the 8 North deposit. These efforts resulted in the addition of over 75,000 contained ounces of gold to proven and probable mineral reserves.

	Year Ended December 31,
Marigold Mine Production Results
( the Company’s 66.67% share)	2002		2001		2000
Ore mined (tons)		3,185,382		3,147,946		1,685,000
Waste mined (tons)		12,847,801		7,576,439		7,773,400
Stripping ratio		4.0:1		2.4:1		4.61:1
Average gold assay (ounces/ton)		0.024		0.023		0.036
Ounces of gold produced		55,550		56,526		43,655
Total cash cost of production per ounce	$	180	$	179	$	240

RAND MINE (Kern County, California)
Property

Glamis Rand Mining Company (“Rand”) operates the Rand Mine located approximately 100 miles northeast of Los Angeles.

The property consists of 135 patented mining claims and 537 unpatented mining claims covering approximately 13.8 square miles. Rand owns all or a portion of 42 of the patented claims and 390 of the unpatented claims. The balance is held under lease.

Royalty rates are 6% of net smelter returns on production from properties leased from Yellow Aster Mining and Milling Company, with a minimum payment of $4,000 per month. Other leases have advance minimum royalties as well as net smelter return royalties. These have no significant minimum required payments, and the royalties average 1.5% of net smelter returns. Royalty expense at Rand during 2002 amounted to $1.2 million. There were no exploration activities during 2002 at the Rand Mine.

Operations

Mining of the ore reserves was completed at the Rand Mine early in 2003, although gold is planned to be produced through 2004, as the mine is reclaimed. Rand’s planned production in 2003 is approximately 35,000 ounces of gold. Mining at the Rand Mine utilized 27-cubic-yard hydraulic shovels and 190-ton haulage trucks. The truck fleet is planned to be transferred to the Marigold Mine in 2003. The fleet of six trucks and two shovels mined 7,353,900 tons of waste and 6,138,800 tons of ore in 2002. The average grade of the ore was 0.023 ounces of gold per ton resulting in 77,950 recoverable ounces of gold being stacked on the heap. Rand produced 66,934 ounces of gold during 2002. To December 31, 2002, the Rand Mine has produced 921,427 ounces of gold since commencement of production in 1987.

There are five heap leach pads within the property, one of which is still active, the Rand heap. The other four have been or are in the process of being rinsed and/or reclaimed.

In 2000, as a result of the revaluation of the remaining reserves at Rand at a price of $275 per ounce of gold, a write-down of property, plant and equipment and mine development costs of $15.5 million was taken in the fourth quarter of 2000.

26

Permitting

All environmental regulatory permits, licenses and authorizations required to carry out planned operations at the Rand Mine and to process the ore remaining on the pad have been obtained and are in good standing.

Production

Certain key operating statistics for the Rand Mine are set forth in the following table:

Rand Mine Production Results	Year Ended December 31,
	2002		2001		2000
Ore mined (tons)		6,138,800		4,091,444		8,462,755
Waste mined (tons)		7,353,900		11,979,256		5,489,345
Stripping ratio		1.2:1		2.92:1		0.65:1
Average gold assay (ounces/ton)		0.023		0.016		0.020
Ounces of gold produced		66,934		59,324		99,936
Total cash cost of production per ounce	$	247	$	265	$	176

RECLAMATION PROJECTS:
PICACHO MINE (Imperial County, California))
Property

Chemgold, Inc. (“Chemgold”) operated the Picacho Mine on leased patented and unpatented mining claims located in Imperial County, California, approximately 18 miles northwest of Yuma, Arizona. All reclamation activities were completed during the first quarter of 2002, and the property was returned to the owner on March 28, 2002.

DAISY MINE (Nye County, Nevada)
Property

The Daisy Mine is owned by Glamis Marigold Mining Company. The Daisy Mine was acquired in 1999 through the acquisition of Rayrock Resources Inc. (“Rayrock”). The Daisy Mine was an open-pit heap-leach operation located in Nye County, Nevada, approximately six miles southeast of the town of Beatty. The property package consists of unpatented mining claims covering 13.7 square miles.

Reclamation Activities

All mining of known ore reserves was completed in December 1999. During 2000, 2001 and 2002 the primary activities at the mine were the rinsing and grading of the heaps and reclamation of the waste stockpiles. Final reclamation earthwork was completed in the first quarter of 2003. A monitoring period will be required for the balance of 2003.

DEE MINE (Elko County, Nevada)
Property

The Dee Mine is owned by Glamis Marigold Mining Company. The Dee Mine was acquired in 1999 as part of the acquisition of Rayrock.

The Dee property, located in Elko County, Nevada, consists of 6.3 square miles of unpatented mining claims along the Carlin Trend in northeastern Nevada. The property lies immediately south of Meridian Gold Inc.’s Rossi property and immediately northwest of Newmont Mining Company’s Bootstrap property. Dee is subject to a minimum royalty of $0.2 million per year.

Barrick Gold Corporation (“Barrick”) holds an option to earn a 60% interest in the Dee property by spending $6.5 million in exploration of the property over a 7-year term concluding in October

27

2004. Barrick just completed its fifth year of exploration activities in 2002, and has expended $5.79 million to date towards the option. Activities in 2002 included data compilation, processing of geophysical data, updating the geology model and 15,275 feet of reverse circulation drilling in seven surface holes. No material results from the drilling were announced by Barrick.

Reclamation Activities

In 2002, reclamation activities focused on completion and closure of the heap leach facilities and tailings dam #2, recontouring of the waste dumps, and the start of reclamation on tailings dam #1. Dismantling of the mill and salvage of components continued. Reclamation is planned to continue through 2004.

OTHER PROJECTS:
EL SAUZAL PROJECT (Chihuahua, Mexico)
Property

The El Sauzal Project is owned by Minas de la Alta Pimeria, S.A. de C.V. The Company acquired the El Sauzal Project through the acquisition of Francisco in July 2002. El Sauzal is located in the southwest part of Chihuahua State, approximately 250 kilometers southwest of the city of Chihuahua and 15 kilometers east of the Sinoloa State line. The project is comprised of seven exploration concessions of approximately 40 square miles which are 100%-owned by the Company. Road access to the project is limited at this point and permits are being sought to construct a new road coming up through Sinaloa into the project. The project ranges in elevation from 325 meters to over 900 meters above mean sea level. The climate in the El Sauzal area is classified as temperate sub-humid, with distinct wet and dry seasons. Rainfall averages 0.8 meters per year.

Mineralization

The El Sauzal Project has three principal zones of mineralization which all feature a near-surface oxide unit, which contains the majority of the known gold resource. Each zone contains unique structural, stratigraphic and mineralization characteristics. The mineral resources and mineral reserves at the El Sauzal Project at December 31, 2002 are based on 20,274 samples from 187 diamond drill holes (27,514 meters) and 1835 surface sample composites. This sample data is spread over an area of approximately 70 hectares.

Development Activities

A feasibility study on the project was completed prior to closing of the Francisco acquisition. After acquiring the property, the Company augmented that work and submitted an expanded feasibility study to the Board of Directors in November 2002. The plan for the project calls for mining from an open pit utilizing a conventional truck and shovel and milling operation. Mill capacity was optimized at 5,500 metric tons per day and projected annual production is expected to average 190,000 ounces of gold for 10 years at an estimated total cash cost per ounce of $110. A $101 million capital project has been planned. The Company is currently working on permits for road and power line construction from the mine site to the town of Choix, connecting to Los Mochis, a port city on the Sea of Cortez in Sinaloa State. This will greatly improve vehicle access to the project.

28

Permitting

At present, the Company is working closely with government officials to complete the final environmental review and permitting phase along with the detailed engineering design work. The Company expects construction to begin in the second half of 2003 with commercial production slated for the first quarter of 2005.

MARLIN PROJECT (Western Guatemala)
Property

The Marlin Project is owned by Montana Exploradora de Guatemala, S.A. The Marlin Project was also acquired as part of the Francisco acquisition. This project consists of one exploration concession of approximately 39 square miles in western Guatemala near Huehuetenango. Huehuetenango is approximately a six hour drive from Guatemala City. The project is accessed by a combination of paved and gravel roads. The project area varies in elevation, climate and landscape between tropical lowlands and highland peaks and valleys.

Mineralization

The Marlin deposit was first discovered in 1998. The mineralization occurs in a Tertiary age, quartz-adularia epithermal system. This mineralization lies on the eastern portion of a two kilometer east-west trending vein system. Approximately one fifth of the mineralization found to date is oxide. The remaining is transition and sulfide. Since acquisition, the Company has been aggressively exploring the Marlin Main Zone and the Southeast extension and has expanded the mineral resource to over 4.0 million gold-equivalent ounces. As of January 11, 2003, the Company had drilled and received new analytical assay data on 227 reverse circulation and diamond drill holes (32,695 meters), bringing the total number of drill holes available for a mineral resource estimate to 300 reverse circulation and diamond drill holes (40,300 meters) and delineating a resource of 4.0 million gold-equivalent ounces. No proven and probable mineral reserve estimates have been completed for the Marlin Project at this time.

Development Activities

As the drilling program progresses, the Company is preparing an internal feasibility study that is expected to be completed in the second quarter of 2003. Based on existing data, the Company is carrying out scoping studies for a conventional milling operation that would process more than 15 million metric tons of ore containing in excess of two million gold equivalent ounces. Most of the production would be obtained by open-pit methods, but the mine may include an underground component for the deeper, higher-grade material. Metallurgical test work to date has yielded recoveries of greater than 90% for gold and 85% for silver at a 200-mesh grind.

CERRO SAN PEDRO PROJECT (San Luis Potosi, Mexico)
Property

Glamis de Mexico was 50% owner and operator of the Minera San Xavier, S.A. de C.V. (“MSX”) joint venture that owns the Cerro San Pedro Project (“CSP”). MSX controls 41 mineral concessions totaling 9,259 hectares, and has all surface rights agreements in place needed for development and operation.

The Company expended $0.4 million during 2002 for miscellaneous development activities on the property.

29

Subsequent Event

Under a Share Purchase Agreement effective February 12, 2003, the Company agreed to sell its 50% interest in CSP to Metallica Resources, Inc. (“Metallica”) for proceeds of up to $18.0 million and a net smelter return royalty of up to 2%, depending on the price of gold. The Company received $2.0 million on closing of this transaction, and is to receive $5.0 million by August 2003, $6.0 million in February 2004, $2.5 million on commencement of commercial production and $2.5 million twelve months from the commencement of commercial production.

With respect to the August 2003 payment, the agreement provides that should Metallica fail to make that payment when due, Metallica would return the acquired 50% interest in the project to the Company, plus an additional 1% interest in the project, and the parties have amended certain terms of the previous shareholders agreement reflecting the 51% interest that would be held by the Company. The Company would retain the $2.0 million initial payment. With respect to the February 2004 payment, the agreement provides Metallica with the option to make that payment with common shares of Metallica.

IMPERIAL PROJECT (Imperial County, California)
Property

Glamis Imperial Corporation holds 664 unpatented mining claims and 281 mill sites in eastern Imperial County, California, totaling approximately 11,400 acres. The Imperial Project is proposed as a run-of-mine heap leach project producing upwards of 120,000 ounces of gold per year over a ten-year mine life.

Development Activities

A feasibility study on the Imperial Project completed in April 1996 showed that the project was economically sound and would provide a positive return on investment. The Company’s financial analysis using a $275 gold price continues to indicate a positive return.

To December 31, 2000, approximately $14.3 million had been expended on acquisition, exploration and development for the Imperial Project. This amount was written off as at December 31, 2000, based on the denial of operating permits by the BLM in January 2001. Additional major capital expenditures for the Imperial Project have been postponed pending completion of project permitting. If permitting is completed and gold prices are acceptable, the Company would need to spend approximately $57.0 million in initial capital to bring the project into operation.

In 2002 the Company recommenced the permitting process for the Imperial Project. In connection with this, the Bureau of Land Management (“BLM”) completed a validity examination of the unpatented mining claims comprising the project, and concluded that the mining claims are valid. At this time, the Company does not know how long it may take for the BLM to complete the permitting process and issue a new Record of Decision.

The local Quechan Tribe of Indians has opposed the project, and legislative and regulatory efforts have been commenced in the State of California to attempt to delay or stop the project. The Company believes that it is legally entitled to approval of its plan of operations for the development and operation of the project. However, in light of such opposition, the Company has discussed with the BLM the possibility of the BLM purchasing the Company’s mining claims at fair market value. No definitive response to this suggestion has been received from the BLM, and the Company cannot predict whether a purchase of the mining claims comprising the Imperial Project is a viable alternative and, if so, when or at what price such a transaction might be completed. In the absence of such a resolution, the Company intends to continue to pursue approval of its plan of operations.

30

CERRO BLANCO PROJECT (Southeastern Guatemala)
Property

The Cerro Blanco property is owned by Entre Mares de Guatemala S.A. The property contains mineralization that is part of a hot spring, bonanza-type, gold system.

Mineralization

The 2000 exploration program at Cerro Blanco included nearly 3,700 meters of reverse circulation drilling that was used to validate the geologic model. Composite samples from this drilling and previous drilling were used for conducting 25 bottle roll tests. A pre-feasibility study was prepared incorporating the 1999 and 2000 results. Using a cut-off grade of 0.5 grams of gold per tonne, the geologic resource now amounts to 2.4 million ounces of gold-equivalent at an average grade of 1.6 grams of gold per tonne.

Development Activities

Initial exploration work and drill data was geared towards defining an open-pit resource, however, subsequent drilling identified a number of narrower, high-grade intercepts. In response, the Company changed the development scope to underground mining with potential operating synergies with the Marlin property.

In the second half of 2002, the Company commenced Phase 2 of the drilling program to verify and extend previously discovered high-grade gold mineralization. A total of six holes were completed by year end. Two additional holes will be drilled later in 2003 and results will be analyzed with the data from the initial phase of the program.

EXPLORATION PROJECTS

The Company expended $5.9 million on various exploration activities in 2002. The primary exploration efforts were focused on the Marigold Mine ($1.2 million), and the two Guatemalan properties, Marlin ($2.5 million) and Cerro Blanco ($1.5 million). Results are described in more detail under the project headings.

In 2003, the Company has budgeted $5.1 million for continued exploration at the Marlin Project ($2.3 million), the Marigold Millennium Expansion Project ($1.6 million), the San Martin Mine and other Honduras exploration ($0.5 million), the Cerro Blanco Project ($0.5 million) and other prospects in Mexico and Central America.

ITEM 5: SELECTED CONSOLIDATED FINANCIAL INFORMATION

Reference is made to pages 21 through 40 of the 2002 Annual Report to Shareholders, which are incorporated herein by reference. These pages contain the Company’s audited consolidated financial statements. Supplemental information for the years 1998-2002 is shown below:

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	Year ended December 31,
	2002		2001		2000			1999			1998
Production statistics:
Total cash cost per ounce ($)		160		172		222			219			215
Ounces of gold produced		251,919		230,065		218,390			175,894			106,113
Average gold price realized per ounce ($)		313		272		280			278			310
Operating summary (millions of US dollars):
Revenues		80.8		64.3		61.6			56.7			30.8
Net earnings (loss)		13.7		4.8		(48.7	)		(21.6	)		(2.0	)
Cash flow from operations		33.8		18.5		6.6			1.7			8.2
Financial Status: (millions of US dollars):
Working capital		169.1		53.4		18.2			61.3			34.2
Total assets		474.5		148.7		112.5			163.4			119.2
Long-term liabilities		77.3		17.8		19.3			17.9			4.7
Shareholders’ equity		385.8		123.4		82.8			137.9			110.4
Per common share ($):
Net earnings (loss)		0.14		0.07		(0.70	)		(0.33	)		(0.06	)
Book value		3.06		1.48		1.18			1.97			2.84
Dividends		—		—		—			—			—

Dividends

No dividends were declared or paid in 2002, 2001, or 2000 and it is not anticipated that dividends will be paid in 2003. If dividends are declared, it is the Company’s policy to declare and pay such dividends in United States funds.

The declaration and payment of future dividends is dependent upon the Company’s financial condition and other factors considered by the Board of Directors. See “Certain Tax Matters — Canadian Federal Income Tax Considerations” for information with respect to Canadian withholding tax applicable to non-Canadian shareholders.

Investment Canada Act

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

There is no limitation imposed by Canadian law or by the memorandum or articles of the Company on the right of a non-resident to hold or vote common shares of the Company, other than as provided in the Investment Canada Act (Canada) (the “Investment Act”). The following discussion summarizes the principal features of the Investment Act for a non-resident who proposes to acquire common shares of the Company. It is general only and is not a substitute for independent advice from an investor’s own advisor, nor does it anticipate statutory or regulatory amendments.

The Investment Act generally prohibits implementation of a reviewable investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture that is not a “Canadian” as defined in the Investment Act (a “non-Canadian”), unless after review the minister responsible for the Investment Act (the “Minister”) is satisfied that the investment is likely to be of net benefit to Canada. An investment in common shares of the Company by a non-Canadian, other than one who is located in a World Trade Organization country (a “WTO Investor”) when the Company was not controlled by a WTO Investor, would be reviewable under the Investment Act if it was an investment to acquire control of the Company and the value of the assets of the Company was Cdn.$5 million or

32

more, or if an order for review was made by the federal cabinet on the grounds that the investment related to Canada’s cultural heritage or national identity. An investment in common shares of the Company by a WTO Investor, or by a non-Canadian when the Company was controlled by a WTO Investor, would be reviewable under the Investment Act if it was an investment to acquire control of the Company and the value of the assets of the Company in 2002 exceeds approximately Cdn.$223 million. A non-Canadian would acquire control of the Company for the purposes of the Investment Act if the non-Canadian acquired a majority of the common shares of the Company. The acquisition of less than a majority but one third or more of the common shares of the Company would be presumed to be an acquisition of control of the Company unless it could be established that, on the acquisition, the Company was not controlled in fact by the acquiror through the ownership of common shares.

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

(a)	acquisition of common shares of the Company by a person in the ordinary course of that person’s business as a trader or dealer in securities,
(b)	acquisition of control of the Company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Act, and
(c)	acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Company, through the ownership of common shares, remained unchanged.

Certain Tax Matters

The following paragraphs summarize certain United States federal income tax considerations in connection with the receipt of distributions paid on Common Shares and the disposition of Common Shares of the Company as well as certain Canadian federal income tax considerations applicable to certain non-residents of Canada. These tax considerations are stated in brief and general terms and are based on United States and Canadian law currently in effect. There are other potentially significant United States and Canadian federal income tax considerations, including proposals to amend some of the rules summarized herein, and state, provincial or local income tax considerations with respect to ownership and disposition of the Common Shares that are not discussed herein. The tax considerations relative to ownership and disposition of the Common Shares may vary from taxpayer to taxpayer depending on the taxpayer’s particular status. Accordingly, prospective purchasers should consult with their tax advisors regarding tax considerations that may apply to their particular situation.

United States Federal Income Tax Considerations for U.S. Holders

The following is a general discussion of certain possible United States federal income tax consequences, under current law, generally applicable to a U.S. Holder (as defined below) of Common Shares of the Company who holds such shares as capital assets. This discussion does not address all potentially relevant United States federal income tax matters. In particular, this discussion does not address the potential application of the United States alternative minimum tax or United States federal income tax consequences peculiar to persons subject to special provisions of United States federal income tax law, including but not limited to broker-dealers, taxpayers who have elected mark-to-market accounting, tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate dealers, partnership or other pass-through entities, and shareholders who acquired their stock through the exercise of employee stock options or otherwise as compensation. In addition, this discussion does not cover any state, local or non-United

33

States tax consequences, other than certain Canadian federal income tax considerations, discussed at “Canadian Federal Income Tax Considerations” below.

The following discussion is based upon the United States Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations, published Internal Revenue Service (“IRS”) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. In addition, this discussion does not consider the potential effects, both adverse and beneficial, of any recently proposed legislation that, if enacted, could be applied, possibly on a retroactive basis, at any time. The following discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of Common Shares of the Company and no opinion or representation with respect to the United States federal income tax consequences to any such holder or prospective holder is made. Accordingly, holders and prospective holders of Common Shares of the Company should consult their own tax advisors about the federal, state, local and foreign tax consequences of purchasing, owning and disposing of Common Shares of the Company.

U.S. Holders

As used herein, a “U.S. Holder” includes a holder of Common Shares of the Company who is a citizen or individual resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof or a trust or estate the income of which is taxable in the United States irrespective of source. Generally a trust is a U.S. Holder for federal income tax purposes if, and only if (i) a court within the United States is able to exercise primary supervision over the administration of the trust, and (ii) one or more United States persons have the authority to control all substantial decisions of the trust.

Distributions on Common Shares of the Company

The following discussion regarding the United States federal income tax consequences of distributions received by U.S. Holders with respect to Common Shares of the Company is subject to the discussion of the passive foreign investment company rules herein (see “Passive Foreign Investment Company” below). U.S. Holders receiving distributions (including constructive distributions) with respect to Common Shares of the Company are required to include in gross income for United States federal income tax purposes as dividends the gross amount of such distributions to the extent that the Company has current or accumulated earnings and profits (as determined for United States federal income tax purposes), without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder’s United States federal income tax. (See more detailed discussion at “Foreign Tax Credit” below). Dividends paid on Common Shares of the Company generally will not be eligible for the dividends received deduction available to corporations.

A corporate U.S. Holder that owns 10% or more of the voting stock of the Company and receives a dividend distribution from the Company may be entitled to a foreign tax credit for its pro-rata share of underlying Canadian corporate tax paid by the Company. The availability of this credit is subject to several complex limitations that are beyond the scope of this discussion, and holders are advised to consult their own tax advisors regarding the availability of this credit.

To the extent that distributions exceed current or accumulated earnings and profits of the Company, they will be treated first as a return of capital up to the U.S. Holder’s adjusted tax basis in the Common Shares (and, to that extent, will reduce the U.S. Holder’s adjusted tax basis), and, thereafter, as gain from the sale or exchange of the Common Shares. (See more detailed discussion at “Disposition of Common Shares of the Company” below.)

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Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of Common Shares of the Company may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer’s income subject to tax. This election is made on a year-by-year basis and generally applies to all foreign income taxes paid by (or withheld from) the U.S. Holder during the year.

The amount of foreign income taxes which may be claimed as a credit in any year is subject to significant and complex limitations, including the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder’s United States income tax liability that the U.S. Holder’s foreign source income bears to his or its worldwide taxable income. In applying this limitation, the U.S. Holder’s various items of income and deduction must be classified into foreign and domestic sources, and complex rules govern the classification process. In addition, the foregoing limitation on the foreign tax credit is applied separately with respect to specific classes of income (such as “passive income”, “high withholding tax interest”, “financial services income”, “shipping income”, and certain other classifications of income), thereby generally limiting the foreign tax credits allowable with respect to each class of income to the United States federal income taxes otherwise payable (or deemed payable) with respect to foreign source income in each such class. Furthermore, the rules for foreign tax credits and deductions are subject to further modification under the United States — Canada Income Tax Treaty. Due to the complexity of the rules governing the availability of, and limitations with respect to, the foreign tax credit, and the fact-specific application of those rules, holders and prospective holders of Common Shares of the Company should consult their own tax advisors regarding their entitlement to any foreign tax credit given their specific circumstances.

Disposition of Common Shares of the Company

The following discussion regarding the United States federal income tax consequences of dispositions of Common Shares of the Company by U.S. Holders is subject to the discussion of the passive foreign investment company rules herein (see “Passive Foreign Investment Company” below). A U.S. Holder will recognize a gain or loss upon the sale, exchange or other taxable disposition of Common Shares of the Company equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received upon the disposition, and (b) the shareholder’s adjusted tax basis in the Common Shares of the Company. This gain or loss will be capital gain or loss if the Common Shares are a capital asset in the hands of the U.S. Holder, and will be a short-term or long-term capital gain, or short-term or long-term capital loss, depending upon the holding period of the U.S. Holder. Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year. Preferential tax rates for net long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. In addition, deductions for net capital losses are subject to significant limitations. For U.S. Holders who are individuals, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders that are corporations (other than corporations subject to Subchapter S of the Code), any unused net capital loss may generally be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains.

Passive Foreign Investment Company

In the following circumstance, the above sections of this discussion may not describe the United States federal income tax consequences resulting from the holding and disposition of Common Shares of the Company.

As a foreign corporation with U.S. Holders, the Company could potentially be treated as a passive foreign investment company (“PFIC”), as defined in Section 1297 of the Code, depending upon the

35

percentage of the Company’s income which is passive, or the percentage of the Company’s assets which produce, or are held for the production of, passive income. U.S. Holders owning common shares of a PFIC are subject to an additional tax on excess distributions and to an interest charge based on the value of deferral of tax for the period during which the common shares of the PFIC are owned. In addition, they are subject to treatment of gain realized on disposition of common shares of the PFIC as ordinary income, rather than capital gain, similarly subject to an additional tax and interest charge.

However, if the U.S. Holder makes a timely election to treat a PFIC as a qualified electing fund (“QEF”) with respect to such shareholder’s interest therein, the above-described rules generally will not apply. Instead, the electing U.S. Holder would include annually in gross income their pro rata share of the PFIC’s ordinary earnings, and net capital gain regardless of whether such income or gain was actually distributed. A U.S. holder is not required to make a QEF election simply because another U.S. Holder makes the election. Gain realized on disposition of common shares of a QEF generally is treated as capital gain if the shares are a capital asset of the disposing shareholder.

Alternatively, a U.S. Holder may make a mark-to-market election for certain PFICs with marketable stock, thereby potentially avoiding the adverse tax consequences of PFIC characterization. Under such an election, the shareholder would determine his, her or its income or loss with respect to the PFIC stock as of the close of each taxable year. For example, an electing shareholder would include in income each year an amount equal to the excess, if any, of the fair market value of the PFIC stock as of the close of the taxable year over the shareholder’s adjusted basis in such stock. Any income included in income pursuant to the mark-to-market election would be treated as ordinary income. For tax years where the shareholder’s adjusted basis in the PFIC stock exceeds its fair market value, an electing shareholder may be entitled to a deduction, subject to certain limitations. Special rules apply to U.S. Holders who own their interests in a PFIC through intermediate entities or persons.

The Company believes that it was not a PFIC in any of the years ended December 31, 2002, 2001 or 2000. The Company’s determination in this respect has been made after a review of the regulations regarding PFICs and the application of those rules to its own past and present circumstances. The Company may have been a PFIC in earlier years. There can be no assurance that the Company’s determination concerning its PFIC status will not be challenged by the IRS, or that it will be able to satisfy record keeping requirements that will be imposed on QEFs. U.S. taxpayers who hold the Company’s shares may wish to consult with a personal tax advisor concerning the possible application of the PFIC provisions to their personal circumstances.

Canadian Federal Income Tax Considerations

Dividends paid on Common Shares held by non-residents of Canada will generally be subject to Canadian withholding tax. This withholding tax is levied at the basic rate of 25%, although this rate may be reduced by the terms of any applicable tax treaty. The Canada — U.S. tax treaty provides that the withholding rate on dividends paid to U.S. residents on Common Shares is generally 15% unless the holder is a company that owns at least 10% of the Common Shares, in which case the withholding rate is 5%.

Generally, a non-resident of Canada who holds Common Shares as capital property will not be subject to Canadian federal income tax on capital gains realized on the disposition of his Common Shares unless the holder either alone or together with persons with whom the holder does not deal with at arm’s length owns 25% or more of the outstanding Common Shares at any

36

time in the previous 60 months. The Canada-U.S. tax treaty would generally exempt a capital gain realized by a resident of the United States from taxation by Canada.

ITEM 6: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Reference is made to pages 13 through 20 of the 2002 Annual Report to Shareholders, which are incorporated herein by reference, for Management’s Discussion and Analysis of Financial Condition and Results of Operations for the years ended December 31, 2002, 2001 and 2000.

ITEM 7: MARKETS FOR SECURITIES

The Common Shares of the Company were first sold to the public under a prospectus dated May 2, 1973 at Cdn.$0.50 per share. The Company’s Common Shares are listed on the Toronto Stock Exchange and the New York Stock Exchange. Stock price history for the years 2002, 2001 and 2000 can be found on the inside back cover of the 2002 Annual Report to Shareholders, which is incorporated herein by reference.

The price of the Common Shares as reported by the Toronto Stock Exchange at the close of business on December 31, 2002 was Cdn.$17.80 per share and on March 31, 2003 was Cdn.$15.15 per share.

The price of Common Shares as reported by the New York Stock Exchange at the close of business on December 31, 2002 was $11.34 and on March 31, 2003 was $10.34 per share.

ITEM 8: DIRECTORS AND OFFICERS

Reference is made to the sections “Security Ownership by Directors and Executive Officers”, “Elections of Directors” and “Corporate Governance, Committees and Reports” on pages 3 through 7 of the Information Circular and Proxy Statement of the Company dated March 14, 2003, which are incorporated herein be reference. Information on the officers of the Company is shown below.

Name and residence	Position and Term Served
A. Dan Rovig Reno, Nevada	Chairman of the Board since November 1998; President and Chief Executive Officer of the Company from November 1989 to August 1997. Mr. Rovig served as a consultant to the Company September 1997 to October 1998 before being appointed Chairman of the Board.
C. Kevin McArthur Reno, Nevada	President and Chief Executive Officer of the Company since January 1998; Chief Operating Officer July 1997 to December 1997.
Charles A. Jeannes Reno, Nevada	Senior Vice-President Administration, General Counsel and Secretary of the Company since April 1999; Vice President and General Counsel of Placer Dome North America, August 1997 to April 1999.

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Name and residence	Position and Term Served
James S. Voorhees Reno, Nevada	Vice President and Chief Operating Officer of the Company since June 1999; Director of Project Management, Newmont Mining Company, August 1997 to May 1999.
Steven L. Baumann Reno, Nevada	Vice President, Latin America Operations of the Company since January 1999; Vice President, General Manager, Chemgold, Inc., August 1997 to December 1999.
Cheryl S. Maher Reno, Nevada	Vice President Finance, Chief Financial Officer and Treasurer of the Company since March 2000; Treasurer, September 1999 to March 2000; Assistant Treasurer, April 1999 to September 1999; Consultant and practicing C.P.A., January 1998 to February 1999.
David L. Hyatt Reno, Nevada	Vice President, U.S. Operations of the Company since June 2002 Vice President, Investor Relations of the Company March 2000 to June 2002; Vice President, Nevada Operations April 1999 to March 2000; Vice President, General Manager Glamis Rand Mining Co., August 1997 to April 1999.
Michael A. Steeves Reno, Nevada	Vice President, Investor Relations of the Company since June 2002; Director of Investor Relations, Coeur d’Alene Mines Corp. November 1998 to May 2002; Vice President, Investor Relations and Director, Augusta Resource Corporation, December 1997-October 1998

ITEM 9: ADDITIONAL INFORMATION

The Company will provide to any person or company, upon a request to the Secretary of the Company, the following information:

a)		When the securities of the Company are in the course of a distribution under a preliminary short form prospectus or a short form prospectus,
	(i)	one copy of the AIF of the Company, together with one copy of any document, or the pertinent ages of any document, incorporated by reference in the AIF,
	(ii)	one copy of the comparative consolidated financial statements of the Company for its most recently completed financial year for which financial statements have been filed together with the accompanying report of the auditor and one copy of the most recent interim financial statements of the Company that have been filed, if any, for any period after the end of its most recently completed financial year,
	(iii)	one copy of the information circular of the Company in respect of its most recent annual meeting of shareholders that involved the election of directors or one copy of any annual filing prepared instead of that information circular, as appropriate, and
	(iv)	one copy of any other documents that are incorporated by reference into the preliminary short form prospectus or the short form prospectus and are not required to be provided under clauses (i), (ii), or (iii); or
b)		At any other time, one copy of any documents referred to in clauses (a) (i), (ii) and (iii), provided that the Company may require the payment of a reasonable charge if the request is made by a person or company who is not a security holder of the Company.

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Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities, options to purchase securities, and interests of insiders in material transactions, if applicable, is contained in the Company’s Information Circular and Proxy Statement dated March 14, 2003. Additional financial information is provided in the Company’s 2002 Annual Report to Shareholders.

39 EX-2 4 o09429aexv2.htm AUDITED COMPARATIVE FINANCIAL STATEMENTS

EXHIBIT 2

Management’s Responsibility

The accompanying consolidated financial statements and all of the data included in this annual report have been prepared by and are the responsibility of management of the Company. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada and reflect management’s best estimates and judgements based on currently available information. The Company has developed and maintains systems of internal accounting controls in order to assure, on a reasonable and cost-effective basis, the reliability of its financial information, and that assets are safeguarded from loss.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal control. The Board exercises its responsibilities through the Audit Committee of the Board which meets with the external auditors to satisfy itself that management’s responsibilities are properly discharged and to review the financial statements before they are presented to the Board of Directors for approval.

The consolidated financial statements have been audited by KPMG LLP Chartered Accountants. Their report outlines the scope of their examination and opinion on the consolidated financial statements.

[Signed]	[Signed]
C. Kevin McArthur President & Chief Executive Officer February 6, 2003	Cheryl S. Maher Vice President Finance, Chief Financial Officer February 6, 2003

Auditors’ Report to the Shareholders

We have audited the consolidated balance sheets of Glamis Gold Ltd. as at December 31, 2002 and 2001 and the consolidated statements of operations, deficit and cash flows for each of the years ended December 31, 2002, 2001 and 2000. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the finan- cial 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 finan- cial position of the Company as at December 31, 2002 and 2001 and the results of its operations and its cash flows for each of the years ended December 31, 2002, 2001 and 2000 in accordance with Canadian generally accepted accounting principles. As required by the Company Act (British Columbia), we report that, in our opinion, these principles have been applied, after giving effect to the change in the method of accounting for stock-based compensation as explained in note 2(i) to the financial state- ments, on a consistent basis.

KPMG LLP [Signed]

Chartered Accountants
Vancouver, Canada
February 6, 2003

1

Consolidated Balance Sheets
(Expressed in millions of United States dollars)

			December 31,
			2002			2001
Assets
Current assets:
	Cash and cash equivalents		$	160.0		$	45.9
	Accounts and interest receivable			2.1			1.1
	Taxes recoverable			1.1			0.6
	Inventories (note 4)			16.6			12.7
	Prepaid expenses and other			0.7			0.6
				180.5			60.9
Property, plant and equipment and mine development costs (note 5)				285.0			81.0
Other assets (note 6)				9.0			6.8
			$	474.5		$	148.7
Liabilities and Shareholders’Equity
Current liabilities:
	Accounts payable and accrued liabilities		$	8.3		$	5.5
	Site closure and reclamation costs, current (notes 6 & 7)			2.4			2.0
	Taxes payable			0.7			—
				11.4			7.5
Reserve for site closure and reclamation costs (notes 6 and 7)				6.9			8.4
Future income taxes (note 11)				70.4			9.4
				88.7			25.3
Shareholders’equity:
Share capital (note 8):
	Authorized:
		200,000,000 common shares without par value 5,000,000 preferred shares, CDN$10 par value, issuable in Series
	Issued and fully paid:
		125,978,115 (2001 - 83,283,462) common shares		437.6			194.8
	Contributed surplus			6.0			0.1
	Deficit			(57.8	)		(71.5	)
				385.8			123.4
			$	474.5		$	148.7

Commitments and contingencies (notes 5, 6, 7, 13 and 15)
Subsequent event (note 5(b))

See accompanying notes to consolidated financial statements.

Approved on behalf of the Board:

C. Kevin McArthur [Signed]	A. Dan Rovig [Signed]
Director	Director

2

Consolidated Statements of Operations
(Expressed in millions of United States dollars, except per share amounts)

		Years ended December 31,
		2002		2001			2000
Revenue		$	80.8	$	64.3		$	61.6
Costs and expenses:
	Cost of sales		41.1		40.5			47.9
	Depreciation and depletion		17.9		12.7			13.6
	Site closure and reclamation		1.4		1.2			0.8
	Exploration		3.2		1.7			2.9
	General and administrative		4.6		4.4			5.2
	Write-down (recovery) of properties (note 9)		—		(1.3	)		46.0
			68.2		59.2			116.4
Earnings (loss) from operations			12.6		5.1			(54.8	)
Interest and other income (note 10)			2.3		1.1			2.0
Earnings (loss) before income taxes			14.9		6.2			(52.8	)
Provision for (recovery of) income taxes (note 11):
	Current		0.4		0.3			—
	Future		0.8		1.1			(4.1	)
			1.2		1.4			(4.1	)
Net earnings (loss) for the year		$	13.7	$	4.8		$	(48.7	)
Earnings (loss) per share:
Basic		$	0.14	$	0.07		$	(0.70	)
Diluted			0.14		0.07			(0.70	)
Weighted average common shares outstanding:
Basic			98,823,366		73,585,155			70,008,059
Diluted			100,390,248		74,374,926			70,008,059

See accompanying notes to consolidated financial statements.

Consolidated Statements of Deficit
(Expressed in millions of United States dollars)

	Years ended December 31,
	2002			2001			2000
Deficit, beginning of year	$	(71.5	)	$	(76.3	)	$	(27.6	)
Net earnings (loss) for the year		13.7			4.8			(48.7	)
Deficit, end of year	$	(57.8	)	$	(71.5	)	$	(76.3	)

See accompanying notes to consolidated financial statements.

3

Consolidated Statements of Cash Flows
(Expressed in millions of United States dollars)

			Years ended December 31,
			2002			2001			2000
Cash flows from operating activities:
	Net earnings (loss) for the year		$	13.7		$	4.8		$	(48.7	)
	Non-cash items:
		Depreciation and depletion		17.9			12.7			13.6
		Reserve for site closure and reclamation costs		1.4			1.2			0.8
		Write-down (recovery) of properties		—			(1.3	)		44.6
		Future income taxes		0.8			1.1			(4.1	)
		Other		—			—			0.3
				33.8			18.5			6.6
	Changes in non-cash operating working capital:
		Accounts receivable		(1.0	)		(0.4	)		0.2
		Taxes recoverable/payable		(0.2	)		0.3			(0.7	)
		Inventories		(4.3	)		(0.7	)		(1.7	)
		Prepaid expenses		0.1			(0.3	)		0.1
		Accounts payable and accrued liabilities		2.4			(3.0	)		0.9
	Site closure and reclamation expenditures			(2.5	)		(2.6	)		(1.4	)
	Net cash provided by operating activities			28.3			11.8			4.0
Cash flows from (used in) investing activities:
	Business acquisitions, net of cash acquired (note 3)			(6.1	)		—			(7.1	)
	Purchase of property, plant and equipment, net of disposals			(16.2	)		(5.2	)		(18.7	)
	Mineral property acquisition and mine development costs			(8.5	)		(9.3	)		(19.9	)
	Proceeds from sale of investments			0.5			0.1			—
	Purchase of other assets			(2.2	)		(0.6	)		—
	Cash used in investing activities			(32.5	)		(15.0	)		(46.3	)
Cash flows from financing activities:
	Proceeds from issuance of common shares			118.3			35.8			0.3
	Cash provided by financing activities			118.3			35.8			0.3
Increase (decrease) in cash and cash equivalents				114.1			32.6			(41.9	)
Cash and cash equivalents, beginning of year				45.9			13.3			55.2
Cash and cash equivalents, end of year			$	160.0		$	45.9		$	13.3
Supplemental disclosures of cash flow information:
	Cash paid (received) during the year for:
		Interest	$	(0.9	)	$	(0.7	)	$	(1.7	)
		Taxes		0.7			(0.4	)		(0.7	)

Non-cash financing and investing activities (notes 3(a) and 12)

See accompanying notes to consolidated financial statements.

4

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

1.	Nature of operations:
	The Company and its wholly owned subsidiaries are engaged in the exploration, development and extraction of precious metals principally in the States of California and Nevada in the United States of America, and in Honduras, Mexico and Guatemala.
2.	Significant accounting policies:
(a)	Generally accepted accounting principles:
	These consolidated financial statements have been prepared in accordance with accounting principles and practices that are generally accepted in Canada, which conform, in all material respects, with those generally accepted in the United States, except as explained in note 16.
(b)	Principles of consolidation:
	The consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries and its proportionate share of the accounts of joint ventures in which the Company has an interest. All material intercompany transactions and balances have been eliminated.   Investments in other companies are carried at cost less provisions for impairment in value.
(c)	Cash equivalents:
	Cash equivalents are highly liquid investments, such as term deposits with major financial institutions, having a maturity of three months or less at acquisition, that are readily convertible to contracted amounts of cash.
(d)	Inventories:

(i)	Finished goods inventory is metals available for sale and is stated at the lower of cost or net realizable value.
(ii)	Work-in-progress inventory, which is ore on leach pads, is valued at the lower of average production cost or net realizable value. Production costs relate to the cost of placing the ore on the leach pad and include direct mining, crushing, agglomerating and conveying costs, as applicable, for the different mine operations. These costs are charged to operations and included in cost of sales on the basis of ounces of gold recovered. Based upon actual gold recoveries and operating plans, the Company continuously evaluates and refines estimates used in determining the costs charged to operations and the carrying value of costs associated with the ore on the leach pads.
(iii)	Supplies and spare parts inventory is stated at the lower of cost, using the first-in, first-out method, or replacement cost.

(e)	Property, plant and equipment:
	Property, plant and equipment is stated at cost less accumulated depreciation. Leach pads are depreciated on a unit-of-production basis over estimated recoverable reserves expected to be processed from the leach pad. Certain mining equipment is depreciated based on hours used over their estimated useful lives. All other asset categories are depreciated using the straight-line method over their estimated useful lives. Estimated useful lives for mining equipment and major asset categories range from three to ten years. Replacements and major improvements are capitalized.
(f)	Mine development costs:

(i)

Property acquisition and mine development costs are recorded at cost and amortized by the unit-of-production method based on recoverable proven and probable reserves. Pre-production expenditures and revenues are capitalized until the commencement of commercial production. If it is determined that the deferred costs related to a property are not recoverable over its productive life, the unrecoverable portion is charged to operations in the period such determination is made.

(ii)

Mine development costs for current production are charged to operations as incurred. Mine development costs incurred to expand operating capacity, develop new ore bodies or develop mine areas in advance of current production are deferred and then amortized on a unit-of-production basis. General and administrative costs are expensed as incurred.

5

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

(iii) Exploration expenditures on properties not advanced enough to identify their development potential are charged to operations as incurred. Expenditures incurred on non-producing properties identified as having development potential, as evidenced by a positive economic analysis of the project, are deferred. If a project is abandoned or it is determined that the deferred costs may not be recovered based on current economics or permitting considerations, the accumulated project costs are charged to operations in the period in which the determination is made.

(g)	Site closure and reclamation costs:
	Minimum standards for site closure and mine reclamation have been established by various governmental agencies that affect certain operations of the Company. A reserve for future site closure and mine reclamation costs has been established based upon the estimated costs to comply with existing reclamation standards. Site closure and mine reclamation costs for operating properties are accrued using the unit-of-production method. The effect of increases or decreases in estimated future costs resulting from amendments to reclamation standards by the regulatory authorities, changes to the extent of remediation required, experience gained by the Company and others on similar properties, or other factors, are reflected in earnings from properties currently in production, prospectively, commencing in the period the estimate is revised.
(h)	Revenue recognition:
	Revenue is recognized when metal is delivered and title passes. Costs incurred or premium income received on forward sales or options contracts are recognized in revenue when the contracts expire or production is delivered. Changes in the fair value of the related asset or liability are recognized in earnings.
(i)	Stock-based compensation:
	The Company has a stock option plan and a stock-based management incentive plan, both of which are described in note 8(b). Effective January 1, 2002, the Company adopted the Canadian Institute of Chartered Accountants’ new handbook section 3870, Stock-Based Compensation and Other Stock-Based Payments. Under the new standard, stock-based payments to non-employees, and employee awards that are direct awards of stock, call for settlement in cash or other assets, or are stock appreciation rights that call for settlement by the issuance of equity instruments, granted on or after January 1, 2002, are accounted for using the fair value method. No compensation cost is recorded for all other stock-based employee compensation awards. Consideration paid by employees on the exercise of stock options is recorded as share capital. The Company discloses the pro forma effect of accounting for these awards under the fair value method. The adoption of this new standard has resulted in no changes to amounts previously reported.
	Prior to adoption of the new recommendations, no compensation expense was recorded for the Company’s stock-based plans when the options or incentives are granted. Any consideration paid by employees or directors on exercise of stock options was credited to share capital. Any compensation liability under the stock-based management incentive plan is accrued as compensation expense.
(j)	Income taxes:
	The Company accounts for income taxes using the asset and liability method. Under this method, future income tax assets and liabilities are determined based on differences between the financial statement carrying values of existing assets and liabilities and their respective income tax bases (temporary differences), and losses carried forward. Future income tax assets and liabilities are measured using the tax rates expected to be in effect when the temporary differences are likely to reverse. The effect on future income tax assets and liabilities of a change in tax rates is included in operations in the period in which the change is substantively enacted. The amount of future income tax assets recognized is limited to the amount that is more likely than not to be realized.
(k)	Earnings per share:
	Basic earnings per share is calculated by dividing net earnings by the weighted average number of shares outstanding for the year. Diluted earnings per share is calculated using the treasury stock method.
(l)	Translation of foreign currencies:
	The Company’s Canadian operations and Honduran operations, starting from the commencement of commercial production in January 2001, are considered self-sustaining operations and, accordingly, the Company uses the current rate method to translate the accounts of these operations to United States dollars as follows:

6

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

(i)	Assets and liabilities at the rate of exchange in effect at the end of the period;
(ii)	Revenues and expenses at the average exchange rate during the period; and
(iii)	Material exchange gains and losses arising from translation are deferred and included as a separate component of shareholders’ equity.

The Company’s subsidiaries and joint ventures outside of the United States with non-producing properties are treated as integrated operations and the related accounts are translated into United States dollars using the temporal method as follows:

(i)	Revenues and expenses at the average exchange rate during the period;
(ii)	Monetary items at the rate of exchange in effect at the end of the period;
(iii)	Non-monetary items at historical exchange rates; and
(iv)	Exchange gains and losses arising from translation are included in the determination of net earnings (loss) for the period.

(m)	Estimates:
	The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management estimates relate to the determination of mineral reserves, reclamation and environmental obligations, impairment of assets, useful lives for depreciation, depletion and amortization, measurement of work-in-process and finished goods inventories and valuation allowances for future tax assets. Actual results could differ from those estimates.
(n)	Comparative figures:
	Certain of the prior years’ comparative figures have been reclassified to conform to the presentation adopted for the current year.
3.	Business acquisitions:
(a)	Francisco Gold Corp.:
	On July 16, 2002, the Company completed the acquisition, by way of a plan of arrangement, of Francisco Gold Corp. (“Francisco”), a Canadian public company. Francisco’s principal assets are the El Sauzal gold project in Chihuahua, Mexico and the Marlin gold project in Guatemala.
	Under the plan of arrangement, each issued Francisco share was exchanged for 1.55 common shares of the Company and one share in Chesapeake Gold Corp. (“Chesapeake”), a new exploration company formed by Francisco. In addition, prior to completion of the closing of the transaction, Francisco transferred to Chesapeake cash of CDN$1.50 per share for each issued share of Francisco (CDN$25.0 million), certain early stage Nicaraguan exploration assets and a 2% net smelter return royalty on Francisco’s Guatemalan projects outside the Marlin project area. The Company retained a right to acquire a 5% stake in Chesapeake (based on its initial capitalization) through a three year share purchase warrant.
	The Company issued 25.8 million common shares to the shareholders of Francisco under the terms of the plan of arrangement and issued 1,674,000 stock options to directors, officers and employees of Francisco exercisable at prices between CDN$3.07 and CDN$4.04 per share in exchange for their existing Francisco stock options. The Company has accounted for this acquisition using the purchase method, as follows:

7

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

(a) Francisco Gold Corp.:

Net assets acquired, at fair value:
Cash and cash equivalents	$	1.4
Other current assets		0.2
Mineral properties		197.1
		198.7
Accounts payable and accrued liabilities		(0.8	)
Future income taxes		(60.0	)
	$	137.9
Consideration given:
Issuance of 25,843,808 common shares of the Company	$	124.5
Issuance of stock options		5.9
Transaction costs		7.5
	$	137.9

(b)	Cambior de Mexico S.A. de C.V.:
	Effective May 9, 2000, the Company acquired 100% of the issued and outstanding shares of Cambior de Mexico S.A. de C.V. (“Cambior de Mexico”) from Cambior Inc., a Canadian public company, for $7.2 million in cash. Cambior de Mexico was subsequently renamed Glamis de Mexico, S.A. de C.V. Cambior de Mexico’s principal asset was the right to acquire a 50% interest in the Cerro San Pedro Project in the State of San Luis Potosi in Mexico (note 5(b)(iii)), as well as interests in a number of other properties in Mexico. The Company also acquired a crusher system from Cambior Inc. for an additional $2.5 million in cash that was intended for use at the Cerro San Pedro Project. Other transaction costs associated with this acquisition totaled $0.3 million. In addition, in consideration for advisory services rendered to the Company in connection with the acquisition, the Company granted to its investment advisor warrants to purchase up to 300,000 shares of the Company’s common stock at an exercise price of $2.00 per share, all of which were exercised prior to December 31, 2002 (note 8(a)). Management considered the intrinsic value of the warrants at the time of issuance to be nominal.
	The acquisition of Cambior de Mexico was accounted for by the purchase method and is summarized as follows:

Net assets acquired, at fair value:
	Cash and cash equivalents	$	0.1
	Net non-cash working capital		0.1
	Property, plant and equipment		0.8
	Mineral properties		6.5
		$	7.5
Consideration given:
	Cash	$	7.2
	Transaction costs		0.3
		$	7.5

4. Inventories:

	2002		2001
Finished goods	$	0.6	$	1.6
Work-in-progress		13.3		9.2
Supplies and spare parts		2.7		1.9
	$	16.6	$	12.7

8

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

5. Property,plant and equipment and mine development costs:

	2002		2001
Producing properties, net	$	73.8		68.9
Non-producing properties, net		211.2		12.1
	$	285.0		81.0

(a) Producing properties:

	Property,				Mine				Accumulated
	plant and		Acquisition		development				depreciation
2002	equipment		costs		costs		Sub-total		& write-downs			Total
Rand, California	$	53.5	$	14.1	$	25.2	$	92.8	$	(87.9	)	$	4.9
San Martin, Honduras		28.4		13.4		22.2		64.0		(19.2	)		44.8
Marigold, Nevada		15.8		9.2		9.4		34.4		(10.3	)		24.1
Other		0.7		—		—		0.7		(0.7	)		—
Total	$	98.4	$	36.7	$	56.8	$	191.9	$	(118.1	)	$	73.8

	Property,				Mine				Accumulated
	plant and		Acquisition		development				depreciation
2001	equipment		costs		costs		Sub-total		& write-downs			Total
Rand, California	$	53.6	$	14.1	$	25.2	$	92.9	$	(86.1	)	$	6.8
San Martin, Honduras	$	24.0		13.4		21.7		59.1		(7.5	)		51.6
Marigold, Nevada		4.2		9.2		3.3		16.7		(6.3	)		10.4
Other		0.7		—		—		0.7		(0.6	)		0.1
Total	$	82.5	$	36.7	$	50.2	$	169.4	$	(100.5	)	$	68.9

At December 31, 2002 and 2001, all of the Company’s producing properties are held 100%, except for the Marigold Mine, which is 66-2/3% owned. The Company’s producing properties are subject to royalties pursuant to the terms of the underlying acquisition, option or lease agreements, which range up to 7% of net smelter returns and provide for minimum payments which vary with the price of gold aggregating approximately $1.0 million per year.

(b)

Non-producing properties:

	Property,				Mine
	plant and		Acquisition		development
2002	equipment		costs		costs		Sub-total		Write-downs			Total
El Sauzal, Mexico	$	0.3	$	105.6	$	1.9	$	107.8	$	—		$	107.8
Marlin, Guatemala		1.2		90.9		—		92.1		—			92.1
Cerro San Pedro, Mexico		0.1		7.4		3.7		11.2		—			11.2
Imperial, California		0.1		3.3		10.9		14.3		(14.3	)		—
Cerro Blanco, Guatemala		0.1		8.0		—		8.1		(8.0	)		0.1
Total	$	1.8	$	215.2	$	16.5	$	233.5	$	(22.3	)	$	211.2

	Property,				Mine
	plant and		Acquisition		development
2001	equipment		costs		costs		Sub-total		Write-downs			Total
Cerro San Pedro, Mexico	$	0.1	$	7.4	$	3.3	$	10.8	$	—		$	10.8
Imperial, California		0.1		3.3		10.9		14.3		(14.3	)		—
Cerro Blanco, Guatemala		0.1		8.0		—		8.1		(8.0	)		0.1
Other		2.5		—		—		2.5		(1.3	)		1.2
Total	$	2.8	$	18.7	$	14.2	$	35.7	$	(23.6	)	$	12.1

9

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

(b) Non-producing properties:

(i)	El Sauzal Project:
	The Sauzal Project was acquired in 2002 (note 3(a)) and is an advanced-stage gold property located in the state of Chihuahua, Mexico. The Company owns 100% of the project. A feasibility study on the project was completed prior to closing of the acquisition of Francisco, and based on that feasibility study, construction and engineering during 2003 to 2004 is expected to be approximately $100 million.
(ii)	Marlin Project:
	The Marlin Project was acquired in 2002 (note 3(a)) and is an advanced-exploration-stage gold-silver property located in western Guatemala. The Company owns 100% of the project. Under the terms of the underlying property acquisition agreement, for each gold-equivalent ounce of proven and probable reserves established in excess of 650,000 gold-equivalent ounces, the Company agrees to issue 2.635 common shares of the Company to the former owners of the Marlin Project, to a maximum of 2,247,500 shares of the Company. As at December 31, 2002, none of the existing mineral resource is categorized as reserves.
(iii)	Cerro San Pedro Project:
	The Cerro San Pedro Project was acquired in 2000 (note 3(b)) and is an advanced-stage gold-silver property located in the state of San Luis Potosi, Mexico. The Company completed its earn-in of a 50% interest in the project by funding $2.0 million during the remainder of 2000 and $2.0 million during 2001. Under the terms of the agreement with the Company’s joint venture partner, Metallica Resources Inc. (“Metallica”), the Company is the operator of the work program on the project. Expenditures subsequent to the earn-in, but before the commencement of construction, are to be shared equally, subject to certain limited exceptions.
	Subsequent to December 31, 2002, the Company agreed to sell its 50% interest in the Cerro San Pedro Project to Metallica for proceeds of up to $18.0 million and a net smelter return royalty of up to 2%, depending on the price of gold. The Company received $2.0 million on closing of this transaction, and is to receive $5.0 million in August 2003, $6.0 million in February 2004, $2.5 million on commencement of commercial production and $2.5 million twelve months from the commencement of commercial production.
	With respect to the August 2003 payment, the agreement provides that should Metallica fail to make that payment when due, Metallica would return the 50% interest in the project acquired to the Company, plus an additional 1% interest in the project, and Metallica agrees to amend certain terms of the existing shareholders agreement reflecting the 51% interest that would be held by the Company. The Company would retain the $2.0 million initial payment. With respect to the February 2004 payment, the agreement provides Metallica with the option to make that payment with common shares of Metallica.
(iv)	Imperial Project:
	The Imperial Project consists of a 100% interest in certain unpatented mining claims located in eastern Imperial County in the State of California. Gold production will be subject to a net smelter return royalty of 1-1/2%.
	Due to the U.S. Department of Interior decision to formally deny the operating permit for the Imperial Project on January 16, 2001, the $14.3 million of deferred costs on the project were written down at December 31, 2000. In November 2001, the denial of the project was formally vacated by the Department of the Interior, and the Company continues to pursue approval of the project. The Bureau of Land Management is currently reviewing the Environmental Impact Statement for the project which must be approved and finalized prior to deciding whether to approve the Company’s plan of operations.
(v)	Cerro Blanco Project:
	The Cerro Blanco Project is an advanced-stage gold property consisting of a 100% interest in one granted concession and eight concession applications in southern Guatemala. Based on economic conditions at the time and uncertainty over the recoverability of the deferred costs, the Company wrote-down the costs to a nominal amount in 2000. Exploration work is continuing on the project.

10

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

(c)	Interests in joint ventures:
	The Company’s 66-2/3% interest in the Marigold Mine and 50% interest in the Cerro San Pedro Project are reflected in these consolidated financial statements on a proportionate basis. The Company’s share of the joint ventures’ assets, liabilities, revenues and expenses included in the consolidated financial statements are as follows:

	2002		2001
Current assets	$	5.4	$	3.7
Non-current assets		31.1		16.9
	$	36.5	$	20.6
Current liabilities	$	2.9	$	1.3
Non-current liabilities		3.9		3.9
	$	6.8	$	5.2

	2002			2001			2000
Revenue from production	$	17.6		$	15.3		$	12.2
Expenses		14.7			12.6			14.4
Earnings (loss) from operations	$	2.9		$	2.7		$	(2.2	)
Cash provided by operations	$	7.2		$	5.0		$	0.6
Cash used in investing activities		(18.2	)		(5.0	)		(3.3	)

6. Other assets:

	2002		2001
Restricted deposits	$	8.2	$	6.1
Sales taxes recoverable		0.4		0.5
Deferred financing costs		0.4		—
Other (including investments in other companies; 2001 quoted market value — $0.3)		—		0.2
	$	9.0	$	6.8

	Restricted deposits:
	The Company provides financial guarantees to regulatory authorities as security for future site closure and reclamation costs for the Company’s operations (see note 7). As at December 31, 2002, the Company had $3.8 million in reclamation bonds outstanding (2001 — $4.3 million), for which the Company has provided collateral in the form of certificates of deposit totaling $1.1 million (2001 — $1.1 million). Additional letters of credit issued as security are collateralized with certificates of deposit totaling $7.1 million (2001 — $5.0 million) that earn interest at fixed rates between 1.28% and 1.88% (2001 — 1.14% and 2.12%). Fees on the bonds and letters of credit are 1% (2001 — 0.5% to 2.5%).
7.	Reserve for site closure and reclamation costs:

	2002			2001			2000
Balance, beginning of year	$	10.4		$	13.1		$	13.7
End of mine life accrual for site closure and reclamation costs		1.4			1.2			0.8
Site closure and reclamation costs incurred		(2.5	)		(2.6	)		(1.4	)
Reversal of overaccrued provision (note 9)		—			(1.3	)		—
Balance, end of year	$	9.3		$	10.4		$	13.1
Allocated between:
Current portion	$	2.4		$	2.0		$	2.0
Non-current portion		6.9			8.4			11.1
	$	9.3		$	10.4		$	13.1

11

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

	The Company’s operations are affected by federal, state and local laws and regulations concerning environmental protection. Under current regulations, the Company is required to meet performance standards to minimize environmental impact from operations and to perform site restoration and other closure activities. The Company’s provisions for future site closure and reclamation costs are based on known requirements. It is not currently possible to estimate the impact on operating results, if any, of future legislative or regulatory developments.
8.	Share capital:
(a)	Issued and fully paid:

		Number
		of Shares			Amount
Balance as at December 31, 1999			69,864,832		$	158.7
Issued during the year:
For cash consideration under the terms of directors’ and employees’ stock options			232,550			0.3
Balance as at December 31, 2000			70,097,382			159.0
Issued during the year:
	For cash consideration under the terms of directors’ and employees’ stock options (including former employees and directors of Rayrock Resources Inc. (“Rayrock”))		1,686,080			2.6
	Issued for cash consideration of CDN$5.00 per share pursuant to an underwriting agreement dated October 10, 2001		11,500,000			33.2
Balance as at December 31, 2001			83,283,462			194.8
Issued during the year:
	Issued upon acquisition of Francisco (note 3(a))		25,843,808			124.5
	For cash consideration on exercise of share purchase warrants (note 3(b))		300,000			0.6
	For cash consideration under the terms of directors’ and employees’ stock options (including former employees and directors of Rayrock and Francisco)		2,690,095			7.1
	Issued for cash consideration of CDN$13.15 per share pursuant to an underwriting agreement dated November 13, 2002		13,915,000			110.6
	Shares cancelled due to previous reorganization		(54,250	)		—
Balance as at December 31, 2002			125,978,115		$	437.6

(b)

Stock options and stock-based management incentive plan:

The Company has a stock option plan that allows it to grant options to its employees, officers and directors to acquire up to 5.5 million common shares. The exercise price of each option equals the trading price for the common shares on the Toronto Stock Exchange before the date of the grant. Options have a maximum term of five years and, subject to certain specific exceptions, terminate one year following the termination of the optionee’s employment. Once approved and vested, options are exercisable at any time.

12

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

(b) Stock options and stock-based management incentive plan:

The continuity of directors’ and employees’ stock options is as follows:

	2002					2001					2000
				Weighted					Weighted					Weighted
				average					average					average
	Number			exercise		Number			exercise		Number			exercise
	of options			price (CDN$)		of options			price (CDN$)		of options			price (CDN$)
Outstanding, beginning of year		3,279,115		$	3.78		5,141,945		$	3.30		5,153,995		$	3.25
Granted during the year		2,462,700			10.30		470,000			3.89		545,000			2.91
Issued on conversion of Francisco employees’ and directors’ stock options (note 3(a))		1,674,000			3.24		—			—		—			—
Exercised during the year		(2,690,095	)		2.66		(1,686,080	)		2.38		(232,550	)		2.06
Cancelled during the year		(5,470	)		5.89		(646,750	)		3.70		(324,500	)		2.69
Outstanding, end of year		4,720,250		$	6.76		3,279,115		$	3.78		5,141,945		$	3.30
Exercisable		4,558,900		$	6.57		3,109,115		$	3.81		5,126,945		$	3.30

Details of the options outstanding as at December 31, 2002 are as follows:

Range of	Number		Weighted average			Weighted average
exercise prices (CDN$)	outstanding		remaining life			exercise price (CDN$)
$2.18 - $3.07		2,173,800		2.2	years	$	2.91
$4.04 - $5.60		198,750		3.8			5.47
$7.38 - $7.44		1,040,000		4.3			7.38
$10.50 - $13.09		1,307,700		4.8			12.84
		4,720,250		3.4	years	$	6.76

No compensation cost is recorded in these financial statements for share options granted to directors, officers and employees. If the fair value method had been used to determine compensation cost for all share options granted to directors, officers and employees that vested in the period, the Company’s net earnings and earnings per share would have been as follows:

			Fair value of options
	As reported		granted and vested		Pro-forma
Year ended December 31, 2002:
Net earnings	$	13.7	$	5.2	$	8.5
Basic earnings per common share	$	0.14			$	0.09
Diluted earnings per common share	$	0.14			$	0.08

For the year ended December 31, 2002, the fair value of share options was estimated using the Black-Scholes option pricing model with the following assumptions:

Risk-free interest rate	3.69	%
Annual dividends	—
Expected stock price volatility	50	%
Expected life	2.5	years

13

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

(b)       Stock options and stock-based management incentive plan:

	The Company also has a stock-based management incentive plan that allows it to grant rights for a holder to receive the appreciation in the value of the stock-based right over the stated base price in cash. As at December 31, 2002, there were no share appreciation rights outstanding. As at December 31, 2001, the Company had 43,500 stock appreciation rights outstanding at a base price of CDN$4.80 per share that expire July 14, 2003. At December 31, 2000 the Company had 165,000 of these share appreciation rights at CDN$4.80 per share that expire July 14, 2003 as well as 600,000 stock appreciation rights at a base price of CDN$2.22 per share that expire February 26, 2002. The 600,000 stock appreciation rights were granted to a former officer of Rayrock through continuance of Rayrock stock appreciation rights. Total expense incurred by the Company in 2002 upon exercise of stock appreciation rights was $0.1 million (2001 — $0.8 million; 2000 — nil).
9.	Write-down (recovery) of properties:
	During 2001, the Company updated its estimated costs and reversed the overaccrued portion of site closure and reclamation costs on properties no longer in production and during 2000, the Company wrote-down certain of its properties, as follows:

		2001			2000
Producing properties (note 5(a)):	Rand	$	—		$	15.5
	Marigold		—			0.9
	Dee		(1.0	)		4.1
	Daisy		(0.3	)		—
Non-producing properties (note 5(b)):	Imperial		—			14.3
	Cerro Blanco		—			8.0
	Other non-producing properties		—			0.6
	Equipment		—			1.3
Inventories and other current assets			—			1.3
		$	(1.3	)	$	46.0

10. Interest and other income:

	2002		2001			2000
Interest and other income	$	1.5	$	0.7		$	2.6
Foreign exchange gain (loss)		0.8		(0.1	)		(0.3	)
Gain (loss) on sale of other assets		—		0.5			(0.3	)
	$	2.3	$	1.1		$	2.0

11.	Income taxes:
	The provision for income taxes differs from the Canadian federal and British Columbia provincial statutory rate as follows:

	2002						2001						2000
	Amount			Rate			Amount			Rate			Amount			Rate
Income tax expense (benefit) computed at statutory rates	$	5.9			39.6	%	$	2.8			44.6	%	$	(24.1	)		(45.6	)%
Foreign tax rates different from statutory rate		(2.8	)		(18.8	)		(1.9	)		(30.1	)		9.5			18.0
Benefit of losses not reflected in the accounts		(1.8	)		(12.2	)		2.5			40.4			10.9			20.7
Other		(0.1	)		(0.4	)		(2.1	)		(33.3	)		(0.4	)		(0.8	)
	$	1.2			8.2	%	$	1.3			21.6	%	$	(4.1	)		(7.7	)%

14

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

11.	Income taxes:
(a)	Future income tax assets and liabilities:
	The significant components of the Company’s future income tax assets and liabilities at December 31, 2002 and 2001 are as follows:

		2002			2001
Future income tax assets:
U.S. and Canada:	Property, plant and equipment and mine development costs	$	8.3		$	12.8
	Reclamation and other liabilities not currently deductible for tax		1.1			3.1
	Losses carried forward and Alternative Minimum Tax credits		7.1			8.6
Mexico:	Property, plant and equipment and mine development costs		1.5			1.6
	Losses carried forward		5.5			4.5
Guatemala:	Property, plant and equipment and mine development costs		0.7			0.7
	Losses carried forward		1.3			1.7
Total future income tax assets			25.5			33.0
Valuation allowance			(25.5	)		(33.0	)
Future income tax assets,net of allowance			—			—
Future income tax liabilities:
U.S. and Canada:	Property, plant and equipment and mine development costs		2.4			2.4
Honduras:	Property, plant and equipment and mine development costs		7.8			7.0
Mexico:	Property, plant and equipment and mine development costs		30.5			—
Guatemala:	Property, plant and equipment and mine development costs		29.7			—
Total future income tax liabilities			70.4			9.4
Net future income tax liabilities		$	70.4		$	9.4

(b)	Potential future tax benefits:
	At December 31, 2002, the Company has Canadian losses and tax pools of approximately CDN$22 million, United States operating losses of approximately $8 million, Honduran tax deductions of approximately $17 million, Mexican operating losses of approximately $30 million, and Guatemalan tax deductions of approximately $6 million, which may be carried forward and used to reduce certain taxable income in future years. The Canadian tax pools are without expiry, and the Canadian, U.S. and Mexican losses and the Honduran and Guatemalan deductions expire at various dates prior to 2016. Except for the Honduran tax deductions, the future income tax asset related to these items has not been reflected in the accounts as a valuation allowance has been fully provided.
(c)	Future income taxes:
	In 2002 and 2001, the future income tax of $0.8 million and $1.1 million, respectively, was due primarily to tax-effecting the earnings from the San Martin Mine.
	In 2000, the future income tax recovery of $4.1 million was due primarily to tax-effecting the write-downs of property, plant and equipment and mine development costs.
12.	Non-cash investing activities:
	During the year ended December 31, 2002, the Company issued common shares and options pursuant to the agreement to acquire all the issued and outstanding shares of Francisco (note 3(a)) for non-cash consideration as follows:

Consideration paid through the issuance of common shares	$	124.5
Consideration paid through the issuance of stock options (credited to contributed surplus)		5.9
	$	130.4

There were no non-cash investing activities during 2001 or 2000.

15

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

13.	Financial instruments and financial risk management:
(a)	Hedging:
	In order to protect against the impact of declining gold prices, the Company has a policy that enables it to enter into forward sales and option contracts to effectively provide a minimum price for a portion of inventories and future production. Contracted prices on forward sales and options are recognized in revenues as designated production is delivered to meet commitments.
	As at December 31, 2002 and 2001 the Company had no forward sales or option contracts outstanding.
	As at December 31, 2000, the Company had sold call options on 62,000 ounces of gold at an average price of $294 per ounce expiring in 2001. At December 31, 2000, the fair value of these call options was not significant.
(b)	Carrying value and fair value of financial instruments:
	Except as disclosed elsewhere in these consolidated financial statements, the carrying amounts of the Company’s financial instruments approximate their fair values due to the short term to maturity of such instruments.
(c)	Credit risk:
	The Company monitors the financial condition of its customers and counterparties to contracts and considers the risk of material loss to be remote.
(d)	Foreign currency risk:
	The Company is exposed to fluctuations in foreign currencies through its foreign operations primarily in Honduras, Mexico, Guatemala and Canada. The Company monitors this exposure, but had no hedge positions at December 31, 2002, 2001 or 2000.
14.	Segmented information:
(a)	Operating segments:
	The Company has determined its operating segments to be producing properties and non-producing properties, based on the way management organizes and manages its business. The accounting policies of all segments are consistent with those outlined in note 2 — significant accounting policies. The Company has not allocated general and administrative expenses from the corporate segment.

	Producing			Non-producing
2002	properties			properties			Corporate			Total
Revenue	$	80.8		$	—		$	—		$	80.8
Cost of sales		41.1			—			—			41.1
Depreciation and depletion		17.7			0.1			0.1			17.9
Other operating expenses		2.2			2.4			4.6			9.2
Earnings (loss) from operations		19.8			(2.5	)		(4.7	)		12.6
Other income (loss)		(0.2	)		0.3			2.2			2.3
Earnings (loss) before taxes	$	19.6		$	(2.2	)	$	(2.5	)	$	14.9
Capital expenditures	$	21.9		$	10.6		$	—		$	32.5
Identifiable assets	$	99.8		$	213.1		$	161.6		$	474.5

	Producing		Non-producing
2001	properties		properties			Corporate			Total
Revenue	$	64.3	$	—		$	—		$	64.3
Cost of sales		40.5		—			—			40.5
Depreciation and depletion		12.6		—			0.1			12.7
Other operating expenses		0.7		1.2			4.1			6.0
Earnings (loss) from operations		10.5		(1.2	)		(4.2	)		5.1
Other income		—		0.8			0.3			1.1
Earnings (loss) before taxes	$	10.5	$	(0.4	)	$	(3.9	)	$	6.2
Capital expenditures	$	12.9	$	1.6		$	—		$	14.5
Identifiable assets	$	96.9	$	11.6		$	40.2		$	148.7

16

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

(a) Operating segments:

	Producing			Non-producing
2000	properties			properties			Corporate			Total
Revenue	$	61.6		$	—		$	—		$	61.6
Cost of production		47.9			—			—			47.9
Depreciation and depletion		13.3			—			0.3			13.6
Write-down of investments and properties		21.7			23.0			1.3			46.0
Other operating expenses		1.9			1.6			5.4			8.9
Loss from operations		(23.2	)		(24.7	)		(6.9	)		(54.8	)
Other income (expense)		0.3			(0.1	)		1.8			2.0
Loss before taxes	$	(22.9	)	$	(24.8	)	$	(5.1	)	$	(52.8	)
Capital expenditures	$	2.8		$	41.2		$	2.5		$	46.5
Identifiable assets	$	27.9		$	66.7		$	17.9		$	112.5

(b) Geographic information:

	United States		Latin
2002	& Canada		America		Other		Total
Revenue	$	39.1	$	41.7	$	—	$	80.8
Earnings from operations		0.2		12.4		—		12.6
Earnings before taxes		2.4		12.1		0.4		14.9
Identifiable assets		72.7		271.0		130.8		474.5

	United States			Latin
2001	& Canada			America		Other			Total
Revenue	$	34.0		$	30.3	$	—		$	64.3
Earnings (loss) from operations		(2.9	)		8.0		—			5.1
Earnings (loss) before taxes		(1.7	)		8.3		(0.4	)		6.2
Identifiable assets		45.5			73.9		29.3			148.7

	United States			Latin
2000	& Canada			America			Other			Total
Revenue	$	61.6		$	—		$	—		$	61.6
Loss from operations		(44.4	)		(9.2	)		(1.2	)		(54.8	)
Loss before taxes		(42.3	)		(9.3	)		(1.2	)		(52.8	)
Identifiable assets		45.8			65.3			1.4			112.5

15.	Commitments and contingencies:
(a)	Operating leases:
	The Company has entered into operating leases for office premises and equipment. Minimum annual lease payments required are approximately as follows:

Fiscal year	Minimum lease payments
2003	$	0.6
2004		0.3
2005		—
2006		—
2007 and thereafter		0.1
	$	1.0

(b)	Capital expenditures:
	At December 31, 2002, the Company had committed to contracts for equipment totaling $6.1 million (Company’s share — $4.1 million) to be used in the expansion at the Marigold Mine. Contracts for $5.8 million relating to engineering and construction at El Sauzal had also been committed to.

17

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

(c)	Legal claims:
	At December 31, 2002, certain of the Company’s mineral properties in Honduras and Mexico were the subject of legal claims associated with the permitting, construction, underlying property agreements or operation of the mine. Although the outcome of these matters is not determinable at this time, the Company believes none of these claims will have a material adverse effect on the Company’s financial position or results of operations.
16.	Differences between Canadian and United States generally accepted accounting principles:
	Accounting practices under Canadian and United States generally accepted accounting principles, as they affect the Company, are substantially the same, except for the following:
(a)	Accounting for income taxes:
	United States accounting principles require the use of the asset and liability method of accounting for income taxes, which is comparable to the Canadian standard adopted in 2000. However, as a result of the Company electing to adopt the Canadian standard without restating prior years, a difference arises effective January 1, 2000 between Canadian accounting principles and United States accounting principles. Canadian accounting principles allow the Company to charge opening deficit with the $6.7 million additional future income tax liability required to be recognized on adoption of the new Canadian standard. Under United States accounting principles, this charge would have been recorded as an increase to the San Martin and Cerro Blanco mineral properties at the time of the business acquisition. As a result of this difference, the write-down of the Cerro Blanco property costs in 2000 would be $10.2 million under United States accounting principles.
	Under United States accounting principles, at December 31, 2002, property, plant and equipment and mine development costs for the San Martin Project would be increased by $3.0 million (2001 — $3.8 million; 2000 — $4.5 million) over the amount presented under Canadian accounting principles, with a corresponding reduction in deficit, and at December 31, 1999, future income taxes payable would be increased by approximately $6.7 million over the amount presented under Canadian accounting principles, with a corresponding increase to the carrying value of the San Martin and Cerro Blanco mineral properties. The resulting increase in depreciation and depletion charges as these costs are amortized would have reduced reported earnings for 2002 by $0.8 million (2001 - $0.7 million; 2000 — nil).
(b)	Accounting for investments in debt and equity securities:
	Statement of Financial Accounting Standards No. 115, “Accounting for Investments in Debt and Equity Securities”, requires that portfolio investments that have readily determinable fair values and are held principally for sale in the near term be presented at fair value with their unrealized holding gains and losses included in earnings. Investments that have readily determinable fair values and, while not held principally for sale in the near term, are available-for-sale, must also be presented at fair value with their holding gains and losses reported in a separate component of shareholders’ equity until realized. Both of these types of investments are presented on a cost basis under Canadian accounting principles.
	Under United States accounting principles, other assets and unrealized holding gains in shareholders’ equity at December 31, 2002 would each be increased by nil (2001 — $0.2 million; 2000 — $0.3 million).
(c)	Accounting for long-lived assets:
	Under United States accounting principles, the portion of the write-down of properties in prior years relating to producing mineral properties would have been calculated using discounted estimated future cash flows. Under Canadian accounting principles, the write-down was based on undiscounted future cash flows. However, in the Company’s case, the remaining effect of this discounting is not significantly different than the amounts presented under Canadian accounting principles.
	United States accounting principles require long-lived assets held for resale to be disclosed as such. The impact of this would be to reclassify $1.2 million of property, plant and equipment from non-producing properties to assets held for resale as at December 31, 2001. These assets were sold during 2002.
(d)	Stock based compensation:
	Under generally accepted accounting principles in the United States, stock-based compensation is accounted for based on a fair value methodology, although the effects may be disclosed in the notes to the financial statements rather that in the statement of operations, which the Company has elected to do. The method is comparable to the Canadian standard adopted in 2002. However, as a result of the Canadian standard not requiring retroactive application, details of the fair value of options granted and vested during 2001 and 2000 are required to be disclosed for United States regulatory purposes. Accordingly, the fair value of stock options granted to directors, officers and employees during 2001 and 2000 was estimated to be $0.6 million and $0.5 million respectively, of which $0.2 million would be deferred at December 31, 2001 (2000 — nil) and amortized to operations over the vesting period.

18

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

Fair value has been estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2002			2001			2000
Risk-free interest rate		3.69	%		4.3	%		5.0	%
Annual dividends		—			—			—
Expected stock price volatility		50	%		72	%		67	%
Expected life		2.5	years		2.5	years		2.1	years

Had the Company determined compensation cost based on the fair value at the grant date for its stock options, the Company’s earnings (loss) for the year, under United States accounting principles, would have changed to the pro forma amounts indicated below:

	2002		2001		2000
Earnings (loss) for the year:
Under United States accounting principles	$	12.9	$	4.1	$	(51.2	)
Compensation expense based on fair value of options granted and vested		5.2		0.4		0.6
Pro forma earnings (loss) for the year	$	7.7	$	3.7	$	(51.8	)
Pro forma earnings (loss) per share	$	0.08	$	0.05	$	(0.74	)

	The fair value of warrants granted to the Company’s investment advisor in connection with the acquisition of Cambior de Mexico in 2000 was $0.1 million. Under United States accounting principles, this amount would have been treated as a cost of the acquisition and accordingly the purchase price attributed to mine development costs would have been increased by this amount.
(e)	Comprehensive income:
	Generally accepted accounting principles in the United States require that a company classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings (deficit) and contributed surplus in the equity section of the balance sheet.
	Under United States accounting principles, other comprehensive income (loss) for the year ended December 31, 2002, which consists of changes in the unrealized holding gains on investments, would be a loss of $0.2 million (2001 — $0.1 million; 2000 — nil).
(f)	Change in revenue recognition accounting policy:
	Under United States accounting principles, the impact of a change in accounting policy is applied prospectively in the period of the change, with the cumulative impact on prior periods reflected in operations for the current period. In 2000, the Company accounted for the change in the method of accounting for revenue recognition by retroactively restating the comparative financial statements, as required under Canadian accounting principles. Under United States accounting principles, the impact of this change in accounting policy would be to increase the loss for the year ended December 31, 2001 by $0.3 million compared to the amounts presented under Canadian accounting principles.
(g)	Accounting for start-up costs:
	Accounting principles in the United States require expenditures and revenues recovered during the start-up of operations to be charged to earnings. Under Canadian accounting principles, these costs and recoveries may be deferred prior to the commencement of commercial operations. The impact of this difference for the year ended December 31, 2000, which relate to the San Martin Mine, is not significant.
(h)	Accounting for interests in joint ventures:
	Under United States accounting principles, interests in joint ventures are generally required to either be consolidated or accounted for by the equity method. However, interests in unincorporated joint ventures in the natural resources industry may be accounted for by proportional consolidation, as under Canadian accounting principles. As the Company’s 66-2/3% interest in the Marigold Mine and 50% interest in the Cerro San Pedro Project are held through unincorporated joint ventures, there is no difference between United States and Canadian accounting principles.
(i)	Supplemental disclosures for business acquisitions:
	United States accounting principles requires that for the period in which a material business combination is completed, the notes to the financial statements of the combined entity disclose certain supplemental information, which may be unaudited, on a pro forma basis. In the Company’s case, if the acquisition of Francisco completed

19

Notes to Consolidated Financial Statements
(Tables expressed in millions of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

during 2002 had been completed at January 1, 2002, for purposes of the 2002 pro forma operating results, and at January 1, 2001, for purposes of the 2001 pro forma operating results, the Company’s operating results would have been as follows:

	(unaudited)	2002		2001
Pro forma revenues		$	80.8	$	64.3
Pro forma earnings for the year			12.1		4.0
Pro forma earnings per share		$	0.11	$	0.04

(j)	Accounting for asset retirement obligations:
	Effective for the Company’s 2003 fiscal year, United States accounting principles will require the Company to change its method of accounting for asset retirement obligations, which include site closure and reclamation costs, for purposes of this note. The new statement requires an enterprise to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets. The new standard also requires the enterprise to record the contra to the initial obligation as an increase or decrease to the carrying amount of the related long-lived asset and to depreciate that amount over the life of the asset. The liability is increased at the end of each period to reflect the passage of time (as a charge to earnings) and changes in the estimated future cash flows underlying the initial fair value measurement.
	At December 31, 2002, the Company has not yet determined the impact of this new statement.
(k)	Accounting for costs associated with exit or disposal activities:
	Effective for the Company’s 2003 fiscal year, United States accounting principles will require the Company to change its method of accounting for costs associated with an exit activity (including restructuring) or with disposal of long- lived assets. The new statement requires an enterprise to record a liability for a cost associated with an exit or disposal activity when that liability is incurred and can be measured at fair value. The new standard will also require disclosure about exit and disposal activities, the related costs, and changes in those costs in the notes to the interim and annual financial statements that include the period in which an exit activity is initiated and in any subsequent period until the activity is completed.
	At December 31, 2002, the Company does not believe the impact of this new statement will have a material effect on its financial statements.
	A reconciliation of the loss for the year as shown in these consolidated financial statements to the loss for the year in accordance with United States accounting principles, excluding the effects of accounting for stock options using the fair value method (note 16(d)), and to comprehensive income (loss) for the year using United States accounting principles, is as follows:

	2002			2001			2000
Earnings (loss) for the year in these consolidated financial statements	$	13.7		$	4.8		$	(48.7	)
Adjustment for differences in accounting for income taxes		(0.8	)		(0.7	)		(2.2	)
Adjustment for change in revenue recognition accounting policy		—			—			(0.3	)
Earnings (loss) for the year using United States accounting principles		12.9			4.1			(51.2	)
Other comprehensive income (loss), net of tax:
Change in unrealized holding gains on investments		(0.2	)		(0.1	)		—
Comprehensive earnings (loss) for the year using United States accounting principles	$	12.7		$	4.0		$	(51.2	)
Basic earnings (loss) per share	$	0.13		$	0.06		$	(0.73	)
Diluted earnings (loss) per share	$	0.13		$	0.06		$	(0.73	)

Shareholders’ equity under United States accounting principles would be as follows:

	2002			2001
Shareholders’ equity:
Common stock	$	437.6		$	194.8
Contributed surplus		6.1			0.2
Unrealized holding gains		—			0.2
Deficit		(55.3	)		(68.2	)
	$	388.4		$	127.0

20

Management’s Discussion and Analysis of Financial Condition and Results of Operation

This management’s discussion and analysis of the financial results of the Company’s operations for the years 2000 through 2002 should be read in conjunction with, and is qualified by, the consolidated financial statements and notes thereto (the “financial statements”) which form a part of this report. This financial information,which is expressed in United States dollars unless otherwise stated, was prepared in accordance with accounting principles generally accepted in Canada. Reference should be made to Note 16 of the financial statements for a reconciliation of Canadian and U.S. generally accepted accounting principles.

The following discussion contains statements that are not historical facts, and by their nature are considered “forward looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. See also “Forward Looking Statements” at the end of this discussion.

OVERVIEW

There were several highlights for the Company during 2002. Production increased to 251,919 ounces of gold from 230,065 ounces in 2001. The continued emphasis on cost-effective production paid increased benefits as the average London Bullion Market price for gold rose to $310 per ounce from $271 per ounce in 2001 and from $279 per ounce in 2000. The Company’s already-profitable mines and unhedged production were well positioned to take advantage of the higher gold price. The San Martin Mine increased production and reduced costs and was the single most important factor in lowering the Company’s average total cash cost of production to $160 per ounce of gold from $172 per ounce in 2001 and from $222 per ounce in 2000.

The Company continues to look for ways to expand with low-cost production through both acquisition and exploration. On July 16, 2002, the Company completed the acquisition, by way of a plan of arrangement, of Francisco Gold Corp. (“Francisco”), a Canadian public company. Francisco’s principal assets were the El Sauzal gold project in Chihuahua, Mexico and the Marlin gold project in Guatemala. The Company issued 25.8 million common shares to the shareholders of Francisco under the terms of the plan of arrangement and issued 1.7 million stock options to directors, officers and employees of Francisco in exchange for their existing Francisco stock options. The Company has accounted for this acquisition using the purchase method.

In November 2002, the Company raised $111.6 million in a successful common share offering. The Company intends to use the proceeds for development and construction at the El Sauzal project in Mexico and the Marlin project in Guatemala.

Subsequent to December 31, 2002, the Company agreed to sell its 50% interest in the Cerro San Pedro Project to Metallica Resources Inc. (“Metallica”) for proceeds of up to $18.0 million and a net smelter return royalty of up to 2%, depending on the price of gold. The Cerro San Pedro Project is the most advanced of the properties acquired during the acquisition of Cambior de Mexico S.A. de C.V. (“Cambior de Mexico”) in May 2000. The Company purchased 100% of the issued and outstanding shares of Cambior de Mexico from Cambior Inc. for $7.5 million. Cambior de Mexico was subsequently renamed Glamis de Mexico, S.A. de C.V. (“Glamis de Mexico”). Glamis de Mexico has interests in a number of mineral properties in Mexico.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

Summary

The Company continued its profitable performance in 2002 with net earnings of $13.7 million, or $0.14 per share. For 2001, the Company had net earnings of $4.8 million ($0.07 per share) as compared to the 2000 loss of $48.7 million ($0.70 per share), including write-downs of $41.9 million ($0.60 per share).

All of the Company’s mining operations were profitable in 2002 and generated earnings of $20.4 million, compared to $9.9 million in 2001 and a loss before write-downs of $0.7 million in 2000. The 9% increase in the ounces of gold produced and sold and a 15% increase in the realized price of gold were the primary reasons behind the increase.

The Company continues to generate positive cash flows from operations. Cash flows from operations (before changes in non-cash working capital and reclamation expenditures) grew to $33.8 million for 2002 from $18.5 million in 2001 and $6.6 million in 2000. The Company’s working capital was $169.1 million at December 31, 2002, including cash and equivalents of $160.0 million. This compares to working capital of $53.4 million and cash of $45.9 million at December 31, 2001. The Company spent $25.0 million in capital expenditures for mine development and plant and equipment and $7.5 million in costs related to the Francisco acquisition. Exploration expense was $3.2 million in 2002. All expenditures were from internally-generated funds. Capital expenditures and exploration expenses in 2003 are budgeted at $51.5 million.

Gold Production

The Company produced 251,919 ounces of gold from three mines during 2002, as compared to 230,065 ounces of gold in 2001 from the same three mines. In 2000, the Company produced 218,390 ounces of gold from five mines. Although the number of mines has decreased, the production at the San Martin Mine has more than offset the closures at the Dee, Daisy and Picacho mines.

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Following is a discussion of the Company’s gold production during 2002:

San Martin Mine

The mine began commercial production in January 2001 and produced 114,216 ounces of gold during 2001 at a total cash cost per ounce of $120. During 2002, the mine increased production to 129,435 ounces of gold, at a total cash cost per ounce of $106. San Martin is budgeted to produce 125,000 ounces of gold in 2003, as mining in the Rosa pit declines and development and mining of the Palo Alto pit accelerates.

Marigold Mine (66.7% Glamis-owned)

The Company is the operator at the Marigold Mine, a joint venture operation with Barrick Gold Corporation. Marigold had another successful year with production for the Company’s account of 55,550 ounces of gold at a total cash cost per ounce of $180 per ounce of gold. Marigold produced 56,525 ounces of gold for the Company’s account in 2001 at a total cash cost per ounce of $179. Production during the first nine months of 2002 was only 32,672 ounces of gold as the planned stripping campaign impacted production. In the fourth quarter of 2002, the mine produced 22,878 ounces of gold, putting the mine on track for planned production of 90,000 ounces of gold for the Company’s account in 2003.

Rand Mine

Production in 2002 from the Rand Mine increased to 66,934 ounces of gold at a total cash cost per ounce of $247 from 59,324 ounces at a total cash cost per ounce of $265 for 2001. Rand is expected to finish mining in early 2003, although gold is planned to be produced through 2005, as the mine is reclaimed. Rand’s planned production in 2003 is approximately 35,000 ounces of gold.

PROJECTS

El Sauzal Project, Chihuahua, Mexico

The Company acquired the El Sauzal Project through the acquisition of Francisco in July 2002. El Sauzal is located in the southwest part of Chihuahua state. The project is comprised of seven exploration concessions of approximately 40 square miles which are 100%-owned by the Company. A feasibility study on the project was completed prior to closing of the Francisco acquisition. Based on that study, and subsequent work performed by the Company, a $100 million capital project has been planned. Engineering is underway and construction is expected to continue through 2004.

Marlin Project, Guatemala

The Marlin Project was also acquired as part of the Francisco acquisition. This project consists of one exploration concession of approximately 39 square miles in western Guatemala near Huehuetenango. Since acquisition, the Company has been aggressively exploring the Marlin Main Zone and the Southeast extension and has expanded the mineral resource from 1.5 million gold-equivalent ounces to over 4 million gold-equivalent ounces. Additional drilling and an economic assessment are planned for 2003.

Cerro San Pedro Project, San Luis Potosi, Mexico

The Company continued to move the project toward development, expending $0.4 million on various development and holding costs. As noted in the overview, subsequent to December 31, 2002, the Company agreed to sell its 50% interest in the Cerro San Pedro Project to Metallica for proceeds of up to $18.0 million and a net smelter return royalty of up to 2%, depending on the price of gold. The Company received $2.0 million on closing of this transaction, and is to receive $5.0 million in August 2003, $6.0 million in February 2004, $2.5 million on commencement of commercial production and $2.5 million twelve months from the commencement of commercial production. With respect to the August 2003 payment, the agreement provides that should Metallica fail to make that payment when due, Metallica would return the 50% interest in the project acquired to the Company, plus an additional 1% interest in the project and Metallica agrees to amend certain terms of the existing shareholders agreement reflecting the 51% interest that would be held by the Company. The Company would retain the $2.0 million initial payment. With respect to the February 2004 payment, the agreement provides Metallica with the option to make that payment with common shares of Metallica.

Cerro Blanco Project, Guatemala

Two phases of drilling were undertaken on the Cerro Blanco deposit during 2002 at a cost of $1.5 million. Results during the first-phase drilling on the main Cerro Blanco zone yielded high-grade gold intercepts at depth. A second phase of drilling was planned for late in the year and as of December 31, 2002 six of the eight planned holes had been completed. Analysis of the results is not yet complete.

Imperial Project, California

In connection with the recommenced permitting process for the Imperial Project, the Bureau of Land Management (“BLM”) completed a validity examination of the unpatented mining claims comprising the project, and concluded that the mining claims are valid. At this time, the Company does not know how long it may take for the BLM to complete the permitting process and issue a new Record of Decision.

Opposition to the Imperial Project by the local Quechan Tribe of Indians continues, and legislative and regulatory efforts have been commenced in the State of California to attempt to delay or stop the project. The Company believes that it is legally entitled to approval of its plan of operations for the development and operation of the project. However, in light of such opposition, the Company has discussed with the BLM the possibility of the BLM purchasing the Company’s mining claims at fair market value. No definitive response to this suggestion has been received from the BLM, and the Company

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cannot predict whether a purchase of the mining claims comprising the Imperial Project is a viable alternative and, if so, when or at what price such a transaction might be completed. In the absence of such a resolution, the Company intends to continue to pursue approval of its plan of operations.

RECLAMATION ACTIVITIES

The Company continues with reclamation and closure activities at the Dee and Daisy mines. The Picacho Mine was closed and returned to the owner at the end of March 2002; Daisy is expected to be completed early in 2003. The Company spent $2.5 million on reclamation activities during 2002, $2.6 million in 2001 and $1.4 million in 2000. The Company plans to spend approximately $2.4 million in 2003 on site closure and reclamation, primarily at the Rand and Dee mines.

REVENUES

Revenues from production increased solidly to $80.8 million for the year ended December 31, 2002 from $64.3 million for the year ended December 31, 2001 and $61.6 million for the year ended December 31, 2000. The increase is a result of a 9% increase in the number of ounces produced and sold as well as a significantly stronger gold price. The Company realized $313 per ounce of gold sold in 2002, compared to $272 per ounce in 2001 and $280 per ounce in 2000.

COST OF PRODUCTION

The Company’s total cash cost of production includes mining, processing, direct mine overhead costs and royalties, and excludes selling, general and administrative costs at the corporate level, depreciation and depletion costs and end-of-mine reclamation accruals. Total production costs include depreciation and depletion and end-of-mine reclamation accruals. The difference between cost of sales and cost of production is the difference in the cost of the any additional ounces sold out of inventory during the year. The number of gold ounces produced in 2002 was 251,919 compared to the number of ounces of gold actually sold of 257,759. There is no significant difference in the total cash cost per ounce of production and total cash cost per ounce sold.

The Company’s cost of sales for the year ended December 31, 2002 was $41.1 million, and for the year ended December 31, 2001 was $40.5 million, both years representing significant reductions from $47.9 million for the year ended December 31, 2000. These costs continue to reflect the impact of over 50% of the production coming from the low-cost San Martin Mine as well as improved performance at the Marigold Mine.

The average total cash cost per ounce of gold decreased to $160 per ounce of gold from $172 in 2001 and $222 in 2000. In 2002, the average total cost of production per ounce of gold averaged $236 per ounce, up from $216 per ounce in 2001, as development costs at San Martin and Marigold were amortized. The average total cost of production in 2000 was $288 per ounce of gold.

OTHER INCOME AND EXPENSES

Depreciation and depletion charges totaled $17.9 million during 2002 compared to $12.7 million during 2001 and $13.6 million in 2000. Changes in the depreciation and depletion expense are attributable to changes in the reserve base as well as production levels, as many charges are made on a “unit-of-production” basis. Both San Martin and Marigold had increased depreciation and depletion charges as a result of increased development activities.

The Company expended $3.2 million on exploration in 2002 as well as $2.9 million on exploration at the Marlin Project that was accounted for as part of the Francisco acquisition. These exploration expenditures included $0.4 million on the Marigold property, an additional $0.5 million on the Marlin Project, $1.5 million at the Cerro Blanco Project, $0.4 million on various projects in Honduras, and $0.4 million in total on various other properties in North America and Central America. Exploration expense was $1.7 million during 2001. Of that, $0.5 million was incurred in the U.S. and $1.1 million was divided between projects in Mexico, Guatemala, Panama and El Salvador. Exploration expense in the year ended December 31, 2000 was $2.9 million. Year 2000 exploration focused on the Marigold property in the U.S. ($0.9 million), other U.S. projects ($0.6 million), the Cerro Blanco Project in Guatemala ($0.6 million) and the Glamis de Mexico projects ($0.4 million).

General and administrative expenses increased slightly in 2002 to $4.6 million from $4.4 million in 2001, both lower than the $5.2 million incurred in 2000. Increased expenses to relocate and increase staff and start-up costs at the new development projects accounted for the increase.

The Company had no write-downs of properties during 2002, and in 2001 recognized a recovery of $1.3 million relating to over-accruals of reclamation and site closure liabilities on properties no longer in production. The Company incurred write-downs of $46.0 million during 2000 ($41.9 million net of tax). The major producing property items in 2000 included the third quarter write-off for closure of the Dee Mine ($4.3 million), the fourth quarter write-down of the Marigold mill complex (the Company’s portion equaling $1.0 million) and the write-down in the carrying value of the Rand Mine ($16.3 million) due to revaluation of the reserves at a $275 per ounce gold price. On non-producing properties, the carrying value of a crusher acquired as part of the Cerro San Pedro Project was reduced by $1.3 million to its estimated market value of $1.2 million. In addition the $8.0 million carrying value of the Cerro Blanco Project in Guatemala was written off. Finally, based upon the Department of the Interior’s decision in January 2001 to deny the permits for the Imperial Project, the Company wrote off its investment of $14.3 million as at December 31, 2000. Other miscellaneous properties totaling $0.8 million were also written off.

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The amount of interest and other income recognized by the Company increased to $2.3 million in 2002 from $1.1 million in 2001 and from $2.0 million in 2000. In 2002, interest income was $0.9 million, foreign exchange gains were $0.8 million and other income was $0.6 million. Other income consisted of gains on sales of investments of $0.5 million, miscellaneous income of $0.7 million and a loss on asset disposal of $0.6 million. The 2001 amount includes interest and miscellaneous other income of $1.4 million and gains on disposals of assets of $0.5 million which was offset by a payment of $0.8 million on share appreciation rights made to a former Rayrock officer. In 2000, interest and other income was $2.5 million, primarily from interest on cash balances, reduced by a loss on sale of assets of $0.3 million and a foreign exchange loss of $0.2 million.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital and Cash Flow

The Company’s working capital position improved significantly at December 31, 2002 to $169.1 million from $53.4 million at December 31, 2001. The largest amount of the increase came from the common share offering in November 2002, which netted the Company $111.6 million in cash, and the balance from strong cash flows from the operating units net of capital expenditures. Working capital was $18.2 million at December 31, 2000. The 2001 increase included the results of a common share offering in October 2001 that netted the Company $33.2 million.

Cash flow from operations (before changes in non-cash working capital and reclamation expenditures) was $33.8 million in 2002, compared to $18.5 million in 2001 and $6.6 million in 2000. The year-on-year increases were due to the higher gold price and reduced cash costs of production. Net cash provided by operating activities, which includes the non-cash adjustments and cash expenditures on the reclamation properties, also increased to $28.3 million in 2002 compared to $11.8 million in 2001 and $4.0 million in 2000.

Long-term liabilities at December 31, 2002 consisted of reserves for reclamation of $6.9 million, a reduction from the $8.4 million at December 31, 2001, and the $11.0 million at December 31, 2000. The reduction is due to significant expenditures since 2000 on site closure and reclamation (totaling $6.5 million over three years). The liability for future income tax was $70.4 million as at December 31, 2002 ($9.4 million at December 31, 2001). This consists of approximately $60.0 million recorded in connection with the purchase price of Francisco. The balance consists primarily of amounts recorded in connection with the purchase of the San Martin property as well as the result of tax-effecting the earnings from San Martin.

Capital Resources

In November 2002, the Company sold 13.9 million common shares in a public offering, including exercise of the underwriters over-allotment option, at a price of Cdn$13.15 per share, less a commission of Cdn$7.3 million resulting in proceeds to the Company of Cdn$175.7 million (US$111.6 million). Transaction costs associated with the offering were $1.1 million.

On July 16, 2002, the Company completed the acquisition by way of a plan of arrangement of Francisco. Francisco’s principal assets were the El Sauzal gold project in Chihuahua, Mexico and the Marlin gold project in Guatemala. The Company issued 25.8 million common shares valued at $124.5 million to the shareholders of Francisco under the terms of the plan of arrangement and issued 1,674,000 stock options to directors, officers and employees of Francisco exercisable at prices between Cdn$3.07 and Cdn$4.04 per share in exchange for their existing Francisco stock options.

There were no acquisitions in 2001 or 2000 where shares of the Company were issued (the acquisition of Cambior de Mexico was entirely in cash). However, in consideration for advisory services rendered to the Company in connection with the acquisition of Cambior de Mexico, the Company granted to its investment advisor warrants to purchase up to 300,000 shares of the Company’s common shares at an exercise price of U.S. $2.00 per share, all of which were exercised in 2002.

No dividends are planned to be declared or paid in 2003 due to the losses incurred in prior years. No dividends were paid or declared in 2002, 2001 or 2000.

In the course of its business, the Company may issue debt or equity securities to meet the growth plans of the Company if it determines that additional funding could be obtained under favorable financial terms. No assurance can be given that additional funding will be available or, if available, will be on terms acceptable to the Company.

Capital Expenditures

The Company’s capital expenditures increased to $32.5 million during 2002, from $14.8 million in 2001, due primarily to the expansion at Marigold and the Francisco acquisition. Expenditures in 2001 focused on expansion at Marigold and San Martin. The largest use of funds in 2000 ($47.6 million) was for the construction of the San Martin Mine, followed by the purchase of Cambior de Mexico.

Major capital expenditures during the fiscal year 2002 were as follows:

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	(in millions)
Marigold Mine development and purchase of equipment	$	17.6
Acquisition costs of Francisco		7.5
San Martin Mine development and purchase of equipment		4.2
El Sauzal Project development and purchase of equipment		1.9
Marlin Project, purchase of equipment		0.7
Cerro San Pedro (Glamis de Mexico) development		0.4
Other		0.2
	$	32.5

Included in the above were $0.8 million of exploration expenditures that were capitalized relating to expanded reserves at Marigold. Capital expenditures and funds for exploration in 2003 are estimated to be approximately $51.5 million. The primary capital expenditures are expected to be for development of the El Sauzal Project ($30.0 million), equipment purchases and development for the Marigold Mine expansion ($10.6 million), development at the Marlin Project ($4.9 million), and leach pad expansion and development at the San Martin Mine ($2.7 million). Exploration is planned primarily at the Marlin Project and Marigold, with additional work in Honduras and Guatemala. The Company believes that estimated cash flows from operations and current cash reserves will be sufficient to fund these anticipated expenditures.

HEDGING

At December 31, 2002 and at December 31, 2001, the Company had no ounces hedged. At December 31, 2000, the Company had no ounces sold forward, had sold 62,000 ounces of gold call options for 2001 at an average strike price of $294 per ounce, and owned no put options. At December 31, 2000, the fair value in respect of these call options was not significant.

COMMITMENTS AND CONTINGENCIES

In the course of its normal business, the Company incurs various contractual commitments and contingent liabilities. These are illustrated in the table below: (amounts in millions of U.S.dollars)

Contractual Obligations	Less than one year		1 – 3 years		3 – 5 years		More than 5 years		Total
Operating leases	$	0.6	$	0.3		—	$	0.1	$	1.0
Minimum royalty payments	$	0.7	$	1.4	$	0.8	$	2.4	$	5.3
Construction and equipment purchase contracts	$	9.9							$	9.9
Contingencies	Less than one year		1 – 3 years		3 – 5 years		More than 5 years		Total
Future site closure and reclamation costs(1)	$	2.4	$	2.2	$	0.6	$	11.9	$	17.1

⁽¹⁾  In the Company’s financial statements, $2.4 million of these obligations are included in accrued liabilities and $6.9 million in long-term liabilities. The Company has $8.2 million in certificates of deposit as collateral backing these obligations.

ENVIRONMENTAL, REGULATORY AND OTHER RISK FACTORS

Reclamation and Environmental

The Company generally is required to mitigate long-term environmental impacts by stabilizing, contouring, reshaping and re-vegetating various portions of a site once mining and processing are completed. Reclamation efforts are conducted in accordance with detailed plans that have been reviewed and approved by the appropriate regulatory agencies. Whenever feasible, reclamation is conducted concurrently with mining operations.

Standard leaching techniques have been designed to comply with environmental requirements imposed by regulatory authorities. Due to the impervious qualities of the heap leach pad and the closed nature of the leaching system, the Company believes that its mining operations have no materially adverse effect on the environment. However, the Company cannot guarantee that such will not occur.

Tailings impoundments have been constructed at the Company’s Dee and Marigold mines. Milling operations have been suspended indefinitely at the Marigold Mine and significant work was performed in 2002 to reclaim the tailings impoundment. The work is expected to be completed during the first half of 2003. At the Dee Mine, milling operations were completed early in 2001 and reclamation of the tailings impoundment commenced. Tailings impoundments pose certain risks to the environment including the potential for groundwater contamination and wildlife mortalities. The Company operates all of its tailings facilities in substantial compliance with applicable rules and regulations. Tailings facilities will be reclaimed in accordance with state-approved reclamation plans.

Though the Company believes that its mining operations are in material compliance with all present health, safety and environmental rules and regulations, there is always some uncertainty associated with such due to the complexity and application of such rules and regulations. The Company does not anticipate that the cost of compliance with existing environmental laws and regulations will have a material impact on its earnings in

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the foreseeable future. However, possible future health, safety and environmental legislation, regulations and actions could cause additional expense, capital expenditures, restrictions and delays in the activities of the Company, the extent of which cannot be predicted. The Company made no material capital expenditures for environmental control facilities during 2002, 2001 and 2000, except for expenditures for the leach pad construction at San Martin and Marigold mines. The Company estimates that it will make no material capital expenditures in this area during the year ending December 31, 2003, other than monitoring systems incorporated into leach pad construction and expansion programs. At the corporate level, an Environmental Policy has been established to assure measurable standards for internal environmental audits for review by the Audit and Environment Committee of the Board of Directors. The Committee has been active and is satisfied the Company is complying with regulatory parameters.

As of December 31, 2002, the Company had in place $7.1 million in letters of credit ($5.0 million at December 31, 2001) backed by certificates of deposit and $3.8 million in reclamation bonds ($4.3 million at December 31, 2001) issued as security for future reclamation costs.

Legal and Regulatory

Legislation has been introduced in prior sessions of the U.S. Congress to make significant revisions to the U.S. General Mining Law of 1872 that would affect the Company’s unpatented mining claims on federal lands, including a royalty on gold production. It cannot be predicted whether any of these proposals will become law. Any levy of the type proposed would only apply to unpatented federal lands and accordingly could adversely affect the profitability of portions of the gold production from the Marigold mine, and all production from the Imperial Project if it were to be developed.

In the last days of the Clinton administration, several regulatory initiatives were issued which could adversely affect the future development of minerals on public lands in the United States. These included new Surface Management Rules which govern BLM’s approval process for mineral development (known as the “3809” rules), a Solicitor’s opinion on the use of mill sites and mining claims for activities ancillary to mining, and various BLM Instructional Memoranda relating to the same. Many of these new initiatives are the subject of various legal challenges and have been or are being reviewed by the new federal administration. In particular, the new 3809 rules have been re-proposed with certain changes that would have less of an adverse impact on new mining development in the United States. It is uncertain how these initiatives will ultimately be finalized. The Company does not believe that they would adversely impact any of the Company’s current mining operations. However, they could adversely impact the Company’s ability to gain the necessary approvals to develop new mineral resources on public lands in the United States, including the expansion at the Marigold Mine.

Other Risk Factors

The Company’s mineral development and mining activities and profitability are subject to significant risks due to numerous factors outside of its control including, but not limited to, the price of gold, changes in the regulatory environment, various foreign exchange fluctuations and risks inherent in mining. Refer to the Company’s Annual Information Form for additional discussions of risk factors.

Because the Company has no production hedged, any sustained change in the price of gold over or under current levels will appreciably affect the Company’s general liquidity position and could substantially increase or decrease revenues, earnings and cash flow.

Acquisition of title to mineral properties in all jurisdictions where the Company operates is a very detailed and time-consuming process. Certain of the Company’s properties have not been surveyed and therefore in accordance with the laws of the jurisdiction in which the properties are located, their existence and area could be in doubt. Although the Company has investigated title to all of its mineral properties, the Company cannot give any assurance that title to such properties will not be challenged or impugned. In addition, portions of the Company’s mineral reserves lie within unpatented mining claims in the United States. There is a risk that any of the Company’s unpatented mining claims could be determined to be invalid, in which case the Company could lose the right to any mineral reserves contained within those mining claims.

The Company prepares estimates of future gold production for its various operations. The Company’s production estimates are dependent on, among other things, the accuracy of mineral reserve estimates, the accuracy of assumptions regarding ore grades and recovery rates, assumptions pertaining to ground conditions and physical characteristics of ores, such as hardness and the presence or absence of particular metallurgical characteristics and the accuracy of estimated rates and costs of mining and processing. The failure of the Company to achieve its production estimates could have a material and adverse effect on any or all off the Company’s future cash flows, profitability, results of operations and financial condition.

The Company’s published figures for both mineral reserves and mineral resources are only estimates. The estimating of mineral reserves and mineral resources is a subjective process which depends in part on the quality of available data and the assumptions used and judgments made in interpreting such data. There is significant uncertainty in any reserve or resource estimate such that the actual deposits encountered and the economic viability of mining the deposits may differ materially from the Company’s estimates.

Gold exploration is highly speculative in nature. Success in exploration is dependent upon a number of factors including, but not limited to, quality of management, quality and availability of geological expertise and

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availability of exploration capital. Due to these and other factors, no assurance can be given that the Company’s exploration programs will result in the discovery of new mineral reserves or resources.

The Company conducts mining, development and exploration activities in countries other than Canada and the United States. The Company’s foreign mining investments are subject to the risks normally associated with the conduct of business in foreign countries, which include, among others, invalidation of governmental orders or permits, corruption, uncertain political and economic environments, terrorist actions, arbitrary changes in laws or policies, the opposition of mining from environmental or other non-governmental organizations and limitations on foreign ownership or the export of gold. These risks may limit or disrupt the Company’s projects, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization or expropriation without fair compensation, any or all of which could have a material and adverse effect on the Company’s profitability or the viability of its foreign operations.

The Company’s mining operations are subject to health, safety and environmental legislation and regulations, changes in which could cause additional expenses, capital expenditures, restrictions and delays in the Company’s activities, the extent of which cannot be predicted.

The Company also invests cash balances in short-term investments that are subject to interest rate fluctuations. Because these investments are in highly liquid, short-term instruments, the Company believes that any impact of an interest rate change would not be material.

CRITICAL ACCOUNTING POLICIES

The preparation of its consolidated financial statements requires the Company to use estimates and assumptions that affect the reported amounts of assets and liabilities as well as revenues and expenses. The Company’s accounting policies are described in note 2 to its consolidated financial statements. The Company’s accounting policies relating to work-in-progress inventory valuation, depreciation and amortization of property, plant and equipment and mine development costs, and site reclamation and closure accruals are critical accounting policies that are subject to estimates and assumptions regarding reserves, recoveries, future gold prices and future mining activities.

The Company records the cost of mining ore stacked on its leach pads as work-in-progress inventory, and values work-in-progress inventory at the lower of cost or estimated net realizable value. These costs are charged to earnings and included in cost of sales on the basis of ounces of gold recovered. The assumptions used in the valuation of work-in-progress inventories include estimates of gold contained in the ore stacked on leach pads, assumptions of the amount of gold stacked that is expected to be recovered from the leach pads and an assumption of the gold price expected to be realized when the gold is recovered. If these estimates or assumptions prove to be inaccurate, the Company could be required to write-down the recorded value of its work-in-progress inventories, which would reduce the Company’s earnings and working capital.

The Company records mineral property acquisition costs and mine development costs at cost. In accordance with Canadian generally accepted accounting principles, the Company capitalizes pre-production expenditures net of revenues received, until the commencement of commercial production. A significant portion of the Company’s property, plant and equipment and mine development costs are depreciated and amortized on a unit-of-production basis. Under the unit-of-production method, the calculation of depreciation, depletion and amortization of property, plant and equipment and mine development costs is based on the amount of reserves expected to be recovered from each location. If these estimates of reserves prove to be inaccurate, or if the Company revises its mining plan for a location, due to reductions in the price of gold or otherwise, to reduce the amount of reserves expected to be recovered, the Company could be required to write-down the recorded value of its plant and equipment and mine development costs, or to increase the amount of future depreciation, depletion and amortization expense, both of which would reduce the Company’s earnings and net assets.

In addition, generally accepted accounting principles require the Company to consider at the end of each accounting period whether or not there has been an impairment of the capitalized property, plant and equipment and mine development costs. For producing properties, this assessment is based on expected future cash flows to be generated from the location. For non-producing properties, this assessment is based on whether factors that may indicate the need for a write-down are present. If the Company determines there has been an impairment because its prior estimates of future cash flows have proven to be inaccurate, due to reductions in the price of gold, increases in the costs of production, reductions in the amount of reserves expected to be recovered or otherwise, or because the Company has determined that the deferred costs of non-producing properties may not be recovered based on current economics or permitting considerations, the Company would be required to write-down the recorded value of its property, plant and equipment and mine development costs which would reduce the Company’s earnings and net assets.

The Company has an obligation to reclaim its properties after the minerals have been mined from the site, and has estimated the costs necessary to comply with existing reclamation standards. These costs are accrued on a unit-of-production basis as gold is recovered and sold, based on the estimated amount of mineral reserves expected to be recovered from each location, with the aggregate amount accrued being reflected as a liability on the Company’s consolidated balance sheet. If these estimates

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of costs or of recoverable mineral resources prove to be inaccurate, the Company could be required to increase the reserve for site closure and reclamation costs, increase the amount of future reclamation expense per ounce, or both, all of which would reduce the Company’s earnings and net assets.

CONTROLS AND PROCEDURES

Within the 90 day period prior to the filing of this report, the Company carried out an evaluation, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the United States Securities Exchange Act of 1934 (“Exchange Act”). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Subsequent to the date of their evaluation, there have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls.

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud. A control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Forward-Looking Statements

Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995: Except for the statements of historical fact contained herein, the information presented constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes”, or variation of such words and phrases that refer to certain actions, events or results to be taken, occur or achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the actual results of exploration activities, actual results of reclamation activities, the estimation or realization of mineral reserves and resources, the timing and amount of estimated future production, costs of production, costs and timing of the development of new deposits, requirements for additional capital, future prices of gold, possible variations in ore grade or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labor disputes and other risks of the mining industry, delays in obtaining governmental approvals, permits or financing or in the completion of development or construction activities, the Company’s hedging practices, currency fluctuations, title disputes or claims limitations on insurance coverage and the timing and possible outcome of pending litigation, as well as those factors discussed above in the section entitled “Environmental, Regulatory and Other Risk Factors”. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

28 EX-3 5 o09429aexv3.htm INFORMATION CIRCULAR AND PROXY STATEMENT

EXHIBIT 3

GLAMIS GOLD LTD.
5190 Neil Road, Suite 310
Reno, Nevada 89502 U.S.A.

NOTICE OF ANNUAL AND EXTRAORDINARY
GENERAL MEETING OF SHAREHOLDERS

TAKE NOTICE that the annual and extraordinary general meeting (the “Meeting”) of shareholders of GLAMIS GOLD LTD. (the “Company”) will be held at The Fairmont Royal York Hotel, 100 Front Street West, Toronto, Ontario, on Wednesday, May 7, 2003 at 1:30 p.m., local time, for the following purposes:

1.	to receive the report of the Directors of the Company;
2.	to receive and consider the consolidated financial statements of the Company for its fiscal year ended December 31, 2002 and the report of the auditor thereon;
3.	to fix the number of directors at 6;
4.	to elect Directors of the Company for the ensuing year;
5.	to appoint an auditor of the Company for the ensuing year and to authorize the Directors to fix the auditor’s remuneration;
6.	to consider and, if thought fit, approve an ordinary resolution amending the Company’s Shareholder Rights Plan by extending the Expiration Time for an additional three year period;
7.	to consider any permitted amendment to or variation of any matter identified in this Notice; and
8.	to transact such other business as may properly come before the Meeting or any adjournment thereof.

An Information Circular and a copy of the Annual Report of the Company for the year ended December 31, 2002 accompany this Notice. The Information Circular contains details of matters to be considered at the Meeting. The Annual Report includes the consolidated financial statements and the auditor’s report thereon.

A shareholder who is unable to attend the Meeting in person and who wishes to ensure that such shareholder’s shares will be voted at the Meeting is requested to complete, date and sign the enclosed form of proxy and deliver it by hand, mail or facsimile transmission in accordance with the instructions set out in the form of proxy and in the Information Circular.

DATED at Reno, Nevada, U.S.A., March 24, 2003.

BY ORDER OF THE BOARD

“C. Kevin McArthur”
President & Chief Executive Officer

GLAMIS GOLD LTD.
5190 Neil Road, Suite 310
Reno, Nevada, 89502 U.S.A.

INFORMATION CIRCULAR
as at March 14, 2003

This Information Circular is furnished in connection with the solicitation of proxies by the management of GLAMIS GOLD LTD. (the “Company”) for use at the annual and extraordinary general meeting (the “Meeting”) to be held on May 7, 2003 at 1:30 p.m., local time, at The Fairmont Royal York Hotel, 100 Front Street West, Toronto, Ontario.

Dollar amounts stated herein are in U.S. dollars unless otherwise stated.

Pursuant to section 111 of the Company Act (British Columbia), advance notice of the Meeting was published in the Vancouver Sun newspaper on March 11, 2003 and filed with The Toronto Stock Exchange (“TSX”), the British Columbia Securities Commission and the Ontario Securities Commission.

GENERAL PROXY INFORMATION

Solicitation of Proxies

The solicitation of proxies will be primarily by the mail, but proxies may be solicited personally or by telephone by Directors, officers and regular employees. All solicitation costs will be borne by the Company.

Appointment and Revocation of Proxies

The individuals named in the accompanying form of proxy are the Chairman of the Board of Directors of the Company and the President and Chief Executive Officer of the Company. A shareholder wishing to appoint some other person (who need not be a shareholder) to represent him at the Meeting has the right to do so, either by inserting such person’s name in the blank space provided in the form of proxy or by completing another form of proxy. A form of proxy will not be valid unless it is completed and delivered to the office of Computershare Trust Company of Canada by fax to 1-866-249-7775 or by mail or by hand to Proxy Department, 100 University Avenue, Toronto, Ontario, Canada, M5J 2Y1, not less than 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting at which the person named therein purports to vote in respect thereof.

A shareholder who has given a proxy may revoke it by an instrument in writing delivered either to Computershare Trust Company of Canada as specified above or to the registered office of the Company by fax to (604) 685-7084 or by mail or by hand to 1500, 1055 West Georgia Street, P.O. Box 11117, Vancouver, British Columbia, Canada, V6E 4N7, at any time up to and including the last business day that precedes the day of the Meeting or, if adjourned, any reconvening thereof, or in any other manner provided by law. In addition, a revocation of a proxy does not affect any matter on which a vote has been taken before the revocation.

Registered and Unregistered Shareholders

Registered shareholders may vote the common shares (the “Shares”) they hold in the Company either by attending the Meeting in person or, if they do not plan to attend the Meeting, by completing the proxy and following the delivery instructions contained in the form of proxy and this Information Circular.

Unregistered shareholders, being persons whose holdings of Shares are registered in the name of a stockbroker or financial intermediary (each an “Intermediary”), must follow special procedures if they wish to vote at the Meeting. To vote in person at the Meeting, an unregistered shareholder must insert his or her name in the space provided for in the form of proxy for the appointment of a person, other than the persons named in the proxy, as proxyholder and have the proxy signed by the Intermediary. In such case, the unregistered shareholder attends as a proxyholder for their own shareholdings and will be subject to the same limitations as any other proxyholder in voting shares (see “Exercise of Discretion”). If the unregistered shareholder does not plan to attend the Meeting, the unregistered shareholder can vote by proxy, by following the instructions included on the proxy and provided to the unregistered shareholder by the relevant Intermediary. In either case, the proxy must be delivered in the manner provided for in this Information Circular or as instructed by the shareholder’s Intermediary. An unregistered shareholder who does not follow the instructions for delivery of the relevant form of proxy and who attends the Meeting will not be entitled to vote at the Meeting.

Exercise of Discretion

Shares represented by properly executed proxies appointing the persons named in the enclosed instrument of proxy will be voted or withheld from voting on any ballot in accordance with the instructions contained in the instrument of proxy. In the absence of instructions, the Shares represented by a proxy will be voted FOR the establishment of the size of the Board of Directors at six, FOR the election of directors by equal distribution of the votes eligible to be cast on the election among the Company’s nominees, FOR the appointment of KPMG LLP as auditor of the Company and FOR the amendment of the Company’s Shareholder Rights Plan to extend the Expiration Time by three years.

With respect to amendments are variations to matters identified in the accompanying Notice of Meeting, other than the election of directors, and with respect to other matters which may properly come before the Meeting, the Shares represented by a proxy will be voted by the persons so designated in their discretion. A proxy may not confer any discretion to vote in respect of the election of a director unless the nominee is named in the proxy or in the Information Circular. At the date of this Information Circular, management of the Company knows of no such amendment, variations or other matters to come before the Meeting.

Voting Shares and Principal Shareholders

As of March 14, 2003, the Company had outstanding 126,312,142 fully paid and non-assessable Shares, each Share carrying the right to one vote.

Only shareholders of record at the close of business on March 19, 2003, who either personally attend the Meeting or who have completed and delivered a form of proxy in the manner and

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subject to the provisions described above will be entitled to vote or to have their Shares voted at the Meeting. A quorum for general meetings of shareholders is not less than two persons being present in person or being represented by proxy, holding not less than one-twentieth of the issued Shares.

To the knowledge of the Directors and senior officers of the Company, no person or corporation beneficially owns, directly or indirectly, or exercises control or direction over Shares carrying more than 10% of the voting rights attached to all outstanding Shares as at March 14, 2003.

Security Ownership by Directors and Executive Officers

The following table sets out as of March 14, 2003, ownership of Shares by each Director and nominee for Director of the Company, each current executive officer of the Company and by all Directors and executive officers of the Company, who are such as at March 14, 2003, as a group, without naming them. All such Shares are directly owned by the person shown unless otherwise indicated by footnote.

Name of Beneficial Owner	Number of Shares
A. Dan Rovig, Director and Chairman		225,000	(1)
C. Kevin McArthur, Director, President and Chief Executive Officer		1,000,000	(2)
James R. Billingsley, Director		150,000	(3)
A. Ian S. Davidson, Director		161,996	(4)
Jean Depatie, Director		142,000	(5)
Kenneth F. Williamson, Director		105,000	(6)
Leonard Harris, Director		100,000	(7)
P. Randy Reifel, Director		3,459,948	(8)
Gerald L. Sneddon, Director		402,330	(9)
Charles A. Jeannes, Senior Vice President Administration, General Counsel and Secretary		420,000	(10)
James S. Voorhees, Vice President Operations and Chief Operating Officer		396,500	(11)
Cheryl S. Maher, Vice President Finance, Chief Financial Officer and Treasurer		145,500	(12)
David L. Hyatt, Vice President, US Operations		103,000	(13)
Steven L. Baumann, Vice President, Central America		100,000	(14)
Michael A. Steeves, Vice President, Investor Relations		100,000	(15)
Directors and Executive Officers as a Group (15 persons)		7,011,274	(16)

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Notes:

(1)	The number includes immediately exercisable options in respect of 200,000 Shares, 100,000 at a price of Cdn$2.70 per Share on or before March 9, 2004, 20,000 at a price of Cdn$5.60 per Share on or before November l, 2006 and 80,000 at a price of Cdn$13.09 per Share on or before November 6, 2007.
(2)	The number includes immediately exercisable options in respect of 900,000 Shares, 100,000 at a price of Cdn$2.90 per Share on or before May 2, 2005, 20,000 at a price of Cdn$5.60 per Share on or before November l, 2006, 600,000 at a price of Cdn$7.38 per Share on or before March 24, 2007 and 180,000 at a price of Cdn$13.09 per Share on or before November 6, 2007.
(3)	The number includes immediately exercisable options in respect of 150,000 Shares, 100,000 at a price Cdn$2.70 per Share on or before March 9, 2004, 20,000 at a price of Cdn$5.60 per Share on or before November l, 2006 and 30,000 at a price of Cdn$13.09 per Share on or before November 6, 2007.
(4)	The number includes immediately exercisable options in respect of 150,000 Shares, 100,000 at a price of Cdn$2.70 per Share on or before March 9, 2004, 20,000 at a price of Cdn$5.60 per Share on or before November 1, 2006 and 30,000 at a price of Cdn$13.09 per Share on or before November 6, 2007. 2,200 of the noted number of Shares are owned by his spouse in trust.
(5)	The number includes immediately exercisable options in respect of 140,000 Shares, 100,000 shares at a price of Cdn$2.70 per Share on or before March 9, 2004, 20,000 at a price of Cdn$5.60 per Share on or before November 1, 2006 and 30,000 at a price of Cdn$13.09 per Share on or before November 6, 2007.
(6)	The number includes immediately exercisable options in respect of 100,000 Shares, 50,000 at a price of Cdn$2.60 per Share on or before April 28, 2004, 20,000 at a price of Cdn$5.60 per Share on or before November 1, 2006 and 30,000 at a price of Cdn$13.09 per Share on or before November 6, 2007.
(7)	The number includes immediately exercisable options in respect of 100,000 Shares, 50,000 at a price of Cdn$2.70 per Share on or before March 9, 2004, 20,000 at a price of Cdn$5.60 per Share on or before November 1, 2006 and 30,000 at a price of Cdn$13.09 per Share on or before November 6, 2007.
(8)	The number includes immediately exercisable options in respect of 797,500 Shares, 697,500 at a price of Cdn$3.07 per Share on or before August 21, 2005 and 100,000 at a price of Cdn$13.09 per Share on or before November 6, 2007. 2,406,933 of the noted number of shares are owned by corporate entities controlled by Mr. Reifel.
(9)	The number includes immediately exercisable options in respect of 332,500 Shares, 232,500 at a price of Cdn$3.07 per Share on or before August 21, 2005 and 100,000 at a price of Cdn$13.09 per Share on or before November 6, 2007.
(10)	The number includes immediately exercisable options in respect of 375,000 Shares, 50,000 at a price of Cdn$2.90 per Share on or before May 2, 2005, 200,000 at a price of Cdn$7.38 per Share on or before March 24, 2007 and 125,000 at a price of Cdn$13.09 per Share on or before November 6, 2007.
(11)	The number includes immediately exercisable options in respect of 375,000 Shares, 75,000 at a price of Cdn$2.90 per Share on or before May 2, 2005, 200,000 at a price of Cdn$7.38 per Share on or before March 24, 2007 and 100,000 at a price of Cdn$13.09 per Shares on or before November 6, 2007.
(12)	The number includes immediately exercisable options in respect of 140,000 Shares, 5,000 at a price of Cdn$2.50 per Share on or before March 25, 2004, 60,000 at a price of Cdn$3.00 per Share on or before February 28, 2005, 20,000 at a price of Cdn$2.90 per Share on or before May 3, 2005 and 55,000 at a price of Cdn$13.09 per Share on or before November 6, 2007.
(13)	The number includes immediately exercisable options in respect of 100,000 Shares, 50,000 at a price of Cdn$2.70 per Share on or before March 9, 2004, 40,000 at a price of Cdn$2.90 per Share on or before May 3, 2005 and 10,000 at a price of Cdn$13.09 on or before November 6, 2007.
(14)	The number includes immediately exercisable options in respect of 100,000 Shares at a price of Cdn$13.09 per Share on or before November 6, 2007.
(15)	The number includes immediately exercisable options in respect of 100,000 Shares at a price of Cdn$11.84 per Share on or before June 14, 2007.
(16)	The number includes immediately exercisable options in respect of 4,070,000 Shares.

ELECTION OF DIRECTORS

Size of Board

The size of the Board of Directors was last determined by shareholders at seven. It is proposed that the size of the Board of Directors be established at six persons for the ensuing year. Shareholders will therefore be asked to approve an ordinary resolution that the number of Directors elected be fixed at six.

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The Board of Directors unanimously recommends that each shareholder vote FOR the establishment of the size of the Board of Directors at six.

Term of Office

The term of office of each of the current Directors expires at the conclusion of the Meeting. The persons named below will be nominated for election at the Meeting as management’s nominees. Each Director elected at the Meeting or appointed by the Board of Directors to fill a vacancy on the Board of Directors thereafter will hold office until the next annual general meeting of the Company or until the Director’s successor is elected or appointed, unless the Director’s office is earlier vacated in accordance with the Articles of the Company or the provisions of the Company Act (British Columbia).

Nominees

The following table sets out the names and ages of management’s nominees for election as Director, all offices in the Company now held by each of them, the principal occupation, business or employment of each of them and the period of time during which each has been a Director of the Company. Each of the nominees has consented in writing to stand for election as a Director of the Company.

Name, Age, Position and	Occupation, Business	Period a Director of the
Country of Residence(1)	or Employment(2)	Company
A. Dan Rovig, 64 Chairman and Director U.S.A.	Independent Consultant; Director and Chairman of the Board of the Company.	November 17, 1989 to August 15, 1997 and November 19, 1998 to present.
C. Kevin McArthur, 48 President, Chief Executive Officer and Director U.S.A.	President and Chief Executive Officer of the Company.	January 1, 1998 to present.
A. Ian S. Davidson, 61 Director Canada	Vice-President of RBC Dominion Securities Inc.	June 28, 1994 to present.
Jean Depatie, 66 Director Canada	President and Chief Executive Officer of Gold Hawk Resources Inc.	December 12, 1997 to present.
Kenneth F. Williamson, 55 Director Canada	Independent Consultant.	April 28, 1999 to present.
P. Randy Reifel, 50 Director Canada	President of Chesapeake Gold Corp.; President of Francisco Gold Corp. from February 1984 to July 2002.	July 16, 2002 to present.

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Notes:

(1)	See “Structure and Duties of Committees” for a description and composition of the committees of the Board of Directors. There is no executive committee of the Board of Directors.
(2)	The information as to principal occupation and business or employment is not within the knowledge of the management of the Company and has been furnished by the respective nominees.

A. Dan Rovig is currently a Director and Chairman of the Board of Directors of the Company and has been such from November 19, 1998. Mr. Rovig first joined the Company in September of 1988 as the President of Glamis Gold Inc. and as Vice President Operations of the Company. He became a Director and the President and Chief Executive Officer of the Company and its subsidiaries on November 17, 1989 and held those positions until August 15, 1997 when he retired from the Company. Following retirement he acted as a consultant to the Company until August 1998. Before joining the Company in September 1988, Mr. Rovig was an executive officer of British Petroleum Minerals Ltd, including its subsidiaries Amselco Minerals Inc. and BP Minerals America for five years.

C. Kevin McArthur has been a Director, President and Chief Executive Officer of the Company since January 1, 1998. He served the Company and its subsidiaries in various capacities from February 1988 to the present, including Chief Operating Officer of the Company from July 30, 1997 to December 31, 1997, President & General Manager of Glamis Rand Mining Company from December 1, 1995 to July 29, 1997 and prior to that as Vice President and General Manager of Chemgold, Inc. Both Glamis Rand Mining Company and Chemgold, Inc. are subsidiaries of the Company.

A. Ian S. Davidson became a Director of the Company in June of 1994. Mr. Davidson has been in the investment industry since 1969 and is currently a Vice President of RBC Dominion Securities Inc. He has held this position with RBC Dominion Securities Inc. and its predecessor since February 1992.

Jean Depatie became a Director of the Company in December of 1997. Mr. Depatie has been President and Chief Executive Officer of Gold Hawk Resources Inc. since May 1997. Prior thereto he was President and Chief Executive Officer of Cambiex Exploration from August 1995 to April 1997 and President & Chief Executive Officer of Louvem Mines Inc. from February 1993 to August 1995. Mr. Depatie is currently a Director of the following public companies: Freewest Resources Canada Inc., Novicourt Inc., Richmont Mines Inc., Sulliden Exploration Inc. and Louvem Mines Inc.

Kenneth F. Williamson became a Director of the Company in April of 1999. Mr. Williamson has been associated with the brokerage business as an investment banker for the last 20 years having held positions as Vice Chairman, Investment Banking at Midland Walwyn/Merrill Lynch from 1993 until 1998. Since 1998 he has been an independent consultant. His main areas of concentration have been mergers and acquisitions and the capital markets. Mr. Williamson is currently a Director of the following public companies: Blackrock Ventures Inc. and Bioteq Environmental Technologies Inc.

P. Randy Reifel became a Director of the Company in July of 2002 upon the closing of the merger of Francisco Gold Corp. (“Francisco”) with the Company. Mr. Reifel was a director and the President of Francisco from February, 1984 until July, 2002. Currently, Mr. Reifel is a

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director and the President of Chesapeake Gold Ltd. (“Chesapeake”), a public company that was formed as part of the merger between the Company and Francisco.

The Board of Directors unanimously recommends that each shareholder vote FOR the election of the above nominees as Directors, to hold office until the next annual general meeting of shareholders or until their successors are elected and qualified.

Voting for Directors

Under the Company Act (British Columbia) and the Articles of the Company, the six nominees for election to the Board of Directors who receive the greatest number of votes cast for the election of Directors by Shares present, in person or represented by proxy at the Meeting and entitled to vote, will be elected Directors, if a quorum is present. In the election of Directors, a withholding of a vote will have no effect on the election since only affirmative votes will be counted with respect to the election of Directors. Voting at the meeting will, except where a poll is demanded by a member or proxy holder entitled to attend the Meeting, be by a show of hands.

Compensation of Directors

For the fiscal year ended December 31, 2002, each Director of the Company was entitled to an annual remuneration of $8,000 payable quarterly for acting as a Director and $1,000 for each meeting of the Board of Directors attended. In addition, each member of a committee received $500 for each committee meeting attended. Directors also receive share purchase options (see “Security Ownership by Directors and Executive Officers”). These share purchase options are granted at the discretion of the Corporate Compensation Committee whose current practice is to provide the Chairman with up to 200,000 share purchase options and each outside Director with up to 100,000 share purchase options. Additional share purchase options have previously been granted based on particular circumstances. All share purchase options granted to Directors are immediately exercisable. Subject to the discretion of the Corporate Compensation Committee, the practice of the Committee is to grant additional share purchase options to Directors following their exercise of the options presently held.

CORPORATE GOVERNANCE AND COMMITTEES

The TSX requires that every listed company incorporated in Canada or a province of Canada must disclose on an annual basis its approach to corporate governance. The Company has elected to incorporate the required disclosure in this Information Circular. The following disclosure was approved by the Board of Directors (the “Board”) at a meeting held on February 13, 2003.

     Stewardship of the Company

The Board is empowered by the Company’s Articles to manage, or supervise the management of the affairs and business of the Company. The Board assumes responsibility for the stewardship of the Company through quarterly and special meetings and has delegated certain of its responsibilities to those committees described below under “Structure and Duties of Committees”. In addition, the Board has established policies and procedures that limit the ability

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of management to carry out certain specific activities without the prior approval of the Board. All material acquisitions and material asset dispositions require approval of the Board.

The strategic planning process, related not only to current mining operations, but also to the acquisition and development of new properties or the acquisition of companies which control properties which are of interest to the Company, is of key importance to a corporation the size of the Company. The Board is actively involved in this planning process thereby carrying out its duty to take steps to increase shareholder value. The strategic planning process in respect of current mining operations is accomplished through a yearly review and approval process wherein the Board reviews a rolling, five-year budget which is presented by management. The strategic planning process with respect to the acquisition of properties or other companies is carried out by the full Board reviewing proposals brought to it by management. Outside consultants and professionals are engaged as appropriate by management or the Board. The Board monitors management’s success in implementing the strategic plan through the Board’s quarterly and special meetings and provides ongoing guidance to management at such meetings.

The Board, as part of the strategic planning process, has identified the principal risks associated with the Company’s business and has implemented a process for the regular review of these risks and has taken steps to deal with them. The Board has adopted an Environmental Compliance Program that is administered by the Audit and Environment Committee. This committee reports to the Board on a quarterly basis, thereby enabling the Board to monitor the effectiveness of the Environmental Compliance Program.

The Board has delegated responsibility for communication with the public and the Company’s shareholders to its President and Chief Executive Officer, Senior Vice President Administration and Vice-President, Investor Relations. Procedures are in place to ensure proper dissemination of news releases and that shareholders who request information about the Company receive it in a timely manner. In addition, the Board has adopted a Corporate Disclosure, Confidentiality and Insider Reporting Policy which sets out rules for the disclosure of corporate information, the obligation of Directors, officers and employees of the Company to hold non-disclosed material information confidential and the trading and reporting of sales of shares of the Company.

The responsibility for monitoring the effectiveness of the Company’s internal financial information systems has been delegated to the Company’s Chief Financial Officer who reports to the Audit Committee and the Board on a quarterly basis. The duty of monitoring the technical affairs of the Company falls on the President and Chief Executive Officer who is a member of the Board. Operational reports are made to the Board on a quarterly basis to enable the Board to evaluate the Company’s performance against the Company’s strategic plan.

The Board does not have in place formal programs for succession of management and training of management. Due to the size of the Company, management personnel who are already trained are generally engaged as required to fill vacancies.

     Constitution of the Board

The Board is currently comprised of nine persons of which the eight Directors who are not employees of the Company are “unrelated Directors” and as such are independent from

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management. The remaining member on the Board is the President and Chief Executive Officer of the Company, who is an employee of the Company. Accordingly, a majority of the members of the Board are unrelated Directors and as such the Board is in a position to act independently from management. If the six persons nominated in this Information Circular for Director are elected, five members of the Board will be unrelated Directors and accordingly, the Board will remain independent from management. At each meeting of the Board, a separate executive session is held attended only by the unrelated Directors. The executive session is chaired by the Chairman of the Board, who is an unrelated Director. The purpose of these sessions is to allow frank and open discussion regarding the affairs of the Company, including management performance, without management being present.

Structure and Duties of Committees

     Audit and Environment Committee

The Company’s Audit and Environment Committee (referred to in this Information Circular as the “Audit Committee”) is comprised of Kenneth F. Williamson, A. Ian S. Davidson, James R. Billingsley, Jean Depatie and P. Randy Reifel, all of whom are unrelated Directors. The Audit Committee has both financial review and environmental functions.

In carrying out its financial review function, the Audit Committee reviews all financial statements of the Company prior to their publication, reviews audits, considers the adequacy of the audit procedures, recommends the appointment of independent auditors, reviews and approves professional services to be rendered by them and reviews fees for audit services. On August 4, 2000, the Board adopted and approved a charter for the Audit Committee to follow in carrying out its audit and financial review functions. Each member of the Audit Committee is an unrelated Director and the Board has determined that each member of the Audit Committee is “independent,” as that term is used in Part 303.01 of the Listed Company Manual of the New York Stock Exchange. The Board has established definitions for “financial literacy” and “accounting or related financial expertise” and has determined that all members of the Audit Committee are financially literate and that one member of the Audit Committee has accounting or related financial expertise. The Audit Committee meets separately (without management present) with the Company’s auditors to discuss the various aspects of the Company’s financial statements and the independent audit.

The Audit Committee’s environmental review function includes arranging for and reviewing the annual independent environmental audit of the Company’s operations. The responsibility of the Committee is to ensure adherence to the Company’s Environmental Compliance Program (the “Program”), to review the effectiveness of the Program and to ensure that environmental incidents are dealt with expeditiously.

     Corporate Compensation Committee

The Company has a Corporate Compensation Committee whose current members are A. Dan Rovig, A. Ian S. Davidson, Leonard Harris, Gerald L. Sneddon and C. Kevin McArthur (as a non-voting member). All voting members of this Committee are unrelated Directors. Though the TSX guidelines on corporate governance recommend that all members of this committee should

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be unrelated Directors, the Board has determined that the input of the President and Chief Executive Officer is important in reviewing the compensation of the Company’s employees. The function of the Corporate Compensation Committee is to review on an annual basis, the compensation paid to the Company’s Directors, to review the performance and compensation paid to the Company’s executive officers and to make recommendations on compensation to the Board. In addition, the Corporate Compensation Committee reviews annually the compensation plans for the Company’s non-executive staff. The philosophy of the Corporate Compensation Committee is stated below under “Report of the Corporate Compensation Committee on Compensation of Executive Officers and Others”.

     Corporate Governance Committee

The Company’s Corporate Governance Committee is comprised of James R. Billingsley, Leonard Harris, Kenneth F. Williamson and P. Randy Reifel, all of whom are unrelated Directors. The Corporate Governance Committee has been given the responsibility of developing and recommending to the Board the Company’s approach to corporate governance. This Committee has had a Directors’ Manual prepared and distributed to all Directors to assist members of the Board in carrying out their duties. The Corporate Governance Committee also reviews with management all new and modified rules and policies applicable to governance of the Company to assure that the Company remains in full compliance with such requirements.

     Nominating Committee

The Board has established a Nominating Committee that has been assigned the responsibility for attracting and recommending Board members. This Committee is comprised of Jean Depatie, A. Dan Rovig and C. Kevin McArthur, the President and Chief Executive Officer of the Company. A majority of the members of this Committee are unrelated Directors. Though the TSX guidelines on corporate governance recommend that the Nominating Committee be comprised entirely of non-management Directors, the Board has determined that the input of the President and Chief Executive Officer on the Nominating Committee is helpful to the Committee in evaluating nominees for the position of Director.

While the Company does not have a formal procedure for assessing and evaluating the effectiveness of the members of the Board and its committees, this function is carried out by the Nominating Committee on an annual basis when evaluating and recommending persons as nominees for the position of Director of the Company.

The Company Act (British Columbia) requires that the Company, not less than 56 days before it holds a general meeting at which a Director is to be elected, publish an advance notice of the meeting that, among other things, invites written nominations for Directors signed by shareholders holding in the aggregate not less than 10% of the Shares having the right to vote at the meeting. If a nomination is received, the information concerning the nominee required to be furnished in an information circular is to be included with the Company’s list of nominees. The required notice was published on March 11, 2003. No nominees for Director were received from the shareholders.

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Report of the Corporate Compensation Committee on Compensation of Executive Officers and Others

The Company’s Corporate Compensation Committee, comprised of A. Dan Rovig, A. Ian S. Davidson, Leonard Harris and Gerald L. Sneddon as voting members and C. Kevin McArthur as a non-voting member, reviews the compensation of the Company’s executive officers, other employees and Directors annually and makes recommendations on compensation to the Board.

It is the policy of the Committee to compensate the Company’s executive officers by both direct remuneration (salary and bonuses) and entitlement to share purchase options. Though the Committee has not established any specific compensation criteria directly related to corporate performance, the Committee’s philosophy is to balance short and long term incentives in evaluating performance and determining actual incentive awards. The Committee targets base salary levels by comparison with other public companies of a similar size to the Company in the metals and mining industry. The base salaries are reviewed annually for market competitiveness and to reflect each executive officer’s responsibilities, experience and individual performance. The Company has established no formal bonus program for executives. Instead, the Committee reviews executive performance on an ongoing basis and has from time to time awarded cash bonuses to all or some of the executives for outstanding or extraordinary performance, often in connection with a particular transaction or accomplishment. Compensation in the form of share purchase options in excess of the amounts stated in employment contracts is tied in part to individual and Company performance.

The Committee reviews several factors in determining, on an annual basis, the total compensation payable to the President and Chief Executive Officer. In particular, the Committee reviews publicly available data and data provided by independent third parties regarding compensation paid to Chief Executive Officers of other public companies of a similar size to the Company in the metals and mining industry. Additionally, the Committee considers the specific performance of the Chief Executive Officer during the preceding year, including generally the performance of the Company as a whole as measured by its financial performance, operational performance and specific strategic achievements.

The Committee also reviews the compensation paid to Directors of the Company. The compensation paid to the Directors is based on the Committee’s analysis of the time and effort devoted by the Directors to the meetings and affairs of the Company, as well as various surveys of compensation paid to directors of other public companies of a similar size to the Company in the metals and mining industry. In addition, Directors are entitled to receive share purchase options under the Company’s Incentive Share Purchase Option Plan. The Committee’s current practice is to provide the Chairman with up to 200,000 share purchase options and each outside director with up to 100,000 share purchase options. Additional share purchase options have previously been granted based on particular circumstances. All share purchase options granted to Directors are immediately exercisable. Subject to the discretion of the Corporate Compensation Committee, the practice of the Committee is to grant additional share purchase options to the Directors following their exercise of the options presently held.

     Corporate Compensation Committee

A. Dan Rovig A. Ian S. Davidson Leonard Harris Gerald L. Sneddon

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EXECUTIVE COMPENSATION

Remuneration of Management and Others

During the Company’s fiscal year ended December 31, 2002 the aggregate remuneration paid or payable to the Directors and all executive officers of the Company and its subsidiaries (all of whose financial statements are consolidated with those of the Company) was $2,479,715.

Under an existing policy of insurance, the Company is entitled to be reimbursed for indemnity payments it is required or permitted to make to Directors and officers. The Directors and officers of the Company as individuals are insured for losses arising from claims against them for certain acts, errors or omissions. The policy provides a maximum coverage in any one policy year of Cdn.$10 million for each claim. The annual premium which is payable during the current fiscal year is Cdn$106,000. The premiums for the policy are not allocated between Directors and officers as separate groups.

Named Executive Officers

Under applicable laws Mr. McArthur, Mr. Jeannes, Mr. Voorhees, Ms. Maher and Mr. Hyatt are “Named Executive Officers” of the Company for the period ended December 31, 2002. The following disclosure is in respect of these individuals.

     Compensation of Named Executive Officers

The table below shows the compensation paid to the Named Executive Officers for the past three fiscal years.

SUMMARY COMPENSATION TABLE

								Long Term Compensation
	Annual Compensation							Awards
								Securities
							Other Annual	Underlying Options/		All Other
			Salary		Bonus		Compensation	SARs Granted		Compensation
Name and Principal Position	Year		($)		($)		($)	(#)(2)		($)
C. Kevin McArthur		2002		267,000		365,000	Nil		780,000		1,503,766	(1)(3)
President, Chief Executive		2001		242,000		365,000	Nil		20,000		17,375	(1)
Officer and Director		2000		240,000		30,000	Nil		100,000		13,500	(1)
Charles A. Jeannes		2002		220,000		210,000	Nil		325,000		1,005,800	(3)
Senior Vice-President Administration,		2001		201,667		210,000	Nil		Nil		Nil
General Counsel and Secretary		2000		200,000		20,000	Nil		50,000		Nil
James S. Voorhees		2002		220,000		210,000	Nil		300,000		799,949	(3)
Vice-President, Operations,		2001		201,667		100,000	Nil		Nil		Nil
and Chief Operating Officer		2000		195,360		Nil	Nil		75,000		Nil
Cheryl S. Maher		2002		148,500		110,000	Nil		55,000		434,965	(3)
Vice-President Finance,		2001		136,125		65,000	Nil		Nil		Nil
Chief Financial Officer and Treasurer		2000		133,046		Nil	Nil		40,000		Nil
David L. Hyatt		2002		134,250		30,000	Nil		10,000		246,258	(3)
Vice-President, U.S		2001		120,997		35,000	Nil		Nil		12,208	(3)
Operations		2000		120,000		20,000	Nil		40,000		Nil

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Notes:

(1)	Includes a fee of $8,000 paid annually to the Named Executive Officer in his capacity as a Director of the Company and fees of $1,000 for each meeting of the Board attended and of $500 for each committee meeting attended.
(2)	The Table lists share purchase options (“Options”) granted during the noted fiscal year under the Company’s Incentive Share Purchase Option Plan (the “Plan”). The Named Executive Officers of the Company are not entitled to receive share appreciation rights (“SAR”) under the Company’s Share Appreciation Rights Plan. As of February 28, 2003, options in respect of 4,454,750 Shares were outstanding under the Plan at exercise prices ranging from Cdn$2.18 to Cdn$13.09 and 1,388,030 Shares remained available under the Plan for additional options. Options granted under the Plan are generally made for a 5-year period at the closing price as published by the TSX on the trading day prior to the date of grant. The Corporate Compensation Committee determines which Named Executive Officers, Directors and employees of the Company are to receive Options, the exercise price of the Options, and restrictions, if any, which are to attach to the right to exercise Options. The employment contracts of the Named Executive Officers provide that they are entitled to be granted Options in respect of a stated number of Shares, however, the Corporate Compensation Committee can, and has, granted options in excess of the stated amounts. If a Named Executive Officer has his employment with the Company terminated without cause, any outstanding Options will remain in effect for a period which is the shorter of the time to the expiration of the share purchase option and up to 36 months from the time of termination of employment.
(3)	The stated amount includes an amount in respect of the exercise of Options that is the difference between the aggregate market value, on the day of exercise, of Shares acquired upon exercise of Options and the aggregate purchase price of such Shares under the Option.

     Long-Term Incentive Plan and Restricted Stock Awards

No long-term incentive plan awards or awards of restricted stock were made to the Named Executive Officers during the Company’s most recently completed financial year.

     Options Granted to the Named Executive Officers

Share purchase options granted during the financial year ended December 31, 2002 to the Named Executive Officers, pursuant to the Company’s Incentive Share Purchase Option Plan, are as follows:

OPTION/SAR GRANTS IN THE LAST FISCAL YEAR

								Market Value of
			% of Total					Securities				Potential Realizable
	Securities Under		Options/SARs					Underlying Options				Value at Assumed
	Options/ SARs		Granted to					on the				Annual Rates of Stock
	Granted(1)		Employees			Exercise Price		Date of Grant				Price Appreciation
Name	(#)		in Fiscal Year			(Cdn$/Security)		(Cdn$/Security)		Expiration Date		for Option Term
												5%		10%
												(Cdn$)		(Cdn$)
C. Kevin McArthur		600,000					7.38		7.38		03/24/07		8,712,920		11,585,644
		180,000		32	%		13.09		13.09		11/06/07		1,699,229		2,720,940
Charles A. Jeannes		200,000					7.38		7.38		03/24/07		2,904,306		3,861,881
		125,000		13	%		13.09		13.09		11/06/07		1,180,020		1,889,542
James S. Voorhees		200,000					7.38		7.38		03/24/07		2,904,306		3,861,881
		100,000		12	%		13.09		13.09		11/06/07		944,016		1,511,634
Cheryl S. Maher		55,000		2	%		13.09		13.09		11/06/07		519,209		831,398
David L. Hyatt		10,000		<1	%		13.09		13.09		11/06/07		94,402		151,163

Note:

(1) The grants are in respect of Shares of the Company. No SARs were granted to the Named Executive Officers.

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     Share Purchase Options Exercised by the Named Executive Officers

Share purchase options exercised by the Named Executive Officers during the financial year ended December 31, 2002 and the value of the unexercised in-the-money options at December 31, 2002, are as follows:

						Value of Unexercised
						in-the-Money Options
					Unexercised Options at FY-end,	at FY-end and
	Securities Acquired		Aggregate Value		Exercise Price and whether	whether Exercisable
	on Exercise		Realized		Exercisable or Unexercisable	or Unexercisable
Name	(#)		(Cdn.$)		(#)	(Cdn.$)
C. Kevin McArthur		200,000		2,340,000	100,000 Exercisable at Cdn.$2.90	1,490,000 Exercisable
					20,000 Exercisable at Cdn.$5.60	244,000 Exercisable
					600,000 Exercisable at Cdn.$7.38	6,252,000 Exercisable
					180,000 Exercisable at Cdn.$13.09	847,800 Exercisable
Charles A. Jeannes		125,000		1,586,750	50,000 Exercisable at Cdn.$2.90	745,000 Exercisable
					200,000 Exercisable at Cdn.$7.38	2,084,000 Exercisable
					125,000 Exercisable at Cdn.$13.09	588,750 Exercisable
James S. Voorhees		100,000		1,262,000	75,000 Exercisable at Cdn.$2.90	1,117,500 Exercisable
					200,000 Exercisable at Cdn.$7.38	2,084,000 Exercisable
					100,000 Exercisable at Cdn.$13.09	471,000 Exercisable
Cheryl S. Maher		55,000		686,200	5,000 Exercisable at Cdn.$2.50	76,500 Exercisable
					20,000 Exercisable at Cdn.$2.90	298,000 Exercisable
					60,000 Exercisable at Cdn.$3.00	888,000 Exercisable
					55,000 Exercisable at Cdn.$13.09	259,050 Exercisable
David L. Hyatt		40,000		383,200	50,000 Exercisable at Cdn.$2.70	755,000 Exercisable
					40,000 Exercisable at Cdn.$2.90	596,000 Exercisable
					10,000 Exercisable at Cdn.$13.09	47,100 Exercisable

     Employment Agreements between the Company and the Named Executive Officers

By an amended agreement dated November 1, 2001, Mr. C. Kevin McArthur was engaged by the Company to act as its President and Chief Executive Officer. The agreement has a month-to-month term subject to certain termination provisions. If Mr. McArthur is terminated for other than cause, he will be paid any remuneration due through the date of termination, together with two times the annual salary in force at the date of termination and will receive continued full benefit coverage for 24 months following termination or the cash value thereof. If the employment of Mr. McArthur is terminated or if he resigns his employment within 12 months following a change of control of the Company, as defined in the agreement, he will be paid any remuneration due through the date of termination together with three times the annual salary in force at the date of termination and will receive continued full benefit coverage for 36 months following termination or the cash value thereof. The current salary under the Agreement is $300,000 per annum plus benefits and participation in the Company’s Incentive Share Purchase Option Plan (see Note 2 to the “Summary Compensation Table”).

By an amended agreement dated November 1, 2001, Mr. Charles A. Jeannes was engaged by the Company to act as its Senior Vice-President Administration, General Counsel and Secretary. The Agreement has a month-to-month term subject to certain termination provisions. If Mr. Jeannes’ employment with the Company is terminated for other than cause, he will be paid any remuneration due through the date of termination together with two times the annual salary in force at the date of termination and will receive continued full benefit coverage for 24 months following termination or the cash value thereof. If the employment of Mr. Jeannes is terminated

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or if he resigns his employment within 12 months following a change of control of the Company, as defined in the agreement, he will be paid any remuneration due through the date of termination together with three times the annual salary in force at the date of termination and will receive continued full benefit coverage for 36 months following termination or the cash value thereof. The current salary under the Agreement is $220,000 per annum plus benefits and participation in the Company’s Incentive Share Purchase Option Plan (see Note 2 to the “Summary Compensation Table”).

By an amended agreement dated November 1, 2001, Mr. James S. Voorhees was engaged by the Company to act as its Vice-President, Operations and Chief Operating Officer. The Agreement has a month-to-month term subject to certain termination provisions. If Mr. Voorhees’ employment with the Company is terminated for other than cause, he will be paid any remuneration due through the date of termination together with two times the annual salary in force at the date of termination and will receive continued full benefit coverage for 24 months following termination or the cash value thereof. If the employment of Mr. Voorhees is terminated or if he resigns his employment within 12 months following a change of control of the Company, as defined in the agreement, he will be paid any remuneration due through the date of termination together with three times the annual salary in force at the date of termination and will receive continued full benefit coverage for 36 months following termination or the cash value thereof. The current salary under the Agreement is $220,000 per annum plus benefits and participation in the Company’s Incentive Share Purchase Option Plan (see Note 2 to the “Summary Compensation Table”).

By an amended agreement dated November 1, 2001, Ms. Cheryl S. Maher was engaged by the Company to act as its Vice President, Finance, Chief Financial Officer and Treasurer. The Agreement has a month-to-month term subject to certain termination provisions. If Ms. Maher’s employment with the Company is terminated for other than cause, she will be paid any remuneration due through the date of termination together with the annual salary in force at the date of termination and will receive continued full benefit coverage for 12 months following termination or the cash value thereof. If the employment of Ms. Maher is terminated or if she resigns her employment within 12 months following a change of control of the Company, as defined in the agreement, she will be paid any remuneration due through the date of termination together with two times the annual salary in force at the date of termination and will receive continued full benefit coverage for 24 months following termination or the cash value thereof. The current salary under the Agreement is $148,500 per annum plus benefits and participation in the Company’s Incentive Share Purchase Option Plan (see Note 2 to the “Summary Compensation Table”).

By an amended agreement dated November 1, 2001, Mr. David L. Hyatt was engaged by the Company to act as its Vice-President, U.S. Operations. The Agreement has a month-to-month term subject to certain termination provisions. If Mr. Hyatt’s employment with the Company is terminated for other than cause, he will be paid any remuneration due through the date of termination, together with the annual salary in force at the date of termination and will receive continued full benefit coverage for 12 months following termination or the cash value thereof. If the employment of Mr. Hyatt is terminated or if he resigns his employment within 12 months following a change of control of the Company, as defined in the agreement, he will be paid any remuneration due through the date of termination, together with two times the annual salary in

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force at the date of termination and will receive continued full benefit coverage for 24 months following termination or the cash value thereof. The current salary under the Agreement is $135,000 per annum plus benefits and participation in the Company’s Incentive Share Purchase Option Plan (see Note 2 to the “Summary Compensation Table”).

No funds were set aside or accrued by the Company during the year ended December 31, 2002 to provide pension, retirement or similar benefits for Directors or Named Executive Officers of the Company pursuant to any existing plan.

PERFORMANCE GRAPHS

The Toronto Stock Exchange

The following chart compares the market performance of the Company’s Shares in Canadian dollars on the TSX as compared to the S&P/TSX Gold Index and the S&P/TSX Composite Index. The TSX is the principal trading market for Shares of the Company outside of the United States.

TORONTO STOCK EXCHANGE

Compares 5 Year Cumulative Total Return Among Glamis Gold Ltd., TSX Gold Index and TSX Composite Index

New York Stock Exchange

The following chart compares the market performance of the Company’s Shares in U.S. dollars on the New York Stock Exchange (“NYSE”) as compared to the MG Group Index (an index comprised solely of gold mining companies) and the NYSE Market index.

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NEW YORK STOCK EXCHANGE

Compares 5 Year Cumulative Total Return Among Glamis Gold Ltd., NYSE Market Index and MG Group Index

APPOINTMENT OF AUDITORS

KPMG LLP, Chartered Accountants, of 777 Dunsmuir Street, Vancouver, British Columbia, will be nominated at the Meeting at a remuneration to be fixed by the Directors. KPMG LLP have been the auditors of the Company since March 11, 1986.

It is anticipated that a representative of KPMG LLP will be in attendance at the Meeting and will be given an opportunity to make a statement if he desires and will be available to respond to appropriate questions.

The Board of Directors unanimously recommends that each shareholder vote FOR the appointment of KPMG LLP as auditor of the Company.

PARTICULARS OF OTHER MATTERS TO BE ACTED UPON

Extension of Shareholder Rights Plan

The Company is party to a Shareholder Rights Plan Agreement dated February 25, 2000 (the “Rights Plan Agreement”) with Montreal Trust Company of Canada (now Computershare Trust Company of Canada) as Rights Agent, pursuant to which the Company issued rights entitling the purchase of common shares of the Company (“Rights”) prior to the “Expiration Time” (the “Rights Plan”). The terms and conditions of the Rights Plan, which was previously approved by the shareholders, are described in more detail below.

The Rights Plan Agreement is currently effective and will expire at the conclusion of the Meeting unless shareholders approve an extension of the Expiration Time as defined in the Rights Plan Agreement. The Board of Directors is of the view that the original reasons for entering into the Rights Plan Agreement continue to apply and that it is appropriate to extend the

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expiry time of the Rights. It is proposed that the Expiration Time be extended for an additional 3-year period which will end at the conclusion of the Company’s annual general meeting held in 2006, subject to approval of the TSX. No other changes to the Rights Plan are being proposed.

Accordingly, shareholders will be asked to consider and, if thought fit, to pass an ordinary resolution extending the Rights Plan Agreement and all Rights issued under the Rights Plan. The text of the proposed resolution is as follows:

“BE IT RESOLVED THAT the proposed amendment (the “Amendment”) to the Company’s Rights Plan Agreement, to extend the Expiration Time for an additional three year period, as more particularly set out in the Information Circular prepared for the Meeting, be approved, subject to approval of the TSX.”

A copy of the Rights Plan Agreement and of the proposed amending agreement may be obtained by contacting the Secretary of the Company as follows: Charles A. Jeannes, 310 – 5190 Neil Road, Reno, Nevada 89502. Telephone: (775) 827-4600, Extn: 4107.

The Board and Management recommend that shareholders vote FOR the Amendment and to thereby extend the Expiration Time of the Rights Plan for an additional 3 year period.

     Background

The Board proposed the adoption of the Rights Plan and is proposing the Amendment to protect the shareholders of the Company from unfair take-over strategies to which the Company and its shareholders may be particularly vulnerable because of the different securities laws applicable in Canada and the United States of America, the principal trading markets for the Company’s Shares.

The Rights Plan was not proposed and the Amendment is not being proposed by the Board in response to, or in anticipation of, any acquisition proposal, and is not intended to prevent a Take-over Bid being made for the Company or to secure continuance of management or the Directors in office. The Rights Plan is designed to ensure that, in the event of a Take-over Bid being made for Voting Shares (which at the moment are comprised solely of Shares) of the Company, all shareholders will receive full and fair value for their Shares and will not be subject to abusive or coercive takeover strategies and that the Board, on behalf of the Company and all of its shareholders, will have the time and opportunity to evaluate the bid and its effects, to seek out alternative bidders and to explore, develop and evaluate other ways of maximizing shareholder value.

Accordingly, the objectives of the Rights Plan are, (i) to provide each shareholder, no matter where they are resident, the opportunity to receive the same offer, (ii) to provide each shareholder, together with his or her advisor, with sufficient time to assess and evaluate a Take-over Bid and (iii) to permit the Board, where appropriate, to explore, develop and evaluate alternatives to maximize the value to shareholders. Under the Rights Plan, a bidder is encouraged either to make a Permitted Bid, which does not need approval of the Board, having terms and conditions that are designed to meet these objectives, or, to negotiate the terms of a bid with the Board.

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The objectives of the Rights Plan and the terms of the Rights Plan have been developed to deal with the following specific concerns with the existing securities laws in Canada pertaining to Take-over Bids:

     Time

Current Canadian securities legislation generally provides that Take-over Bids may expire after 35 days (which in certain jurisdictions is 35 days after the announcement of the bid by way of advertisement, rather than the date of mailing a Take-over Bid circular). The Board is concerned that this period of time does not provide an opportunity (i) for the shareholders and the Board to properly assess the initiating bid, (ii) for the shareholders to assess the merits of competing bids, and (iii) for the Board to seek out or otherwise allow competing bidders to emerge or to develop other methods of maximizing shareholder value.

The Rights Plan, through the Permitted Bid concept, provides a mechanism whereby the minimum expiry period for a Take-over Bid will be 45 days from the time a Take-over Bid circular is mailed and provides that if the Permitted Bid is successful in having at least 50% of the outstanding Voting Shares held by Independent Shareholders (such being generally the shareholders of the Company other than (i) the bidder and its Associates and Affiliates and other persons acting in concert with the bidder and (ii) any employee benefit plan for the employees of the Company or a wholly-owned subsidiary of the Company), tendered by such time, the Take-over Bid will be extended for an additional 10 Business Days. These provisions will allow the shareholders and the Board additional time to consider the Take-over Bid and the various alternatives that may potentially be available.

     Pressure to Tender

There is concern that a shareholder may feel compelled to tender to a bid which the shareholder considers to be inadequate and not represent full and fair value because, in failing to do so, the shareholder may be left with illiquid or minority discounted Voting Shares in the Company. The requirements for a Permitted Bid in the Rights Plan include a mechanism which is intended to ensure that a shareholder who has not tendered to a Permitted Bid, may do so once it is known that the Permitted Bid has been successful. A Permitted Bid is required to contain a provision that Voting Shares will not be taken-up and paid for under the Take-over Bid unless a majority of the outstanding Voting Shares held by Independent Shareholders have tendered by the end of the Permitted Bid’s minimum 45 day period, following which the Take-over Bid must be extended for a further 10 Business Days so as to allow those who did not tender at the first expiry time to nevertheless tender into the bid.

     Unfair Treatment

The Board has adopted the Rights Plan in part because a bidder could attempt to obtain control of the Company without paying full value, without obtaining shareholder approval and without treating all shareholders equally. Canadian securities laws contain various exemptions which may allow for unequal treatment of shareholders in transactions involving an acquisition of effective control of a company. Under these laws it is possible, through the acquisition of shares in the open market or through private agreements involving a small number of shareholders, to acquire a large share position or even a control block in a Canadian public company without

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making an offer to all shareholders. Under these types of acquisitions, control of a company may be obtained without the acquirer being required to pay a “control premium” to all shareholders of the company.

     Summary of Operation of the Rights Plan

As described in more detail below, if a person (an “Acquiring Person”) acquires 20% or more of the Voting Shares of the Company, other than by way of (i) a Permitted Bid, (ii) a Competing Bid, (iii) a transaction otherwise approved by the Board or (iv) through distributions by the Company, holders of Rights other than the Acquiring Person may acquire for Cdn$100, Common Shares of the Company having a market value of Cdn.$200. In such a case, the Rights will cause substantial dilution to an Acquiring Person. This dilutive aspect of the Rights Plan is intended to discourage a potential acquirer from undertaking “creeping acquisitions” or buying a large block of shares from a select group of shareholders through “private agreement transactions”

The Rights Plan does not affect the duties imposed upon the Board at law to act honestly and in good faith and in the best interests of the Company and to consider any Take-over Bid in respect of the Company on that basis. In addition, the Rights Plan does not prevent a person from utilizing the proxy solicitation mechanism of the Company Act (British Columbia) to effect a change of the Board nor will it affect the right of holders of not less than 5% of the Voting Shares of the Company to requisition the Board to call a meeting of shareholders for the purposes stated in the requisition.

Issuance of the Rights will not alter in any way the financial condition of the Company and will not interfere with the day-to-day operations of the Company or its business plans nor will it change the way in which shareholders currently trade Shares.

     Description of the Rights Plan

The following description of the Rights Plan is a summary only. Reference is made to the Rights Plan Agreement for a full description of the terms of the Rights Plan.

     Issuance of Rights

Effective at 5:00 p.m. on February 25, 2000, one Right was issued in respect of each outstanding Common share (each a “Voting Share”) of the Company (the “Effective Time”) and one Right will be issued in respect of each Voting Share of the Company issued thereafter, prior to the earlier of the Separation Time and the Expiration Time. If the Amendment is approved by shareholders at the Meeting, the Rights will expire at the termination of the Company’s annual general meeting held in the year 2006 (the “Expiration Time”), unless earlier redeemed by the Company. If the Amendment is not approved by the shareholders of the Company at the Meeting, the Rights Plan will expire at the conclusion of the Meeting.

     Trading of Rights

Certificates for Voting Shares issued after the Effective Time will contain a notation incorporating the Rights Plan Agreement by reference. Until the Separation Time, or earlier termination or expiration of the Rights, the Rights will be evidenced by and transferred with the

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associated Voting Shares and the surrender for transfer of any certificate representing Voting Shares will also constitute the surrender for transfer of the Rights associated with those Voting Shares. After the Separation Time, the Rights will become exercisable and begin to trade separately from the associated Voting Shares. As soon as practicable following the Separation Time, separate certificates evidencing rights (“Rights Certificates”) will be mailed to the holders of record of Voting Shares as of the Separation Time and the Rights Certificates alone will evidence the Rights. The Rights will be listed in Canada on The Toronto Stock Exchange upon separation.

     Separation Time

Under the Rights Plan the Separation Time means the close of business on the 10th Trading Day after the earliest to occur of:

(a)	a public announcement that a person or a group of affiliated or associated persons (an “Acquiring Person”) has acquired Beneficial Ownership of 20% or more of the outstanding voting shares of the Company (“Voting Shares”), other than as a result of (i) a reduction in the number of Voting Shares outstanding, (ii) a Permitted Bid, (iii) acquisitions of Voting Shares approved by the Board, or (iv) other specified exempt acquisitions where shareholders participate on a pro rata basis;
(b)	the date of commencement of, or the first public announcement of an intention of any person to commence, a Take-over Bid where the Voting Shares subject to the bid, together with the Voting Shares beneficially owned by that person (including affiliates, associates and joint actors) would constitute 20% or more of the outstanding Voting Shares; and
(c)	the date upon which a Permitted Bid or Competing Permitted Bid ceases to be such,

or such later date as the Board may determine.

Under the Rights Plan, a Take-over Bid means an offer to acquire Voting Shares where the Voting Shares subject to the offer together with the number of Voting Shares held by the person making the bid constitute in the aggregate 20% or more of the outstanding Voting Shares of the Company.

     Exercise of Rights

Rights will not be exercisable until the Separation Time. After the Separation Time and prior to the occurrence of a transaction which results in a person becoming an Acquiring Person (a “Flip-In Event”), each Right will entitle the registered holder thereof to purchase from the Company one Common share at a price of Cdn.$100, subject to adjustment and certain anti-dilution provisions (the “Exercise Price”). If a Flip-In Event occurs, each Right will, unless the Flip-In Event is waived in accordance with the terms of the Rights Plan, entitle the registered holder to receive, upon payment of the Exercise Price, Common Shares of the Company having an aggregate market price equal to twice the Exercise Price. In such event, however, any Rights

- 21 -

beneficially owned by an Acquiring Person, (including affiliates, associates and joint actors), or the transferee of any such person, will be void. A Flip-In Event does not include acquisitions approved by the Board or acquisitions pursuant to a Permitted Bid or Competing Permitted Bid.

Until a Right is exercised, the holder thereof, as such, will have no rights as a shareholder of the Company, including the right to vote or receive dividends.

     Permitted Bids

The Rights Plan employs a “Permitted Bid” concept whereby a Take-over Bid will not trigger the Separation Time if it meets certain conditions. A “Permitted Bid” is defined as an offer to acquire Voting Shares for cash or securities made by means of a Take-over Bid circular, where the Voting Shares subject to the offer, together with shares beneficially owned by the offeror at the date of the offer (including its affiliates, associates and joint actors), constitute 20% or more of the outstanding Voting Shares and that also complies with the following additional provisions:

(a)	the bid must be made to all the holders of Voting Shares wherever resident; and
(b)	the bid must contain the following irrevocable and unqualified conditions:

(i)	no Voting Shares will be taken up or paid for prior to the close of business on the 45th day following the date the circular is sent to shareholders and then only if more than 50% of the then outstanding Voting Shares held by Independent Shareholders have been tendered to the bid and not withdrawn;
(ii)	Voting Shares may be deposited pursuant to the bid, unless it is withdrawn, at any time during the 45 day period described in §(b)(i);
(iii)	Voting Shares deposited pursuant to the bid may be withdrawn until taken up or paid for; and
(iv)	if the deposit condition referred to in §(b)(i) is satisfied, the offeror will extend the expiration date for the bid for at least 10 Business Days from the date on which the offer would otherwise expire.

     Competing Permitted Bids

A “Competing Permitted Bid” is a Take-over Bid made after a Permitted Bid has been made and prior to its expiry that satisfies all of the provisions of a Permitted Bid, except that it must remain open for acceptance until at least the later of 21 days and the expiry of the outstanding Permitted Bid. The reduction in the time for acceptance of a Competing Permitted Bid is to allow, as nearly as practicable, all bids to be dealt with by the shareholders of the Company within substantially the same time frame.

     Beneficial Ownership

Under the definition of “Beneficial Ownership” in the Rights Plan, a person is deemed to own securities owned by the person’s affiliates and associates and by any person acting jointly or in

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concert with such person. A person is also deemed to own securities which such person has a right to acquire within 60 days of the exercise of conversion rights or purchase rights. The Rights Plan contains certain exceptions which would permit investment managers and trust companies holding securities on behalf of clients, Crown agents, certain statutory bodies and pension plan administrators to hold more than 20% of the outstanding Voting Shares of the Company in the ordinary course of their business without becoming an Acquiring Person, provided they do not actually make a Take-over Bid for such shares. In addition, the Rights Plan has an exemption from the deemed ownership of securities for those which are lodged under a Permitted Lock-up Agreement or in respect of securities which have been deposited or tendered pursuant to a tender or exchange offer or Take-over Bid unless such deposited or tendered shares have been accepted unconditionally for payment or exchange or have been taken up or paid for.

A Permitted Lock-up Agreement is an agreement whereby a person agrees to deposit or tender Voting Shares held by the person to a Take-over Bid, but which permits the person to withdraw the Voting Shares from the agreement in order to tender or deposit them to another Take-over Bid that contains an offering price or value per Voting Share that is at least 5% in excess of the value per Voting Share offered under the bid which is subject to the Lock-up Agreement.

     Redemption of Rights and Waiver of a Flip-In Event

At any time prior to the occurrence of a Flip-In Event, the Board may, with the prior consent of the holders of Voting Shares, authorize the redemption of all, but not less than all, of the then outstanding Rights at a redemption price of Cdn.$0.00001 per Right, subject to adjustment. In addition, if an offeror acquires more than 50% of the Outstanding Voting Shares not already beneficially owned by the offeror, pursuant to a Permitted Bid, a Competing Permitted Bid or another exempt acquisition, the Board will be deemed to have elected to have the Company redeem the Rights at the redemption price.

Prior to the occurrence of a Flip-In Event, the Board may, with the prior consent of the holders of Voting Shares, waive a Flip-In Event that occurs as a result of a circular Take-over Bid sent to all holders of Voting Shares. In that event, the Board will be deemed to have waived any other Flip-In Event occurring by reason of any other circular Take-over Bid.

The Board may also waive the application of the Rights Plan to a Flip-In Event resulting from inadvertence where the Acquiring Person has reduced its beneficial ownership of Voting Shares to below 20%. Except as described above, the waiver of the application of the Rights Plan to a particular Flip-In Event requires shareholder approval.

     Protection against Dilution

The Exercise Price, the number and nature of securities which may be purchased upon the exercise of Rights and the number of Rights outstanding, are subject to adjustment from time to time to prevent dilution in the event of stock dividends, subdivisions, consolidations, reclassifications or other changes in the outstanding Common Shares, pro rata distributions to holders of Common Shares and other circumstances where adjustments are required to appropriately protect the interests of the holders of Rights.

- 23 -

     Supplements and Amendments

The Board may, without the approval of the holders of Voting Shares or Rights, make any amendments to the Rights Plan Agreement (i) specifically contemplated therein, or (ii) to correct clerical or typographical errors, or (iii) which may be required to maintain the validity and effectiveness of the Rights Plan Agreement as a result of any change in any applicable laws or regulatory requirements. If these amendments occur before the Separation Time, they must be put before the shareholders for ratification at the next occurring meeting of shareholders and if the amendments occur after the Separation Time they must be put before the holders of Rights for ratification at a meeting to be called in accordance with the Articles of the Company and the Company Act (British Columbia).

At any time before the Separation Time, the Company may, with the prior consent of the holders of Voting Shares, amend, vary or rescind any of the provisions of the Rights Plan Agreement or the Rights whether or not such action would materially adversely affect the interests of the holders of Rights generally.

At any time after the Separation Time and before the Expiration Time, the Company may, with the prior consent of the holders of Rights, amend, vary or rescind any of the provisions of the Rights Plan Agreement or the Rights whether or not such action would materially adversely affect the interests of the holders of Rights generally.

     Income Tax Consequences

     Canadian Income Tax Consequences

The Company will not receive any income as a result of the issuance of the Rights for Canadian federal income tax purposes. Generally, the value of a right, if any, to acquire additional shares of a company is not a taxable benefit includable in income under the Income Tax Act (Canada) (the “Act”), and is not subject to non-resident withholding tax under the Act, provided that an identical right is conferred on all shareholders. While Rights were issued in respect of each outstanding Share, the Rights may become void in the hands of certain shareholders (an Acquiring Person, in the circumstances outlined under “Description of the Rights Plan” above) upon the occurrence of certain triggering events. Whether the issuance of the Rights is a taxable event is therefore not free of doubt. However, the Company is of the view that the Rights have a negligible monetary value at their date of issue and will continue to have a negligible monetary value. If the Rights have a negligible monetary value, the issue of the Rights will not give rise to a measurable taxable benefit or capital gain and will not be subject to non-resident withholding tax. The foregoing does not address the Canadian income tax consequences of other events such as the separation of the Rights from the Shares, the occurrence of a Flip-In Event or the exercise or redemption of Rights. The holder of Rights may well have significant income or be subject to withholding tax under the Act if the Rights become exercisable or are exercised or otherwise disposed of. Such consequences under the Act are not further addressed in this summary, as the Company is of the view that the structure of the Rights Plan makes it unlikely that the Rights would become exercisable or that the Separation Time will occur (although this result cannot be guaranteed).

As long as the Shares continue to be qualified investments for trusts governed by registered retirement savings plans, registered retirement investment funds and deferred profit sharing plans, the Rights will continue to be qualified investments for such plans.

- 24 -

     United States Tax Consequences

For United States federal income tax purposes, the Internal Revenue Service has stated in Revenue Ruling 90-11 that the adoption of a shareholders’ rights plan similar to the Rights Plan is not a taxable transaction to a company’s shareholders. That ruling expressly refrains from addressing the tax consequences of any other event in connection with a rights plan. The United States federal income tax consequences of such other events as the separation of the Rights from the Shares, a Flip-In Event or the exercise or redemption of Rights, are uncertain. The tax consequences, including the likelihood that an event will be a taxable transaction (which, in certain cases is probable) or, if taxable, whether it is a distribution or a sale or exchange of a Right can vary depending on the facts and circumstances at the time of the event.

Shareholders should consult their own tax advisors regarding the consequences of receiving, holding, exercising or exchanging Rights.

INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS

To the knowledge of management of the Company, no Director or executive officer of the Company or nominee for election as a Director of the Company or any security holder known to the Company to own of record or beneficially more than 10% of the Company’s outstanding shares or any member of the immediate family of any of the foregoing persons had any interest in any material transaction during the year ended December 31, 2002, or has any interest in any material transaction in the current year, save and except for the involvement of Messrs. Reifel and Sneddon in the acquisition of Francisco Gold Corp. (“Francisco”) by the Company.

On July 16, 2002, the Company completed the acquisition by way of a plan of arrangement of Francisco, a Canadian public company. Under the plan of arrangement, each issued Francisco common share was exchanged for 1.55 Shares of the Company and one share in Chesapeake Gold Corp. (“Chesapeake”), a new exploration company formed by Francisco. In addition, prior to completion of the closing of the transaction, Francisco transferred to Chesapeake cash of Cdn$1.50 per share for each issued share of Francisco (Cdn$25.0 million), certain early-stage Nicaraguan exploration assets and a 2% net smelter return royalty on Francisco’s Guatemalan projects outside the Marlin project area. The Company retained a right to acquire a 5% stake in Chesapeake (based on its initial capitalization) through a three-year share purchase warrant.

The Company issued 25.8 million Shares to the shareholders of Francisco under the terms of the plan of arrangement and issued stock options to acquire 1,674,000 Shares to directors, officers and employees of Francisco exercisable at prices between Cdn$3.07 and Cdn$4.04 per share, in exchange for their existing Francisco stock options. The Company accounted for the acquisition using the purchase method. The Company’s total acquisition cost for the transaction was $138,419,000.

At the time of closing of the plan of arrangement Mr. Randy Reifel, a nominee for the Board of Directors, was a director, the President and acting Chief Financial Officer of Francisco and he became a director of the Company. At such time Mr. Reifel held 2,103,754 shares of Francisco (12.6% of its outstanding shares) and held share purchase options to acquire 450,000 shares of Francisco at a price of Cdn$6.25 each. Under the plan of arrangement these were converted into

- 25 -

3,260,809 Shares and an option to acquire 697,500 Shares at a price of Cdn$3.07 each, respectively. In addition, at the time of closing of the plan of arrangement, Mr. Gerald Sneddon was a director and Executive Vice President Operations of Francisco and he became a director of the Company. At such time Mr. Sneddon held 86,800 shares of Francisco (0.5% of its outstanding shares) and held share purchase options to acquire 150,000 shares of Francisco at a price of Cdn$6.25 each. Under the plan of arrangement these were converted into 134,540 Shares and an option to acquire 232,500 Shares at a price of Cdn$3.07 each, respectively.

ANNUAL REPORT

The Annual Report to Shareholders of the Company for the fiscal year ended December 31, 2002, which includes audited consolidated financial statements, will be mailed to Shareholders contemporaneously herewith, but such Annual Report is not incorporated in the Information Circular and is not deemed to be a part of the proxy-soliciting material.

OTHER MATTERS

Management knows of no other matters that are to be presented for action at the Meeting. Should any other matters properly come before the Meeting, the persons named in the accompanying proxy will have discretionary authority to vote all proxies in accordance with their judgment.

BY ORDER OF THE BOARD

(Signed) “C. Kevin McArthur”
President and Chief Executive Officer

- 26 -

GLAMIS GOLD LTD.
5190 Neil Road, Suite 310, Reno Nevada, U.S.A. 89502
Telephone: (775) 827-4600 Fax: (775) 827-6992

P R O X Y

This proxy is solicited by the management of GLAMIS GOLD LTD. (the “Company”). The undersigned hereby appoints A. Dan Rovig, Chairman of the Board of Directors of the Company, or failing him, C. Kevin McArthur, President and Chief Executive Officer of the Company, or instead of either of the foregoing, (insert name)                                                                                 , as nominee of the undersigned, with full power of substitution, to attend and vote on behalf of the undersigned at the Annual and Extraordinary Meeting to be held at The Fairmont Royal York Hotel, 100 Front Street West, Toronto, Ontario, on May 7, 2003, at 1:30 p.m., local time, and at any adjournments thereof, and directs the nominee to vote or abstain from voting the shares of the undersigned in the manner indicated below:

1.	Fixing the Number of Directors
	Vote For  o  Against  o  the resolution fixing the size of the board of directors at 6.
2.	Election of Directors
	The nominees proposed by management of the Company are:

A. Dan Rovig	Jean Depatie
C. Kevin McArthur	A. Ian S. Davidson
Kenneth F. Williamson	P. Randy Reifel

	Vote For  o  the election of all nominees listed above (except those whose names the undersigned has deleted)
	Withhold Vote o
3.	Auditor
	Vote For  o  Withhold Vote  o  on the resolution to appoint KPMG LLP, Chartered Accountants, as auditor of the Company at a remuneration to be fixed by the board of directors.
4.	Amendment to Shareholders’ Rights Plan
	Vote For  o  Against  o  the resolution to amend the Company’s Rights Plan Agreement to extend the Expiration Time for an additional 3-year period, as more particularly set out in the Information Circular prepared for the Meeting.
5.	Upon any permitted amendment to or variation of any matter identified in the Notice for the Meeting.
6.	Upon any other matter that properly comes before the Meeting.

THE UNDERSIGNED HEREBY REVOKES ANY PRIOR PROXY OR PROXIES.

DATED:                                                                         , 2003.

Signature of Shareholder (Please print name here)

A proxy will not be valid unless the completed, signed and dated form of proxy is delivered to the office of Computershare Trust Company of Canada, Proxy Department, by fax to (1-866-249-7775) or by mail or by hand to 100 University Avenue, Toronto, Ontario, M5J 2Y1, not less than 48 hours (excluding Saturdays, Sundays and holidays) before the Meeting or the adjournment thereof at which the proxy is to be used.

Any one of the joint holders of a Share may sign a form of proxy in respect of the Share but, if more than one of them is present at the meeting or represented by proxyholder, the one of them whose name appears first in the register of members in respect of the Share, or that one’s proxyholder, will alone be entitled to vote in respect thereof. Where the form of proxy is signed by a company, either its corporate seal must be affixed to the form of proxy or the form of proxy should be signed by the company under the hand of an officer or attorney duly authorized in writing, which authorization must accompany the form of proxy.

A shareholder has the right to appoint a person, other than either of the nominees designated in this form of proxy, who need not be a shareholder, to attend and act for and on behalf of the shareholder at the Meeting and may do so by inserting the name of that other person in the blank space provided for that purpose in this form of proxy or by completing another suitable form of proxy.

The Shares represented by the proxy will be voted or withheld from voting in accordance with the instructions of the shareholder on any ballot, and where a choice with respect to a matter to be acted on is specified the Shares will be voted on a ballot in accordance with that specification. This proxy confers discretionary authority with respect to matters identified or referred to in the accompanying Notice for the Meeting for which no instruction is given, and with respect to other matters that may properly come before the Meeting other than voting for a nominee for Director who is not specified in the proxy. In respect of a matter so identified or referred to for which no instruction is given, the nominees named in this proxy will vote shares represented thereby FOR the approval of such matter.

ANNUAL RETURN CARD
REQUEST FOR INTERIM FINANCIAL STATEMENTS

TO: GLAMIS GOLD LTD.
(Cusip No. 376775102)
(Scrip No. GLGQ)

In accordance with National Instrument No. 54-102 of the Canadian Securities Administrators, registered and non-registered (beneficial) shareholders may request annually to receive interim corporate mailings, including financial statements of the company. If you wish to receive such material, please complete and return this form to the registrar and transfer agent for Glamis Gold Ltd. (the “Company”):

Attention: Stock Transfer Department
Computershare Trust Company of Canada
100 University Avenue
9th Floor
Toronto, Ontario M5J 2Y1

I certify that I am a registered/non-registered owner of common securities of the Company and request that I be placed on the Company’s Supplemental Mailing List in order to receive the Company’s interim corporate mailings, including financial statements.

DATED:                                         , 2003.	Signature
	Name of Registered/Non-Registered Shareholder – Please Print
	Address
	Postal Code
	Fax Number
	Name and title of person signing if different from name above.

By providing an E-mail address, you will be deemed to be consenting to the electronic delivery to you at such E-mail address of the interim financial statements, if delivery by electronic means is allowed by applicable regulatory rules and policies.

E-mail address (optional)

EX-5 6 o09429aexv5.htm CONSENT OF INDEPENDENT AUDITORS

EXHIBIT 5

CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS

To the Board of Directors
Glamis Gold Ltd.

     We consent to the incorporation by reference in this annual report on Form 40-F of Glamis Gold Ltd. and to the incorporation by reference in the registration statement on Form S-8 of Glamis Gold Ltd. filed on May 24, 2002, of our report dated February 6, 2003, relating to the consolidated balance sheets of Glamis Gold Ltd. as of December 31, 2002 and 2001 and the related consolidated statements of operations, deficits and cash flows for each of the years ended December 31, 2002, 2001 and 2000, which report appears in the December 31, 2002 Annual Report to Shareholders of Glamis Gold Ltd.

[/s/] KPMG LLP
Chartered Accountants

Vancouver, Canada
March 31, 2003

EX-6 7 o09429aexv6.htm CONSENT OF MINE RESERVES ASSOCIATES INC.

EXHIBIT 6

CONSENT OF MINE RESERVES ASSOCIATES, INC.

To the Board of Directors of Glamis Gold Ltd.

     We consent to the inclusion in this annual report on Form 40-F of Glamis Gold Ltd., of our verification of certain mineral reserves of Glamis Gold Ltd. which appears under the heading “Summary of Reserves and Other Mineralization – Proven and Probable Mineral Reserves” in Glamis Gold Ltd.’s Annual Information Form for the year ended December 31, 2002, which is included in this annual report as an exhibit.

MINE RESERVES ASSOCIATES, INC.

By: [/s/] Donald Elkin
Its: President

Golden, Colorado
March 31, 2003

EX-7 8 o09429aexv7.htm CONSENT OF MINE DEVELOPMENT ASSOCIATES

EXHIBIT 7

CONSENT OF MINE DEVELOPMENT ASSOCIATES, INC.

To the Board of Directors of Glamis Gold Ltd.

     We consent to the inclusion in this annual report on Form 40-F of Glamis Gold Ltd., of our audit of certain mineral reserves of Glamis Gold Ltd. which appears under the heading “Summary of Reserves and Other Mineralization – Proven and Probable Mineral Reserves” in Glamis Gold Ltd.’s Annual Information Form for the year ended December 31, 2002, which is included in this annual report as an exhibit.

MINE DEVELOPMENT ASSOCIATES, INC.

By: [/s/]
Its:

Reno, Nevada
March 31, 2003

EX-8 9 o09429aexv8.htm COSENT OF JAMES S. VOORHEES

EXHIBIT 8

CONSENT OF JAMES S. VOORHEES

To the Board of Directors of Glamis Gold Ltd.

     I consent to the inclusion in this annual report on Form 40-F of Glamis Gold Ltd., of the report, which was prepared under my direct supervision, regarding certain mineral reserves of Glamis Gold Ltd. which appears under the heading “Summary of Reserves and Other Mineralization – Proven and Probable Mineral Reserves” in Glamis Gold Ltd.’s Annual Information Form for the year ended December 31, 2002, which is included in this annual report as an exhibit.

[/s/] James S. Voorhees

Reno, Nevada
March 31, 2003

EX-99.1 10 o09429aexv99w1.htm CERTIFICATION - CEO

EXHIBIT 99.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the annual report of Glamis Gold Ltd., a Canadian company and foreign private issuer under the multi-jurisdictional disclosure system (the “Company”), on Form 40-F for the period ended December 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, C. Kevin McArthur, Chief Executive Officer of Glamis, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 31, 2003 /s/ C. Kevin McArthur
C. Kevin McArthur
Chief Executive Officer

EX-99.2 11 o09429aexv99w2.htm CERTIFICATION - CFO

EXHIBIT 99.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the annual report of Glamis Gold Ltd., a Canadian company and foreign private issuer under the multi-jurisdictional disclosure system (the “Company”), on Form 40-F for the period ended December 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Cheryl S. Maher, Chief Financial Officer of Glamis, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company

Dated: March 31, 2003 /s/ Cheryl S. Maher
Cheryl S. Maher
Chief Financial Officer

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EX-1

exv1

EX-2

exv2

EX-3

exv3

EX-5

exv5

EX-6

exv6

EX-7

exv7

EX-8

exv8

EX-99.1

exv99w1

EX-99.2

exv99w2