United States
                       Securities and Exchange Commission
                              Washington D.C. 20549

                                   FORM 10-KSB

                Annual Report Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934
 (Mark one)
[x]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

For the fiscal year ended       June 30, 2005      or
                             --------------------

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from  ________________  to _______________

Commission File Number    0-16097
                         --------

                               BAY RESOURCES LTD.
             (Exact name of Registrant as specified in its charter)

          Delaware                                              98-0079697
          --------                                              ----------
(State or other jurisdiction of                                (IRS Employer
 incorporation or organisation)                              Identification No.)

         Level 8, 580 St Kilda Road Melbourne, Victoria, 3004, Australia
                                    ------------------------------------
            (Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code   011 (613) 8532 2860
                                                     -------------------

Securities registered pursuant to Section 12 (b) of the Act:
      Title of each class                              Name of each exchange
                                                        on which registered
             N/A                                                N/A
             ---                                                ---

Securities registered pursuant to Section 12(g) of the Act:
                    Common stock, par value $.0001 per share
                    ----------------------------------------
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 the past 90 days.

                           Yes    X                  No    _

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB.|X|

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act)

                           Yes    _                  No   X

State Issuer's Revenues for its most recent fiscal year.





None

The  aggregate  market  value  based on the  average  bid and asked price on the
over-the-counter  market of the Registrant's common stock, ("Common Stock") held
by non-affiliates of the Company was US$5,324,902 as at June 30, 2005.

There were  16,711,630  outstanding  shares of Common Stock as of September  22,
2005.

DOCUMENTS INCORPORATED BY REFERENCE

Not Applicable

Transitional Small Business Issuer Yes:___  No:_X_





TABLE OF CONTENTS                                                           PAGE


PART I
Item 1       Business                                                          1
Item 2       Properties                                                       35
Item 3       Legal Proceedings                                                35
Item 4       Submission of Matters to a Vote of Security Holders              35

PART II
Item 5       Market for Common Equity and Related Stockholder Matters         36
Item 6       Management's Discussion and Analysis of Financial Condition
             or Plan of Operation                                             37
Item 7       Financial Statements                                             44
Item 8       Changes in and Disagreements with Accountants on
             Accounting and Financial Statement Disclosure                    44
Item 8A      Controls and Procedures                                          44


PART III
Item 9       Directors and Executive Officers of the Registrant               46
Item 10      Executive Compensation                                           48
Item 11      Security Ownership of Certain Beneficial Owners
             and Management and Related Stockholder Matters                   51
Item 12      Certain Relationships and Related Transactions                   54


Part IV
Item 13      Exhibits, Financial Statement Schedules, and Reports
             on Form 8-K                                                      59
Item 14      Principal Accounting Fees and Services                           59


             Signatures                                                       60
             Exhibit Index                                                    62

Appendix A - Glossary
Appendix B - List of Mining Interests





                                     PART I


Item 1     Business

General

Our name is Bay  Resources  Ltd.  and we  sometimes  refer to  ourselves in this
annual report as "Bay  Resources",  the "Company" or as "we," "our," or "us." We
are an  exploration  stage  mining  company.  Our  objective  is to exploit  our
interest in the mineral claims in Nunavut, Canada which are in the Committee Bay
Greenstone Belt and in the Slave Craton. Our principal exploration target is for
gold and we are seeking to determine  whether adequate gold reserves are present
on the property  covered by our claims to develop an operating  mine.  We are in
the initial  stages of our  exploration  program and have not yet identified any
ore reserves.

We hold the interest in the Slave Craton and our wholly owned  subsidiary  named
"Golden Bull  Resources  Corporation"  (formerly  4075251 Canada Inc.) holds the
interests in the Committee Bay Greenstone Belt. Our wholly-owned subsidiary is
referred to in this annual report as `Golden Bull."

We sometimes  refer to our claims  collectively  in this annual report as either
the  "Committee  Bay  Properties"  or the  "Slave  Properties".  Our  claims are
registered in the Mining  Recorders Office in the Mining District of Nunavut and
give us the right to explore and mine minerals from the property  covered by the
claims.

We were  incorporated in the State of Delaware on February 1, 1973. We commenced
our mineral exploration  activities in 2002. Prior thereto, we were engaged in a
number of other business  activities that have been discontinued.  Our executive
offices are at Level 8, 580 St. Kilda Road,  Melbourne,  Victoria 3004 Australia
and we have an office at 1 Yonge Street,  Suite 1801, Toronto,  Ontario M5E 1W7,
Canada.  Our  website  location is  www.bayresourcesltd.com  and you can send an
email to us at  peter@bayresourcesltd.com.  Our wholly owned subsidiary,  Golden
Bull, was incorporated on May 27, 2002 in the Province of Ontario, Canada and is
licensed to do business in the Northwest Territories and Nunavut Canada.

Currency

We  use  the  Australian  dollar  as  our  reporting  currency,   since  we  are
headquartered  in  Australia  and our  administrative  expenses  are incurred in
Australian dollars.  References to dollars are to Australian dollars (A$) unless
otherwise  indicated as being  Canadian  dollars (CDN$) or United States dollars
(US$).  As of September 20, 2005, the currency  exchange rate was  approximately
US$1.00  equals  A$1.30504,  and US$1.00  equals CDN  $1.17020,  as published by
Bloomberg  at  www.Bloomberg.com.   For  the  convenience  of  the  reader,  the
Australian  Dollar figures for the year ended June 30, 2005 have been translated
into United States Dollars ("US$) using the rate of exchange at June 30, 2005 of
A$1.00=US$0.7620.



                                       1



History of the Company

Our  predecessor  corporation,  Bayou Oil,  was  incorporated  under the laws of
Minnesota  in 1973 and since that time it had a number of  activities  that have
been ceased.

On February 13, 1998, we incorporated a 100% owned  subsidiary,  Bayou Australia
Pty Ltd, a corporation incorporated under the laws of Australia.

On June 29, 1999 we undertook a reverse  stock split on a 1:20 basis and changed
our Articles of  Incorporation to amend the par value of our shares from US$0.15
cents to US$0.0001  cents per share.  On September  27, 1999 we changed our name
from Bayou International, Ltd to Baynet, Ltd.

In May  2000,  we  commenced  work on the  development  of a B2B  mining  portal
however, this is no longer proceeding as it was considered uneconomic.

On July 13, 2000 we changed the name of our subsidiary,  Bayou Australia Pty Ltd
to  Baynex.com  Pty Ltd. On August 21, 2000 we  incorporated  a new wholly owned
subsidiary,  Baynet International Pty Ltd, a corporation  incorporated under the
laws of Australia.  In October 2000, it changed its name to Bay Resources (Asia)
Pty Ltd.

During fiscal 2001, we conducted a due diligence review of St. Andrew Goldfields
Ltd ("St. Andrew") with a view to taking a substantial investment in St. Andrew.
Following  the  conclusion  of the review,  we decided  not to proceed  with the
investment.

During the 2002 fiscal year we commenced our gold exploration business by:

     (i)  entering  into an agreement to explore for gold on Tahera's  extensive
          property interests on the Slave Craton in northern Canada; and

     (ii) making  application  via  Gold  Bull,  for  properties  in the  highly
          prospective Committee Bay Greenstone Belt in Nunavut, Canada.

In October 2002 we entered into an  agreement  (via our wholly owned  subsidiary
Bay  Resources  (Asia) Pty Ltd) with the Tibet  Bureau of Geology  and  Minerals
Exploration  Development,  China to earn a minimum  51%  interest  in the Xigaze
copper belt  running in a 200  kilometer  east-west  trend either side of Lhasa.
However,  in February 2003 we decided to withdraw from these  arrangements  as a
result of further hurdles being placed before us by the Chinese authorities that
were not known at the time of entering into the agreement.

In April 2004, we raised US$1,670,000 (A$2,253,000) through a private placement,
issued 1,753,984  shares of common stock and 1,753,984  warrants to repay all of
our debt and  commenced  exploration  on the  Slave  Craton  and  Committee  Bay
properties.

It is the  policy  of our  Board of  Directors  that we will not  engage  in any
activities which would subject us to registration and reporting  requirements of
the Investment Company Act of 1940.

Description Of Business

We are an  exploration  stage mining  company.  Our  objective is to exploit our
interest in the mineral  claims in Nunavut,  Canada.  We hold  interests  in the
Slave Craton and through our wholly owned subsidiary,  Golden Bull Resources, in
the Committee Bay Greenstone Belt in Nunavut.  Our principal  exploration target
is for gold and we are seeking to determine  whether  adequate gold reserves are
present on the property  covered by our claims to develop an operating  mine. We
are in  the  initial  stages  of our  exploration  programs  and  have  not  yet
identified any ore reserves.


                                       2



Slave Craton Project

During 2002, we reached an agreement with the Canadian  company,  Tahera Diamond
Corporation,  to explore for gold on Tahera's extensive  properties on the Slave
Craton in Nunavut,  Canada.  At that time,  Tahera's Slave land package includes
177 claims and 11 Inuit Land Concessions covering  approximately  471,000 acres.
Tahera is a exploration  company conducting diamond  exploration in the northern
Slave Craton and plans to bring its Jericho diamond pipe into production in late
2005. Tahera has put together an extensive  database of geologic and geophysical
information  and does not wish to conduct  exploration for gold and base metals.
Under the agreement, they will allow us to use the database to explore for gold.
We have  agreed to pay them a two  percent  net  smelter  return  royalty on any
production from gold and base metals we discover having used Tahera's  extensive
database.

The Tahera data to which we have access,  includes  electromagnetic  geophysical
surveys,  overburden and bedrock mapping, overburden sampling and drilling data.
The overburden samples cover some 60,000 square kilometers of the northern Slave
Craton  with  some  17,000  samples  being  potentially  available  for gold and
base-metal analysis.  The overburden samples have been taken on a reconnaissance
scale with line intervals at 2.5-5.0  kilometers  with some detailed  surveys at
50-100  meter  sample   spacings.   The  samples   cover  areas  of  known  gold
mineralisation including in the vicinity of the Lupin and Ulu gold deposits.

We  believe  there  are  some  exceptional  gold  targets  on  Tahera's  ground;
principally in the High Lake Volcanic Belt, and in the Contwoyto  Formation near
Lupin.  In the High Lake Volcanic Belt,  several high grade gold showings on the
ground include surface samples of 24 grams per tonne ("gpt gold"), 130 gpt gold,
176 gpt gold, and 220 gpt gold, and drillhole  intersections  to 25.5 gpt gold /
1.54 meters. The target is silicified  shear-hosted gold, similar to the 565,000
ounce ULU gold deposit which borders the Tahera ground.

Tahera's  Jericho and Contwoyto  properties lie in close  proximity to the Lupin
gold mine, which is a high grade,  gold deposit of over three million ounces. We
believe that there is significant potential for gold mineralization,  similar to
that found at Lupin, on Tahera's Jericho and Contwoyto properties. Previous work
has  revealed  surface gold values of 11 gpt, 15 gpt, 21 gpt, and 28 gpt gold in
Banded Iron Formation  ("BIF").  The geology is very similar to the nearby Lupin
gold mine (2-3  kilometers  to the west) where gold  mineralization  is in a "Z"
folded  iron  formation.  The R43-R45  target on Tahera's  ground is a 10 meters
wide, 1.3 kilometers long iron formation,  that has an unsampled "Z" fold of the
same magnitude as Lupin.

We have  included  a list of the  mining  claims  that  are  covered  under  our
agreement with Tahera in Appendix B to this report.

Committee Bay Greenstone Belt Project

In June 2002, we staked land in the highly prospective  Committee Bay Greenstone
Belt.


                                       3



The  Committee  Bay  Greenstone  Belt is located  approximately  240  kilometers
northeast of Baker Lake in Nunavut,  Canada and is believed to represent  one of
the largest unexplored greenstone belts in North America, with potential to host
world-class  gold deposits.  The Baker Lake area is best known for the Meliadine
gold Project, currently in the pre-feasibility stage.

Originally  29 claims were staked  totalling a land area of 71,694  acres in the
Committee Bay  Greenstone  Belt in central  Nunavut,  Canada.  These claims were
recorded  on October 16,  2002.  From the  original  area we retained a total of
49,439.48 acres on 21 claims. To keep the claims in good standing,  we needed to
spend a total of CDN$197,798 of assessment  work by October 16, 2004. A total of
CDN$98,879  (CDN$2 per acre) is required in each  subsequent year up to 2012 (at
which  point a  decision  to bring the  claims to lease  must be made).  We have
included a list of our mining  claims in the Committee  Bay  Greenstone  Belt in
Appendix B to this report.

The  Canadian  Government  completed a Targeted  Geoscience  Initiative  ("TGI")
between 2000-2003 in the Archean Committee Bay Greenstone Belt. Total government
funding for the Committee Bay Greenstone Belt TGI area was approximately  CN$3.5
million.  The  stated  objective  of the  TGI  was to  increase  the  level  and
cost-effectiveness   of  private  sector   exploration  for  mineral  resources.
Government  work in the Committee Bay Greenstone  Belt included  1:100,000 scale
geologic  mapping,  prospecting,   surficial  mapping,  drift  prospecting,  and
airborne geophysics (400 meter flight line spacing). A joint government-industry
(GSC - DeBeers Exploration Canada Ltd.) partnership  initiated in 2001, involves
heavy-mineral analysis of esker samples for diamond indicator minerals.

The  stratigraphy  of the Committee  Bay  Greenstone  Belt includes  Banded Iron
Formations  (BIF) up to 50 meters  thick,  komatiite  volcanic  flows,  basalts,
intermediate to felsic tuffs, and  quartz-cobble  conglomerates.  Deformation is
recorded by major shear zones, second order faults,  complex folding, and felsic
intrusions. Numerous gold showings are spread out over a 260 x 40 kilometer area
including the Inuk zone (12.8 gpt gold over 5 meters) in northeast Committee Bay
and the Three  Bluffs zone (27.41 gpt gold over 9.44  meters) in the Hayes River
area.

Our Wrench claim group adjoins the Bluff claim block, where the mine grade/width
intersections  of 27.41 gpt gold over  9.44  meters  and 61.6 gpt gold over 4.84
meters were  announced in September 2003 by Committee Bay Resources Ltd ("CBR"),
a company listed on the Toronto Venture Exchange with a large landholding in the
Committee Bay Greenstone  Belt. The government  airborne  magnetic  survey shows
that oxide  iron  formation  (the host at the Three  Bluffs  discovery)  strikes
northeast  from  their  showing  onto  our  Wrench  claims.  A  number  of  gold
occurrences are known on this trend, including a 9.7 gpt gold sample taken in an
area of folded oxide iron  formation,  quartz veining and pyrite + pyrrhotite on
our Wrench claim.

The geology is highly prospective for BIF hosted gold (as in the 3 million ounce
Meadowbank and the 4.6 million ounce Meliadine gold deposits to the south).  Our
claims protect several auriferous iron formations with surface values to 9.7 gpt
gold.  In addition to the BIF hosted gold  targets,  this Belt has potential for
shear-hosted lode gold,  Witswaterstrand style gold, komatiite hosted stratiform
nickel-copper  (Kambalda  analogy),  and platinum  group  elements  ("PGE's") in
layered igneous  complexes  (Laughland  Lake  Anorthosite  Suite).  Samples from
previous work in the  Committee  Bay area  returned  samples up to 245 gpt gold,
0.5% nickel, and 0.8% copper.

The region is best known for the Meliadine  Gold Project,  which is currently in
the  pre-feasibility  stage,  as well as the  Meadowbank  Project of  Cumberland
Resources,  which is in post  feasibility  stage.  These two  projects  host 7.5
million  ounces of gold  resources.  The Committee Bay  Greenstone  Belt is also
situated in the same general area as the developing diamond play currently being
explored  by De  Beers,  BHP-Billiton,  and  Stornoway  Ventures  Ltd.  We  have
accumulated a large landholding in the Belt.


                                       4



CBR signed a letter of intent with Gold Fields  Explorations  Ltd, in June 2003,
to form a joint  venture,  whereby Gold Fields  Exploration  will take an equity
position  in CBR and will  spend  US$10  million  on  exploration  to earn a 65%
interest in that project.

Mining In Canada

The mining  industry in Canada  operates  under both federal and  provincial  or
territorial legislation governing the exploration,  development,  production and
decommissioning of mines. Such legislation  relates to the method of acquisition
and ownership of mining rights, labour, health and safety standards,  royalties,
mining and income taxes,  exports,  reclamation and rehabilitation of mines, and
other matters.  The mining  industry in Canada is also subject to legislation at
both the federal and provincial or territorial  levels concerning the protection
of the environment. Legislation imposes high standards on the mining industry to
reduce or eliminate the effects of waste  generated by extraction and processing
operations and  subsequently  deposited on the ground or emitted into the air or
water.  The  design  of mines and  mills,  and the  conduct  of  extraction  and
processing  operations,   are  subject  to  the  regulatory  restrictions.   The
exploration, construction, development and operation of a mine, mill or refinery
require compliance with environmental  legislation and regulatory  reviews,  and
the  obtaining  of land  use and  other  permits,  water  licenses  and  similar
authorizations from various governmental  agencies.  Legislation is in place for
lands under federal jurisdiction or located in certain provinces and territories
that provides for the  preparation  of costly  environmental  impact  assessment
reports  prior to the  commencement  of any  mining  operations.  These  reports
require a detailed  technical and scientific  assessment as well as a prediction
of the impact on the environment of proposed mine exploration and development.

Failure to comply with the requirements of environmental  legislation may result
in regulatory  or court orders being issued that could result in the  cessation,
curtailment or modification of operations or that could require the installation
of additional facilities or equipment to protect the environment.  Violators may
be required to  compensate  those  suffering  loss or damage by reason of mining
activities and the violators, including our officers and directors, may be fined
or, in some cases, imprisoned if convicted of an offence under such legislation.
Provincial and territorial mining legislation  establishes  requirements for the
decommissioning,  reclamation and  rehabilitation  of mining properties that are
closed.  Closure  requirements  relate to the protection and  restoration of the
environment and the protection of public safety.  Some former mining  properties
must be managed for a long time following closure in order to fulfill regulatory
closure  requirements.  The  cost of  closure  of  existing  and  former  mining
properties  and, in  particular,  the cost of  long-term  management  of open or
closed mining properties can be substantial.

Government Regulations

We are committed to complying and, to our knowledge,  are in compliance with all
governmental and environmental regulations. Permits from a variety of regulatory
authorities are required for many aspects of mine operation and reclamation. Our
exploration work is subject to the Mining Land Use Regulations of the Indian and
Northern Affairs Canada Mining Act. This Act requires us to obtain permits prior
to performing  significant  exploration  programs.  We are currently  conducting
exploration under a Land Use Permit, which is valid until June 20, 2006.


                                       5



We cannot predict the extent to which future  legislation  and regulation  could
cause additional expense, capital expenditures,  restrictions, and delays in the
development of our Canadian  properties,  including those with respect to mining
claims. Our activities are not only subject to extensive federal, provincial and
local  regulations  controlling  the  mining  of  and  exploration  for  mineral
properties,   but  also  the  possible  effects  of  such  activities  upon  the
environment.  We will be  obligated  to take steps to ensure  that such  streams
draining the property do not become  contaminated  as a result of our activities
on the property. We are not aware of any environmental  problems on the property
as of the date of this prospectus.

The mining industry in Nunavut,  where our exploration  properties are situated,
operates  under  Canadian   federal  and   territorial   legislation   governing
prospecting,  development, production, environmental protection, exports, income
taxes, labour standards,  mine safety and other matters. We believe our Canadian
operations are operating in substantial compliance with applicable law.

Our exploration  works is subject to environmental  regulation  primarily by the
Federal  Department of Indian Affairs and Northern  Development  and the Nunavut
Water Board. The Department of Fisheries & Oceans (Canada) and the Department of
the Environment  (Canada) have an enforcement role in the event of environmental
incidents,  but  presently  have  no  direct  regulatory  role  in  relation  to
exploration activity.

On April 1, 1999, the Nunavut Land Claims Agreement, dated May 28, 1993, between
the Inuit of Canada's  eastern  arctic region and Her Majesty the Queen in right
of Canada,  came into  force.  Under  this  agreement,  the Inuit  were  granted
ownership of approximately 360,000 square kilometers of land in an area referred
to as the Nunavut Settlement Area,  including  ownership of subsurface rights in
approximately  37,500 square kilometers of those lands. Third party interests in
lands in the  Nunavut  Settlement  Area  created  prior  to  April  1,  1999 are
protected  under the  Nunavut  Land  Claims  Agreement.  Where a third party was
granted a mining lease under the Canada Mining  Regulations in lands  comprising
the Nunavut  Settlement  Area,  that interest  continues in accordance  with the
terms and conditions on which it was granted, including any rights granted under
the  legislation  that give rise to the interest.  However,  where any successor
legislation  has the effect of  diminishing  the rights  afforded to the federal
government,  it will not bind the  Inuit  without  its  consent.  The  Inuit are
entitled to receive whatever  compensation is payable by the interest holder for
the use of exploitation of mineral rights. The federal  government  continues to
administer  the third party  interest  on behalf of the Inuit,  unless the third
party and the Inuit enter into an  agreement  under which the third party agrees
to the  administration  of their  interest  by the  Inuit.  In the event such an
agreement  is reached,  the  applicable  legislation  will cease to apply to the
third  party  interest.  Subsurface  interests  in  such  lands  continue  to be
administered  in  accordance  with  applicable  legislation  relating  to  those
interests and are not affected by the Nunavut Land Claims Agreement.

Third party  interests  in lands in the Nunavut  Settlement  Area  created on or
after  April  1,  1999  are  granted,  in the  case of  surface  rights,  by the
appropriate regional Inuit association and, in the case of subsurface rights, by
Nunavut Tungavik  Incorporated.  Which will hold subsurface title to Inuit owned
lands and will be additionally responsible, in consultation with the appropriate
regional  Inuit  associations,  for the  administration  and management of those
subsurface rights.


                                       6



Government Requirements For Maintenance Of Claims

Slave Craton

Fees and  exploration  expenditures  associated  with the  maintenance of Tahera
Corporation's ground covered under the Slave Craton Agreement with Bay Resources
is the responsibility of Tahera.

Committee Bay Greenstone Belt

The Nunavut  Government has granted our interest in the 21 mineral claims in the
Committee Bay Greenstone Belt described in this Report.

To keep the 21 claims in good  standing,  we were  required  to spend a total of
CDN$197,798 of qualifying  assessment work by October 16, 2004.  Assessment work
must be filed with the Mining Recorder within 30 days of the claim's anniversary
date  or  within  60  days  of  the  lapsing  notice  date.  We  actually  spent
CDN$1,566,962.

 A total of CDN$98,879  (CDN$2 per acre) is required in each  subsequent year up
to 2012 (at which  point a decision  to bring the claims to lease must be made).
However, the excess of CDN$1,369,164 spent can be used to offset the expenditure
requirement in following  years.  As a result we have already met our commitment
until 2012.

Description of Exploration Properties

Please note that the Glossary at the end of this Report contains definitions for
the geological and other specialized terms used in this section.

Property Location And Description

Slave Craton

Hood River Ground

The Hood River mineral claims and Inuit Owned Land  Concessions  are in the High
Lake  Volcanic  Belt located in the  northwest  section of the Slave  Structural
Province  in the  Mackenzie  District  of Nunavut  (Figure 1) on NTS Map Sheets:
76L/10,  14, and 15 and 76M/3.  The land  holdings  here include 4 mining claims
(Hood 3, 4, 12, and 14) totalling 10,330 acres, and 5 contiguous IOL concessions
(CO  20-00-01,  CO  20-00-03a,  CO  20-00-03b,  CO  20-00-04,  and CO  20-01-01)
totalling  21,381.64  acres.  Only the IOL concessions are within the greenstone
component of the High Lake Volcanic Belt and therefore of  exploration  interest
to us. The  approximate  center of the Inuit  Concessions is about 45 kilometers
north of the Arctic Circle, and 530 kilometers NNE of Yellowknife at 66o 54' 37"
N, 110o 55' 12"W.  The Inuit  Concessions  are held 50:50 by Benachee  Resources
Inc. and Snowpipe  Resources  Ltd.  (both wholly owned by Tahera).  There are no
known  encumbrances on the concessions.  Tahera's land use permits are in effect
for 2005 and will cover proposed exploration work by us.


                                       7



Contwoyto Lake Ground

The CO-08 IOL Concession  underlain by the Contwoyto  Formation on the east side
of Contwoyto Lake contains  blocks (CO 08-00-01,  CO 08-00-02,  CO 08-00-03,  CO
08-00-05,  and CO 08-00-06).  The original C0-08  Concession  Agreement  totaled
65,250.8 acres and is located in the Mackenzie District of Nunavut (Figure 1) on
NTS Map 76E/15.  These  concessions  are all  contiguous  except for CO 08-00-01
which is approximately  1-2 kilometers west of the main block,  separated by the
northeast arm of Contwoyto Lake. The approximate  center of the C0-08 Concession
is  about  100   kilometers   south  of  the  Arctic   Circle,   100  kilometers
north-northwest of Lac de Gras, and 380 kilometers NNE of Yellowknife at 65o 49'
23" N, 111 o 13' 08"W. The C0-08 Concession  Agreement is held 50:50 by Benachee
Resources Inc. and Snowpipe  Resources  Ltd. (both wholly owned by Tahera).  The
IOL  concessions  are not  surveyed and there are no known  encumbrances  on the
concessions.  Tahera's  land use  permits  for 2005 are in effect and will cover
proposed exploration work by us.

Committee Bay Greenstone Belt

Our Committee Bay Claims are located 245 to 365 kilometers northeast of the town
of Baker Lake (Qamani'tuaq),  Nunavut,  Canada, or 210 to 320 kilometers west to
southwest  of the town of Repulse  Bay  (Ngoldjat).  The  community  of Kagaaruk
(formerly Pelly Bay) is 190 to 305 kilometers northeast of the claim groups. The
centre of the claim area is approximately 66(degree) 37'N, 92(degree) 00'W.

Our land holdings in the Committee Bay  Greenstone  Belt include 21 claims in 10
claim blocks on NTS (National  Topographic  System) sheets 56 K, 56 J, and 56 O.
These  claims  total  approximately  49,439.48  acres and all were  recorded  on
October 16, 2002. These claims have not been legally surveyed.

Access, Infrastructure, Local Resources

Slave Craton

Access to all the areas in the Slave  Craton is by aircraft.  In summer  months,
float equipped  aircraft can utilize local lakes of  appropriate  size including
Contwoyto Lake,  Napatulik Lake,  Penthouse Lake  (unofficial  name),  and Carat
Lake. In addition  airstrips are available for fixed wing aircraft equipped with
tundra  tires at  Kinross'  Lupin mine site,  Wolfden's  Ulu gold  deposit,  and
Tahera's  Carat  Camp  (Jericho).  Helicopter  support  is  needed  to  mobilize
personnel  to and within  the  property  areas.  The  winter  road  which  links
Yellowknife to the Lupin mine site on Contwoyto Lake has historically  been used
for economical transportation of supplies in winter months.

Tahera's  properties  are  located  in the  treeless  Arctic  within the zone of
permafrost. Vegetation consists primarily of lichen and moss. The weather in the
property areas is typical of the continental  barrenlands  which experience cool
summers and extremely cold winters.  Winter  temperatures  can reach -45 degrees
Celsius  occasionally  accompanied  by high winds  creating  extreme  wind chill
conditions and extensive drifting snow. Summer temperatures are generally in the
5 to 10 degree  Celsius  range but can  reach  the high  20's  degrees  Celsius.
Minimum and maximum  temperatures  recorded  at the  nearest  permanent  weather
stations are -53(0) C at the Lupin mines site, and +32(0) C at  Coppermine.  The
ground  remains  snow covered for more than 250 days a year.  Snow  accumulation
begins in  September  and remains  into June.  Average  annual  snowfall  rarely
exceeds 1 meter,  most of which falls  during  autumn and spring  storms.  Small
lakes are clear of ice  usually  by the third  week in June  (though  ice on the
larger lakes can persist into the middle of July) and start  freezing over again
in late  September.  Wind speeds have been recorded in excess of 100  kilometers
per hour.


                                       8



The topography of the C0-08 Concession  Agreement  consists of low rolling hills
with areas of low-lying  swampy muskeg near  Contwoyto  Lake at the south end of
the  concessions.  Local relief is low, rarely  exceeding 150 meters.  On the C0
20-01-01 Hood River Concession,  there is about 115 meters of relief in the form
of deeply incised  linears and steep cliffs.  The basalt units form  topographic
plateaus,  elevated over the sediments and granitic rocks.  Outcrop density here
is typically 50 - 60%, with the cover consisting of north-trending lakes, grassy
swamps, and boulder-strewn glacial drift.

The  closest  community  with  regularly  scheduled  air  service  is  Kugluktuk
(formerly    Coppermine)   which   is   145   kilometers    northwest   of   the
Anuri/Rockinghorse  concessions  and 200 kilometers  northwest of the Hood River
concessions.  First Air has  scheduled  flights  everyday  from  Yellowknife  to
Kugluktuk.  The main centre for  transportation  to the land holdings is through
Yellowknife,  530 kilometers  southwest of the Hood River  concessions,  and 410
kilometers  southwest of the Contwoyto  concessions.  Fixed wing and  helicopter
charter services are available in Yellowknife,  as are all supplies  (groceries,
lumber, fuel, etc.) and expediting services. The only infrastructure that exists
to service the land holdings includes Tahera's Construction Camp (Jericho site),
the 20 person camp at Tahera's Rockinghorse  property, the 12 person Tahera camp
northwest of the Hood River concession, and possibly the Wolfden camp on the ULU
claim. A limited network of  approximately  3.5 kilometers of roads connects the
airstrip,  camp,  fuel farm,  and Jericho  mine site on the  Jericho  claim area
northwest of Contwoyto Lake.

Committee Bay Greenstone Belt

Access to the claims is by fixed wing  aircraft  equipped with tundra tires able
to land on short natural features such as eskers. Alternatively,  float equipped
planes have the option of landing at some of the larger  lakes  (Laugh land Lake
for  example) or on  sections of the Hayes  River.  The closest  community  with
regularly  scheduled  air service is Baker  Lake,  about 350  kilometers  to the
southwest.  Canadian  North and First Air flights  arrive from  Yellowknife  and
Iqaluit.  Calm Air flies from Winnipeg to Rankin Inlet (Kangiqliniq) and then on
to Baker Lake daily  except  Sundays.  Kivalliq  Air flies  from  Cambridge  Bay
(Qaluktuuttiaq)  to Baker Lake  enroute  to Rankin  Inlet.  Fuel and  expediting
services are available in Baker Lake.  There is no  infrastructure  in the claim
area.

The Committee Bay Greenstone  Belt lies within the zone of permafrost.  The mean
annual  temperature  of -20oC  reflects its Arctic  location  (the Arctic Circle
transects the property area).  The climate is typical of the Eastern Arctic with
average  temperatures in the winter months of -30oC to -35oC, and +10oC to +12oC
in the summer.  The ground  remains  snow  covered for more than 250 days a year
(generally  September to June).  Rivers break up in June and lakes are ice bound
until mid July. In the summer and fall, the temperature differential between the
warm land and the cooler ocean can create fog blankets in low lying areas.  Wind
speeds have been recorded in excess of 100 kilometers per hour.

The project area is on the northern section of the Wager Plateau,  a shield area
that has been significantly modified by glacial processes. Elevations range from
122 meters above sea level in the southwest to 560 meters above sea level in the
northeast.  The Hayes River and its  tributaries  flow  northwest  into Chantrey
Inlet. In the southwest, the Brown River flows into northwestern Hudson Bay. The
Arrowsmith River, to the north, flows into the Gulf of Boothia.


                                       9



Property History

Slave Craton

The following section deals with historic exploration on Tahera's land holdings.
Non  diamond-related  exploration  activities  are emphasized as these relate to
Bay's interest and  exploration  agreement with Tahera.  Specifically,  previous
exploration  work on the Hood  River/High  Lake and Contwoyto Lake land holdings
are detailed as these are deemed to be most prospective for gold.

Hood River/ High Lake Belt

Borealis  Exploration  conducted a field program in 1970 in the "Penthouse" area
(now part of Tahera's Concession CO 20-00-01). The program consisted of mapping,
trenching,  sampling and drilling.  Trenching on the "Penthouse gossan" returned
values up to 1.37 gpt gold, 92.57 gpt silver,  6.48% copper,  and 1.10% lead. An
X-ray sized drillhole drilled under the trench  intersected 1.37 gpt gold, 15.09
gpt silver,  and 0.18% lead over 0.9 meters. The PH 1-13 claims were staked over
this showing and these had lapsed by 1983.

The  Blackridge  area was first  investigated  between 1965 and 1970 by Borealis
Exploration.  Borealis  conducted  an airborne  electromagnetic  ("EM")/magnetic
gamma ray  spectrometer  survey over their  Permit 62 (NTS  76L/15).  The actual
auriferous  zone was  discovered  in 1974 by Long Lac Minerals  during  regional
prospecting  in the  Hood  River  area.  This  showing  is now  within  Tahera's
Concession 20-00-04. A claim was staked here in 1975 and surface grab samples of
6.2 gpt  gold  and 8.4 gpt gold  were  reported.  Noranda  Exploration  Ltd.  is
reported to have done  airborne  geophysics  with follow up ground work in 1981.
Aber Resources Ltd. was the next company to have filed  assessment  work for the
showing,  having staked the  Blackridge  claim in 1983,  along with a contiguous
claim BR1-2. A program of gridding,  geophysical surveys (magnetics and very low
frequency "VLF"),  and drilling (6 holes totalling 199 meters) was undertaken in
1985.  The  principal  mineralized  zone  was  traced  for at least  700  meters
northeast  in a 2.5-3.5  meter  wide  zone  within  gabbro at a  gabbro/sediment
contact.  The highest  surface grades  included a chip sample of 7.5 gpt gold/ 9
meters and the best intersection from drilling was 10.3 gpt gold / 1.07 meters.

Hy-Tech Resources Ltd. conducted an exploration  program in 1988 on the HY 17-19
claims to the west of Aber's  claims.  These claims which  belonged to Expeditor
Resource  Group  Ltd.  were  staked on  January  13,  1988.  The work by Hy Tech
included 113 rock samples and 60 soil samples.  The best value was 610 parts per
billion ("ppb") gold (with 4.3% arsenic) at a volcanic  -sediment contact in the
southeast  corner of historic HY 17. BHP Minerals  Ltd.  evaluated  the HY 17-19
claims  in  an  agreement  with  the  claim  owners  (Consolidated   Envirowaste
Industries  Inc.) in 1992.  Nineteen rock samples and one soil sample was taken.
The best result was 2.87 gpt gold.

BHP  Minerals  Ltd.  staked the CROWN and CROWN 2 claims in 1987  following  the
discovery of auriferous mineralization during reconnaissance traversing. Samples
of  silicified  material  with  mineralization  at a  sediment/volcanic  contact
returned  values to 4 gpt gold.  This "Main  zone" was  traced  for 800  meters.
Further  work on the Crown  claims in 1988 and 1989  included 63  kilometers  of
gridding,  geological  mapping,  rock chip sampling (181 samples),  limited soil
geochemical sampling (4 samples),  55 kilometers of ground magnetics-VLF surveys
and 77.5 meters of trenching.


                                       10



Aber Resources staked the DEN 1 - 16, 19, 20 claims in 1987 to the west of BHP's
CROWN claims.  Covello,  Bryan,  and Associates then staked the JEB 1-3 and FIDO
1-3 claims in 1988 to be  included  in this Aber claim  group.  Work by Covello,
Bryan,  and  Associates  in  1988  included  gridding,   mapping,  sampling  and
geophysics.  High values (up to 15.63 oz/t gold from grab samples) were returned
from these claims  prompting BHP to enter into a joint venture with Aber on this
land package. From 1989 to 1991 BHP drilled 951.87 meters in eighteen drillholes
and took 253 core samples, 1,109 rock samples and 573 soil samples. Along the 55
kilometers of gridding they performed a number of geophysical surveys.

Following  discovery  of the ULU gold  deposit in 1989,  BHP mapped the core ULU
claims  (including part of Tahera's current IOL Concession  20-01-01) at 1:5,000
scale and select areas were mapped at 1:1,000.  Geochemical  surveying  included
humus  and  B  horizon  soil  samples.   A  limited  trenching  program  exposed
mineralisation  in a 45 meter x 15 meter section in the northwest portion of the
main deposit (the "Flood" Zone).  Geophysical surveys over the mineralised zones
included Total Field Magnetics, VLF-EM,  VLF-Resistivity,  Induced Polarisation,
Applied Potential, and Radiometrics.

The 1993 Nunavut Land Claims  Agreement came into effect on April 1, 1999. Under
this agreement the Inuit were granted surface  ownership of about 360,000 square
kilometers of land, of which they have the subsurface  rights for  approximately
37,500 square kilometers.  Nunavut Tungavik  Incorporation ("NTI") is the entity
through  which  these  subsurface  rights are  administered.  The areas that BHP
worked  on in the  Hood  River  (CROWN,  DEN,  FIDO  and  ULU)  were  ultimately
incorporated  into NTI lands, with the exception of the original ULU claim which
was brought to lease by Echo Bay Mines Ltd.

In March,  2003,  Strongbow  Resources  Inc. and Nunavut  Tungavik  Incorporated
announced an agreement whereby Strongbow could explore 604,723 hectares of Inuit
Owned Lands in 28  non-contiguous  parcels within the West  Kitikmeot  region of
Nunavut.  Their IOL  parcel  CO-27  covers  all the south  half of the High Lake
Greenstone  Belt and borders  Tahera's IOL  concession on the east,  south,  and
west.

Contwoyto Formation

Following the discovery of the Lupin Mine on the western shore of Contwoyto Lake
in 1960,  exploration  for  additional  Lupin-style  BIF  hosted  gold  deposits
commenced throughout the Contwoyto Formation.  This resulted in the discovery of
a number of showings  including  Fingers Lake,  Butterfly,  Raft,  (143 gpt gold
surface  grab),  Pan  (34 gpt  gold  surface  grab,  11.31  gpt  gold/3.11meters
trenching),  Musk (8.4 gpt gold/10 meters surface grab), Mud (14.1 gpt gold/15.8
meters),  Esker Lake, Brad (11.3 gpt gold/ 4.82 meters drilling) , Striker (9.39
gpt gold/3 meters surface,  47.3 gpt gold/3.4 meters drilling),  Troy, and Donut
(24.41 gpt gold /3 meters surface  grab).  The bulk of this work was done in two
stages; (i) after the discovery of the "Main Showing" (later to become the Lupin
mine) in 1960 by  Canadian  Nickel  Company;  and (ii) after Echo Bay Mines Ltd.
optioned  the  Lupin  showing  in 1979  and  started  mining  in  1982.  Limited
exploration for BIF hosted gold targets  continued to 1995,  after which much of
the ground was staked over for diamond exploration.

Gold exploration  specific to the Tahera-Bay  agreement on the northeast side of
Contwoyto Lake started in 1962 with Canico  (Canadian  Nickel Company  Limited).
Canico held  Prospecting  Permit 35 which  covered NTS sheets 76E/10 and 76E/15.
From 1962 to 1964 they preformed mapping,  prospecting,  trenching, and airborne
and ground magnetometer surveys.


                                       11



Echo Bay mapped and sampled their C1 - C4 claims on the northeast  border of the
northeastern arm of Contwoyto Lake in 1983, retaining just the C2 claim in 1984.
During  the  course  of  taking 97 grab  samples  on the C2 claim in 1983,  they
discovered the R43-R45 and R44-R47 showings which returned values up to 11.1 gpt
gold.  Limited  follow  up  surface  sampling  in 1984 did not  yield  anomalous
results.  Echo Bay used a syngenetic  gold model at this time, and this sampling
therefore  would  not  have  been  properly  focused  on  important   structural
considerations  (such as quartz veining in fold hinges)  crucial to locating the
gold bearing rock.

Hecla  Mining  optioned  a total  of 33  claims  over  the  northeastern  arm of
Contwoyto  Lake  in 1985  from  Contwoyto  Goldfields.  A  helicopter-borne  EM,
magnetics,  and VLF-EM survey was conducted  over these claims by Dighem Surveys
in  1985.  This  was  followed  in  1986-1989  with  both  ground  and  airborne
geophysics,  surface  mapping and sampling,  geochemical  soil and till surveys,
trenching and diamond drilling. The claims were transferred to Hecla in 1986. In
1986, Hecla investigated 74 of the 363 airborne anomalies. 327 rock samples were
taken and 57 silicate-facies  iron formations were mapped.  Drilling by Hecla on
the 5-5 grid  (currently  within  Tahera's  Contwoyto  Concession  CO  08-00-02)
included eight holes totalling 942 meters in 1987 and four holes totalling 352.9
meters in 1988.

Cominco  performed  sampling,  geophysics,  and  drilling on their Coco 6 and 15
claims from 1988 to 1990. They discovered the Ox showing by surface  sampling in
1988 and this was  followed up by more  sampling  (9.65 gpt gold/ 3 meters chip)
and drilling.  Gold bearing iron formations were intersected (see mineralization
section).

Hecla acquired and merged into Acadia Mineral Ventures Ltd. Acadia and Contwoyto
Goldfields  optioned the main  Contwoyto  property to Kingswood  Ventures Ltd in
1992.  Their  ground  position  covered all of the main gold  showings  known on
Tahera's Contwoyto  Concessions.  Drilling by Hecla in 1987 on the 5-5 land grid
included  8 holes  totalling  942  meters.  All  eight  holes  intersected  iron
formation  with  five  of the  eight  holes  intersecting  sulphide-rich  and/or
siliceous  sulphidic iron formation.  The best intercept was 2.31 gpt gold/ 7.85
meters (6.27 meters true width).

Four short drill holes on the 5-5 grid in 1988 tested a folded iron formation as
outlined by an IP survey.  Diamond drillhole ("DDH") 88-4 tested 225 meters west
of the 2.31 gpt gold/ 7.85 meter  intercept  in DDH 87-6.  DDH 88-4  intercepted
2.88 gpt gold/ 3.9 meters in a pyrite-rich  siliceous iron formation.  Excalibur
International  Consultants  were contracted to perform a review of previous work
on  the  property.  Excalibur  recommended  a  seven-hole  drill  program  after
reviewing the database. Two of the seven drillholes were recommended for the 5-5
grid area which is on Tahera's current concession CO 08-00-02.

Tahera's  predecessors  started exploring the northern Slave Stuctural  Province
for  diamonds  in 1993.  (Tahera  was the result of the  amalgamation  of Lytton
Minerals Ltd and New Indigo  Resources Inc. in 1999.) 4.3 million  hectares were
staked  encompassing a significant  portion of the northern  Slave Craton.  More
than 37,000 till samples and 11,000  square  kilometers  of airborne  geophysics
were collected  since  exploration  commenced in 1993. This work resulted in the
discovery  of 20  kimberlite  bodies on various  Tahera  properties.  Additional
geophysical surveys in 1995-1997 included a helicopter-borne VLF EM and magnetic
survey over a 110 square kilometers in the Contwoyto Lake area. A total of 1,500
square kilometers was covered in a helicopter-borne  survey over the Jericho and
Contwoyto  Lake land  holdings in 1998.  Survey line  spacings were at 50 meters
with a sensor height of 30 meters.


                                       12



Committee Bay Greenstone Belt

The  Committee  Bay  Greenstone  Belt was the  subject  of two  separate  3 year
(2000-2003)   government  TGI.  These  TGIs  are  a  collaboration  between  the
Geological  Survey of Canada,  Canada-Nunavut  Geoscience  Office and university
partners.   The  stated   objective  of  TGI  was  to  increase  the  level  and
cost-effectiveness   of  private  sector   exploration  for  mineral  resources.
Government  work in the Committee Bay Greenstone  Belt included  1:100,000 scale
geologic  mapping,  prospecting,   surficial  mapping,  drift  prospecting,  and
airborne  geophysics.  Airborne magnetic surveys (400 meter flight line spacing)
were  carried  out  within  three  1:250,000-scale  NTS map  sheet  areas  (56K,
56J/9-16, 56O/1-8, and 56P) and released as total field maps in 2002. Quaternary
research  involved  multimedia  sampling for gold and base metals and this drift
prospecting/sampling was carried out between 2001 and 2003.

Following  the  release  of  Heywood's  original  geology  map in 1961,  several
exploration  companies  performed work in the Committee Bay Greenstone Belt. The
nickel copper potential of ultramafic rocks was the primary target of this first
exploration  wave.  King  Resources  staked  400  claims  in the  Committee  Bay
Greenstone Belt (NTS 56I, 56J, 56K, 56O, 56P) in 1969/1970.  They mapped the "A"
claims that year (site of our current "A" claim) and  conducted  trenching,  and
geophysical surveys.  This program outlined several  electromagnetic  conductors
coincident with surface mineralization.  Values up to 0.18% nickel were returned
from trenching.  King Resources also mapped, trenched, and conducted geophysical
surveys on the "E" claims (site of our current "E" claim) and identified several
similar conductors.  The best trench value on the "E" claims was 0.51% nickel on
a 1.46  kilometer  long  conductor.  King Resources also spent time on their "B"
claims  evaluating  a  prospective  rusty  zone of rocks with  disseminated  and
locally massive of pyrite and pyrrhotite with trace chalcopyrite. King Resources
conducted  geophysical  surveys  looking for nickel on the "B" claims in 1969. A
VLF  conductor was outlined  coincident  with rusty zones in  sedimentary  rocks
adjacent to  ultramafic  rocks.  The ground  magnetic  survey  revealed a strong
anomaly  at least  one  kilometer  long.  Mapping  and  trenching  over the zone
produced a high of 0.19% nickel.

Aquitaine  Company staked 347 claims in 56J and 56K in 1970.  This claim package
included  the HAR claims  over the Laugh land Lake  Anorthosite  Suite or LLAS .
Aquitane  preformed  airborne  and ground  geophysical  surveys over the LLAS in
1971. A weak airborne EM response was generated. A sulphide-bearing oxide facies
BIF,  traceable  for 2  kilometers  along  the  northern  border of the LLAS was
drilled  with eight  Winkie  holes  totalling  175 meters in 1971.  Intervals of
pyrite + pyrrhotite +/-  chalcopyrite  were  encountered in the BIF (including 2
meters of massive  pyrrhotite).  The  highest  value was 0.7%  copper,  and 0.2%
nickel.  Gold was not  analyzed.  The  anorthosite  itself  was  apparently  not
drilled.

Cominco undertook general nickel-copper reconnaissance in 1970 and 1974 and more
detailed work in 1975 and 1976. Geologic mapping, ground magnetic and EM surveys
were  conducted  over permit 349 (granted  April 1, 1975) on 56J/13 in the Hayes
River area.  Although  prospective rock units with nickel and copper values were
found, no further follow up was recommended.  Some rock geochemistry was done by
Cominco  on  their  "OX"  grid and  other  sulphide  showings.  The Ox grid is 1
kilometers north of King Resources "A" Claims.


                                       13



In 1986,  Wollex  Exploration  Ltd.  of  Calgary  (division  of  Comaplex)  took
reconnaissance  rock samples  within the current Pickle claims area. The highest
values were 908 ppb gold and 0.5% nickel  from a 13 meter wide  gossanous  shear
zone in a folded  ultramafic flow. No further work was done here by Wollex.  Our
current  three  Pickle  claims  (PICK 1-3) are found  southwest  of the  Central
Tonalite.  This claim area was investigated as Prospecting Permits 1332 and 1333
which were  granted to the  Committee  Bay Joint  Venture  (CBJV) on February 1,
1993.  Reconnaissance sampling by CBJV returned values of 5.77 and 8.61 gpt gold
in  sheared  BIF with  pyrite +  arsenopyrite.  Although  the Pickle 1 claim was
staked in 1995, no follow-up  work was filed.  The IF is 70-100 meters thick and
traceable for 1.5  kilometers.  The gold values are found in sulphidic  sections
(arsenopyrite and pyrite) of the sheared oxide + silicate BIF over a distance of
1.35 kilometers.

In 1992, R.A Olson Consulting Ltd.  ("ROACL")  conducted  reconnaissance  in the
Committee Bay area on behalf of the Committee Bay joint venture (CBJV).  Several
highly anomalous gold values were returned from the 392 rock samples taken, with
a high of 121 gpt gold  (Williamson,  1993).  ROACL preformed  follow-up work in
1993, taking 348 samples, mapping, prospecting.  Higher gold values corresponded
with BIF with quartz  veining  and/or  silicified,  and pyrite + pyrrhotite  +/-
arsenopyrite.  In 1995,  505 rock chip and grab  samples  were taken,  and eight
drillholes  totalling  811.41m  completed  (producing 596 samples core samples).
This work  exclusively  focused on the Bluff 1-7 claims (Hayes River area, 56J),
and the Inuk area further to the northeast. Part of the geological crew was from
Cyprus Canada,  who had entered into the Committee Bay joint  venture.  In 1996,
the CBJV  collected 447 rock samples,  drilled 6 holes  totalling 781 meters (at
Three Bluffs),  and flew a 13,262 line kilometers  detailed  geophysical  survey
(magnetics and VLF).  This survey covered an area between the current KIM claims
over to the Bluff 1-7 claims.  Approximately  CDN$5.4  million was  collectively
spent on the  Committee Bay  Greenstone  Belt between 1992 and 2001 by Committee
Bay North  Ltd.,  Echo Bay Mines Ltd.,  and Apex  Geoscience.  This  exploration
focused on three areas: Laugh land Lake, Hayes River and Curtis River.

Numerous gold  occurrences  were  discovered  by the CBJV on the Laughland  Lake
(56K) 1:250,000 sheet between 1992 and 2001. Initial reconnaissance  sampling by
the CBJV in the now Bay Pickle Claim area  returned  values of 5.77 and 8.61 gpt
gold.

More than 677 rock  samples were taken on two  showings,  "Four Hills" and "Cop"
further to the north.  Gold values  included  highs of 28.02 and 48.07 gpt gold.
Additional work included airborne and ground  geophysical  surveying,  gridding,
and detailed geologic mapping.  Four claims (Cop 1-4) totalling 10,330 acres are
still held here by Apex  Geoscience and Committee Bay North Ltd. CBR completed a
227 kilometer  helicopter-borne Time Domain  Electromagnetic  geophysical survey
over the Four Hills and Cop showings in 2003.

Further to the south,  the CBJV  discovered the Ghost and West Plains  showings.
Gold values to 13.37 gpt gold are found within complexly folded silicate IF. The
Ghost 1 claim was staked here by the CBJV in 1995. Reconnaissance sampling 10 to
15 kilometers  further south by the CBJV in 1992-1994  (within their Prospecting
Permits  1333 and 1484)  returned  values of up to 6.95 gpt gold.  The  Plains 1
claim was staked in 1995.  CBJV  reports  the gold  assays were from high strain
zones in silicate iron formation  with sulfides.  CBR completed a 180 kilometers
helicopter-borne  Time Domain  Electromagnetic  geophysical survey over the West
Plains claims in 2003.

Numerous gold  occurrences were also discovered by the CBJV on the 56J 1:250,000
sheet between 1992 and 2001. These include the Coyote, Ridge, and Bluff group of
showings.  Reconnaissance  sampling in the Coyote area was first done by CBJV in
1995 (within  their Permit 1981) and then again in 1996.  Values to 246 gpt gold
were  returned  from  intensely  sheared  gabbro  with  quartz  veins,  pyrite +
pyrrhotite  +  chalcopyrite  +  visible  gold.  CBR  completed  an 86  kilometer
helicopter-borne geophysical survey over their single Coyote claim in 2003.


                                       14



The Ridge showing was  discovered in 1995 on CBJV's Permit 1771.  Gold values to
2.34 gpt gold were returned from  silicified,  intensely folded oxide + silicate
BIF.  Quartz  veins with up to 10%  disseminated  pyrrhotite  + pyrite are found
within  "Z-shaped" fold noses. The BIFs are traceable on surface for 500 meters,
and on the magnetics for several  kilometers.  Only limited  follow-up  work (11
samples) was done in 1996, and the prospecting  permit was allowed to lapse. The
stratigraphy and structure is similar to the Meadowbank's North Portage deposit.
The showings were recently restaked by CBR with 13 claims (HYR 1-12, and HYR 15,
recorded August 30, 2002). CBR completed a 225 kilometer  helicopter-borne  Time
Domain  Electromagnetic  geophysical  survey  over these  Ridge  claims in 2003.
Recent sampling results to 27 gpt gold.

The  Bluff 1 to 7 Claims  in the Hayes  River  area (56 J) cover  four main gold
showings.  These 7 claims,  totalling  18,077.5 acres, were staked in 1995. They
are now held by Committee Bay North Ltd and have an anniversary  date of October
12,  2005.  Exploration  work  included  rock  chip  sampling,  detailed  ground
magnetics (5 meter x 20 meter  stations),  1:500 scale mapping,  and drilling of
lower  amphibolite-grade,  highly  folded BIF  (oxide,  silicate,  and  sulphide
facies). Surface grab samples returned 26 rock samples greater than 10 gpt gold.
Some visible gold was discovered in chloritic and silicified  oxide IF. The four
main showings are "Three Bluffs", "Antler", "Hayes", and "Ledge."

At Three Bluffs (on the Bluff 3 claim),  the BIF is 10-55  meters wide,  and was
originally  traceable  for at least 1.9  kilometers.  The best chip samples were
6.81 gpt gold /21.00 meters, 11.61 gpt gold/4.80 meters, and 19.04 gpt gold/3.90
meters.  The best results from 12  drillholes  in 1994-1996  included  11.52 gpt
gold/1.89  meters,  8.58 gpt gold/2.55  meters,  and 6.31gpt  gold/4.15  meters.
Follow up drilling here in 2003 included 6 holes totalling 694 meters. This work
extended  the  known  mineralization   approximately  240  meters  and  returned
spectacular  intercepts of 19.93 gpt gold/5 meters,  61.6 gpt gold/4.84  meters,
and 27.41 gpt  gold/9.44  meters.  The iron  formation has now been traced for 6
kilometers  along  strike  and  mineralization  in the  form  of  sulphides  and
silicification is reported to increase towards the northeast (towards our Wrench
claims).  Chip  samples  taken in the central  and eastern  portions of the iron
formation included 11.6 gpt gold/4.8 meters and 19.04 gpt gold/3.9 meters.

Also  in  2003,  a  helicopter-borne  time  domain  electromagnetic  survey  was
undertaken totaling 214.1 line kilometers at 120/60 meter spacing.

Another gold  occurrence on the BLUFF 3 claim is the Ledge showing.  A 10 meters
wide oxide BIF has been traced for 1.2  kilometers.  The best grab sample result
was 21.43 gpt gold from a  pyrrhotite  + pyrite  bearing  sections of the BIF. A
ground magnetic survey in 1996 showed  continuation of the magnetic signature to
the northeast.

The  Antler   showing  is  on  the  BLUFF  2  claim.   Sheared  oxide  BIF  with
sulphide-rich,  silicified  quartz arenite,  is traceable for  approximately 420
meters.  Mineralisation includes quartz veins and brecciated BIF with pyrrhotite
+ pyrite.  A high of 120.82 gpt gold was returned from grab  sampling.  The best
result from the two holes drilled in 1994 was 6.72 gpt gold/0.75 meters.


                                       15



The Hayes showing on BLUFF 1 claim contains a 4-5m wide sulphidic  (pyrrhotite +
pyrite)  BIF with narrow  sheared  and  siliceous  intervals  traceable  for 260
meters.  Rock chip samples  included  11.67 gpt  gold/0.60  meters and 23.38 gpt
gold/0.30 meters.

The CBJV also discovered  several gold showings in the Curtis River area (56 P).
These  included the "Inuk",  "Mist",  and "Koffy"  showings  with gold assays to
1,894  gpt,  31  gpt  and  334  gpt  gold   respectively,   in  BIF.   Shearing,
silicification,  quartz veining, and pyrite plus pyrrhotite are present. Some of
the current  claims were  previously  covered by CBJV Permit  1772.  An airborne
magnetic  survey was completed over these showings in 1996.  Ground  geophysical
surveys (total field magnetic and VLF-EM) and 773.6 meters in six drillholes was
completed  on the Inuk  showing (56 P/7) in 1997. A high value of 12.81 gpt gold
over 4.99 meters was obtained from mineralized iron formation. 5 holes totalling
544 meters of drilling  were  completed  at the Inuk  showing in 2003.  The best
intersection was 16 gpt gold / 12.6 meters. 12.4 line-kilometers of gridding and
3.0 line kilometers of ground  geophysical  surveying (total field magnetics and
VLF-EM) were performed in 1997 over the Mist-Koffy  Grid. Rock samples  returned
values to 12.04 gpt gold. Additional sampling in 2001 included an assay of 31.29
gpt gold.  Surface channel  sampling in 2003 yielded an assay of 334.15 gpt gold
over 0.8 meters.  Three  drillholes  totaling 238.9m were completed at the Koffy
showing in 2003.  The highest  grade  intersection  was 3 gpt gold / 3.4 meters.
Also  in  2003,  a  helicopter-borne  time  domain  electromagnetic  survey  was
undertaken totaling 108 line kilometers.

CBR, a company with  landholding  in the Committee Bay area,  signed a letter of
intent with an affiliate of Gold Fields  Explorations  Ltd in February  2003, to
form a joint  venture,  whereby  Goldfields  Exploration  will earn a 65% equity
position in CBR upon spending US$10 million on exploration over 8 years.

Our five Wrench claims (WREN 1-5) were  previously  within  Prospecting  Permits
1477,  1481,  and 1482  granted to the  Committee  Bay Joint  Venture  (CBJV) on
February 1, 1994.  Reconnaissance sampling by the CBJV in 1993 returned a series
of gold anomalies (high of 3.68 gpt gold) over approximately three kilometers in
sheared  oxide BIF in their  northern part of their BLUFF claim block (BLUFF 7).
The government  aeromagnetic survey shows a continuation of this auriferous iron
formation  for at least  three  kilometers  onto the Wrench  claims.  Government
sampling  in 2001 on this trend  returned  a high of 9.7 gpt gold from  sulphide
bearing (pyrite + pyrrhotite),  quartz-veined intervals of oxide BIF. Additional
kilometer-scale  segments of IF with anomalous  gold are present  further to the
east within the Wrench claim block.

After  their 2004 drill  program,  CBR was able to produce an  inferred  mineral
resource for their Three Bluffs project.

This drilling defined gold mineralization for at least 1km along strike and to a
depth of 320m from surface.  A near surface high grade inferred mineral resource
of 1.9 million  tonnes grading 8.0 gpt gold for 487,000 ounces was defined by 49
drill  holes.  Using a lower  cutoff  grade this  inferred  mineral  resource is
expanded to 5.1 million tonnes grading 4.0 gpt gold for 657,000 ounces.

The  developing  Eastern  Arctic  diamond plays  currently  being explored by De
Beers, BHP-Billiton,  Northern Empire Minerals Ltd., and Stornoway Ventures Ltd.
are to the  northeast  and  southeast  of the  Committee  Bay  Greenstone  Belt.
Impressive  diamond results were returned from the Melville Island  kimberlites.
The Churchill  diamond play north of Rankin Inlet  intersected 11 kimberlites in
their first drill program in the spring/summer of 2003.


                                       16



Geological Setting

Slave Craton

The Slave Structural Province encompasses an elliptical area 500 kilometers wide
by 750 kilometers  long and is located between Great Slave Lake to the south and
Coronation  Gulf to the north.  Rocks within the Slave  Structural  Province are
assigned to three lithotectonic  assemblages  identified as: an early assemblage
of  granitic  rocks,  gneisses  and  quartz  arenites;   Yellowknife  Supergroup
sediments,   volcanic   rocks  and   synvolcanic   intrusions;   and  a  younger
sedimentary-plutonic  assemblage of clastic  sediments and granitic  rocks.  The
distribution of ultramafic  rocks in the Slave is  volumetrically  insignificant
when compared to Archean cratons of a similar age (e.g. the Superior  Province).
Another  significant  difference is the greater  percentage of turbidite domains
within the Slave.

The earliest assemblage includes the ca. 4.03 Ga Acasta gneisses, 2.82 Ga - 3.15
Ga granitoid gneisses as well as a 2.85 Ga quartzite-banded iron formation group
generally  found west of 111(Degree).  The Yellowknife  Supergroup is exposed as
twenty-six  linear  volcanic  belts  surrounded  by granitic  batholiths.  These
volcanic  belts are typically  isoclinally  folded and largely range in age from
2715-2671  Ma.  The  belts  have  been  divided  in the  literature  into  mafic
volcanic-dominated  (Yellowknife  type) and felsic  volcanic-dominated  (Hackett
River  type).  Yellowknife-type  volcanic  belts are  dominated  by  massive  to
pillowed basalt flows with lesser amounts of felsic volcanic and  volcaniclastic
rocks, clastic sedimentary rocks and occasionally  synvolcanic  conglomerate and
carbonate  units.  The Hackett  River-type belts are defined by the abundance of
calc-alkaline   felsic  and  intermediate   volcanic  rocks   intercalated  with
turbidite.  A  late  (2.62  -  2.60  Ga)  volcanic  and  sedimentary  assemblage
consisting of felsic to intermediate volcanic rocks associated with conglomerate
and sandstone  ("Timiskaming-type")  has been  identified  overlying some of the
volcanic belts. A pan-Slave  deformation  event is recorded in all  supracrustal
rocks by the presence of at least greenschist facies mineral assemblages. Higher
metamorphic grades, indicated by the presence of cordierite and andalusite,  are
recognised in some belts.

Granitoid rocks that are coeval with, or postdate the  supracrustal  assemblages
comprise greater than 50% of the Slave Province. Synvolcanic granitoid rocks are
typically tonalites,  diorites, and granodiorites,  and these have been dated at
2.70 to 2.64  Ga.  Late to  post-deformational  granitoids  include  megacrystic
biotite  granodiorite  and two-mica  granites and range in age from 2605 to 2580
Ma.

At least five episodes of  Proterozoic  diabase dyke "swarms" (2400 Ma - 600 Ma)
have  been  recorded  in  the  Slave  Structural  Province.  These  include  the
northeasterly  trending 2.23 Ga Malley dikes, the east-west Mackay suite of 2.21
Ga,  the  north   trending  2.02  Ga  Lac  de  Gras  dikes  (2.02  Ga)  and  the
north-northwest  trending  1.27 Ga  Mackenzie  set.  These  dyke sets form local
positive  relief  where  they  intrude  easily  eroded  lithologies  such as the
metaturbidites  and  negative  relief in areas  where they are  juxtaposed  with
granites and gneisses.

Proterozoic  metasedimentary  cover rocks,  having  limited aerial extent in the
Slave Structural  Province,  are located near Rockinghorse Lake and northeast of
Contwoyto Lake,  straddling the Burnside River, and extending to Bathurst Inlet.
These rocks comprise the Goulburn and Epworth groups and represent  cratonic and
marginal geosynclinal environments and lie unconformably on Archean basement.


                                       17



Committee Bay Greenstone Belt

The Prince Albert Group ("PAG") incorporates a series of Archean aged greenstone
belts that stretch  approximately 600 kilometers northeast from the Aylmer Shear
Zone in the south to the eastern tip of Melville Peninsula in the north. The 300
kilometers  long section  southwest of Committee  Bay is referred to here as the
Committee Bay Greenstone  Belt. This diverse  supracrustal  assemblage  includes
iron formation  (oxide + silicate  facies),  semipelite,  quartzite,  komatiite,
basalt and intermediate to felsic tuffs.  Synvolcanic intrusions include gabbro,
quartz  diorite,  tonalite,  granite and  granodiorite.  An anorthosite  complex
intrudes the sequence  northeast of Laughland Lake. Based on  stratigraphic  and
age  similarities,  the PAG is interpreted  to be correlative  with the Woodburn
Lake Group,  on the order of 100  kilometers  to the  southwest.  The Mary River
Group, 230 kilometers  northeast of the Melville Peninsula on Baffin Island, may
represent the northern continuation of the PAG. The 2.718 to 2.732 Ga age of the
Committee Bay Greenstone  Belt places it in the Timmins (2.70 - 2.725 Ga) to Red
Lake (2.73 - 2.99 Ga) range.

Government  mapping in  conjunction  with the regional  aeromagnetic  survey has
outlined  three  predominant  crustal  domains  in  the  central  Committee  Bay
Greenstone   Belt:   (i)  the  central  domain   comprises   northeast-striking,
tightly-folded, amphibolite-facies supracrustal belts, cored by younger plutons;
(ii) the northern domain comprises high-grade metasedimentary and plutonic rocks
separated from the central domain by  shallowly-dipping,  high-strain zones and;
(iii) the  southeastern  domain  includes a large  northeast-striking  foliated,
K-feldspar-magnetite granodiorite batholith, intrusive into the central domain.

The approximate  supracrustal  stratigraphic  sequence in Committee Bay from the
base up is basalt (~2.73 Ga),  porphyritic  felsic rocks,  komatiite,  and oxide
iron formation  (~2.722 - 2732 Ga),  psammite and quartzite (~2.718 - 2.722 Ga),
intermediate  volcaniclastic  rocks  interlayered  with  psammite and  komatiite
(~2706 - 2711 Ga) and  wacke/semipelite  with oxide iron formation (~<2.706 Ga -
<2.691 Ga). The lower volcanic dominated  supracrustal sequence is intruded by a
2.718 Ga foliated biotite- and hornblende- tonalite called the Central Tonalite.
Other  synvolcanic  intrusions  include  plagioclase  phyric quartz  diorite and
biotite+titanite granodiorite.

The sedimentary sequences of the PAG include siliciclastics rocks, conglomerate,
quartz arenite and iron  formation.  The  siliciclastics  rocks are dominated by
interbedded fine grained, biotite psammite and semi pelite.  Conglomeratic rocks
include  polymictic  matrix-supported  conglomerates  with angular to subrounded
clasts of quartzite, felsic volcanics, and mafic to ultramafic volcanics. Quartz
cobble conglomerates have also been noted. Quartz arenites form prominent ridges
and are well bedded. The deposition of oxide and silicate-facies  iron formation
is  recorded at two major  stratigraphic  horizons  between  2.73 Ga and 2.71 Ga
interbedded  with  semipelitic  rocks as well as quartz  arenite and  komatiite.
Garnet and grunerite are common in the silicate facies,  and magnetite and chert
comprise the oxide facies. Minor sulphide facies iron formation has been noted.

The  komatiite  bodies are  generally  thick  spinifex-textured,  pillowed,  and
cumulate  dominated  peridotitic  flows.  Rare  amount of basalt and  komatiitic
basalt are found  associated with the main komatiite  flows. The total aggregate
thickness  of  komatiite  in the lower  sequence  is on the order of 300  meters
thick.  The  largest  and  best  preserved  exposures  of  komatiite  are to the
northeast of the Central Tonalite, where the sequence is 5 to 10 kilometers wide
and up to 25 kilometers long.  Basaltic rocks include thin chlorite schist units
interlayered  with  oxide and  silicate  iron  formation.  A large  exposure  of
pillowed  and massive  basaltic  flows is exposed  north and east of the Central
Tonalite.  Felsic  volcanic  rocks appear to be confined to  laminated  lapilli,
crystal, and lithic tuff units found associated with komatiite and semipelite.


                                       18



The supracrustal  stratigraphy and associated  synvolcanic plutons were intruded
by  voluminous,  2610-2593 Ma  granodiorite  and tonalite  plutons.  The 2610 Ma
Walker  Lake  intrusive  complex,  a 300  kilometer  long,  northeast  trending,
K-feldspar megacrystic,  biotite-hornblende-magnetite  granodiorite batholith is
found along the belt's  southeastern  margin.  Biotite + titanite  tonalite  and
monzogranite  are also contained within the Walker Lake intrusive  complex.  The
Laughland  Anorthosite Suite is a layered mafic complex of gabbroic  anorthosite
northeast  of  Laughland  Lake.  Mafic  phases  include  gabbroic   anorthosite,
pyroxenite, and layered  gabbro-pyroxenite.  Meter-scale igneous layering occurs
between   anorthosite  and   coarse-grained   plagioclase   megacrystic   gabbro
(gabbroic-anorthosite).  Contacts are poorly exposed,  though  alteration of the
Prince Albert Group along the margins indicates that the LLAS is younger. In NTS
56 0 (northern Committee Bay) biotite- and K-feldspar-granodiorite  intrudes the
upper sedimentary sequence at ~ 2.580 Ga.Younger plutonic intrusions include the
~ 1830 Ma equigranular  biotite + magnetite +/- fluorite  Hudson  monzogranites,
also found along the belt's southeastern margin,  especially in the Laughland to
Walker Lake region.  Laterally  continuous  northeast  trending  quartz-feldspar
porphyry  dykes,  0.5m to 10m wide,  are traceable for hundreds of meters in the
Three  Bluffs  area.  Age  dates  for these  porphyry  dykes  are not  currently
available.

Deposit Types

Slave Craton

Ulu Deposit

The Flood Zone on Wolfden  Resources' ULU claim is approximately  1.2 kilometers
west of Tahera Concession CO 20-00-01's western boundary. It is the best example
of the  target  being  explored  for in the High Lake  area.  The Flood Zone was
estimated  by Echo Bay in their  1998 Ulu  feasibility  study  update  to host a
geological  resource of 1,368,953  tonnes grading 12.91 gpt gold  (approximately
565,000  ounces of gold  between  surface and the 360 meter level) using a 5 gpt
cut-off  grade and a 1.5 meter minimum  mining width  (Wolfden  Resources  Press
Release December 3, 2003).

At  the  Ulu  gold   deposit,   the  Flood   Zone  is  a   southeast   trending,
shear-controlled vein system in basalt at the core of the Ulu anticline. Several
anatsomizing  gold zones  comprise the deposit  which has been traced on surface
for 435 meters,  and ranges in true width from 2.0 to 17.9  meters.  BHP's drill
program  on the Flood  Zone from 1989 - 1992  outlined  a series of  mineralised
zones 320 meters along strike and down to a depth of 620 meters.

Lupin Gold Mine

The Lupin Mine, having produced  3,275,000 ounces of gold at an average grade of
9.5 gpt gold from 1982 to 2003,  is the  largest  example  of the  target in the
Contwoyto area. The stratabound auriferous ores at Lupin are largely confined to
a single  continuous  horizon of amphibolitic  (silicate-facies)  iron formation
which has been traced in excess of 3  kilometers  along strike and more than 1.2
kilometers downdip.

The ore grade  mineralization  is  concentrated  in a distinct  "Z" fold with an
overall strike length of approximately  1.07 kilometers and a downdip projection
of 1.85 kilometers.  This isoclinal "Z"fold plunges 75 - 80 degrees to the north
and is part of a larger  anticlinorium.  The highest  gold  values and  sulphide
concentrations are within 1 meter of quartz vein-iron formation contacts.


                                       19



Committee Bay Greenstone Belt

The Committee Bay Greenstone  Belt is interpreted to correlate with the Woodburn
Lake  Group,  on the order of 100  kilometers  southwest,  which hosts the 3.0 M
ounce gold iron formation hosted Meadowbank  deposit.  The similar Committee Bay
geology is also highly  prospective for BIF hosted gold.  There are several such
showings  already  discovered in the Belt  including  "Three  Bluffs"  (inferred
resources of 5.1 million  tonnes grading 4.0 gpt) and "Inuk" (12.81 gpt gold / 5
meters from  drilling).  Auriferous  iron formations on our claims include those
found on the Wrench, Pickle, NN1, NN2, and Goose claims.

Mineralization

No known  mineral  reserves  are known on our land.  Our  previous  and proposed
programs are exploratory in nature.

Slave Craton

Hood River Property

High  grade  gold  showings  are found  within a 9 by 7  kilometer  block in the
Ulu-Crown-Blackridge area in the west-central portion of the High Lake belt. The
mineralisation  style is best  illustrated  at the Ulu gold  deposit  where gold
occurs in  brecciated  basaltic  wallrock  clasts which are replaced by acicular
arsenopyrite + quartz + K-feldspar.

There is a close spatial  association  of the gold bearing zones on the original
ULU  claims  with the  axial  trace of the ULU  anticline.  Tahera's  Concession
20-01-01  includes the previous  ULU 2 claim which covers the  northernmost  two
kilometers  of this  important  fold  axis.  Several  gold  bearing  zones  were
identified by BHP in this area.  The  exploration  drilling  outside of the main
deposit included drilling on the "Northern Fold Nose" ("NFN") zone, which is now
part of Tahera's land  holdings.  Values of 27.7 and 66.0 gpt gold were obtained
from surface grab samples of a 1 meter wide quartz vein containing arsenopyrite,
pyrite, pyrrhotite, chalcopyrite, and native copper. Highly anomalous silver and
bismuth  were also  returned  from these  samples.  This quartz vein is variably
exposed over 40 meters at the volcanic-sediment  contact on the east limb of the
fold. Two drill holes tested this vein. The first  drillhole  returned 25.63 gpt
gold/1.54 meters (estimated true width of 1.49 meters) at a vertical depth of 60
meters in 1990.  The  second  hole was  drilled  underneath  the first  hole the
following year and intersected  54.94 gpt gold/0.95 meters (estimated true width
of 0.80 meters) at a vertical depth of 95 meters below surface. The vein remains
concordant  to the contact  which  changes  dip from -45 degrees  west at the 60
meter level to 73 degrees west at the 95 meter  level.  This  mineralization  is
open at depth.

Further  mineralized  zones were discovered in the core of the NFN. A gold value
of 176 gpt gold was produced  from narrow  quartz-pyrite  vein rubble taken from
within a northeast  linear.  Coarse  acicular  arsenopyrite  was noted in narrow
shears within silicified basalt just south of the NFN. The best value in this 50
meters x 70 meters  area was 11.7 gpt gold.  This area is within  Tahera's  land
holdings (Concession CO 20-01-01).


                                       20



BHP  outlined  five zones of gold  mineralization  on their  Crown  claims  (now
largely  within  Tahera's  Concessions).  At the  "Main  Zone",  several  highly
anomalous  gold  values  to 24 gpt were  returned  from  along  800  meters of a
silicified  basalt/biotite  schist contact.  In addition to the 24.35 gpt gold /
1.00 meter chip sample,  values of 13.6 and 5.6 gpt gold were returned from grab
samples. Seven trenches were dug in the Main Zone area. Silicified zones up to 6
meters wide with  arsenopyrite  were noted. The best value returned was 14.4 gpt
gold / 0.8 meters.  The "B" zone is parallel  to, and 80 meters east of the Main
Zone.  The  structural  setting   (NE-trending   basalt/sediment   contact)  and
mineralogy  here is similar to the Main Zone.  Gold values  (including  highs of
12.4 and 8.7 gpt gold) are found along 450 meters and the zone is reported  open
to the  north,  gold  values  to 1.8 and 4.6 gpt gold  were  reported  from grab
samples of silicified  basalt and sediments  with  arsenopyrite  in the "Western
Zone."  Anomalous gold values were also reported in the folded  stratigraphy  of
the "Eastern" and "Fold" zone.

To the  immediate  northwest of BHP's  historic  Crown claims are the  Penthouse
showings on the  historic  DEN 16 and 19, and Fido 3 and 6 claims.  The original
sampling for Aber Resources  Ltd. on the Penthouse grid returned  values of 23.9
to 220.1 gpt gold.  The highest  sample taken by Aber here was from a silicified
north-trending shear zone which was discontinuously  traceable for 200 meters on
the south part of their Longspur grid (South  Penthouse).  A northeast  trending
shear,  traceable for 250 meters on the north part of their Longspur grid (North
Penthouse) produced a value of 130.1 gpt gold from narrow (0.1 - 0.5 meter wide)
arsenopyrite  bearing veins.  Several zones of mineralization were identified by
BHP on the Penthouse grid.  Sediment-hosted  mineralization  was found in narrow
intercalations  (1.0 - 4.5 meters  wide)  within  basalt along 750 meters of the
main  western  sediment-basalt  contact on Den 16 and 19. BHP reports  that gold
values  for this style were  "generally  in the 2-10 gpt range with an  isolated
value of 33.1 gpt that came from a massive  arsenopyrite  sample on the southern
Penthouse  grid." The Spent showing is at the south edge of the South  Penthouse
grid. Here a 1 meter wide black quartz vein with fine grained  arsenopyrite  was
traced on surface for 200 meters.  The selvages of the vein were also silicified
up to 30 centimeters and beyond into the host basalt. The best grab samples were
9.6 and 32.0 gpt gold. There is no indication in the assessment reports that the
SPent Zone was  drilled.  Drilling  by BHP on the South  Penthouse  area in 1989
included 235 meters of NQ core in 3 drillholes  testing surface  anomalies to 33
gpt gold. These holes  intersected  silicified  sediment  intercalations  within
basalt. The highest assay value returned from drill core was 1.5 gpt gold.

Four "gopher" drill holes tested  anomalous value on the North Penthouse area in
1989,  gold  values  to 1.97 gpt gold were  returned  from  silicified  sediment
intercalations with 1-7% arsenopyrite.  Feldspar porphyry was intersected in the
last 1989 drill hole and a value of 2.3 gpt gold was returned  from an intensely
silicified  interval at the lower contact of the  porphyry.  BHP mentions a 76.8
gpt gold sample  from North  Penthouse  in their 1992  report.  Five  drillholes
tested  recessive  linears,  anomalous  surface results (to 15 gpt gold) and VLF
conductors  in  1991.  The  best  value  was  7.8  gpt  gold / 0.5  meters  from
sulphide-rich (7% arsenopyrite and pyrite) selvages to quartz veins.

Polymetallic  quartz  veins  became  the focus of  exploration  for BHP in 1990.
Average  gold values  were  reported to range from 2-9 gpt with highs up to 21.2
gpt.  Highly  elevated silver values up to 473 gpt were noted in the galena-rich
samples along with anomalous zinc,  lead,  cadmium,  and antimony  values.  This
style of  mineralization is very similar to the auriferous  polymetallic  quartz
vein at the Northern  Fold Nose on the  historic ULU 2 claim.  The 21.2 gpt gold
sample was from a silicified shear at a basalt-gabbro  contact and contained 10%
acicular arsenopyrite with strong actinolite alteration.  Several other showings
of fine grained acicular  arsenopyrite  mineralization were discovered including
grab samples of 3.29 and 4.28 gpt gold on the North  Penthouse  grid and 9.6 and
20.4 gpt gold along an 80 meter strike on the Southern Penthouse grid.


                                       21



Five  drillholes  totalling  171.5 meters  tested  anomalies on the small FIDO 3
claim  in  1990.  The  majority  of  these  holes  intersected  narrow  zones of
silicification +/- brecciation with up to 5% arsenopyrite + pyrrhotite. The best
value returned from drill core was 1.92 gpt gold.

Massive  sulphide  mineralization  is  present as  discontinuous  pods up to 1.5
meters thick along the western  basalt-sediment  contact on the south  Penthouse
grid.  Values of up 4.8% zinc, 0.5% lead, 0.5% copper, 40 gpt silver and 0.5 gpt
gold were  returned from surface  sampling.  No drilling was carried out on this
showing by BHP, though they noted that it had been trenched by previous workers.
This may be from  Borealis  Exploration's  work in 1970  which  returned  trench
values of 1.37 gpt gold, 92.57 gpt silver, 6.48% copper, and 1.10% lead.

South of the historic Crown claims,  across the southeastern  edge of a granitic
intrusion is the North  Mare/Blackridge  showing  last worked by Aber  Resources
Ltd.  The  mineralization   consists  of  an  altered,  and  locally  brecciated
gabbro-hosted  silicified  zone with up to 20%  arsenopyrite  and 10% pyrite +/-
pyrrhotite.  The principal  mineralized  zone was traced on surface for at least
700 meters  northeast in a 2.5 - 3.5 meter wide zone. The highest surface grades
included a chip sample of 7.5 gpt gold/ 9 meters and the best  intersection from
drilling was 10.3 gpt gold / 1.07 meters.
Contwoyto Property

More than 100 iron  formation-hosted  gold occurrences occur in the Point Lake -
Contwoyto  Lake  meta-sediment  sequence.  The most  notable  gold-bearing  iron
formation in the vicinity is the Lupin gold mine. Mineralization specific to the
Tahera held ground includes a number of significant  iron formation  hosted gold
showings including the R43-R45,  the R44-R47,  the 4-2 grid, the Ox, and the 5-5
grid showings.

The R43-R45  showing is hosted by a Z-shape folded silicate iron formation up to
10 meters wide and  traceable  for over 1.3  kilometers.  A surface  grab sample
returned  4.69 gpt gold,  however  the area is mainly  unsampled.  The  geology,
mineralisation, alteration and structure are extremely similar to the Lupin gold
mine (located just 28 kilometers to the west) where gold  mineralization is in a
"Z" folded iron formation with pyrrhotite and arsenopyrite. The R43-R45 "Z" fold
is of the same magnitude as Lupin. No drilling was reported here.

The R44-R47 showing is hosted by a banded garnet-silicate iron formation up to 5
meters wide and  traceable on surface for 1.9  kilometers.  The best gold values
returned from surface sampling have been 2.98 and 11.1 gpt gold. No drilling was
reported here.

Siliceous and  sulphide-rich  boulders of iron  formation up to 2 meters in size
were traced on surface  for 200 meters on Helca's 4-2 grid.  The best gold assay
was 14.7 gpt gold. No follow-up drilling appears to have been done.

Cominco's Ox showing was discovered by surface sampling in 1988 on the lakeshore
along the northern  boundary of the historic Coco 6 claim. This area is now part
of Tahera's IOL concession CO 08-00-05.  The initial  sampling of iron formation
produced  values of 3.29 gpt gold/ 4.0 meters.  Follow up chip  sampling in 1990
returned  a value of 9.65 gpt  gold/ 3 meters  from a  pyrrhotite-rich  boulder.
DDH-CC-89-4 was drilled underneath the showing and intersected two separate iron
formation  horizons 8.2 meters apart. The upper iron formation  assayed 2.12 gpt
gold/ 2.02 meters. The lower iron formation averaged 2.4 gpt gold/ 1.81 meters.


                                       22



Several 080-0900 trending,  300 - 2700 meters long EM conductors were identified
on Hecla Grid 5-5. A total of six iron formations were identified  here, four of
which were  coincident  with the EM  conductors.  Sulphide rich boulders of iron
formation at the  southwest  section of Grid 5-5 yielded  values to 28 gpt gold.
The "Fox A" Canico showing is also within the Hecla 5-5 Grid area. Here the iron
formation is 33 meters wide and 220 meters long and  returned  values to 5.1 gpt
gold.  Camico's  "Grid 60" covered the shoreline on the west end of Hecla's Grid
5-5.  A  pyrite-bearing  amphibolite  iron  formation  sample  on the  shore  of
Contwoyto Lake assayed 11.0 gpt gold. This amphibolite unit trends westward into
the lake.

Drilling by Hecla in 1987 on the 5-5 land grid  included 8 holes  totalling  942
meters.  All eight holes intersected iron formation with five of the eight holes
intersecting  sulphide-rich and/or siliceous sulphidic iron formation.  The best
intercept was 2.31 gpt gold/ 7.85 meters (6.27 meters true width) from a section
of 15% pyrite +/-  arsenopyrite  and pyrrhotite in DDH 87-6.  Drillhole 87-15 is
reported  to have  tested  30  meters  below  this  intercept  and only a narrow
interval of iron formation was encountered.  Faulting was interpreted to explain
the  change.  DDH  87-8  was  collared  close  to the  baseline  at L 9+00E  and
intersected  25.57  gpt  gold/0.30  meters  in  garnet-bearing   siliceous  iron
formation with <5% pyrrhotite. Several other intervals of iron formation, <1.0 -
5.5 meters  wide were  intersected  in this hole.  The  surface  samples  values
targeted for each drillhole were not explicitly given, although a value of 20.81
gpt gold was noted from surface sampling of a sulphidic siliceous iron formation
35 meters south of the collar for DDH 87-17. An 11.73 gpt gold surface  sampling
value within  sulphidic iron formation was located  approximately 75 meters east
of the collar for DDH 87-17 and may have been the target of DDH 88-3.

Four short drill holes on the 5-5 grid in 1988 tested a folded iron formation as
outlined by an IP survey.  DDH 88-4 tested 225 meters west of the 2.31 gpt gold/
7.85m  intercept  in DDH  87-6.  DDH 88-4  intercepted  2.88 gpt  gold/  3.9m in
pyrite-rich  siliceous  iron  formation.  DDH 88-3  tested  an area  370  meters
southeast  of the 28 gpt gold  surface  sample  and  intersected  5.9  meters of
siliceous and  garnet-bearing  iron formation  with 1-2% pyrite.  The bottom 1.7
meters of this unit  contained  20% pyrite and assayed 4.2 gpt gold /1.7 meters.
The actual high grade surface showing (28 gpt gold in  arsenopyrite  and quartz-
rich iron formation boulders) was apparently not drilled.  DDH 88-5 tested still
further to the southeast  (several  hundred meters away).  Three iron formations
were intersected and the uppermost unit returned 2.07 gpt gold / 0.9 meters from
a pyritiferous upper contact. DDH 88-2 intersected six horizons of siliceous +/-
sulphidic iron formation  ranging from 5.7 to 15.0 meters thick.  The best value
was 3.2gpt gold/1.4 meters.


Committee Bay Greenstone Belt

The Committee Bay Greenstone Belt is prospective for a number of mineral deposit
types  including  BIF hosted  gold,  shear-hosted  lode gold,  komatiite  hosted
stratiform  nickel-copper  (Kambalda  analogy),  and  PGEs  in  layered  igneous
complexes.

Examples  of  iron  formation  hosted  gold  include  our  Wrench  claims  where
government  sampling  in 2001  returned  a high of 9.7 gpt  gold  from  sulphide
bearing  (pyrite +  pyrrhotite),  quartz-veined  intervals  of oxide  BIF.  This
section   of  iron   formation   is  over  6.5   kilometers   long.   Additional
kilometer-scale  segments  of IF with  anomalous  gold  (200  -390 ppb gold) are
present further to the east within the Wrench claim block.


                                       23



Other iron formation hosted gold examples include  mineralisation  on our Pickle
claims. The IF here is 70-100 meters thick and traceable for 1.5 kilometers. The
gold values are found in sulphide rich sections (arsenopyrite and pyrite) of the
sheared  oxide + silicate  BIF over a distance of 1.35  kilometers.  In addition
gold values in iron formation are also found on our NN1 and NN2 claims.

An example of shear-hosted gold in the belt is CBR's Coyote showing where values
to 246 gpt gold were returned from  intensely  sheared gabbro with quartz veins,
pyrite + pyrrhotite + chalcopyrite  + visible gold.  The hosting  structure is a
splay off the  east-west  Walker  Lake Shear Zone and is a classic  setting  for
shear-hosted  gold. We have a claim on either side of the Coyote claim  showing.
Another  shear-hosted  target is our Goose  Claims where a value of 1.6 gpt gold
was reported in a folded  sequence of sheared  mafic and  ultramafic  volcanics.
Sulphides (pyrrhotite + arsenopyrite + pyrite) are found with oxide +/- silicate
BIF, and quartz veins.  The  stratigraphy and structure has parallels to the Red
Lake camp.

Komatiite hosted  (Kabalda-style) nickel potential exists on our three EE claims
(EE 1-3).  These claims  cover  nickel  values from 0.2% to 0.5% spread over 930
meters of a contact between a thick  ultramafic body and sediments.  The highest
copper value was 0.2%. A second ultramafic/sediment  contact on the western edge
of the western E claim also has anomalous  nickel over a similar  strike length.
The folded  stratigraphy in the centre of the EE claim block is also prospective
for gold (samples to 200 ppb).

The Laughland Lake  Anorthosite  Suite  ("LLAS") has good PGE  potential.  Rusty
zones  defined by sulphide  gossans of up to 100 meters wide and 500 meters long
have been  reported  in this  area.  Values  to 185 ppb Pt, 41 ppb Pd,  1530 ppm
nickel, and 1.35% copper have originated from these zones.

Exploration

As a result of the level of the 2004 exploration  program, no field work will be
undertaken in calendar 2005.  Work will be limited to further  assessment of the
2004 results and planning the 2006 season.

Slave Craton

The first  phase of the  planned  exploration  programs  over the Hood River and
Contwoyto  IOL claim  groups was  carried out in August  2004 and  consisted  of
exploration mapping, sampling and prospecting. This initial program was outlined
to follow  up and  assess  geophysical  and  geological  anomalies  reported  by
previous workers with a focus on targeting areas for phase two work.

As a result of the 2004 field  season,  several  areas have  emerged as having a
strong  potential for gold based on  geological,  mineralogical  and  structural
criteria  and as  such  require  further  examination.  A  program  of  detailed
structural  mapping is recommended in order to understand the complex structural
environment. Further work should include detailed sampling and ground geophysics
over key  anomalous  areas  with a follow up drill  program.  BHP  Minerals  Ltd
discovered the ULU deposit through a similar approach.


                                       24



Hood River IOL Concessions

Bay Resources completed a total of $104,446 of qualifying assessment work on the
Hood River IOL Cocessions. This work was filed by Tahera. Four key areas warrant
further investigation.


Northern Fold Nose ( CO20-01-01)

This zone is located  approximately 3 kilometers north of the ULU deposit and is
thought to be part of the major fold structure which hosts the ULU deposit.

Further  mineralized zones were discovered in the core of the Northern Fold Nose
than  previously  described.  Acicular  arsenopyite  was noted in narrow  shears
within  silicified basalt just south of the Northern Fold Nose. Chip sampling of
the  exposed  veins  during the 2004 field  season  yielded  several  samples of
anomalous gold values. A relationship between arsenic and gold is observed. Gold
values  obtained from this work ranged from 22.9 gpt to 495 ppb.  Speculation is
that the asymmetry of the fold  produced a pressure  shadow on the east limb and
later hydrothermal fluids concentrated in this area.

Penthouse (CO20-00-01)

The  Penthouse  claims are covered by  Tahera's  concession  CO20-00-01  and are
underlain by a geologically  and  structurally  complex package of rocks.  Mafic
volcanic and metasediments underlie the area.

The sediments are thought to form the conduit for mineralizing fluids.  Gabbroic
sills  occur  within  the the mafic  volcanics  and  sediments  and form  marker
horizons outlining the structural complexity of the area.

A total of 65 samples  were taken in the North  Penthouse  area with gold values
ranging from 0.98 gpt to 12.82 gpt in chip and grab  samples.  A total of 36 per
cent of samples taken from this area yielded anomalous assays.

A total of 53 samples were taken from the South  Penthouse area with 15 per cent
returning  anomalous  values.   These  samples  yielded  the  same  arsenic-gold
relationship with values ranging from 1.95 gpt to a high of 30.32 gpt.

The Crown Trenches and East Crown (CO20-00-01)

The Crown `Main Zone' is located in the southern portion of Tahera's  concession
CO20-00-01. It is comprised of a 800 meter contact zone of silicified basalt and
biotite schist contact.  Gold  mineralization is associated with  silicification
+/-chloritization  alteration assemblage with disseminated to massive,  anhedral
to euhedral arsenopyrite +/- pyrrhotite +/- pyrite. Seven trenches were dug into
this contact.

The 2004 field work  consisted  largely of  resampling  of the  trenches in this
area.  A total of 60, 1.0 meter to 1.5 meter chip  samples were taken from these
trenches.  Results  returned  gold  values from 5.78 gpt to 0.51 gpt with 32 per
cent of the samples returning anomalous results.

East of the  trenches  several  anomalous  zones  were  located  with a new zone
extending  off the  claims and to the north for over 1  kilometer.  This zone is
roughly  parallel  to the Crown  trench  area and may perhaps be part of a large
scale folded stratigraphy.


                                       25



A total of 30 samples were taken on the East portion of the Crown area. The gold
values ranged from 2.75 gpt to 0.02 gpt.

Blackridge area  (CO20-00-04-CO20-00-03A)

The main showing occurs along a gabbro-sediment  contact.  A linear  mineralized
contact zone was traced over 750 meters.

Anomalous  results were returned from siliceous  metavolcanics and metasediments
with   the   highest   values   returned   from   trenches   cut   into   gabrro
metavolcanic/metasediment  contact.  A total of 39 samples  were taken from this
area with  values  ranging  from  37.78 gpt gold,  21.58 gpt gold to lows in the
vicinity  of 2.5 gpt  gold.  Elevated  copper  values  were  also  noted and the
persistent  relationship between arsenic and gold held in this sampling. A total
of 40 per cent of the samples taken returned anomalous values.  Overall the 2004
results were an  improvement  over the historical  results  reported as 2.87 gpt
gold and 10.3 gpt gold over 1.07 meters.

Contwoyto IOL Concessions

Bay  completed  a total of  CDN$109,057  of  qualifying  assessment  work on the
Contwoyto  IOL  Cocessions.  This work was filed by Tahera.  Some key areas that
warrant further investigation include:

Norma Fault Area ( Co-08-00-01)

The  geology  consists  of a  package  of  sedimentary  rocks  belonging  to the
Contwoyto  Formation  with minor Ichen  Formation  rocks located  largely on the
northwest shore of the northeast arm of Contwoyto  Lake.  These rocks are appear
as well bedded turbiditic sequences with amphibolitized iron rich sediments

A moderate to well mineralized  silicate facies iron formation zone was found on
the  western  edge of the claim  block and  traced  over 800  meters.  This zone
consisted  of  narrow  bands +/- 50 cm to 1.0 meter  wide  mineralized  silicate
facies iron formation  containing very find grained pyrrhotite,  pyrite and rare
chalcopyrite at the contact with a gabbroic sill.

Grid 5-5 Area ( Co-08-00-02 )

Prospecting  in the  area of grid 5-5 on the  southeast  shore of the arm in the
vicinity  revealed  the area to be  underlain  by a package  of  amphibole  rich
silicate  facies iron  formations,  interbedded  with a well  banded  turbiditic
sequence of biotite felpspar rich +/- cordiertite/ andalusite sediments. Grey to
clear quartz  sweats and veining were  observed  conformable  to bedding.  These
sediments were typically  magnetite  poor however a strong  magnetic  effect was
experience  in the center of the zone  during  mapping.  This  package  has been
folded asymmetrically with soft sediment folding exhibited within the individual
beds. A fold closure to the south was observed in outcrop. Geophysical anomalies
indicate  fold zones  trending off shore into the lake  proximal to the Grid 5-5
zone.

This area  produced  the best gold  results in the  Contwoyto  concessions  with
values ranging from 1.5 to 6.98 gpt gold from the iron formation.


                                       26



Ox Area( Co-08-00-05 )

The north end of the claim block is underlain by a sulphide poor silicate facies
iron  formation 100 meters wide and extending  over 150 meters to the northeast.
To  the  north  of  the   claim   block   interbeds   of   turbidites,   biotite
schists/greywacke  and coarse to fine grained  heavily  oxidized  amphipobilite.
Mineralization   is  largely  fine  grained   pyrite,   pyrrhotite   with  minor
chalcopyrite  and  rare  malachite,  in  trace  to  5  percent  abundance.   The
mineralization  is finely  disseminated  as well as locally  concentrated  along
planes of  schistosity.  Structurally  the area consists of tightly folded units
with minor quartz veining  crosscutting  and conformable to bedding planes.  The
sampling  program on the Ox grid fold zone  yielded  consistent  anomalous  gold
values.

Committee Bay Greenstone Belt

A total of CDN$1.567 million was spent on our Committee Bay Greenstone Belt 2004
program.  A large  portion  of the  expense  went to  establishing  a  re-usable
base-camp  into  this  fairly  remote  location.  All  field,  office,  and camp
supplies,  as well as fuel,  was flown in.  As well all  field  activities  were
helicopter supported.

Between  June  2004  and  early  September  2004,  a  regional,  grassroots-type
prospecting/mapping  program was undertaken to explore all of our mineral claims
in the Committee Bay  Greenstone  Belt.  Each of our 21 claims hold  significant
promise of a mineral  deposit.  In some  localities  outcrop was not abundant or
observed  however,  many of the claim sites were selected to cover key anomalies
identified from the government regional airborne magnetic survey.

A total of 1,476 rock samples were removed and analysed  from the 21 claims.  In
addition,  a small soil grid was  established  on the Wrench claims and 658 soil
samples were  collected.  Anomalous to ore grade gold was returned from sampling
on several of the claim  areas.  Of  particular  note were the results  from the
Wrench claims which cover an area adjacent to the CBR's Three Bluffs deposit and
were found to hold identical structures and lithologies.  Sampling along exposed
BIF produced high gold values of up to 100.45 gpt gold and anomalous values were
returned from a 1.5 kilometer strike length of the target horizon.

Our exploration program began in late May 2004 with a geophysical program on the
Wrench claims. This is covered in the "Geophysical Surveys" section.

Geophysical Surveys

Committee Bay Greenstone Belt- Wrench Claims

An  eighty  six line  grid was  established  over the  Wrench  Claims  by Aurora
Geosciences Ltd of Yellowknife,  NT. Grid point control was  accomplished  using
GPS technology. Lines were turned off the base line on one hundred metre centres
and in total the grid was comprised of 176.46 line kilometres. Subsequently, two
geophysical surveys were undertaken.  Total field magnetic surveying was carried
out  with   readings   obtained  at  6.25  metre   stations.   Horizontal   loop
electromagnetic  (H.L.E.M.)  surveying  was also  undertaken.  Readings for this
survey were spaced at twenty five metre intervals.

The Wrench claim group comprise five contiguous  claims  covering  approximately
4,900 hectares. The claims are underlain by metasediments and over 10 kilometers
of strike length of a folded and faulted BIF. A government  aeromagnetic  survey
confirms that the signature of the Wrench iron  formation is directly  connected
with and along  strike of CBR's  Three  Bluffs high grade iron  formation  (45.4
grams per tonne ("gpt") gold over 6.9 meters) discovered in 2003.


                                       27



The geophysical  program served a number of purposes.  The magnetics  accurately
trace the iron formation and delineate important structural  information such as
faulting  and  folding.  The HLEM  component  highlights  where  the  conductive
pyrrhotite-rich  sections of the iron formation are and, in conjunction with the
magnetics, may define trenching and drill targets.

The magnetic  survey  outlined a strong,  six kilometre long  northeast-trending
magnetic anomaly along the western half of the grid. In the southeastern portion
of the grid, two additional strong, parallel,  magnetic anomalies were recorded.
The H.L.E.M.  survey outlined 17 distinct conductive  trends/anomalies,  most of
which are coincident with, or flank very strong magnetic features.

Field  verification  of the  magnetic  anomalies  indicates  that  the  magnetic
anomalies are a result of the presence of BIF units that underlie the grid.

Further Exploration

Slave Craton

A  program  of  detailed  mapping  and  sampling  along  with  selective  ground
geophysical surveys has been recommended for the second phase of the exploration
on the Tahera claims.

After the 2004 program the IOL  concession  area at Contwoyto  was  dramatically
reduced down from 65,250.8 acres to 21,533.1 acres.  All prospective  ground was
retained.  The area reduction was done in conjunction  with Tahera and it served
to also greatly  reduce the amount of exploration  requirement  for this area. A
program of  approximately  $63,300 would be required to maintain the ground into
2006.

A small  portion  of the Hood River IOL  Concession  area was  reduced  with all
prospective ground retained for further exploration. Currently Bay Resources has
no required 2005 spending  commitments to maintain this ground however, the Hood
River area contains many of the most  prospective gold targets which will be the
subject of future exploration.

Committee Bay Greenstone Belt

With the large  assessment  credit excess from the 2004 program,  our claims are
secure for several years with no spending requirements,  however due to the gold
potential  and interest in the Committee Bay  Greenstone  Belt,  further work is
planned.

Future exploration programs will involve further geophysical  surveys,  mapping,
prospecting, sampling, and drilling. Identifying and defining drill targets will
be the primary  objective.  Given the high grade results (61.6 gpt gold / 4.84m,
and 27.41 gpt gold / 9.44m)  from CBR's  recent  drilling  on the Three  Bluff's
showing, on strike to the southeast, our Wrench showing (values to 100 gpt gold)
is a possible  drill  target.  The thick  sequence  of sheared BIF with pyrite +
arsenopyrite on the Pickle claims also represents an excellent drill target.


                                       28



Employees

We  have a Vice  President  Exploration  and  Chief  Operating  Officer  who are
full-time  employees.  We also use  casual  employees  in our field  exploration
program. The services of our Chief Executive Officer and Chief Financial Officer
as well as clerical  employees are provided to us on a part-time  basis pursuant
to a Service Agreement dated November 25, 1988 (the "Service  Agreement") by and
between AXIS  Consultants  Pty Limited and ourselves.  AXIS also provides office
facilities,  equipment,  administration  and  clerical  services  to the Company
pursuant to the Service  Agreement.  The Service  Agreement may be terminated by
written notice from the parties thereto.

Further detail relating to additional terms of the Service Agreement is included
in  "Item  2-  Properties",   "Item  13-  Certain   Relationships   and  Related
Transactions" and "Item 11- Executive Compensation".

Canadian Governmental and Environmental Regulation

The mining industry in the Nunavut Territory,  where our exploration  properties
are  situated,  operates  under  Canadian  federal and  territorial  legislation
governing  prospecting,   development,   production,  environmental  protection,
exports,  income  taxes,  labor  standards,  mine safety and other  matters.  We
believe our Canadian  operations  are operating in substantial  compliance  with
applicable law.

Our exploration  works is subject to environmental  regulation  primarily by the
Federal  Department of Indian Affairs and Northern  Development  and the Nunavut
Water Board. The Department of Fisheries & Oceans (Canada) and the Department of
the Environment  (Canada) have an enforcement role in the event of environmental
incidents,  but  presently  have no direct  regulatory  role in  relation to our
exploration activity.

On April 1, 1999, the Nunavut Land Claims Agreement, dated May 28, 1993, between
the Inuit of Canada's  eastern  arctic region and Her Majesty the Queen in right
of Canada,  came into  force.  Under  this  agreement,  the Inuit  were  granted
ownership of approximately 360,000 square kilometers of land in an area referred
to as the Nunavut Settlement Area,  including  ownership of subsurface rights in
approximately  37,500 square kilometers of those lands. Third party interests in
lands in the  Nunavut  Settlement  Area  created  prior  to  April  1,  1999 are
protected  under the  Nunavut  Land  Claims  Agreement.  Where a third party was
granted a mining lease under the Canada Mining  Regulations in lands  comprising
the Nunavut  Settlement  Area,  that interest  continues in accordance  with the
terms and conditions on which it was granted, including any rights granted under
the  legislation  that give rise to the interest.  However,  where any successor
legislation  has the effect of  diminishing  the rights  afforded to the federal
government,  it will not bind the  Inuit  without  its  consent.  The  Inuit are
entitled to receive whatever  compensation is payable by the interest holder for
the use of exploitation of mineral rights. The federal  government  continues to
administer  the third party  interest  on behalf of the Inuit,  unless the third
party and the Inuit enter into an  agreement  under which the third party agrees
to the  administration  of their  interest  by the  Inuit.  In the event such an
agreement  is reached,  the  applicable  legislation  will cease to apply to the
third  party  interest.  Subsurface  interests  in  such  lands  continue  to be
administered  in  accordance  with  applicable  legislation  relating  to  those
interests and are not affected by the Nunavut Land Claims Agreement.


                                       29



Third party  interests  in lands in the Nunavut  Settlement  Area  created on or
after  April  1,  1999  are  granted,  in the  case of  surface  rights,  by the
appropriate regional Inuit association and, in the case of subsurface rights, by
Nunavut Tungavik  Incorporated.  Which will hold subsurface title to Inuit owned
lands and will be additionally responsible, in consultation with the appropriate
regional  Inuit  associations,  for the  administration  and management of those
subsurface rights.

Risk Factors

Risks of Our Business

We Lack an Operating  History And Have Losses  Which We Expect To Continue  Into
the Future.

To date we have no source of revenue.  We have no operating history as a mineral
exploration  or mining company upon which an evaluation of our future success or
failure  can be made.  Our  ability to achieve and  maintain  profitability  and
positive cash flow is dependent upon:

     -    exploration  and  development  of the property  covered by our mineral
          claims;

     -    our  ability to locate  economically  viable  mineral  reserves in the
          property covered by our mineral claims;

     -    our ability to raise the capital necessary to conduct  exploration and
          preserve our interest in the mineral claims,  increase our interest in
          the mineral claims and continue as an exploration  and mining company;
          and

     -    our ability to generate revenues and profitably  operate a mine on the
          property covered by our mineral claims.


We Have No Known Gold Or Other Mineral Reserves And We Cannot Assure You That We
Will Find Such Reserves. If We Develop A Gold Or Other Mineral Reserve, There Is
No Guarantee That Production Will Be Profitable.

We have not  identified  any gold or other  commercial  mineral  reserves on the
properties  covered by our mineral  claims and we cannot  guarantee we will ever
find any. Even if we find a gold or other commercial minerals reserve,  there is
no assurance that we will be able to mine them. Even if we develop a mine, there
is no  assurance  that we will  make a  profit.  If we do not find gold or other
commercial minerals you could loose part or all of your investment.

We Will  Need  Additional  Financing  To  Determine  If  There  Is Gold Or Other
Commercial Minerals And To Maintain The Mineral Claims.

Our success will depend on our ability to raise additional  capital. We have met
our legal exploration commitments until 2012. However, at this time, we have not
found a gold deposit and further exploration is required.  There is no assurance
whatsoever  that funds will be available from any source or, if available,  that
they can be obtained on terms  acceptable  to us to make these  investments.  If
funds are not available in the amounts required to maintain an interest, we will
be unable to proceed  further on the Committee Bay properties and our operations
would be severely limited,  and we would be unable to reach our objective.  This
could cause the loss of all or part of your investment.


                                       30



The Report Of Our  Independent  Registered  Public  Accounting  Firm Contains An
Explanatory Paragraph Questioning Our Ability To Continue As A Going Concern.

The  report  of  our  independent  registered  public  accounting  firm  on  our
consolidated  financial  statements  as of June 30, 2005 and for the years ended
June 30, 2005 and 2004 and for the period July 1, 2002 (inception of exploration
stage) through June 30, 2005 includes an explanatory  paragraph  questioning our
ability to continue as a going concern.  This  paragraph  indicates that we have
not yet commenced  revenue  producing  operations and have a retained deficit of
A$31,406,000  which  conditions  raise  substantial  doubt  about our ability to
continue  as a going  concern.  Our  consolidated  financial  statements  do not
include any adjustment that might result from the outcome of this uncertainty.

We Are A Small Operation And Do Not Have Significant Capital.

Because we will have limited working capital, we must limit our exploration.  If
we are unable to raise the capital required to undertake  adequate  exploration,
we may not find gold or other  commercial  minerals even though our property may
contain  gold or other  commercial  minerals.  If we do not  find  gold or other
commercial  minerals we may be forced to cease  operations and you may lose your
entire investment.

We May Not Find Any Ore Reserves That Are Economical

If we are unable to raise the  required  capital or we do not find gold or other
commercial  minerals  on the  properties  or we cannot  remove the gold or other
commercial  minerals  discovered  economically,  we may have to look  for  other
mineral  rights  on other  properties  in Canada  or other  parts of the  world.
Alternatively,  we may cease operations  altogether and you may lose your entire
investment.

Weather  Interruptions In Nunavet May Affect And Delay Our Proposed  Exploration
Operations.

We can only work above ground at our mineral claims in Nunavet, Canada from late
May until early October of each year. Once we are able to work  underground,  we
plan to conduct our exploration year round, however, it is possible that snow or
rain could cause roads leading to our claims to be impassible. This could impair
our  ability  to meet our  objectives  and may  increase  our costs  beyond  our
ability, if any, to secure financing,  which would adversely affect the value of
your investment and our ability to carry on business.

If Our  Officers  And  Directors  Stopped  Working For Us, We Would Be Adversely
Impacted.

Our Vice President  Exploration  and Chief  Operating  Officer are employed on a
full time  employment  contract.  Other than these  officers,  none of our other
officers or directors work for us on a full-time  basis.  There are no proposals
or definitive arrangements to compensate our officers and directors or to engage
them on a  full-time  basis.  They each  rely on other  business  activities  to
support  themselves.  They each have a  conflict  of  interest  in that they are
officers  and  directors of other  companies.  You must rely on their skills and
experience  in  order  for us to  reach  our  objective.  We have no  employment
agreements or key man life insurance  policy on any of them. The loss of some or
all of these officers and directors could adversely  affect our ability to carry
on  business  and could  cause you to loose part or all of your  investment.


                                       31



We Could Encounter Delays Due To Regulatory And Permitting Delays.

We could face delays in obtaining mining permits and environmental permits. Such
delays, could jeopardize financing, if any, in which case we would have to delay
or abandon work on the properties.

Gold Price Fluctuations.

If we are successful in developing a gold ore reserve,  our ability to raise the
money to put it into  production and operate it at a profit will be dependant on
the then  existing  market price of gold.  Declines in the market prices of gold
may  render  reserves  containing  relatively  low grades of ore  uneconomic  to
exploit,  and we may be  required to  discontinue  exploration,  development  or
mining on the properties,  or write down our assets. If the price of gold is too
low we will not be able to raise the money or  produce  any  revenue.  We cannot
predict the future market price of gold. A sustained decline in the market price
of gold could cause a reduction in the value of your investment and you may lose
all or part of your  investment.  However,  in  September  2005,  the gold price
reached an 18 year high.

There Are  Uncertainties  Inherent In The  Estimation  Of Gold Or Other  Mineral
Reserves.

Based upon our preliminary study of the properties we believe that the potential
for  discovering  gold reserves  exists,  but we have not  identified  such gold
reserves and we are not able to estimate the probability of finding  recoverable
gold  ore.  Such  estimates  cannot be  calculated  from the  current  available
information.  Reserve  estimates,  including the economic  recovery of gold ore,
will require us to make assumptions about recovery costs and gold market prices.
Reserve  estimation is, by its nature,  an imprecise and subjective  process and
the accuracy of such  estimates  is a function of the quality of available  data
and of engineering and geological  interpretation,  judgment and experience. The
economic  feasibility of the properties  will be based upon our estimates of the
size and grade of ore  reserves,  metallurgical  recoveries,  production  rates,
capital and operating costs, and the future price of gold. If such estimates are
incorrect  or vary  substantially  it could  effect  our  ability  to develop an
economical mine and would reduce the value of your investment.

If We Define An Economic Ore Reserve And Achieve Production,  It Will Decline In
The Future. An Ore Reserve Is A Wasting Asset.

Our future ore reserve and  production,  if any, will decline as a result of the
exhaustion of reserves and possible closure of any mine that might be developed.
Eventually,  at  some  unknown  time  in the  future,  all  of the  economically
extractable  ore will be removed from the  properties,  and there will be no ore
remaining. This is called depletion of reserves.  Ultimately, we must acquire or
operate  other  properties  in order to  continue as an on going  business.  Our
success in continuing to develop reserves, if any, will affect the value of your
investment.

There Are Significant Risks Associated With Mining Activities.

The  mining  business  is  generally  subject  to risks and  hazards,  including
quantity of production,  quality of the ore, environmental  hazards,  industrial
accidents,  the  encountering  of unusual or unexpected  geological  formations,
cave-ins,  flooding,  earthquakes and periodic interruptions due to inclement or
hazardous  weather  conditions.  These occurrences could result in damage to, or
destruction of, our mineral properties or production facilities, personal injury
or death,  environmental damage,  reduced production and delays in mining, asset
write-downs,  monetary  losses and  possible  legal  liability. 


                                       32



We could  incur  significant  costs that could  adversely  affect our results of
operation.   Insurance  fully  covering  many  environmental   risks  (including
potential  liability  for  pollution or other hazards as a result of disposal of
waste  products  occurring  from  exploration  and  production) is not generally
available to us or to other companies in the industry.  What liability insurance
we carry may not be adequate to cover any claim.

We Are Subject To Significant  Environmental And Other Governmental  Regulations
That Can Require Substantial Capital Expenditure, And Can Be Time-Consuming.

We are required to comply with various Canadian laws and regulations  pertaining
to exploration,  development and the discharge of materials into the environment
or otherwise  relating to the  protection of the  environment,  all of which can
increase  the costs and time  required  to  attain  operations.  We will have to
obtain exploration, development and environmental permits, licenses or approvals
that may be required for our operations.  There can be no assurance that we will
be  successful  in  obtaining,  if required,  a permit to commence  exploration,
development  and  operation,  or that such  permit can be  obtained  in a timely
basis. If we are unsuccessful in obtaining the required permits it may adversely
affect  our  ability to carry on  business  and cause you to lose part or all of
your investment.

Mining  Accidents  Or Other  Adverse  Events At Our  Property  Could  Reduce Our
Production Levels.

If and when we reach  production it may fall below estimated  levels as a result
of mining  accidents,  cave-ins  or  flooding on the  properties.  In  addition,
production  may be  unexpectedly  reduced  if,  during  the  course  of  mining,
unfavorable  ground  conditions or seismic activity are encountered,  ore grades
are lower than expected, or the physical or metallurgical characteristics of the
ore are less amenable to mining or processing  than  expected.  The happening of
these types of events  would  reduce our  profitably  or could cause us to cease
operations which would cause you to lose part or all of your investment.

The   acquisition   of  gold  mineral   properties  is  subject  to  substantial
competition.  If we must pursue alternative  properties,  companies with greater
financial  resources,  larger staffs,  more  experience,  and more equipment for
exploration  and  development may be in a better position than us to compete for
properties.  We may  have to  undertake  greater  risks  than  more  established
companies in order to compete which could affect the value of your investment..

We are substantially dependent upon AXIS Consultants To Carry Out Our Activities

We are substantially  dependent upon AXIS for our senior  management,  financial
and accounting,  corporate legal and other corporate headquarters functions. For
example,  each of our officers is employed by AXIS and, as such,  is required by
AXIS to devote  substantial  amounts of time to the  business and affairs of the
other shareholders of AXIS.

Pursuant to a services  agreement,  AXIS  provides  us with  office  facilities,
administrative  personnel  and services,  management  and  geological  staff and
services.  No fixed fee is set in the agreement and we are required to reimburse
AXIS for any  direct  costs  incurred  by AXIS  for us.  In  addition,  we pay a
proportion of AXIS indirect  costs based on a measure of our  utilization of the
facilities and activities of AXIS plus a service fee of not more than 15% of the
direct and indirect  costs.  To date,  AXIS has not charged us a service fee but
there can be no  assurance  that AXIS will not charge a fee in the future.  This
service  agreement  may be  terminated  by us or AXIS on 60  days'  notice.  See
"Certain Relationships and Related Party Transactions."


                                       33



Future Sales of Common Stock Could Depress The Price Of Our Common Stock

Future sales of  substantial  amounts of common stock pursuant to Rule 144 under
the  Securities  Act of 1933 or otherwise by certain  stockholders  could have a
material  adverse  impact on the market  price for the common stock at the time.
There are presently  15,661,358  outstanding  shares of our common stock held by
stockholders  which are deemed  "restricted  securities"  as defined by Rule 144
under the Securities Act. Under certain circumstances,  there shares may be sold
without registration  pursuant to the provisions of Rule 144. In general,  under
rule 144, a person (or persons whose shares are  aggregated) who has satisfied a
one-year  holding  period  may,  under  certain  circumstances,  sell within any
three-month  period a number of restricted  securities which does not exceed the
greater of one (1%)  percent of the shares  outstanding  or the  average  weekly
trading  volume  during the four  calendar  weeks  preceding  the notice of sale
required  by  Rule  144.  In   addition,   Rule  144  permits,   under   certain
circumstances,   the  sale  of  restricted   securities   without  any  quantity
limitations  by a person who is not an  affiliate  of ours and has  satisfied  a
two-year  holding period.  Any sales of shares by stockholders  pursuant to Rule
144 may have a depressive effect on the price of our common stock.

Our Common Stock Is Traded Over the Counter,  Which May Deprive  Stockholders Of
The Full Value Of Their Shares

Our common stock is quoted via the Over The Counter  Bulletin Board (OTCBB).  As
such, our common stock may have fewer market makers,  lower trading  volumes and
larger  spreads  between  bid and  asked  prices  than  securities  listed on an
exchange  such as the New York Stock  Exchange or the NASDAQ.  These factors may
result in higher  price  volatility  and less  market  liquidity  for the common
stock.

A Low Market Price May Severely Limit The Potential Market For Our Common Stock

Our common stock is currently trading at a price  substantially  below $5.00 per
share, subjecting trading in the stock to certain SEC rules requiring additional
disclosures  by  broker-dealers.  These  rules  generally  apply  to any  equity
security  that has a market  price of less than  $5.00  per  share,  subject  to
certain exceptions (a "penny stock"). Such rules require the delivery,  prior to
any penny stock transaction, of a disclosure schedule explaining the penny stock
market and the risks  associated  therewith and impose  various  sales  practice
requirements  on  broker-dealers  who sell penny  stocks to  persons  other than
established customers and institutional or wealthy investors. For these types of
transactions,  the broker-dealer must make a special  suitability  determination
for the  purchaser  and have  received the  purchaser's  written  consent to the
transaction  prior  to the  sale.  The  broker-dealer  also  must  disclose  the
commissions  payable to the broker-dealer,  current bid and offer quotations for
the  penny  stock  and,  if the  broker-dealer  is the sole  market  maker,  the
broker-dealer must disclose this fact and the  broker-dealer's  presumed control
over the market.  Such information must be provided to the customer orally or in
writing before or with the written  confirmation  of trade sent to the customer.
Monthly  statements  must be sent  disclosing  recent price  information for the
penny stock held in the account and  information  on the limited market in penny
stock. The additional  burdens imposed upon  broker-dealers by such requirements
could discourage broker-dealers from effecting transactions in our common stock.


                                       34



The Market Price Of Your Shares Will Be Volatile.

The stock market  price of gold mining  exploration  companies  like us has been
volatile.  Securities  markets may experience price and volume  volatility.  The
market  price of our  stock  may  experience  wide  fluctuations  that  could be
unrelated  to  our  financial  and  operating   results.   Such   volatility  or
fluctuations  could  adversely  affect your  ability to sell your shares and the
value you might receive for those shares.

Item 2     Properties

The Company  occupies  certain  executive  and office  facilities  in Melbourne,
Victoria,  Australia which are provided to it pursuant to the Service  Agreement
with AXIS. See "Item 1- Business- Employees" and "Item 12- Certain Relationships
and Related Transactions". The Company believes that its administrative space is
adequate for its current needs.

In addition,  we have an office in North  America at Suite 1801, 1 Yonge Street,
Toronto ON Canada.  The office  receives  mail,  couriers and  facsimiles on our
behalf and  forwards any  documents  received to us. The lease is for six months
and can be renewed on a month to month basis.  We pay a fee of CDN$30 per month.
This is a temporary  arrangement whilst we determine whether to open a permanent
office.

Item 3     Legal Proceedings

There are no pending legal  proceedings  to which the Company is a party,  or to
which any of its property is the subject, which the Company considers material.

Item 4     Submission of Matters to a Vote of Security Holders

Not Applicable


                                       35



PART II


Item 5     Market for Common Equity and Related Stockholder Matters

Our  Common  Stock is traded in the  over-the-counter  market  and quoted on the
OTC-Bulletin Board under the symbol "BYRE". The trading for the Common Stock has
been  sporadic and the market for the Common Stock  cannot be  classified  as an
established trading market.

The  following  table sets out the high and low bid  information  for the Common
Stock  as  reported  by  the  National   Quotation   Service   Bureau  for  each
period/quarter indicated in US$:

Calendar Period                     High Bid (1)                  Low Bid (1)
---------------                     ---------                     --------


2003
First Quarter                         3.50                          1.01
Second Quarter                        2.25                          1.75
Third Quarter                         2.50                          1.50
Fourth Quarter                        3.20                          2.25

2004
First Quarter                        10.01                          2.40
Second Quarter                        9.50                          9.50
Third Quarter                         9.50                          8.00
Fourth Quarter                        8.00                          1.50

2005
First Quarter                         2.50                          1.01
Second Quarter                        1.75                          0.65

(1)  The quotations set out herein  reflect  inter-dealer  prices without retail
     mark-up,  mark-down or commission  and may not  necessarily  reflect actual
     transactions.

Shareholders

As of August 31, 2005 the Company had approximately 245 shareholders of record.

Dividend Policy

It is the present  policy of the Board of  Directors  to retain  earnings,  when
incurred,  for use in our business.  We have not declared any cash  dividends to
the holders of its Common Stock and does not intend to declare such dividends in
the foreseeable future

Transfer Agent

Our United States Transfer Agent and Registrar is The Bank of New York.

Proposed Dual Listing on Toronto Venture Exchange

We have lodged an application with TSX-V to dual list our shares of common stock
on TSX-V.  Cannacord Capital Corporation,  have agreed to act as sponsor for the
listing  and may  offer  to act as  agent on a  commercially  reasonably  basis,
following a successful  listing,  to assist us in raising up to CDN$3 million in
flow through financing to assist us with funding our operations.


                                       36



Item 6     Management's  Discussion  and Analysis of Financial  Condition or 
           Plan of Operation

General

The following  discussion  and analysis of our  financial  condition and plan of
operation  should  be read in  conjunction  with the  Financial  Statements  and
accompanying notes and the other financial  information  appearing  elsewhere in
this report. This report contains numerous  forward-looking  statements relating
to our business.  Such  forward-looking  statements are identified by the use of
words such a s believes,  intends, expects, hopes, may, should, plan, projected,
contemplates,  anticipates or similar words. Actual operating schedules, results
of operations,  ore grades and mineral deposit  estimates and other  projections
and   estimates   could   differ   materially   form  those   projected  in  the
forward-looking statements.

We are an  exploration  stage mining  company.  Our  objective is to exploit out
interest in the mineral  claims in Nunavut,  Canada.  Our principal  exploration
target  is for  gold and we are  seeking  to  determine  whether  adequate  gold
reserves  are  present  on the  property  covered  by our  claims to  develop an
operating mine. We are in the initial stages of our  exploration  program and we
have not yet  identified  any ore  reserves.  We have not generated any revenues
from operations.

Selected Financial Data

Our selected  consolidated  financial data presented below for each of the years
in the two-year  period ended June 30, 2005,  and the balance sheet data at June
30, 2004 and 2005 have been  derived  from  consolidated  financial  statements,
which have been audited by PKF,  Certified  Public  Accountants,  a Professional
Corporation.  The selected financial data should be read in conjunction with our
consolidated  financial  statements for each of the years in the two-year period
ended June 30, 2005,  and Notes  thereto,  which are included  elsewhere in this
Annual Report.


                                       37



Consolidated Statement of Operations Data
(in thousands, except per share data)


                               Year ended June 30


                                                                         Conv.
                                                                       Transl.
                                             2004          2005          2005
                                               A$            A$           US$

Revenues                                        -             -              -
                                ----------------------------------------------


Costs and expenses                          1,722         2,603          1,984
                                ----------------------------------------------

Loss from operations                       (1,722)       (2,603)         (1,84)

Other income (loss)                            (1)            3              2
                                ----------------------------------------------

Profit (loss) before income
taxes                                      (1,723)       (2,600)        (1,984)

Provision for income taxes                      -             -              -
                                ----------------------------------------------

Net profit (loss) from                     (1,723)       (2,600)        (1,984)
Continuing Operations

Net loss from                                   -             -              -
Discontinued Operations
                                ----------------------------------------------

Net profit (loss)                          (1,723)       (2,600)        (1,984)
                                ----------------------------------------------



                                               A$            A$            US$

Net profit (loss) per share

On continuing operations                     (.18)         (.16)          (.12)

On discontinued                                 -             -              -
                                ----------------------------------------------
operations
                                             (.18)         (.16)          (.12)
                                ----------------------------------------------



Weighted average number
of shares outstanding (000's)               9,385        16,714         16,714
                                ==============================================

Consolidated Balance Sheet Data

                                               A$            A$            US$

Total assets                                1,466           227            173
Total liabilities                             599         1,577          1,201
                                ----------------------------------------------

Stockholders' equity (deficit)                867        (1,350)        (1,029)
                                ----------------------------------------------


                                       38



Foreign Currency Translation

The majority of our administrative operations are in Australia and, as a result,
our accounts are reported in Australian dollars.  The income and expenses of its
foreign  operations  are  translated  into  Australian  dollars  at the  average
exchange  rate  prevailing  during the  period.  Assets and  liabilities  of the
foreign  operations are  translated  into  Australian  dollars at the period-end
exchange rate. The following table shows the period-end rates of exchange of the
Australian  and Canadian  dollar  compared with the US dollar during the periods
indicated.

                Year ended
                   June 30

                     2004            A$1.00        =     US$0.6903
                                     CDN$1.00      =     US$0.7433
                     2005            A$1.00        =     US$0.7620
                                     CDN$1.00      =     US$0.9279

The  exchange  rate  between the A$ and US$ has moved by 10.4%  between June 30,
2004 and 2005. Accordingly, a direct comparison of costs between fiscal 2004 and
2005 is not necessarily a true comparison.

Plan of Operation

We have A$2,000 in cash at June 30, 2005. We are  investigating  the possibility
of raising  money in the USA and  Canada for  exploration  and  working  capital
purposes.

During  fiscal 2004 and 2005,  we undertook a field  exploration  program on our
Committee Bay and Slave Properties at a cost of A$2,228,000.  This was more than
the minimum required expenditure. As a result, we do not have a legal obligation
to undertake further  exploration on our properties  during their life.  However
our  properties  are  prospective  for  gold  and  other  minerals.  Subject  to
financing,  we plan to undertake further  exploration in the 2006 summer season.
At this stage, we have not prepared a budget for the 2006  exploration  program.
Our budget for general and administration  for fiscal 2005 is A$0.8 million.  We
are currently  investigating  capital raising  opportunities which may be in the
form of either equity or debt, to provide funding for working  capital  purposes
and future exploration  programs.  There can be no assurance that such a capital
raising will be successful, or that even if an offer of financing is received by
the Company, it is on terms acceptable to the Company.

As set out in Item1 "Employees" we have a Vice President Exploration and a Chief
Operating Officer,  use temporary employees in our field exploration program and
the services of our Chief Executive  Officer and Chief Financial Officer as well
as certain clerical employees are provided by AXIS. At the current time, we have
no plans to change these arrangements or employ any further persons.

Results of Operations

Year ended June 30, 2005 versus Year ended June 30, 2004

Total costs and expenses have increased from A$1,722,000 for the year ended June
30, 2004 to  A$2,597,000  (US$1,979,000)  for the year ended June 30, 2005.  The
increase was a net result of:


                                       39


i)   An increase in exploration expenditure written off from A$951,000 in fiscal
     2004 to  A$1,277,000  (US$973,000)  in  fiscal  2005.  In fiscal  2005,  we
     completed  our summer  season field  program on the Committee Bay and Slave
     Properties.  These  properties  are in  Nunavet  in an  isolated  area  and
     exploration can only be undertaken between June and August each year due to
     ground  conditions.  Exploration  is costly as we were required to hire and
     construct  a  temporary  camp which also had to be  transported  by charter
     flight.  All supplies and casual employees also needed to be transported to
     the temporary camp by charter flights and/or helicopter. The properties are
     located  approximately  100  kilometers  from the camp  and  employees  are
     transported  by  helicopter  daily from camp to the  exploration  site.  In
     addition,  our Vice  President  Exploration  was employed for a full twelve
     months  compared  to three  months in fiscal  2004.  In fiscal  2004 (April
     2004),  we appointed a Vice  President  Exploration in Canada and commenced
     the exploration  program on the Committee Bay  Properties.  During the 2003
     fiscal year, the Company entered into an arrangement in Tibet in China (see
     Item 1 Business - General and History of the Company). This arrangement was
     subsequently cancelled however the Company incurred exploration expenditure
     totalling  A$109,000 in the form of salaries,  consulting fees,  travel and
     accommodation  and legal expenses.  There was no comparable  transaction in
     the 2004 fiscal year.

ii)  A decrease in interest  expense  from  A$122,000 in fiscal 2004 to A$44,000
     (US$34,000)  in fiscal  2005.  During  fiscal 2005,  we borrowed  A$644,633
     (US$491,210)  from  Wilzed,  a  company  which our  President  and CEO is a
     Director  and  shareholder.  Wilzed  charged  us  A$31,235  (US$23,801)  in
     interest.  Wilzed charged interest at a rate between 9.10% and 9.35% during
     fiscal  2005.  AXIS  provides  management  and  geological  services  to us
     pursuant to a Service Deed dated November 25, 1988.  AXIS charged interst a
     rate between  10.60% and 10.85% for fiscal 2005.  In March 2004,  we repaid
     all in debt  owing to Chevas Pty Ltd and AXIS.  During  the 2004  year,  an
     interest rate of 8.60% was charged on outstanding amounts by Chevas. Chevas
     is a  company  associated  with Mr.  J.I.  Gutnick,  our  President,  which
     provided  funding  for the  Company's  operations  during  the  year.  AXIS
     provides  management and geological  services to the Company  pursuant to a
     Service  Deed dated  November 25,  1988.  AXIS  charged  interest at a rate
     between 10.10% and 10.60% for fiscal 2004.

iii) An increase in legal,  accounting and professional  costs from A$112,000 in
     fiscal 2004 to A$189,000  (US$144,000) in fiscal 2005.  During fiscal 2005,
     we  incurred  legal  expenses of  A$58,874  (US$44,862)  in relation to the
     proposed  listing on Toronto Venture  Exchange and A$40,763  (US$31,061) in
     relation to financing  documents and general legal work; audit related fees
     of A$56,369  (US$42,953)  being A$52,061  (US$39,670) for the  professional
     services in relation to the  financial  statements  in the  quarterly  Form
     10-QSB's  and annual Form  10-KSB and $4,308  (US$3,282)  for  professional
     services  in  relation  to  the  listing  application  on  Toronto  Venture
     Exchange;  and A$32,826  (US$23,668) in costs from our stock transfer agent
     for management of the share register. During fiscal 2004, we incurred legal
     expenses of A$31,500 which relates to the preparation of documentation  for
     a dual  listing on Toronto  Venture  Exchange;  A$23,000  being legal costs
     involved in the preparation of a registration  statement for the purpose of
     registering  shares  of  common  stock  and  warrants  issued to RAB in the
     placement  that occurred in April 2004;  and general  legal  expenses to do
     with the normal  activities  of the Company.  We also  changed  independent
     accountants  during  the  fiscal  2003  year  and  as  a  result,  incurred
     additional costs of A$5,000 during fiscal 2004.

                                       40


iv)  An  increase  in  administrative  costs from  A$537,000  in fiscal  2004 to
     A$716,000  (US$546,000) in fiscal 2005.  During fiscal 2005, the management
     fee  charged  by AXIS to us was  A$120,000  (US$91,440);  AXIS  charged  us
     A$224,065  (US$170,737) for Director's fees and salaries incurred on behalf
     of the Company which relates to fees paid to independent  Directors and the
     cost of the President and Chief Executive Officer, Director,  Secretary and
     Chief  Financial  Officer and other staff of AXIS who provided  services to
     the  Company.   One  independent  Director  charged  the  Company  directly
     amounting to A$20,000  (US$15,240).  The Company paid A$68,000 in insurance
     premiums and there was no comparable amount in fiscal 2004 as the insurance
     policies were only taken out when the operations in Canada commenced at the
     end of fiscal  2004.  In November  2004,  we  appointed  a Chief  Operating
     Officer and we paid his salary  totalling  A$82,823  (US$63,111).  Prior to
     that date,  the current  Chief  Operating  Officer had provided  consulting
     services and we had paid him  A$51,132  (US$38,962).  In addition,  we have
     paid  A$35,732  (US$27,228)  to  Cannacord  who have  agreed to sponsor our
     listing on Toronto Venture Exchange. During fiscal 2004, the management fee
     charged by AXIS to the Company was A$100,000.  In fiscal 2004, AXIS charged
     the Company  A$205,000 for Director's fees and salaries  incurred on behalf
     of the Company which related to fees paid to independent  Directors and the
     cost of the President and Chief Executive Officer, Director,  Secretary and
     Chief  Financial  Officer and other staff of AXIS who provided  services to
     the Company.  One Independent  Director  charged the Company  directly from
     January  1,  2004 and this  amounted  to  A$11,000.  The  Company  incurred
     A$56,000  in  travel  and  accommodation  costs in  relation  to  travel by
     Directors  and officers on capital  raising  trips and trips in relation to
     the  proposed  dual  listing of the  Company's  securities  on the  Toronto
     Venture Exchange; A$131,000 for consultants, a majority of which related to
     the  costs  of  the  Vice   President   Investor   Relations  and  Business
     Development,  who was a  consultant  during  the  year;  and  A$19,000  for
     lodgement costs of filings with the SEC.

v)   an  increase  in stock  based  compensation  from A$nil for fiscal  2004 to
     A$377,000  (US$287,000) for fiscal 2005. Following  shareholder approval on
     January 27, 2005 the Company issued 1,400,000  options (and up to a further
     500,000 options) at an exercise price of US$1.00 per option pursuant to the
     2004 Stock Option Plan. Of the total 1,400,000 options issued, 350,000 vest
     immediately following shareholder approval,  50,000 vest on March 31, 2005,
     333,331  vest on July 27,  2006,  333,334  vest on January 27, 2006 and the
     balance  vest on July 27,  2006.  If the  additional  500,000  options  are
     granted, they will vest 250,000 on October 31, 2005 and 250,000 on December
     31, 2006. The exercise price of US$1.00 was derived from the issue price of
     common  stock  from  the  placement  of  shares  on March  31,  2004 and is
     considered  by the  Company's  Directors to be the fair value of the common
     stock.

     The Company has accounted  for all options  issued in 2005 based upon their
     fair market  value using the Black  Scholes  pricing  model.  There were no
     options issued by the Company prior to 2005.


                                       41



     The Company has  calculated  the fair value of the options  using the Black
     Scholes  valuation  method using a share price of US$1.00,  strike price of
     US$1.00,  maturity period of 5 years 7 1/2 months,  risk free interest rate
     of 5.15% and  volatility  of 20%.  This equates to a value of US31.85 cents
     per  option.   The  total  value  of  the  options   equates  to  A$575,100
     (US$438,200) and has been reflected as Deferred Compensation Expense within
     the Shareholders  Equity Statement.  The gross fair value is amortised into
     operations  over the vesting  period.  For fiscal  2005,  the  amortization
     amounted to $377,210.

Accordingly,  the loss from operations  increased from  A$1,723,000 for the year
ended June 30, 2004 to  A$2,603,000  (US$1,984,000)  for the year ended June 30,
2005.

The net loss amounted to A$2,600,000  (US$1,982,000) for the year ended June 30,
2005 compared to a net loss of A$1,723,000 for the year ended June 30, 2004. The
net loss per common equivalent share in 2005 was A$0.16 cents (US$0.12) compared
with a net loss  with a common  equivalent  share of  A$0.18  cents in the prior
year.

Liquidity and Capital Resources

For the fiscal year 2005, net cash used in operating  activities was A$2,032,000
(US$1,549,000)   primarily   consisting  of  amounts  spent  on  exploration  of
A$1,277,000  (US$973,000),  a decrease in prepayments  and deposits of A$159,000
(US$121,000) for the exploration programme,  an increase in accounts payable and
accrued   expenses  of  A$110,000   (US$84,000)  and  repayment  of  short  term
advance-affiliates  of  A$104,000  (US$79,000);  net cash  provided by financing
activities was A$922,000  (US$703,000)  being proceeds from long-term loans from
affiliates of A$922,000  (US$703,000) and net cash used in investing  activities
of A$6,000 (US$4,000) being purchase of plant and equipment.

As of June 30, 2005 we had  short-term  obligations  of  A$605,000  (US$460,000)
consisting mainly of accounts payable and accrued expenses.

We have A$2,000 in cash at June 30, 2005. We are  investigating  the possibility
of raising cash flow through money in Canada for exploration  purposes.  We have
lodged an  application  with  TSX-V to dual list our  shares of common  stock on
TSX-V.  Cannacord  Capital  Corporation,  have  agreed to act as sponsor for the
listing  and may  offer  to act as  agent on a  commercially  reasonably  basis,
following a successful  listing,  to assist us in raising up to CDN$3 million in
flow through financing to assist us with funding our operations.

During  fiscal 2004 and 2005,  we undertook a field  exploration  program on our
Committee  Bay and Slave  Properties.  This was more than the  minimum  required
expenditure. As a result, we do not have a legal obligation to undertake further
exploration  on our  properties  during their life.  However our  properties are
prospective  for gold and  other  minerals.  Subject  to  financing,  we plan to
undertake further  exploration in the 2006 summer season. At this stage, we have
not prepared a budget for the 2006 exploration  program.  Our budget for general
and  administration  for  fiscal  2006  is  A$0.8  million.   We  are  currently
investigating  capital raising  opportunities which may be in the form of either
equity or debt,  to provide  funding for  working  capital  purposes  and future
exploration programs. There can be no assurance that such a capital raising will
be successful, or that even if an offer of financing is received by the Company,
it is on terms acceptable to the Company.


                                       42



We have been preparing a listing  application for the dual listing of our shares
of common stock on Toronto Venture Exchange.  The listing application was lodged
with TSX in June 2004 and we are  currently  in the  process  of  responding  to
questions  raised by TSX. We believe that a dual listing of our shares of common
stock will provide  liquidity in our shares.  There can be no assurance that the
dual listing on TSX will  eventuate or that such listing will create an increase
in the volume of trading of our shares of common stock.

Cautionary "Safe Harbour"  Statement under the United States Private  Securities
Litigation Reform Act of 1995.

Certain information contained in this Form 10-KSB are forward-looking statements
within the meaning of the Private Securities Litigation Act of 1995 ("the Act"),
which became law in December  1995. In order to obtain the benefits of the "safe
harbor" provisions of the Act for any such forward-looking  statements,  we wish
to caution investors and prospective  investors about significant factors which,
among  others,  have in some cases  affected  our actual  results and are in the
future likely to affect our actual  results and cause them to differ  materially
from those expressed in any such  forward-looking  statements.  This Form 10-KSB
contains forward-looking statements relating to future financial results. Actual
results  may  differ  as a result  of  factors  over  which we have no  control,
including,  without  limitation,  the risks of exploration and development stage
projects,  political risks of development in foreign countries, risks associated
with environmental and other regulatory  matters,  mining risks and competitors,
the volatility of gold prices and movements in foreign exchange rates.

Impact of Australian Tax Law

Australian  resident  corporations are subject to Australian income tax on their
non-exempt  worldwide  assessable  income (which includes  capital gains),  less
allowable deductions,  at the rate of 30%. Foreign tax credits are allowed where
tax has been paid on foreign  source  income,  provided  the tax credit does not
exceed 30% of the foreign source income.

Under the U.S./Australia  tax treaty, a U.S. resident  corporation such as us is
subject to Australian income tax on net profits  attributable to the carrying on
of a business in Australia through a "permanent  establishment" in Australia.  A
"permanent  establishment"  is a fixed  place  of  business  through  which  the
business of an enterprise is carried on. The treaty limits the Australian tax on
interest and royalties paid by an Australian  business to a U.S. resident to 10%
of the gross  interest  or  royalty  income  unless it  relates  to a  permanent
establishment.   Although  we   consider   that  we  do  not  have  a  permanent
establishment in Australia,  it may be deemed to have such an establishment  due
to the location of its administrative  offices in Melbourne.  In addition we may
receive interest or dividends from time to time.

Impact of Australian Governmental, Economic, Monetary or Fiscal Policies

Although Australian taxpayers are subject to substantial regulation,  we believe
that our operations are not materially  impacted by such  regulations  nor is it
subject to any broader regulations or governmental policies than most Australian
taxpayers.

Impact of Recent Accounting Pronouncements

For a  discussion  of the  impact of  recent  accounting  pronouncements  on the
Company's  financial  statements,  see  Note  2 to  the  Company's  Consolidated
Financial Statements which are attached hereto


                                       43


Quantitative and Qualitative Disclosures about Market Risk

Bay  Resources  is exposed to  interest  rate risk  primarily  through  its loan
facilities.  The Company  utilizes these  borrowings to meet its working capital
needs.

At June 30,  2005,  the  Company had  outstanding  borrowings  of  approximately
$972,000 under its Loan Facilities.  In the event that interest rates associated
with these  facilities  were to increase 100 basis points,  the impact on future
cash flows would be a decrease of approximately $9,720 annually.

Item 7.     Financial Statements

            See F Pages

Item 8.     Changes in and Disagreements with Accountants on Accounting 
            and Financial Disclosure

            None

Item 8A     Controls and Procedures

(a)  Evaluation of disclosure  controls and procedures. 

     Our  principal  executive  officer  and its  principal  financial  officer,
     evaluated the effectiveness of our disclosure controls and procedures as of
     the end of the period  covered by this  report.  Based on that  evaluation,
     such principal  executive officer and principal financial officer concluded
     that,  our  disclosure  controls and procedures as of the end of the period
     covered by this report have been designed and are  functioning  effectively
     to  provide  reasonable  assurance  that  the  information  required  to be
     disclosed by us in reports filed under the Securities  Exchange Act of 1934
     is recorded,  processed,  summarized  and reported  within the time periods
     specified in the SEC's rules and forms. We believe that a controls  system,
     no  matter  how  well  designed  and  operated,  can not  provide  absolute
     assurance  that the  objectives  of the  controls  system  are met,  and no
     evaluation  of controls  can provide  absolute  assurance  that all control
     issues and instances of fraud, if any, within a company have been detected.


                                       44



     In preparation for the annual report of management regarding our evaluation
     of our  internal  controls  that is  required  to be included in our annual
     report  for  the  year  ended  June  30,   2006  by  Section   404  of  the
     Sarbanes-Oxley  Act of 2002,  we will need to assess  the  adequacy  of our
     internal control, remediate any weaknesses that may be identified, validate
     that  controls are  functioning  as  documented  and implement a continuous
     reporting and improvement  process for internal  controls.  We may discover
     deficiencies  that  require us to improve  our  procedures,  processes  and
     systems in order to ensure that our  internal  controls  are  adequate  and
     effective and that we are in compliance  with the  requirements  of Section
     404 of the  Sarbanes-Oxley  Act.  If the  deficiencies  are not  adequately
     addressed,  or if we are  unable to  complete  all of our  testing  and any
     remediation in time for compliance with the  requirements of Section 404 of
     the  Sarbanes-Oxley  Act and the SEC rules  under it, we would be unable to
     conclude that our internal  controls over financial  reporting are designed
     and  operating  effectively,  which  could  adversely  affect our  investor
     confidence in our internal controls over financial reporting. 



(b)  Change in  Internal  Control  over  Financial  Reporting.  No change in our
     internal control over financial  reporting  occurred during our most recent
     fiscal quarter that has  materially  affected,  or is reasonably  likely to
     materially affect our internal control over financial reporting.


                                       45



                                    PART III

Item 9.  Directors and Executive Officers of the Registrant

The following table sets out certain  information in relation to each person who
held a position of Director and/or  executive  officer of the Company during the
year ended June 30, 2005.


Name                       Age        Position(s) Held

Joseph Gutnick             53         Chairman of the Board
                                      President, Chief Executive Officer and
                                      Director.

David Tyrwhitt             67         Director.

Peter Lee                  48         Director, Secretary, Chief Financial
                                      Officer and Principal Accounting Officer.

Paul Ehrlich               47         Director


Joseph Gutnick
Mr Gutnick has been Chairman of the Board, President and Chief Executive Officer
since March, 1988. He has been a Director of numerous public listed companies in
Australia  specialising  in the  mining  sector  since 1980 and is  currently  a
Director  of Astro  Diamond  Mines  N.L.,  Great Gold Mines  N.L.,  and  Quantum
Resources Limited and President and CEO of Legend International  Holdings Inc, a
US corporation  listed on the OTC market.  Mr. Gutnick was previously  Executive
Chairman  of Tahera  Corporation,  a company  that is  listed on  Toronto  Stock
Exchange from May 2000 to October 2003 and has previously been a Director of the
World Gold  Council.  He is a Fellow of the  Australasian  Institute of Mining &
Metallurgy  and the  Australian  Institute  of  Management  and a Member  of the
Australian Institute of Company Directors.

David Tyrwhitt
Dr  Tyrwhitt  was  appointed a Director in  November  1996.  He is a  geologist,
holding a Bachelor of Science and PhD  degrees  and has 40 years  experience  in
mineral  exploration  and management  development and operation of gold mines in
Australia.  Dr Tyrwhitt has been a Director of numerous public listed  companies
in Australia in the mining industry and is currently a Director of Astro Diamond
Mines N.L., Great Gold Mines N.L., and Quantum  Resources  Limited listed on the
Australian  Stock  Exchange  and  Legend   International   Holdings  Inc,  a  US
corporation listed on the OTC market.

Peter Lee
Mr Lee has been Chief Financial Officer and Principal  Accounting  Officer since
August 1989 and was appointed a Director in February 1996. Mr Lee is a Member of
the  Institute  of Chartered  Accountants  in  Australia,  a Fellow of Chartered
Secretaries  Australia  Ltd.,  a Member of the  Australian  Institute of Company
Directors  and holds a Bachelor of Business  (Accounting)  from Royal  Melbourne
Institute  of  Technology.  He has over 20 years  commercial  experience  and is
currently  General  Manager  Corporate and Company  Secretary of several  listed
public  companies in  Australia  and CFO and  Secretary of Legend  International
Holdings Inc, a US corporation listed on the OTC market.


                                       46



Paul Ehrlich
Mr.  Ehrlich is an attorney of 20 years  experience  in the fields of commercial
law and commercial  litigation.  From 1989 to 2001 Mr.Ehrlich was a partner in a
major  national  Australian  law firm.  He has expertise in a range of corporate
areas  including  mergers and  acquisition  (with an emphasis on public  company
takeovers,  litigation and trade sales), securities law, public raisings, IPO's,
government  privatisation,  corporate  reconstructions  and the  negotiation and
drafting  of  complex  contractual  and  commercial  arrangements.  Mr.  Ehrlich
specialises  in areas of complex  corporate  litigation  and has conducted  such
litigation  on behalf of clients in the Supreme  Courts of  Victoria,  New South
Wales, South Australia,  Western Australia and in the Federal Court of Australia
and in the High Court of Australia.  He also  specialises in all areas of mining
resource law and project finance.

Mr Ehrlich resigned as a Director in September 2005 and ceased to be a member of
the Audit and Remuneration Committee's.

Mordechai Gutnick
On  September  14,  2005,  Mr Modechai  Zev Gutnick was elected a  non-executive
Director.  Mr Mordechai  Gutnick is a businessman and long-term  investor in the
mining industry.  He is also a Director of Astro Diamond Mines N.L. (May 2003 to
current),  Great Gold Mines N.L.  (May 2003 to current)  and  Quantum  Resources
Limited  (May 2003 to current).  Mr M Z Gutnick has been  appointed to the Audit
and Remuneration Committee's, effective September 14, 2005. Mr Mordechai Gutnick
is the son of Mr Joseph Gutnick.

Mr. J I Gutnick  was  formerly  the  Chairman  of the Board,  Dr.  Tyrwhitt  was
formerly an independent  Director and Mr. Lee was formerly Company  Secretary of
Centaur Mining & Exploration Ltd., an Australian corporation, which commenced an
insolvency proceeding in Australia in March 2001.

Board of Directors

Our  Certificate of  Incorporation  provides that the number of Directors of the
Company  shall be not less  than six nor more than nine as shall be fixed in the
by-laws of the Company.

Directors need not be  stockholders  of the Company or residents of the State of
Delaware.  Directors  are elected for an annual term and  generally  hold office
until the next  Directors  have been duly elected and  qualified.  Directors may
receive compensation for their services as determined by the Board of Directors.
A vacancy on the Board may be filled by the remaining Directors even though less
than a quorum remains. A Director appointed to fill a vacancy remains a Director
until his successor is elected by the Stockholders at the next annual meeting of
Shareholder or until a special meeting is called to elect Directors.

The  executive  officers of the Company are appointed by the Board of Directors.
There are no family relationships between any Directors or executive officers of
the Company unless otherwise disclosed.

Audit Committee

Our Board of Directors has an Audit Committee  comprised of Dr Tyrwhitt and Mr M
Z Gutnick, both of whom are independent Directors.  Our Audit Committee does not
include a "financial  expert" as defined in Item 401 (e) of Regulation  S-B. The
Company  only has two  independent  Directors  and neither of these  independent
Directors has a finance background.


                                       47



Code of Ethics

We have  adopted a Code of Conduct  and Ethics and it applies to all  Directors,
Officers  and  employees.  A copy of the Code of Conduct and Ethics is posted on
our  website and we will  provide a copy to any person  without  charge.  If you
require a copy, you can download it from our website or  alternatively,  contact
us by facsimile or email and we will send you a copy.

Section 16(a) Beneficial Ownership Reporting Compliance

Pursuant to Section 16(a) of the Securities Exchange Act of 1934, our Directors,
executive  officers and  beneficial  owners of more than 10% of the  outstanding
Common  Stock are  required to file  reports  with the  Securities  and Exchange
Commission  concerning  their ownership of and  transactions in our Common Stock
and are also required to provide to us copies of such  reports.  Based solely on
such reports and related information  furnished to us, we believe that in fiscal
2005 all such filing  requirements  were complied with in a timely manner by all
Directors and executive  officers  except (i) Mr Alford filed a Form 3 after the
due date;  (ii) Mr Althaus  filed a Form 3 and nine Form 4's after the due dates
for such  forms  and has not yet  filed a Form 4 with  respect  to the  grant of
options  to him;  (iii) Mr Lee has not yet  filed a Form 4 with  respect  to the
grant of options to him;  and (iv) Dr  Tyrwhitt  has not yet filed a Form 4 with
respect to the grant of options to him.

Item 10. Executive Compensation.

The  following  table  sets  forth  the  annual  salary,  bonuses  and all other
compensation  awards and pay outs on account of our Chief Executive  Officer for
services  rendered  to us during the fiscal year ended June 30,  2005,  2004 and
2003. No other executive  officer received more than US$100,000 per annum during
this period.

Summary Compensation Table
   


                                                                           Long Term
                                      Annual Compensation             Compensation Awards
                               ----------------------------------  -------------------------
                                                                      Restricted  Securities
                                                        Other Annual     Stock    Underlying
                                 Year      Salary       Compensation     Awards    Options
                                 ----      ------       ------------     ------    -------
                                                                          
Name and Principal Position
Joseph Gutnick, Chairman
of the Board and CEO             2005   $91,667(1)(2)     $18,935(3)        --    500,000(4)
                                 2004   $76,000(1)(2)     $16,484(3)        --           --
                                 2003        $-(1)(2)     $28,553(3)        --           --
Pini Althaus, Chief
 Operating Officer               2005   US$110,000(5)            --         --    250,000(6)
Craig Alford, Vice
 President Exploration           2005     CDN$120,000         3,722         --    150,000(7)
--------------------------



1.   The amounts listed were paid by us to AXIS,  which provides the services of
     Mr. J I Gutnick and Mr Lee as well as certain other  officers and employees
     to the Company.
2.   Excludes  options  granted  to Edensor of which Mr JI Gutnick is a Director
     and  Shareholder  (see Item 13 - Certain  Relationships  and Related  Party
     Transactions)
3.   Includes  amounts paid by AXIS to an  accumulation  superannuation  plan on
     behalf of Joseph Gutnick.


                                       48



4.   Includes  166,667 options that are vested 166,667 options that will vest on
     January 27, 2005 and 166,667 options that will vest on July 27, 2006.
5.   Mr Althaus was a consultant for the period to October 2004 and at that time
     was appointed as an employee.  The salary disclosed includes the consulting
     fees for the  period  July to  October  2004 and the  salary for the period
     November 2004 to June 2005.
6.   Includes  250,000  options  that  are  vested.  In  addition,   subject  to
     availability  of options  under the 2004 Stock Option Plan, Mr Althaus will
     be issued a further  250,000 options which will vest on August 31, 2005 and
     250,000 that will vest on December 31, 2006.
7.   Includes 150,000 options that are vested.

For  additional  information  about the  Service  Agreement  and the  Consulting
Agreement see "Item 1- Business- Employees" and "Item 12- Certain  Relationships
and Related Transactions".

We have a policy  that we will not enter into any  transaction  with an officer,
Director or affiliate of the Company or any member of their families  unless the
transaction  is  approved  by  the  Audit  Committee  and  the  Audit  Committee
determines  that the terms of the  transaction are no less favourable to us than
the terms available from non-affiliated third parties or are otherwise deemed to
be fair to the Company at the time authorised.

Option Grants in Last Fiscal Year



                      Number of        Percent of Total
                        Shares        options Granted to                Market
                    of Common Stock      Employees in                  Price on
                      Underlying            Fiscal         Exercise     Date of       Expiration
     Name           Options Granted          Year           Price        Grant           Date
--------------      ---------------   ------------------   --------    ---------      -----------
                                                                            
Joseph Gutnick         500,000               35.7%          US$1.00      US$1.01       10/15/2014
Pini Althaus*          250,000               17.9%          US$1.00      US$1.01       10/15/2014
Craig Alford           150,000               10.7%          US$1.00      US$1.01       10/15/2014



*Subject to availability of options under the 2004 Stock Option Plan, Mr Althaus
will be issued a further  250,000 options which will vest on August 31, 2005 and
250,000 options which will vest on December 31, 2006.

Aggregated Option Exercises in Fiscal 2005 and Fiscal 2005 Year-End Option 
Values

The person listed in the following table did not exercise any options in 2005.



                                          Number of Shares of Common     
                                              Stock Underlying             Value of Unexercised
                                                 Unexercised                   In-The-Money
                                           Options at June 30, 2005   Options at June 30, 2005(1)
    Name                                  Exercisable  Unexercisable  Exercisable   Unexercisable
---------------------------------------   -----------  -------------  -----------   -------------
                                                                                  
Joseph Gutnick                                166,667        333,333   US$208,334      US$416,666
Pini Althaus                                  250,000             --   US$312,500              --
Craig Alford                                  150,000             --   US$187,500              --
===================



(1) Based on U.S.$1.25 per share,  the June 30, 2005 closing  price  reported on
the OTC Bulletin Board.


                                       49



2004 Stock Option Plan

The 2004 Plan provides for the granting of options. The maximum number of shares
available for awards is 10% of the issued and outstanding shares of common stock
on issue at any time. If an option  expires or is cancelled  without having been
fully exercised or vested,  the remaining shares will generally be available for
grants of other awards.

The  2004  Plan is  administered  by the  Remuneration  Committee  of the  Board
comprised  solely of  directors  who are not  employees  or  consultants  to Bay
Resources or any of its affiliated entities.

Any  employee,  director,  officer,  consultant  of or to  Bay  Resources  or an
affiliated  entity  (including a company that becomes an affiliated entity after
the  adoption of the 2004 Plan) is eligible to  participate  in the 2004 Plan if
the  Committee,  in  its  sole  discretion,  determines  that  such  person  has
contributed  significantly or can be expected to contribute significantly to the
success of Bay Resources or an affiliated entity. During any one year period, no
participant is eligible to be granted options to purchase more than 5% shares of
our issued and outstanding  common stock or if they provide  investor  relations
activities, or are a consultant to the Company, 2% of the issued and outstanding
shares of common stock in any 12 month period.

Options granted under the 2004 Plan are to purchase Bay Resources  common stock.
The term of each  option  will be fixed by the  Remuneration  Committee,  but no
option  will be  exercisable  more than 10 years  after  the date of grant.  The
option  exercise  price is fixed by the  Remuneration  Committee at the time the
option is granted.  The exercise price must be paid in cash.  Options granted to
participants vest and have a term of 10 years.

No award is  transferable,  or assignable by the participant  except upon his or
her death.

The Board may amend the 2004 Plan, except that no amendment may adversely affect
the rights of a participant without the participant's consent or be made without
stockholder approval if such approval is necessary to qualify for or comply with
any applicable law, rule or regulation the Board deems necessary or desirable to
qualify for or comply with.

Subject to earlier  termination  by the Board,  the 2004 Plan has an  indefinite
term except that no ISO may be granted  following the tenth  anniversary  of the
date the 2004 Plan is approved by stockholders.

Options to purchase  the  following  shares of common stock have been issued (or
agreed to be issued) as follows:-

Name                                 Quantity                   Exercise Price
J. I. Gutnick                        500,000                    US$1.00
P.J. Lee                             250,000                    US$1.00
D S Tyrwhitt                          50,000                    US$1.00
P L Ehrlich *                         50,000                    US$1.00
P. Althaus **                        750,000                    US$1.00
C. Alford                            150,000                    US$1.00
E Flood                              150,000                    US$1.00


                                       50



* as a result of Mr Ehrlich's  resignation  in September  2005,  the options are
relinguished.

**  tranche  1 of  250,000  options  issued.  Tranches  2 and 3 are  subject  to
availability of options under plan.

None of the proposed  recipients have received any stock options or other equity
based forms of compensation from us for at least the last three years.

Other  than the  issue of these  Options,  there are no other  current  plans or
arrangements to grant any options under the 2004 Plan.

Compensation Pursuant to Plans.

The Company does not have any pension or profit  sharing  plans.  The  Company's
Vice  President  Exploration  and temporary  staff  employed in the  exploration
programme in Canada are subject to Canadian  requirements  for  contributions to
pension plans.  At June 30, 2005, the Company has an obligation to pay A$13,570.
Contributions to employee benefit or health plans during the year ended June 30,
2005 were A$7,196.

Compensation to Directors

It is our policy to  reimburse  Directors  for  reasonable  travel  and  lodging
expenses  incurred  in  attending  Board  of  Directors  meetings.   Independent
Directors are paid Directors fees of A$20,000 per annum.

Securities authorized for issuance under equity compensation plans

The  following  table sets forth,  as of June 30,  2005,  information  regarding
options under our 2004 stock option plan,  our only active plan.  The 2004 stock
option plan has been  approved by our  stockholders.  Outstanding  options under
this plan that are forfeited or cancelled  will be available for future  grants.
All of the options are for the purchase of our common stock.




                                                                      Number of securities
                                                                       remaining available
                            Number of                                  for future issuances
                         securities to be                                  under equity
                           issued upon         Weighted average         compensation plans
                           exercise of          Exercise price              (excluding
                           outstanding          of outstanding         securities reflected
                             options                options                in column (a)
Plan Category                  (a)                    (b)                       (c)
-------------------    -------------------     -----------------       ---------------------
                                                                            
Equity compensation
plans approved by
security holders           1,400,000(1)             US$1.00                   271,163(2)

Equity compensation
plans not approved
by security holders             -                      -                          -
                       -------------------     -----------------       ---------------------

   Total                   1,400,000(1)             US$1.00                   271,163(2)
-------------------    ===================                             =====================



(1)  Does not include  500,000  options that have been granted subject to future
     availability under our 2004 stock option plan.

(2)  The maximum  number of shares  available for issuance  under the 2004 stock
     option plan is equal to 10% of the issued and outstanding  shares of common
     stock, at any time.


                                       51



Principal Officers Contracts

Pini Althaus


On October 15, 2004,  the Company  appointed Mr. Pinchas (Pini) Althaus as Chief
Operating Officer.

Mr  Althaus  has 9 years  business  experience  in  insurance,  sales,  business
development  and investor  relations.  More  recently Mr Althaus was Director of
Business Development for Ambient Corporation (February 2000 to February 2003), a
company  providing  power line  communications  technology.  In this role,  Pini
initiated and  maintained  relationships  with U.S. &  International  electrical
utilities  and power  companies,  and managed and initiated  relationships  with
strategic and business development  partners.  He played a major role in Ambient
completing two successful  rounds of funding,  acted as liaison  between Ambient
and its  investors/financial  community,  managed public relations and corporate
communications  duties,  including  press  releases  and media  interviews,  and
created and delivered presentations for Ambient. He joined Tahera Corporation, a
diamond exploration  company, in February 2003 as Director of Investor Relations
& Business  Development where he managed public relations and investor relations
activities, including press releases, conducting media interviews, responding to
shareholder inquiries and representing Tahera at conferences.

In October 2003,  Pini left Tahera and since that time, has provided  consulting
services to Bay Resources and its subsidiary company covering investor relations
and public relations activities,  including fund raising, press releases,  media
interviews,  and shareholder inquiries.  In addition to this, he has coordinated
road-shows and delivered  presentations on the Company's  behalf. On October 15,
2004, he was appointed Chief Operating Officer of Bay Resources Ltd.

The  employment  agreement was effective May 1, 2004 and expires on December 31,
2006.  Mr.  Althaus  shall be paid a salary  of  US$110,000  exclusive  of bonus
benefits and other  compensation.  The Company has agreed to provide Mr. Althaus
with  executive  benefits  comparable to those  provided by the Company to other
executives of the Company  generally and shall permit Mr. Althaus to participate
in any bonus place, share purchase plan, retirement plan or similar plan offered
by the  Company  to its  executives  generally  in the  manner  and  the  extent
authorized  by the  Remuneration  Committee  of the Company.  In  addition,  Mr.
Althaus will be able to participate in such extended health, medical, disability
insurance and other benefit plans  established by the Company and made available
to other executives of the Company.


The Company has agreed to grant Mr. Althaus  options to purchase  750,000 shares
of common stock of the Company at an exercise  price of US$1.00 per option which
will vest as follows:-

     o    250,000 shall vest immediately;

     o    a further 250,000 will vest at the mid term date of the contract; and

     o    the remaining 250,000 will vest on December 31, 2006.


                                       52



The  options  will  be  issued  subject  to  applicable   securities  laws,  the
availability  of options within the Company stock option plan and may be subject
to whole periods.


In the  case of the  change  of  control,  all  options  then  outstanding  will
immediately vest for the purpose of such transaction.


The Company may terminate the  employment of Mr.  Althaus  without notice or any
payment in law of notice for cause.  The agreement may also be terminated by the
Company  upon 30 days  written  notice to Mr.  Althaus  if Mr.  Althaus  becomes
permanently  disabled and the agreement shall terminate  without notice upon the
death of Mr. Althaus.  If Mr. Althaus'  employment is terminated during the term
for cause or by voluntarily termination by Mr. Althaus, Mr. Althaus shall not be
entitled to any  severance  payment other than pro rata  entitlements  up to the
date of termination.


Mr. Althaus may terminate his  employment  with the Company at any time upon the
occurrence of any one of the following:-

     (i)  A  reduction  of  diminution  in Mr.  Althaus'  authority,  duties  or
          responsibilities (including without limitation, with respect to office
          or title) hereunder,

     (ii) Any  reduction  in the then  applicable  base  salary or Mr.  Althaus'
          eligibility  to  participate  in  any  executive   benefits   program,
          retirement plan or executive incentive bonus programs,

     (iii) Unless without his prior  consent,  his place of work is relocated to
          more than 30 miles from New York,

     (iv) Any other  material  failure on the part of the Company to comply with
          any other  provision of this  agreement or any stock option  agreement
          executed by the parties as contemplated herein.


If Mr. Althaus'  employment is terminated for other than cause, Mr. Althaus will
be  entitled to receive  the lesser of the total of three  months  salary at the
applicable  base salary rate and the present value of the salary of Mr.  Althaus
during the next 24 months.


If Mr. Althaus' employment is terminated as a result of permanent  disability or
death, a payment will be made to Mr. Althaus or his estate of the balance of the
base  salary  that  would  otherwise  have been paid to Mr.  Althaus  during the
remainder of the term of the agreement.


Craig Alford

In  April  2004  the  Company  appointed  Mr.  Craig  Alford  as Vice  President
Exploration.  Mr.  Alford  has over 20 years of  experience  in the  exploration
business  including 5 years as Senior  Geologist  to  District  Manager for Teck
Cominco's exploration programs in Kyrgyzstan, Argentina and Chile. Most recently
Mr. Alford participated in various successful exploration programs within Canada
and the former Soviet Union, including as a Geologic Consultant for Placer Dome,
one of the world's  largest  gold  mining  companies.  Mr.  Alford has worked in
exploration   for  several   major  and  junior   mining   companies   including
Falconbridge,  Golden  Star  Resources,  Granges,  and  Homestake  Minerals.  In
addition, he has worked with the Geologic Survey of Canada.


                                       53



Mr.  Alford holds a Masters  degree with  Commendation  in Geology from Lakehead
University.  He  has  extensive  exploration  experience  in  many  commodities,
including gold,  silver,  copper,  lead,  zinc, oil, and diamonds.  Mr. Alford's
exploration   experience  is  throughout  Canada  and  several  other  countries
including Venezuela, Guyana, Chile, Argentina, Suriname, and Kyrgyzstan.

Mr. Alford is responsible for overseeing Bay Resources' gold  exploration on the
Committee Bay  Greenstone  Belt and in the Slave Craton in Nunavut,  Canada.  He
will  also be  actively  involved  in  continuing  Bay  Resources'  strategy  of
acquiring high potential, early-stage gold properties worldwide.

Mr  Alford's  contract  is for one year until March 31, 2005 and since that time
has been operating on a month to month basis. Discussions are being held between
the parties with a view to renewing the contract. The contract sets out a salary
of  CDN$120,000  per annum and the issue of 150,000 stock options  pursuant to a
Stock Option Plan.  If the Company  terminates  the contract  without  cause the
Company is required to pay Mr Alford a payment equivalent to two weeks salary.

Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management and
          Related Stockholder Matters.

The  following  table sets out,  to the best of our  knowledge,  the  numbers of
shares in us beneficially owned as at June 30, 2005 by:

(i)  each of our present Executive Officers and Directors,

(ii) each  person  (including  any  "group"  as that term is  defined in Section
     13(d)(3) of the Securities Exchange Act) who beneficially owns more than 5%
     of our Common Stock, and

(iii) all of our present Directors and officers as a group.

Name                          Number of Shares Owned               Percentage of
                                                                   Shares (1)

Edensor Nominees Pty Ltd            5,394,590                        32.3

Pini Althaus                          250,000             (8)         1.5

Kerisridge Pty Ltd                  3,507,968                        19.0

Surfer Holdings Pty Ltd             1,500,000                         8.9

Kalycorp Pty Ltd                    2,000,000                        12.0

Joseph Gutnick                     12,954,208          (2)(3)        68.3
                                                 (4)(5)(6)(7)

Stera Gutnick                      12,428,558    (4)(5)(6)(7)        67.3

David Tyrwhitt                         50,000          (2)(8)         0.2

Peter Lee                             250,000          (2)(8)         1.5

Paul Ehrlich                           50,000             (8)         0.2

RAB Special Situations
(Master) Fund Limited               1,670,000             (9)        9.99
                              -----------------------------------------------

All officers and Directors
As a group                         13,554,208         (4)(10)        69.3
                              -----------------------------------------------


                                       54



Notes relating to Item 11:

(1)  Based on 16,711,630 shares outstanding

(2)  Does not include:

     (i)  8,949 shares of Common Stock beneficially owned Great Gold Mines NL or
          

     (ii) 1,918 shares of Common Stock  beneficially  owned by Quantum Resources
          Limited or

     (iii) 229,489 shares of Common Stock beneficially owned by AXIS,

     of which  companies  Messrs  Gutnick,  Lee,  and Dr.  Tyrwhitt are officers
     and/or Directors, as they disclaim beneficial ownership of those shares.

(3)  Does not include 2,500 shares of Common Stock beneficially owned by us.

(4)  Includes  5,394,590  shares  of Common  Stock  owned by  Edensor  Nominees,
     3,507,968 shares of Common Stock owned by Kerisridge  (including  1,753,984
     shares  issuable  upon exercise of  warrants),  1,500,000  shares of Common
     Stock owned by Surfer  Holdings Pty Ltd,  2,000,000  shares of Common Stock
     held by  Kalycorp  Pty Ltd and  26,000  shares  of  Common  Stock  owned by
     Pearlway Investments Proprietary Limited, of which Mr Joseph Gutnick, Stera
     M.  Gutnick  and  members  of their  family  are  officers,  Directors  and
     principal stockholders.

(5)  Includes  500,000  shares  issuable upon exercise of stock options of which
     are vested and

(6)  Joseph Gutnick is the beneficial owner of 25,650 shares of Common Stock.

(7)  Joseph Gutnick and Stera Gutnick are husband and wife.

(8)  Issuable  upon  exercise of stock  options of which 33.3% are vested  33.3%
     vest on  January  27,  2006 and the  remaining  33.4% will vest on July 27,
     2006.

(9)  RAB owns  1,670,000  shares of common  stock and  warrants  exercisable  to
     acquire an additional  1,670,000 shares of common stock. Under the terms of
     the warrants,  in no event shall such  securities be converted  into common
     shares if, after giving effect to such  conversion,  the holder  would,  in
     aggregate, beneficially own common shares of the Company in excess of 9.99%
     of the issued and  outstanding  common  shares,  within the meaning of Rule
     13d-1 of the Securities Exchange Act of 1934, as amended.


                                       55


(10) Includes  1.1  million  shares  that are  issuable  upon  exercise of stock
     options, of which 533,333 are vested,  283,333 vest on January 27, 2006 and
     the remaining 283,333 will vest on July 27, 2006.

Item 12.  Certain Relationships and Related Transactions

We are one of five  affiliated  companies  of which four are  Australian  public
companies listed on Australian  Stock Exchange.  Each of the companies have some
common Directors,  officers and shareholders. In addition, each of the companies
owns  equity  in and  is  substantially  dependent  upon  AXIS  for  its  senior
management and certain mining and exploration  staff.  The Company owns 9.09% of
the outstanding  shares of AXIS. A number of arrangements and transactions  have
been  entered into from time to time  between  such  companies.  It has been the
intention of the affiliated  companies and  respective  Boards of Directors that
each of such  arrangements  or  transactions  should  accommodate the respective
interest of the relevant  affiliated  companies in a manner which is fair to all
parties and  equitable  to the  shareholders  of each.  Currently,  there are no
material arrangements or planned transactions between the Company and any of the
other affiliated companies other than AXIS.

AXIS is paid by each  company for the costs  incurred by it in carrying  out the
administration  function  for  each  such  company.   Pursuant  to  the  Service
Agreement, AXIS performs such functions as payroll, maintaining employee records
required by law and by usual accounting procedures,  providing insurance, legal,
human resources, company secretarial,  land management,  certain exploration and
mining support,  financial,  accounting advice and services. AXIS procures items
of equipment necessary in the conduct of the business of the Company.  AXIS also
provides  for the Company  various  services,  including  but not limited to the
making available of office supplies, office facilities and any other services as
may be required  from time to time by the Company as and when  requested  by the
Company.

We are required to reimburse  AXIS for any direct costs incurred by AXIS for the
Company.  In addition,  we are required to pay a proportion  of AXIS's  overhead
cost based on AXIS's  management  estimate of our  utilisation of the facilities
and activities of AXIS plus a service fee of not more than 15% of the direct and
overhead costs. AXIS has not charged the 15% service fee to us. Amounts invoiced
by AXIS are required to be paid by us. We are also not  permitted to obtain from
sources  other  than  AXIS,  and we are not  permitted  to  perform  or  provide
ourselves,  the services contemplated by the Service Agreement,  unless we first
requests  AXIS to provide  the  service  and AXIS fails to provide  the  service
within one month.

The Service  Agreement may be terminated by AXIS or ourselves upon 60 days prior
notice.  If the Service Agreement is terminated by AXIS, we would be required to
independently  provide,  or to seek an  alternative  source  of  providing,  the
services  currently  provided by AXIS.  There can be no assurance  that we could
independently  provide or find a third  party to  provide  these  services  on a
cost-effective  basis or that any transition  from receiving  services under the
Service  Agreement will not have a material  adverse effect on us. Our inability
to provide such  services or to find a third party to provide such  services may
have a material adverse effect on our operations.

In  accordance  with the Service  Agreement  AXIS  provides the Company with the
services of our Chief Executive  Officer,  Chief Financial  Officer and clerical
employees, as well as office facilities, equipment,  administrative and clerical
services.  We pay AXIS for the actual  costs of such  facilities  plus a maximum
service fee of 15%. 


                                       56



The Company paid AXIS A$487,535  (being A$383,535 in respect to the current year
and A$104,000 being the amount owing at June 30, 2004) in respect of the Service
Agreement for the fiscal year ended June 30, 2005 and A$759,410 (being A$335,987
in respect  to the  current  year and  A$486,000  in respect to prior  years) in
respect of the  Service  Agreement  for the fiscal  year ended June 30, 2004 and
A$201,688 for the fiscal year ended June 30, 2003.  During 2005, AXIS loaned the
Company  A$249,500.At  June 30,  2003,  2004 and  2005,  the  Company  owed AXIS
A$486,000,  A$104,000  and  A$296,764  respectively  for  services  provided  in
accordance with the Service  Agreement.  During fiscal 2003, 2004 and 2005, AXIS
Consultants charged interest of A$46,642,  A$42,742 and A$13,879 respectively on
outstanding  balances.  AXIS charged  interest at rates between 9.60% and 10.10%
for fiscal  2003 and 10.10% and 10.60% for fiscal 2004 and 10.60% and 10.85% for
fiscal 2005.


Chevas, a company  associated with our President,  Joseph Gutnick,  has provided
loan funds to enable us to meet our liabilities and has paid certain expenses on
our behalf.  At June 30, 2002 we had a liability to Chevas of A$783,743.  During
the 2003 fiscal year,  Chevas loaned a further A$369,155 and charged A$86,417 in
interest to us on the loan account. At June 30 2003, we owed Chevas A$1,239,315.
During the 2004  fiscal  year,  Chevas  loaned a further  A$187,122  and charged
A$82,776 in interest to us on the loan  account.  During  fiscal 2004, we repaid
the loan in full.  Chevas charged interest to us on outstanding  balances of the
loan account at the ANZ Banking Group Limited reference rate for overdrafts over
A$100,000  plus 1%. In accordance  with this formula,  the actual  interest rate
charged  during the 2003  fiscal  year was 8.60% and during the 2004 fiscal year
was 8.60% to 9.10%.

Edensor Gold Pty Ltd , a company associated with our President,  Joseph Gutnick,
provided  loan funds  during  fiscal 2004 to enable us to meet our  liabilities.
During the 2004 fiscal year,  Edensor Gold loaned  A$69,000 and charged A$670 in
interest to us on the loan  account.  During  fiscal 2004, we repaid the loan in
full.  Edensor Gold charged  interest to us on outstanding  balances of the loan
account at the ANZ Banking  Group Limited  reference  rate for  overdrafts  over
A$100,000  plus 1%. In accordance  with this formula,  the actual  interest rate
charged during the 2004 fiscal year was 8.85% to 9.10%.

Wilzed Pty Ltd, a company  associated with the President of the Company,  Joseph
Gutnick,  has provided loan funds to enable the Company to meet its liabilities.
During the 2005 fiscal year,  Wilzed loaned  A$644,633  and charged  A$31,235 in
interest.  We repaid $396. At June 30, 2005, the Company owed Wilzed  A$675,472.
Wilzed charged interest during fiscal 2005 at rates between 9.10% and 9.35%.

On January 20, 2000, we issued  8,000,000  options over fully paid shares in our
capital at an issue price of US$0.01 per option and an exercise price of US$1.00
per option to Edensor.  The  options  had a term of 5 years with a  non-exercise
period of 2 years  subject  to a further  board  approval  for  Edensor,  either
directly of  indirectly,  to  exercise  options in the case we required to raise
further working  capital.  On March 22, 2001, the Directors agreed to extend the
term of the options  from 5 years to 10 years.  Edensor  advised us in June 2003
that it had sold 2,000,000 options to Delkern Investments Ltd. In March 2004, we
received  notification from Edensor that it was exercising all of the options it
held utilising the cashless  exercise feature of the terms and conditions of the
options.  As a result of the exercise of the options, we issued 5,142,857 shares
to Edensor.


                                       57



As described in the section headed "Canadian Exploration  Properties" we entered
into an agreement to explore for gold on properties owed by Tahera.  Mr Gutnick,
our President,  was Executive Chairman of Tahera and his family company, Edensor
Nominees,  who are our  controlling  stockholder,  was a shareholder  of Tahera.
During fiscal 2002, Tahera incurred certain exploration and administration costs
in Canada on our  behalf  amounting  to  A$36,365  and this  amount was owing to
Tahera at June 30, 2002. During fiscal 2003, Tahera incurred further exploration
and administration  costs in Canada on our behalf amounting to A$65,314.  During
fiscal  2003,  Mr. J.I.  Gutnick and Chevas paid Tahera  A$47,368  and  A$53,350
respectively on our behalf.  During fiscal 2002 and 2003,  Tahera did not charge
us interest on amounts  outstanding.  At June 30, 2003,  we owed Tahera  A$1,361
(US$900) and Mr. J.I. Gutnick A$47,368  (US$31,594).  During fiscal 2004 we paid
Mr J I Gutnick the amount in full and Tahera advised the Company in writing that
there was no monies owing to it by the Company.

Quantum  Resources  Limited  incurred  certain costs on our behalf  amounting to
A$43,941  (US$29,308)  in respect to our activities in Tibet China (See Item 1 -
Business - General) as a result of Quantum's  contacts in China. This amount was
outstanding  at June 30, 2003.  During  fiscal 2004,  we repaid the principal in
full.

Kerisridge Pty Ltd, a company  associated  with our  President,  Mr J I Gutnick,
loaned us  A$2,273,186  in March 2004 for the purpose of repaying  our long term
debt. On March 31, 2004, Kerisridge agreed to convert all of the debt we owed to
it into common  stock and warrants in us. We issued  1,753,984  shares of common
stock and 1,753,984 warrants  exercisable at US$1.30 and at any time up to March
31, 2006 in full repayment of the amount owing to Kerisridge.

Transactions with Management.

We have a policy  that we will not enter into any  transaction  with an Officer,
Director  or  affiliate  of us or  any  member  of  their  families  unless  the
transaction  is  approved  by  a  majority  of  our  disinterested  non-employee
Directors  and the  disinterested  majority  determines  that  the  terms of the
transaction  are  no  less  favourable  to us  than  the  terms  available  from
non-affiliated  third  parties or are  otherwise  deemed to be fair to us at the
time authorised.


                                       58



                                     PART IV

Item 13.   Exhibits, Financial Statement Schedules and Reports on
           Form 8-K


(a)        Consolidated Financial Statements and Notes thereto.

          (I)  The Consolidated Financial Statements and Notes thereto listed on
               the Index at page 58 of this  Annual  Report on Form  10-KSB  are
               filed as a part of this Annual Report.


(b)       Exhibits

          The  Exhibits to this  Annual  Report on Form 10-KSB are listed in the
          Exhibit Index at page 19 of this Annual Report.

(c)       Form 8-K

          Not Applicable

Item 14.  Principal Accounting Fees and Services

The  following  table shows the audit fees we were billed by PKF for fiscal 2005
and 2004.

                               2005                   2004
                               ----                   ----

Audit fees                      $52,061                $41,121
Audit related fees*               4,308                      -
Tax fees                              -                      -
                         ---------------        ---------------
Total                           $56,369                $41,121
                         ===============        ===============

* services relating to listing on Toronto Venture Exchange A$4,308 (2004: A$nil)

Audit  fees were for the audit of our  annual  financial  statements,  review of
financial statements included in our 10-QSB/10-Q quarterly reports, and services
that are normally provided by independent  auditors in connection with our other
filings with the SEC. This category also includes  advice on accounting  matters
that  arose  during,  or as a result  of,  the audit or  review  of our  interim
financial statements.

As part of its duties,  our Audit  Committee  pre-approves  audit and  non-audit
services  performed  by our  independent  auditors  in order to assure  that the
provision of such services does not impair the auditors' independence. Our Audit
Committee  does not delegate to management its  responsibilities  to pre-approve
services performed by our independent auditors.


                                       59



                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has caused this Annual Report to be signed on its
behalf by the undersigned, thereunto duly authorised.


                                                BAY RESOURCES LTD.

                                                (Registrant)

                                                By:   /s/ Peter J Lee
                                                      --------------------------
                                                      Peter J Lee
                                                      Director, Secretary,
                                                      Chief Financial Officer
                                                      and Principal Financial
                                                      and Accounting Officer



Dated: September 27, 2005


                                       60



                           FORM 10-KSB Signature Page


Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed  below by the  following  persons in the  capacities  and on the
dates indicated.


Signature                      Title                          Date

     /s/ Joseph Gutnick
1.   -------------------       Chairman of the Board,
     Joseph Gutnick            President and Chief Executive
                               Officer (Principal Executive
                               Officer), and Director.        September 27, 2005



     /s/ David Tyrwhitt
2.   -------------------       Director.                      September 27, 2005
     David Tyrwhitt



     /s/ Peter Lee
3.   -------------------       Director, Secretary,
     Peter Lee                 Chief Financial Officer and
                               Principal Financial and
                               Accounting Officer.            September 27, 2005



     /s/ Mordechai Gutnick
4.   ---------------------     Director                       September 27, 2005
     Mordechai Gutnick


                                       61



                                  EXHIBIT INDEX



Incorporated by     Exhibit
Reference to:       No          Exhibit


                          
(1)  Exhibit 3.1    3.1         Certificates of Incorporation of the Registrant
(1)  Exhibit 3.2    3.2         By-laws of the Registrant
(2)  Exhibit A      3.3         Amendment to Certificate of Incorporation dated July 17, 1999
(3)                 3.4         Amendment to Certificate of Incorporation dated October 17,
                                2000
                    3.5         Amendment to Certificate of Incorporation dated April 6, 2005
(4)  99.3           4.1         Warrant to purchase 1,670,000 shares of common stock
(4)  99.4           4.2         Warrant to purchase 1,783,984 shares of common stock
(5)  Exhibit 10.5   10.4        Service Agreement dated November 25, 1988, by and between
                                the Registrant and AWI Administration Services Pty Limited
(6)  Exhibit 10.6   10.5        Agreement with Tahera Corporation
(4)  Exhibit        10.6        Subscription Agreement with RAB Special Solutions LP
(7)                 10.7        Employment Agreement between the Registrant and C. Alford
                    10.8        Employment Agreement between the Registrant and P Althaus.
(7)                 10.9        Sponsorship Agreement with Canaccord Capital
     *              21          List of Subsidiaries as at June 30, 2005.
     *              31.1        Certification pursuant to 18 U.S.C. Section 1350 as adopted
                                pursuant to Section 302 of the
                                Sarbanes-Oxley Act of 2002 by Peter
                                James Lee.
     *              31.2        Certification pursuant to 18 U.S.C. Section 1350 as adopted
                                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by
                                Joseph Isaac Gutnick.
     *              32.1        Certification pursuant to 18 U.S.C. Section 1350 as adopted
                                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by
                                Joseph Issac Gutnick.
     *              32.2        Certification pursuant to 18 U.S.C. Section 1350 as adopted
                                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by
                                Peter James Lee

     *Filed herewith



                                       62



    Financial  Statements  for the years  ended  June 30,  2004 and  2005.  Bay
    Resources,  Ltd Audited  Consolidated  Financial Statements for the Company
    and its  Subsidiaries  for  the  year  ended  June  30,  2004  and  Audited
    Consolidated  Financial  Statements for the Company for the year ended June
    30, 2005.


(1) Registrant's Registration Statement on Form S-1 (File No. 33-14784).

(2) Registrant's Definitive Information Statement dated August 11, 1999.

(3) Registrant's Definitive Information Statement dated October 17, 2000.

(4) Registrant's Form 8-K filed on April 8, 2004.

(5) Registrant's  Annual report on Form 10-K for the fiscal year ended June 27,
    1989.

(6) Registrant's  Quarterly Report on Form 10-Q for the quarter ended March 31,
    2002.

(7) Registrant's Annual Report on Form 10-KSB for the year ended June 30, 2004.


                                       63





                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)


                        Consolidated Financial Statements

                             June 30, 2005 and 2004

         (with Report of Independent Registered Public Accounting Firm)






                                      F-16

CONTENTS


                                                                            Page


Report of Independent Registered Public Accounting Firm                      F-2
Consolidated Balance Sheet                                                   F-3
Consolidated Statements of Operations                                        F-4
Consolidated Statements of Stockholders' Equity (Deficit)                    F-5
Consolidated Statements of Cash Flows                                        F-6
Notes to Consolidated Financial Statements                            F-7 - F-16


                                      F-1



             Report of Independent Registered Public Accounting Firm



To the Board of Directors and Stockholders of
Bay Resources Ltd.

We have audited the  accompanying  consolidated  balance  sheet of Bay Resources
Ltd. and  Subsidiaries  (An Exploration  Stage Company) as of June 30, 2005, and
the  related  consolidated   statements  of  operations,   stockholders'  equity
(deficit)  and cash  flows for the years  ended  June 30,  2005 and 2004 and the
cumulative  period  from  July 1, 2002  (inception  of  exploration  activities)
through June 30, 2005. These financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Bay Resources,  Ltd.
and  Subsidiaries  at June 30, 2005,  and the results of its  operations and its
cash flows for the years ended June 30, 2005 and 2004 and the cumulative  period
from July 1, 2002 (inception of exploration activities) through June 30, 2005 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
the Company will  continue as a going  concern.  As described in note 1, at June
30, 2005 the Company had not yet commenced revenue producing  operations and had
a retained  deficit of  A$31,406,000  (US$23,931,000).  These  conditions  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
The consolidated  financial statements do not include any adjustments that might
result from the  outcome of this  uncertainty.  Management's  plans in regard to
these matters are also discussed in note 1.






New York, NY                                        PKF
September 6, 2005                                   Certified Public Accountants
                                                    A Professional Corporation


                                      F-2



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                           Consolidated Balance Sheet
                                  June 30, 2005



                                                                               Convenience
                                                                  A$000's      Translation
                                                                     2005         US$000's
                                                                                      2005
                                                           -------------------------------
                                                                                  
ASSETS

Current Assets:
Cash                                                                   2                2
Receivables                                                          126               96
Prepayments and Deposits                                              82               62
                                                           -------------------------------
Total Current Assets                                                 210              160
                                                           -------------------------------

Non Current Assets:
Property and Equipment, net                                           17               13
                                                           -------------------------------
Total Non Current Assets                                              17               13
                                                           -------------------------------

Total Assets                                                         227              173
                                                           ===============================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable and Accrued Expenses                                605              460
                                                           -------------------------------
Total Current Liabilities                                            605              460
                                                           -------------------------------

Non Current Liabilities
Long-Term Advance - Affiliate                                        972              741
                                                           -------------------------------
Total Non Current Liabilities                                        972              741
                                                           -------------------------------

Total Liabilities                                                  1,577            1,201
                                                           -------------------------------

Stockholders' Equity (Deficit):
Common stock: $.0001 par value
50,000,000 shares authorised,
16,714,130 shares issued                                               2                2
Less Treasury Stock, at Cost, 2,500 shares                           (20)             (15)
Additional Paid-in-Capital                                        30,275           23,068
Deferred Compensation                                               (198)            (151)
Other Comprehensive loss                                              (3)              (2)
Retained Deficit during exploration stage                         (5,004)          (3,813)
Retained Deficit prior to exploration                            (26,402)         (20,118)
                                                           -------------------------------
Total Stockholders' Equity (deficit)                              (1,350)          (1,029)
                                                           -------------------------------

Total Liabilities and Stockholders' Equity                           227              172
                                                           ===============================


See Notes to Financial Statements


                                      F-3





                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                      Consolidated Statements of Operations
                   For the years ended June 30, 2004 and 2005
                   and for the cumulative period July 1, 2002
             (inception of exploration activities) to June 30, 2005




                                                                          Convenience  July 1, 2002
                                                                          Translation    to June 30,
                                                A$000's        A$000's       US$000's          2005
                                                   2004           2005           2005       A$000's
                                           ---------------------------------------------------------

Revenues                                            $-             $-             $-             $-
                                           ---------------------------------------------------------
                                                                                    
Cost and expenses

Stock Based Compensation                             -            377            287            377
Exploration Expenditure                            951          1,277            973          2,426
Interest Expense net - related entity              122             44             34            299
Legal, Accounting and Professional                 112            189            144            363
Administrative                                     537            716            546          1,541
                                           ---------------------------------------------------------
                                                 1,722          2,603          1,984          5,007
                                           ---------------------------------------------------------
(Loss) from Operations                          (1,722)        (2,603)        (1,984)        (5,007)
Foreign Currency Exchange Gain (Loss)               (1)             3              2             (3)
                                           ---------------------------------------------------------
(Loss) before Income Tax                        (1,723)        (2,600)        (1,982)        (5,004)
Provision for Income Tax                             -              -              -              -
                                           ---------------------------------------------------------
Net (Loss)                                     $(1,723)        (2,600)        (1,982)        (5,004)
                                           =========================================================


Basic net (Loss) per Common Equivalent
 Shares                                          $(.18)         $(.16)         $(.12)         $(.38)
                                           =========================================================

Weighted Number of Common Equivalent
Shares Outstanding (000's)                       9,385         16,714         16,714         12,932
                                           =========================================================



See Notes to Financial Statements


                                      F-4



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
            Consolidated Statements of Stockholders' Equity (Deficit)
                             June 30, 2004 and 2005
                   and for the cumulative period July 1, 2002
             (inception of exploration activities) to June 30, 2005




                       Shares   Common   Treasury    Additional   Retained      Retained     Deferred   Other        Total
                                Stock    Stock, at    Paid-in     Earnings      Earnings      Compen-   Compre-
                                Amount    Cost        Capital     (Deficit)     (Deficit)     sation    hensive
                                                                 (during the    (prior to                Loss
                                                                 Exploration   Exploration
                                                                   stage)         stage)
                      ------------------------------------------------------------------------------------------------------
                                                                                            
                        000's  A$000's     A$000's      A$000's      A$000's       A$000's    A$000's   A$000's    A$000's

Balance June 30,
 2002                   6,347       $1       $(20)      $25,175            -     $(26,402)          -         -   $(1,246)
Net loss                    -        -           -            -        (681)             -          -         -      (681)
                      ------------------------------------------------------------------------------------------------------

Balance June 30,
 2003                   6,347       $1       $(20)      $25,175       $(681)     $(26,402)          -         -   $(1,927)

Issuance of
 1,753,984 shares
 and warrants in
 lieu of debt
 repayment              1,754        -           -        2,273            -             -          -         -      2,273
Sale of 1,670,000
 shares and warrants    1,670        -           -        2,253            -             -          -         -      2,253
Issuance of
 6,943,057 shares on
 cashless exercise
 of options             6,943        1           -          (1)            -             -          -         -          -
Net unrealised loss
 on foreign exchange        -        -           -            -            -             -          -       (9)        (9)
Net (loss)                  -        -           -            -     $(1,723)             -          -         -     (1,723)
                      ------------------------------------------------------------------------------------------------------
Balance June 30,
 2004                  16,714       $2       $(20)      $29,700     $(2,404)     $(26,402)          -       (9)       $867
  
Issuance of
 1,400,000 options
 under 2004 stock
 option plan                -        -           -          575            -             -      (575)         -          -

Amortisation of
 1,400,000 options
 under 2004 stock
 option plan                -        -           -            -            -             -        377         -        377

Net unrealised gain
 on foreign exchange        -        -           -            -            -             -                    6          6

Net/(loss)                  -        -           -            -      (2,600)                                       (2,600)
                      ------------------------------------------------------------------------------------------------------

Balance June 30,
 2005                  16,714       $2       $(20)       30,275     $(5,004)      (26,402)      (198)       (3)    (1,350)
                      ------------------------------------------------------------------------------------------------------



See Notes to Financial Statements


                                      F-5



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                      Consolidated Statements of Cash Flows
                   For the Years Ended June 30, 2004 and 2005
                   and for the cumulative period July 1, 2002
             (inception of exploration activities) to June 30, 2005



                                                                          Convenience   July 1, 2002
                                                                          Translation    to June 30,
                                                   A$000's    A$000's        US$000's           2005
                                                      2004       2005            2005        A$000's
                                              --------------------------------------------------------
                                                                                      
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss)                                         $(1,723)   $(2,600)        $(1,981)       $(5,004)
Adjustments to reconcile net (loss) to net
 cash (used) in operating activities
Foreign Exchange                                        (9)         6               4             (3)
Depreciation of plant and equipment                      1          9               7             10
Stock based compensation                                 -        377             287            377
Accrued interest added to principal                      1         50              38            184
Net Change In :
Receivables                                            (84)       (39)            (30)          (126)
Staking Deposit                                          -          -               -             23
Prepayments and Deposits                              (241)       159             121            (82)
Accounts Payable and Accrued Expenses                  338        110              84            156
Short-Term Advance - Affiliates                        103       (104)            (79)           (36)
                                              --------------------------------------------------------

Net Cash used in Operating Activities               (1,614)    (2,032)         (1,549)        (4,501)
                                              --------------------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of Plant and Equipment                        (21)        (6)             (4)           (27)
                                              --------------------------------------------------------
Net Cash used in Investing Activities                  (21)        (6)             (4)           (27)
                                              --------------------------------------------------------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Net borrowing (repayments) from Affiliates          (1,774)       922             703              3
Sale of Shares of Common Stock                       2,253          -               -          2,253
Proceeds from loan payable                           2,273          -               -          2,273
                                              --------------------------------------------------------

Net Cash Provided by Financing Activities            2,752        922             703          4,530
                                              --------------------------------------------------------
Net Increase (Decrease) in Cash                      1,117     (1,116)           (850)             1
Cash at Beginning of Year                                1      1,118             852              1
                                              --------------------------------------------------------
Cash at End of Year                                  1,118          2               2              2
                                              ========================================================

Supplemental Disclosures
Interest Paid                                         $122          -               -            255

NON CASH FINANCING ACTIVITY
Debt repaid through issuance of shares              $2,273          -               -          2,273
Stock Options recorded as Deferred
 Compensation                                            -       $575            $438           $575



See Notes to Financial Statements


                                      F-6



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

(1)  ORGANIZATION AND BUSINESS

     Bay Resources,  Ltd. ("Bay  Resources" or the "Company") is incorporated in
     the State of  Delaware.  The  principal  shareholder  of Bay  Resources  is
     Edensor   Nominees   Proprietary   Limited   ("Edensor"),   an   Australian
     corporation.  Edensor  owned 32.3% of Bay  Resources  as of June 30,  2005.
     During fiscal 1998, Bay Resources incorporated a subsidiary, Baynex.com Pty
     Ltd  (formerly  Bayou  Australia  Pty Ltd),  under  the laws of  Australia.
     Baynex.com  has not traded  since  incorporation.  On August  21,  2000 the
     Company  incorporated a new wholly owned subsidiary,  Bay International Pty
     Ltd,  (now  known  as  Bay   Resources   (Asia)  Pty  Ltd),  a  corporation
     incorporated  under  the  laws of  Australia.  In June  2002,  the  Company
     incorporated  a  new  wholly  owned   subsidiary,   Golden  Bull  Resources
     Corporation  ("Golden Bull")  (formerly  4075251 Canada Inc), a corporation
     incorporated under the laws of Canada. Golden Bull is the vehicle that will
     be used by the  Company to  undertake  exploration  activities  for gold in
     Canada.

     During the 2002 fiscal year,  Bay Resources  expanded its gold  exploration
     business by entering  into an  agreement  to explore for gold on  extensive
     property  interests  in  northern  Canada held by Tahera  Corporation;  and
     making  application via a new 100% owned subsidiary,  Golden Bull Resources
     Corporation,  for  properties  in  the  highly  prospective  Committee  Bay
     Greenstone Belt in Nunavut, Canada.

     Bay Resources originally applied for 29 claims totaling 71,694 acres in the
     Committee Bay Greenstone Belt in central Nunavut, Canada. These claims were
     recorded  on October  16,  2002.  From the  original  area,  Bay  Resources
     retained a total of  49,439.48  acres on 21  claims.  To keep the claims in
     good  standing,  Bay  Resources  needed to spend a total of  CN$197,798  of
     assessment  work was required to be completed  by the  anniversary  date of
     October 16, 2004. A total of CDN$98,879 is required in each subsequent year
     up to 2012 (at which  point a decision to bring the claims to lease must be
     made). Bay Resources spent more than the minimum requirement and the excess
     spent can be used to  offset  the  expenditure  requirements  in  following
     years.  As a result,  Bay  Resources has already met its  commitment  until
     2012.

     The accompanying  consolidated  financial  statements have been prepared in
     conformity  with  accounting  principles  generally  accepted in the United
     States of America,  which  contemplates  continuation of Bay Resources as a
     going concern. However, Bay Resources is an exploration stage company which
     has  not yet  commenced  revenue  producing  operations  and has  sustained
     recurring losses since inception.

     In addition,  Bay Resources has  historically  relied on loans and advances
     from  corporations  affiliated with the President of Bay Resources and fund
     raising through the sale of equity  instruments.  Based on discussions with
     these  affiliate  companies Bay  Resources  believes this source of funding
     will continue to be available.

     The  Company's  ability  to  continue  operations  through  fiscal  2006 is
     dependent upon future funding from affiliated  entities,  capital raisings,
     or its ability to commence revenue  producing  operations and positive cash
     flows.


                                      F-7



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

(1)  ORGANIZATION AND BUSINESS (continued)

     The Company raised A$2,253,000 in April 2004 through the issuance of shares
     under  a  Private   Placement  and  has  used  their  funding  to  commence
     exploration activity in Canada.

(2)  RECENT ACCOUNTING PRONOUNCEMENTS

     In  December  2002,  the  Financial  Accounting  Standards  Board  ("FASB")
     approved Statement of Financial  Accounting  Standards No. 148, "Accounting
     for  Stock-Based  Compensation  - Transition and  Disclosure.  SFAS No. 148
     amends Statement of Financial Accounting standards No. 123, "Accounting for
     Stock-Based  compensation" (SFAS No. 123) to provide alternative methods of
     transition  for a  voluntary  change  to the fair  value  based  method  of
     accounting for stock-based employee compensation. In addition, SFAS No. 148
     amends the  disclosure  requirements  of SFAS No. 123 to require  prominent
     disclosures  in both  annual and  interim  financial  statements  about the
     method of accounting for stock-based  employee  compensation and the effect
     of the method used on reported results.  SFAS No. 148 was effective for the
     Company fiscal year ended June 30, 2003.

     In May 2003, the FASB issued SFAS No. 150 "Accounting for Certain Financial
     Instruments with Characteristics of both Liabilities and Equity".  SFAS No.
     150 establishes standards for how an issuer classifies and measures certain
     financial  instruments with characteristics of both liabilities and equity.
     It requires that an issuer  classify a financial  instrument that is within
     its  scope  as a  liability  (or  an  asset  is  some  circumstances).  The
     requirements  of  SFAS  No.  150  apply  to  issuer's   classification  and
     measurement of freestanding instruments, including those that comprise more
     than  one  option  or  forward  contract.  SFAS No.  150 does not  apply to
     features  that  are  embedded  in a  financial  instrument  that  is  not a
     derivative  in its  entirety.  SFAS  No.  150 is  effective  for  financial
     instruments  entered into or modified  after May 31, 2003, and otherwise is
     effective at the beginning of the first interim period beginning after June
     15,  2003,  except  for  mandatory  redeemable  financial   instruments  of
     non-public  entities.  It is to be  implemented by reporting the cumulative
     effect of a change in an accounting  principle  for  financial  instruments
     created  before the issuance date of SFAS No. 150 and still existing at the
     beginning  of the  interim  period of  adoption.  The  adoption of this new
     standard had no effect on the Company's financial position.

     In  December  2004,  the FASB  issued  Statement  of  Financial  Accounting
     Standards No. 153 (SFAS 153),  "Exchanges of Nonmonetary  Assets." SFAS 153
     amends the guidance in APB No. 29, "Accounting for Nonmonetary Assets." APB
     No.29 was based on the  principle  that  exchanges  of  nonmonetary  assets
     should be  measured  on the fair  value of the assets  exchanged.  SFAS 153
     amends APB No. 29 to eliminate the exception for  nonmonetary  exchanges of
     similar  productive  assets and  replaces it with a general  exception  for
     exchanges of nonmonetary  assets that do not have  commercial  substance if
     the future cash flows of the entity are expected to change significantly as
     a result of the exchange.  SFAS 151 is effective  for financial  statements
     issued for fiscal years beginning after June 15, 2005.


                                      F-8



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

(2)  RECENT ACCOUNTING PRONOUNCEMENTS (continued)

     The adoption of SFAS 153 is not  expected to have a material  effect on the
     Company's financial position or results of operations.

     In December  2004,  the FASB  revised  Statement  of  Financial  Accounting
     Standards No. 123 (SFAS 123(R)), "Accounting for Stock-Based Compensation."
     The SFAS 123(R)  revision  established  standards  for the  accounting  for
     transactions in which an entity exchanges its equity  instruments for goods
     or services and focuses  primarily on accounting for  transactions in which
     an entity obtains employee services in share-based payment transactions. It
     does  not  change  the   accounting   guidance  for   share-based   payment
     transactions with parties other than employees. For public entities that do
     not file as small business issuers, the revisions to SFAS 123 are effective
     as of the  beginning of the first interim or annual  reporting  period that
     begins after June 15, 2005. For public entities that file as small business
     issuers,  the revisions to SFAS 123(R) are effective as of the beginning of
     the first interim or annual reporting period that begins after December 15,
     2005. For non-public  entities,  the revisions to SFAS 123 are effective as
     of the  beginning  of the first annual  reporting  period that begins after
     December 15, 2005.  The adoption this  statement will not have an effect on
     the  Company's  financial  position or results of operations as the Company
     already  applies  the  provisions  of FASB  No.123 and  accounts  for stock
     options under the fair value method

     In  March  2005,  the FASB  issued  FASB  Interpretation  ("FIN")  No.  47,
     "Accounting  for  Conditional  Asset  Retirement  Obligations."  FIN No. 47
     clarifies the meaning of the term CONDITIONAL  ASSET RETIREMENT  OBLIGATION
     as used in SFAS 143,  "Accounting  for Asset  Retirement  Obligations"  and
     clarifies  when an entity would have  sufficient  information to reasonably
     estimate  the  fair  value  of  an  asset   retirement   obligation.   This
     interpretation  is  effective  no later than the end of fiscal years ending
     after  December 15, 2005 (December 31, 2005 for  calendar-year  companies).
     Retrospective application of interim financial information is permitted but
     is not required.  The adoption of this  statement is not expected to have a
     material effect on the Company's consolidated  financial position,  results
     of operations or cash flows.

     In May 2005,  the FASB issued SFAS no. 154,  "Accounting  Changes and Error
     Corrections ("SFAS No. 154") which replaces APB Opinion No. 20, "Accounting
     Changes" and SFAS No. 3, "Reporting Accounting Changes in Interim Financial
     Statements-An  Amendment  of ABP  Opinion  No. 28.  SFAS No.  154  provides
     guidance on the  accounting  for and  reporting of  accounting  changes and
     error  corrections.   Specially,  this  statement  requires  "retrospective
     application"  of the direct  effect for a  voluntary  change in  accounting
     principle to prior periods' financial statements,  if it is practical to do
     so. SFAS No. 154 also strictly  defines the term  "restatement" to mean the
     correction of an error revising  previously  issued  financial  statements.
     SFAS No. 154 is effective for accounting  changes and corrections of errors
     made in fiscal years  beginning  after December 15, 2005 and is required to
     be  adopted  by the  Company  in the first  quarter  of fiscal  year  2007.
     Although  we will  continue to evaluate  the  application  of SFAS No. 154,
     management does not currently  believe adoption will have a material impact
     on our results of operations, financial position or cash flows.


                                      F-9



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

(3)  ACCOUNTING POLICIES

     The following is a summary of the significant  accounting policies followed
     in  connection   with  the  preparation  of  the   consolidated   financial
     statements.

     (a)  Consolidation

          The  consolidated  financial  statements  include the  accounts of Bay
          Resources and the 100%  interest it holds in  Baynex.com  Pty Ltd, Bay
          Resources  (Asia) Pty Ltd and Golden Bull Resources  Corporation.  All
          significant   intercompany   transactions   and  balances   have  been
          eliminated in consolidation.

     (b)  Foreign Currency Translation

          The  majority  of  Bay  Resources'  administrative  operations  are in
          Australia and as a result the reporting  currency of its  consolidated
          accounts are maintained in Australian dollars. The functional currency
          of the Company Canadian  subsidiary is the Canadian dollar. The income
          and expenses of operations are translated into  Australian  dollars at
          the average  exchange rate  prevailing  during the period.  Assets and
          liabilities of the Canadian  subsidiary are translated into Australian
          dollars at the period-end  exchange  rate.  The resulting  translation
          adjustments  are  accumulated in a separate  component of Stockholders
          Equity.  Foreign  currency  translation   adjustments  have  not  been
          material for all periods presented.

     (c)  Financial Instruments

          The Company's  cash,  receivables,  payables and short term borrowings
          represent  financial  instruments  whose carrying  amounts  reasonably
          approximate their fair value.

     (d)  Comprehensive Income (Loss)

          The Company follows Financial  Accounting Standards No. 130 (SFAS 130)
          "Reporting  Comprehensive  Income".  SFAS 130  requires  a company  to
          report comprehensive income (loss) and its components in a full set of
          financial  statements.  Comprehensive  income  (loss) is the change in
          equity  during  a  period  from  transactions  and  other  events  and
          circumstances  from  non-owner  sources,   such  as  unrealized  gains
          (losses)  on  foreign  currency  translation  adjustments.  Changes in
          unrealized  foreign  currency  translation  gains or  (losses)  during
          fiscal 2005 and 2004 amounted to A$6,000 and (A$9,000),  respectively.
          Accordingly,  comprehensive loss for the years ended June 30, 2005 and
          2004 amounted to A$2,594,000 and A$1,732,000, respectively.


                                      F-10



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

     (3)  ACCOUNTING POLICIES (continued)

          (e)  Property and Equipment

               Property  and  equipment  is  stated  at  cost.  Depreciation  is
               computed over a period covering the estimated  useful life of the
               applicable property and equipment.  Accumulated  depreciation and
               depreciation  expense as of and for the year ended June 30,  2005
               amounted to A$2,654  (2004  A$1,052)  and A$1,602  (2004  $1,052)
               respectively.

          (f)  Cash Equivalents

               Bay Resources  considers all highly  liquid  investments  with an
               original maturity of three months or less at the time of purchase
               to be cash  equivalents.  For the periods presented there were no
               cash equivalents.

          (g)  Income Tax

               Income taxes are provided on financial  statement income. For the
               periods  presented  there  was no  taxable  income.  There are no
               deferred  income taxes  resulting from  temporary  differences in
               reporting  certain  income and  expense  items for income tax and
               financial accounting purposes.  Bay Resources at this time is not
               aware  of any net  operating  losses  which  are  expected  to be
               realised.

          (h)  Loss per share

               Basic (loss) per share is computed based on the weighted  average
               number of common shares outstanding  during the period.  Dilutive
               loss per share has not been  presented  as the  effects of common
               stock equivalents are anti-dilutive.

          (i)  Exploration Expenditure

               Exploration expenditure consisting of prospecting and exploration
               costs are written off into operations as incurred.

          (j)  Accounting for Stock Options

               For the issuances of stock options,  the Company follows the fair
               value  provisions  of  Financial  Accounting  Standards  No.  123
               "Accounting for Stock Based Compensation".  SFAS 123 requires the
               company to measure  the cost of  employee  services  received  in
               exchange for an award of equity  instruments  based on grant date
               fair value.  The cost will be  recognised  over the period during
               which an employee is required to provide  service in exchange for
               the award - usually the vesting  period.  In the case where there
               is no  required  service  period,  the fair  value of the  equity
               instruments is expensed immediately.


                                      F-11



                      BAY RESOURCES, LTD. AND SUBSIDIARIES
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

(3)  ACCOUNTING POLICIES (continued)

     (k)  Pension Plans

          The Company  does not have any pension or profit  sharing  plans.  The
          Company's Vice President  Exploration  and temporary staff employed in
          the   exploration   programme   in  Canada  are  subject  to  Canadian
          requirements for contributions to pension plans. At June 30, 2005, the
          Company has an obligation to pay A$13,570.  Contributions  to employee
          benefit or health  plans  during  the year  ended  June 30,  2005 were
          A$7,196.

     (l)  Convenience Translation to US$

          The  consolidated  financial  statements  as of and for the year ended
          June 30, 2005 have been  translated  into United States  dollars using
          the rate of  exchange  of the United  States  dollar at June 30,  2005
          (A$1.00=US$0.7620).   The   translation   was  made   solely  for  the
          convenience of readers in the United States.

     (m)  Use of Estimates

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and assumptions  that affect certain reported amounts and disclosures.
          Accordingly,   actual  results  could  differ  from  those  estimates.
          Significant  estimates  required to be made by management  include the
          fair value of options and other equity instruments issued.

     (n)  Comparative Figures

          Where  necessary,   comparative  figures  have  been  restated  to  be
          consistent with current year presentation.

(4)  INVESTMENT  SECURITIES The Company has several small  historical cost based
     investments  that it has  provided  a full  valuation  for  diminution  and
     carry's at a $nil value (2004 $nil).



                                                                                           A$000's
                                                                                              2005
                                                                                              ----
                                                                                            
(5)  LONG-TERM ADVANCE - AFFILIATE
     Loan from AXIS Consultants, a corporation affiliated with the                             297
     President of Bay Resources.  Interest accrued at 10.60% to 10.85%
     being the National Australia Bank rate plus 1.5% for overdrafts over
     $100,000.

     Loan from Wilzed Pty Ltd, a corporation  affiliated with the President                    675
     of Bay Resources. Interest accrued at 9.10% to 9.35% being the rate.                      

                                                                                 --------------------
                                                                                               972
                                                                                 ====================



                                      F-12



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

(6)  AFFILIATE TRANSACTIONS

     Bay Resources  advances to and receives  advances from various  affiliates.
     All  advances   between   consolidated   affiliates   are   eliminated   on
     consolidation.

     Included  in  short  term   advances  and  accounts   payable  and  accrued
     liabilities  at June 30,  2004 was  A$104,000  due to AXIS,  an  affiliated
     management company. This entity is affiliated through common management and
     ownership.  The Company paid AXIS A$487,535  (being A$383,535 in respect to
     the current year and A$104,000  being the amount owing at June 30, 2004) in
     respect of the  Service  Agreement  for the fiscal year ended June 30, 2005
     and A$759,410 (being A$335,987 in respect to the current year and A$486,000
     in respect to prior  years) in respect  of the  Service  Agreement  for the
     fiscal  year ended June 30,  2004  During  2005,  AXIS  loaned the  Company
     A$249,500.At  June 30, 2004 and 2005,  the Company owed AXIS  A$104,000 and
     A$296,764 respectively for services provided in accordance with the Service
     Agreement.  During fiscal 2004 and 2005, AXIS Consultants  charged interest
     of A$42,742 and A$13,879 respectively on outstanding balances. AXIS charged
     interest at rates between  10.10% and 10.60% for fiscal 2004 and 10.60% and
     10.85% for fiscal 2005.

     Chevas Pty Ltd, a company  associated  with the  President  of the Company,
     Joseph  Gutnick,  has provided loan funds to enable the Company to meet its
     liabilities and has paid certain expenses on behalf of the Company. At June
     30 2002,  the Company owed Chevas  A$783,743.  During the 2003 fiscal year,
     Chevas loaned a further  A$369,155 and charged  A$86,417 in interest to the
     Company on the loan  account.  At June 30,  2003,  the Company  owed Chevas
     A$1,239,315. During the 2004 fiscal year, Chevas loaned a further A$187,122
     and charged A$82,776 in interest to the Company on the loan account. During
     the 2004  fiscal  year the  Company  repaid the loan in full  amounting  to
     A$1,509,214.  Interest  rates charged in fiscal 2004 ranged between 8.6% to
     9.10%.

     Edensor  Gold Pty Ltd,  a  company  associated  with the  President  of the
     Company,  Joseph Gutnick,  provided loan funds during fiscal 2004 to enable
     the Company to meet its liabilities.  During the 2004 fiscal year,  Edensor
     Gold loaned A$69,000 and charged A$670 in interest.  During fiscal 2004, we
     repaid the loan in full.  Edensor  Gold  charged  interest  on  outstanding
     balances of the loan  account at the ANZ Banking  Group  Limited  reference
     rate for  overdrafts  over  A$100,000  plus 1%.  In  accordance  with  this
     formula,  the actual  interest rate charged during the 2004 fiscal year was
     8.85% to 9.10%.

     Wilzed Pty Ltd, a company  associated  with the  President  of the Company,
     Joseph  Gutnick,  has provided loan funds to enable the Company to meet its
     liabilities.  During the 2005 fiscal  year,  Wilzed  loaned  A$644,633  and
     charged A$31,235 in interest. We repaid $396. At June 30, 2005, the Company
     owed Wilzed A$675,472.  Wilzed charged interest during fiscal 2005 at rates
     between 9.10% and 9.35%.


                                      F-13



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

(6)  AFFILIATE TRANSACTIONS (continued)

     At June 30, 2002,  the Company owed Tahera  A$36,365.  During  fiscal 2003,
     Tahera incurred certain  exploration and administration  costs in Canada on
     behalf of the Company amounting to A$65,314 and Mr. J.I. Gutnick and Chevas
     paid Tahera  A$47,368 and A$53,350  respectively  on behalf of the Company.
     During fiscal 2003 and 2004,  Tahera did not charge the Company interest on
     amounts outstanding.  At June 30, 2003, the Company owed Tahera A$1,361 and
     Mr. J.I. Gutnick  A$47,368.  During fiscal 2004, Mr J I Gutnick was paid in
     full and Tahera  advised  the  Company in writing  that there was no monies
     owing to it by the Company.

     Quantum  Resources  Limited incurred certain costs on behalf of the Company
     amounting  to  A$43,941  during  fiscal  2003 in respect  to the  Company's
     activities in Tibet China as a result of Quantum's  contacts in China. This
     amount  remained  outstanding  and was  included  in  accounts  payable and
     accrued  expenses at June 30, 2003.  During  fiscal  2004,  this amount was
     repaid in full.

     Kerisridge Pty Ltd, a company associated with the President of the Company,
     Mr J I Gutnick,  loaned us  A$2,273,186  in March  2004 for the  purpose of
     repaying  our long term  debt.  On March  31,  2004,  Kerisridge  agreed to
     convert all of the debt owed to them into common  stock and warrants of the
     Company.  The Company issued 1,753,984 shares of common stock and 1,753,984
     warrants  exercisable  at US$1.30  and at any time up to March 31,  2006 in
     full repayment of the $2,273,186 owing to Kerisridge.

     On February  19, 2004  Edensor  Nominees  Pty Ltd  ("Edensor")  advised the
     Company that it was  exercising  the 6,000,000  options for common stock of
     the Company it held  utilizing the cashless  exercise  feature of the terms
     and conditions of the issue of the options.  The Company  issued  5,142,857
     shares  of  common  stock to  Edensor  on March 3,  2004 as a result of the
     exercise of the options. (See note 9)

     Interest expense incurred on loans and advances due to affiliated  entities
     approximated A$45,000 and A$122,000 in fiscal 2005 and 2004, respectively.

(7)  CONTINGENT LIABILITY

     The Company has received an invoice from a corporation  that  conducted the
     pegging  of the  claims in Canada  on  behalf of the  Company.  A number of
     claims that were pegged were not ultimately  issued to the Company due to a
     number of errors by the  pegging  Company.  The  Company  had  advised  the
     pegging  company  that it does not believe any further  payments are due to
     the  pegging  company  as a result of the  economic  loss  incurred  by Bay
     Resources. The Company believes that if it is unsuccessful in defending any
     claim that is  brought  against  it, the  maximum  potential  liability  is
     C$59,000.  No  accrued  liability  has been  recorded  in the  accompanying
     financial statement pending the ultimate disposition of this matter.


                                      F-14



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

(8)  INCOME TAXES

     Bay  Resources  files its income  tax  returns  on an  accrual  basis.  Bay
     Resources should have carry forward losses of approximately US$19.4 million
     as of June 30, 2005 which will expire in the years 2006 through  2024.  Bay
     Resources  will need to file tax returns for those years  having  losses on
     which  returns have not been filed to establish the tax benefits of the net
     operating loss carry forwards.  Due to the uncertainty of the  availability
     and future  utilization of those operating loss  carryforwards,  management
     has  provided  a full  valuation  against  the  related  tax  benefit.  The
     valuation  allowance  increased  from  US$6.8  million at June 30,  2004 to
     US$7.5 million at June 30, 2005.

(9)  STOCKHOLDERS EQUITY

     In February and March 2004,  holders of options to acquire 8,000,000 shares
     of the common stock  informed the Company of their  intentions  to exercise
     the cashless  exercise feature of their option  agreement.  As a result the
     Company issued 6,943,057 shares of its common stock.

     In March 2004,  the Company  raised  US$1,670,000  (A$2,253,000)  through a
     private  placement by issuing 1,670,000 shares of common stock and warrants
     to purchase  1,670,000  shares of common  stock at US$1.30  per share.  The
     warrants expire in two years from the date of issuance.

     In March 2004, the Company received a loan from an affiliated entity in the
     amount  of  A$2,273,000  (US$1,754,000)  which  was  used  to  repay  other
     outstanding  amounts  due to  affiliated  entities.  This  loan  was  later
     satisfied  through the  issuance of  1,753,984  shares of common  stock and
     warrants to purchase  1,753,984  shares of common stock at $1.30 per share.
     The warrants expire in two years from the date of issuance.

     At June 30, 2005 the Company has  outstanding  stock options as detailed in
     footnote  11. At June 30,  2005 the  Company had  warrants  outstanding  to
     purchase  3,423,984 shares of common stock at US$1.30 per share. All of the
     warrants expire in 2006.

(10) ISSUE OF OPTIONS UNDER STOCK OPTION PLAN

     In October 2004, the Board of Directors and  Remuneration  Committee of the
     Company adopted a Stock Option Plan and agreed to issue  1,400,000  options
     and up to a further  500,000  options to acquire  shares of common stock in
     the  Company,  at an  exercise  price of  US$1.00  per  option,  subject to
     shareholder  approval which was subsequently  received on January 27, 2005.
     Of the total 1,400,000 options issued,  350,000 vest immediately  following
     shareholder  approval,  50,000 vest on March 31, 2005, 333,331 vest on July
     27, 2005,  333,334 vest on January 27, 2006 and the balance of 333,335 vest
     on July 27, 2006. If the additional 500,000 options are granted,  they will
     vest  250,000 on October 31, 2005 and 250,000 on  December  31,  2006.  The
     exercise  price of US$1.00 was derived from the issue price of common stock
     from the  placement  of shares on March 31, 2004 and is  considered  by the
     Company's  Directors to be the fair value of the common stock.  The options
     expire on October 15, 2014.


                                      F-15



                       BAY RESOURCES LTD AND SUBSIDIARIES
                         (An Exploration Stage Company)
                   Notes to Consolidated Financial Statements
                             June 30, 2005 and 2004

(10) ISSUE OF OPTIONS UNDER STOCK OPTION PLAN (continued)

     The Company has accounted  for all options  issued in 2005 based upon their
     fair market  value using the Black  Scholes  pricing  model.  There were no
     options issued by the Company in 2004.

     The Company has  calculated  the fair value of the 1,400,000  options using
     the Black Scholes  valuation method using a share price of US$1.00,  strike
     price of  US$1.00,  maturity  period  of 5 years 7 1/2  months,  risk  free
     interest  rate of 5.15% and  volatility  of 20%. This equates to a value of
     US31.85  cents  per  option.  The total  value of the  options  equates  to
     A$575,100  (US$438,200)  and has been  reflected  as Deferred  Compensation
     Expense within the Shareholders  Equity Statement.  The gross fair value is
     amortised into  operations  over the vesting  period.  For fiscal 2005, the
     amortization  amounted to A$377,210  (US$287,434).  Subsequent  to June 30,
     2005, and as a result of the resignation of one of the Company's Directors,
     50,000 options were relinquished.

     A summary of the options  outstanding  and exercisable at June 30, 2005 are
     as follows:

                                        Outstanding              Exercisable
     Number of options                    1,400,000                  733,333
     Exercise price                         US$1.00                  US$1.00
     Expiration date               October 15, 2014         October 15, 2014


                                      F-16


                                                                      Appendix A

                                    GLOSSARY

In this Form 10-KSB, we use certain  capitalized and abbreviated  terms, as well
as technical terms, which are defined below.


ACTINOLITE         A bright to  gray-green  member  of the  amphibole
                   minteral  family.   In  addition  to  silica,   it
                   contains calcium, magnesium, and iron.

AG                 Chemical symbol for silver.

AIR PHOTO
 ANALYSIS          Use of aerial photography to determine or estimate 
                   geological features.

ALKALI             FELDSPAR  Those  feldspar   minerals  composed  of
                   mixtures  of  potassium  feldspar  (KalSi3O8)  and
                   sodium  feldspar  (NaAlSi3O8)  with  little  or no
                   calcium feldspar (CaAl2Si2O8).

ALTERATION         ZONE  An  area   where   bedrock   has   undergone
                   mineralogical changes as a result of the action of
                   hydrothermal fluids.

AMPHIBOLE          A family of  silicate  minerals  forming  prism or
                   needlelike crystals.  Amphibole minerals generally
                   contain iron,  magnesium,  calcium and aluminum in
                   varying amounts, along with water.

AMPHIBOLITE        A rock made up mostly amphibole and plagioclase 
                   feldspar.

ANDESITE           Fine-grained,   generally  dark  colored,  igneous
                   volcanic   rock  with  more  silica  than  basalt.
                   Commonly  with  visible  crystals  of  plagioclase
                   feldspar.

ANOMALY            Pertaining   to  the  data  set   resulting   from
                   geochemical  or geophysical  surveys;  a deviation
                   from uniformity or regularity.

ANTICLINE          An  upward-curving  (convex)  fold  in  rock  that
                   resembles an arch.  The central part  contains the
                   oldest section of rock.

AQUA               REGIA A very corrosive,  fuming yellow liquid made
                   by mixing nitric and hydrochloric  acids,  usually
                   in the  proportion  of one part by  volume of pure
                   nitric  acid  with  three  parts by volume of pure
                   hydrochloric acid.

ARCHEAN            The time interval between  3800-2500 million years
                   ago.  The Archean is one of the  Precambrian  time
                   intervals.

ARSENOPYRITE       A tin-white or silver-white to steel-grey mineral 
                   (FeAsS).

A                  Chemical symbol for arsenic.

ASSAY              To analyze the proportions of metals in a specimen
                   of rock or other geological material. Results of a
                   test of the proportions of metals in a specimen of
                   rock or other geological material.

AU                 Chemical symbol for gold.


                                      A-1



B                  HORIZON A general  term for the near  surface part
                   of the soil profile which is commonly  enriched in
                   iron  and  other  metals,  often  resulting  in  a
                   brownish colour.

BACKGROUND         As pertains to geochemical  data; the variation in
                   natural  abundance of a particular  metal or other
                   constituent within a specific geological setting.

BEDDING            The  arrangement  of a sedimentary  or metamorphic
                   rock in beds or layers of  varying  thickness  and
                   character.

BEDDING PLANE
FAULT              A fault, the fault surface of which is parallel to 
                   the bedding plane of the host rocks.

BEDROCK            A general term for the rock,  usually solid,  that
                   underlies soil or other unconsolidated superficial
                   material.

BIOTITE            A dark brown to dark green or black mica mineral.

BRECCIA            A rock that is  composed  of larger than sand size
                   angular  fragments that are cemented together by a
                   finer   grained   matrix;   in  this   sense   the
                   fragmentation  is usually a result of  movement on
                   nearby or adjoining fault or fracture zones.

CHALCOPYRITE       Copper iron sulfide mineral (CuFeS2).  Color is
                   brassy yellow.

CHANNEL            SAMPLE  A sample  composed  of  pieces  of vein or
                   mineral  deposit that have been cut out of a small
                   trench or channel, usually about one inch deep and
                   4 inches wide.

CHIP               SAMPLE  A sample  of a vein or  other  mineralized
                   structure that is collected by way of small pieces
                   of rock taken at regular and frequent intervals on
                   a transect across the structure;  intended to be a
                   relatively accurate representation of the tenor of
                   mineralization.

CHLORITE           A group  of  platy,  micaceous,  usually  greenish
                   iron-magnesium  alumino-silicates  that  occur  in
                   metamorphic  rocks and as  alteration  products of
                   ferromagnesium  minerals in  volcanic  and igneous
                   rocks.

CLAIM              POST In Yukon  Territory,  a 4 inch  square,  four
                   foot long wooden post that  establishes  the legal
                   location of a mineral claim. Two posts, an Initial
                   Post and a Final Post are required.

CLAIM              TAG In Yukon Territory, a set of small metal tags
                   are issued by the government, each pair with a
                   unique grant number assigned for the claim after
                   the location is recorded. The tags are legally
                   required to be permanently affixed to the Initial
                   and Final claim posts at the first reasonable
                   opportunity after issue of the tags.

CM                 Centimeters

COLLAR             The  start  or  beginning  of a drill  hole or the
                   mouth of an underground working entrance.

CRATON             The  relatively  stable  nucleus  of a  continent.
                   Cratons  are  made  up of a  shield-like  core  of
                   Precambrian  Rock  and a buried  extension  of the
                   shield.


                                  A-2



CU                 Chemical symbol for copper.

DIKE               A sheet-like or  tabular-shaped  igneous intrusion
                   that  cuts   across   the   sedimentary   laering,
                   metamorphic  foliation,  or  other  texture  of  a
                   pre-existing rock.

DYKE               A tabular  igneous  intrusion that cuts across the
                   bedding or foliation of the country rock.

FAULT              A fracture  or  fracture  zone in rock along which
                   there  has  been  displacement  of the  two  sides
                   relative  to  each  other  and   parallel  to  the
                   fracture plane.

FE                 Chemical symbol for iron.

FOLIATED           A  general  term  for  a  planar   arrangement  of
                   mineralogical,  textural or structural features in
                   a rock.

FOLIATION          Aligned layers of minerals characteristic of some
                   metamorphic rocks.

FRACTURE           A general term for any break in a rock, whether or
                   not it causes displacement.

GABBRO             A dark,  coarse-grained  intrusive  igeneous rock.
                   Gabbro is made of calcium-rich  plagioclase,  with
                   amphibole  and/or  pyroxene,   and  is  chemically
                   equivalent to basalt.

GEOCHEMICAL        SAMPLING The collection of soil, silt,  vegetation
                   or rock  samples  for  analysis  as a guide to the
                   presence  of areas of  anomalous  mineral of metal
                   content in bedrock.

GEOLOGICAL         MAPPING In mineral exploration,  the collection of
                   geological   data  such  as  the  description  and
                   orientation of various types of bedrock.

GEOPHYSICAL        SURVEY In mineral  exploration,  the collection of
                   seismic, gravitational,  electrical,  radiometric,
                   density or magnetic data to aid in the  evaluation
                   of the mineral potential of a particular area.

GLACIAL            TILL  Dominantly  unsorted  and  unstratified  and
                   generally    unconsolidated   material   deposited
                   directly  by  and  underneath  a  glacier  without
                   subsequent reworking by water, and consisting of a
                   heterogeneous mixture of clay, silt, sand, gravel,
                   and boulders ranging widely in size and shape.

GRAB SAMPLE        A specimen of mineralized bedrock or float, usually
                   about  fist-sized,  that  may  be  collected  as  a
                   representation  of the mineralized zone as a whole.
                   Because of bias,  either  unintended  or otherwise,
                   and   because  of  the   generally   high   natural
                   variability    typical    of    gold-silver    vein
                   mineralization,  grades of grab samples  should not
                   be  considered  as  a  reliable   estimation  of  a
                   mineralized  zone as a whole  but they  nonetheless
                   serve to establish  the presence of  mineralization
                   with grades of economic interest.

GRANITE            A coarse  grained  intrusive  igneous rock with at
                   least 65% silica. Quartz, plagioclase feldspar and
                   potassium  feldspar  make up most of the  rock and
                   give it a fairly  light  color.  Granite  has more
                   potassium feldspar than plagioclase feldspar.


                                  A-3



GRANODIORITE       A coarse grained igneous plutonic rock intermediate
                   in  composition  between  quartz diorite and quartz
                   monzonite;   containing  quartz,  plagioclase,  and
                   potassium feldspar,  with biotite and hornblende as
                   the dominant mafic components.

GRAPHITIC          Containing graphite.

GREENSTONE         A   metamorphic   rock   derived  from  basalt  or
                   chemically   equivalent   rock  such  as   gabbro.
                   Greenstones   contain   sodium-rich    plagioclase
                   feldspar,   chlorite,  and  epidote,  as  well  as
                   quartz.

GPT                Abbreviation for gram per tonne; equivalent to one
                   part per million (ppm).

HAND TRENCHING     A method of exposing bedrock by hand excavation.

HYDROTHERMAL       Of or  pertaining  to hot water,  to the action of
                   hot water, or to the products of this action, such
                   as a  mineral  deposit  precipitated  from  a  hot
                   aqueous  solution,  with or  without  demonstrable
                   association with igneous processes.

IGNEOUS            Said of a rock or  mineral  that  solidified  from
                   molten or partly molten material;  also applied to
                   processes   leading  to,  or  resulting  from  the
                   formation of such rocks.

ICP-AES            Abbreviation   for   Inductively   Coupled   Plasma
                   Emission    Spectroscopy    -    Atomic    Emission
                   Spectroscopy;  an  analytical  technique in which a
                   sample  solution is introduced into an argon plasma
                   at very high temperature where individual  elements
                   emit light at  specific  wavelengths.  The light is
                   collected by the spectrometer and the wavelength is
                   analyzed    to    yield    individual     elemental
                   concentrations   by  comparison   against  standard
                   solutions with calibrated elemental concentrations.

INTRUSION          Emplacement    of   magma   (molten   rock)   into
                   pre-existing rock. Dikes, sills and batholiths are
                   intrusions.

IP                 A type of geophysical survey method called Induced
                   Polarisation.

IRON               FORMATION A chemical  sedimentary  rock containing
                   at least 15% iron and commonly  containing  chert.
                   The  iron  may  be  present  as  oxide,  silicate,
                   carbonate, or sulfide.

KOMATIITE          An igneous suite of basaltic and ultramafic lavas.

LITHOLOGY          The character of a rock  described in terms of its
                   structure, colour, mineral composition, grain size
                   and arrangement of its component parts.


MAFIC              Pertaining  to  or  composed   dominantly  of  the
                   ferromagnesian  rock  forming  silicates;  said of
                   some igneous rocks and their constituent minerals.


                                  A-4



MAGNETITE          Iron oxide  mineral  (Fe3O4).  Usually  tiny black,
                   metallic crystals. Magnetite will attract a magnet.

MASSIVE            Said of a stratified rock that occurs in very thick,
                   homogenous beds.

METADIORITE        A general term for a metamorphosed diorite; also
                   greenstone.

METAGABBRO         A general term for a metamorphosed gabbro; also 
                   greenstone.

METALLIC           A mineral chiefly composed of, or containing,  one
                   or more metals as a primary constituent.

METALLURGICAL      TEST A general term for a number of  mechanical or
                   chemical  processes  that are employed to test the
                   amenability of separating metals from their ores.

METAMORPHOSED      Rock or mineral that has  undergone  mineralogical
                   and/or  structural  change in response to elevated
                   pressures,  temperatures  or changes  in  chemical
                   conditions.

MINERALIZATION     The  process  or  processes  by which a mineral or
                   minerals are introduced into a rock,  resulting in
                   an  enriched  deposit;  or  the  result  of  these
                   processes.

MINERALIZED        Rock that has undergone the process of
                   mineralization.

NET SMELTER

RETURN             ROYALTY A general term for a residual benefit that
                   is a  percentage  of the value for which a smelter
                   will reimburse the provider of ore to the smelter,
                   after  deduction  for  various  smelting  fees and
                   penalties and, often after cost of  transportation
                   has been deducted.

ORE                The  naturally  occurring  material  from  which a
                   mineral  or  minerals  of  economic  value  can be
                   extracted  profitably  or  to  satisfy  social  or
                   political objectives.

ORE                SHOOT  an  elongate   pipelike,   ribbonlike,   or
                   chimneylike  mass of ore within a deposit (usually
                   a vein),  representing  the more  valuable part of
                   the deposit.

ORTHOCLASE         A member of the feldspar group of minerals (KAlSi3O8).

OUTCROP            The part of a rock formation that appears at the 
                   surface of the ground.

OXIDATION          The  conversion  of sulphide  mineral  (especially
                   metallic  mineral)  species to oxide,  sulphate or
                   hydoxide  minerals,  typically by the processes of
                   near surface weathering.

OXIDE MINERAL      A mineral formed by the union of an element with
                   oxygen.

OVERBURDEN         Loose soil, sand, gravel, broken rock,
                   etc. that lies above the bedrock.

OZ/TON             Abbreviation for troy ounce per ton.


                                  A-5



PATHFINDER         In geochemical  exploration,  a relatively  mobile
                   element or gas that occurs in association  with an
                   element or commodity being sought, but can be more
                   easily  found  because it forms a broader  halo or
                   because  it  can  be  detected   more  readily  by
                   analytical methods.

PERMAFROST         A permanently frozen layer of soil or subsoil,  or
                   even  bedrock,  which  occurs to  variable  depths
                   below the Earth's  surface in arctic or  subarctic
                   regions.

PETROLOGY          See igneous petrology.

PLAGIOCLASE        A member of the feldspar group of minerals 
                   ((Na,Ca)Al(Si,Al)2O6).

PLUTON             A body of medium to coarse  grained  igneous  rock
                   that  formed   beneath  the  Earth's   surface  by
                   crystallization of a magma.

PLUTONIC           SUITE A group of igneous bodies that are linked by
                   virtue of similarities in age, petrology, etc.

PLUTONISM          A general  term for the  phenomena  associated  
                   with the  formation of plutons.

POTASSIUM
FELDSPAR           See orthoclase.

PPB                Abbreviation for part per billion.

PPM                Abbreviation for part per million.

PRECAMBRIAN        A period of geologic time earlier than 544 million
                   years before present.

PROSPECTING        Pertaining  to the search for  outcrops or surface
                   exposures  of  mineral   deposits,   primarily  by
                   nonmechanical methods.

PROXIMAL           MINERALIZATION  Refers to the relative distance of
                   mineralization from a pluton thought to be related
                   to  or  responsible  for  the  deposit.   Proximal
                   deposits form near to the mineralizing pluton.

PYRITE             Iron  sulfide  mineral  (FeS).  Forms  silvery  to
                   brassy metallic cubes or masses.

QUARTZ             A glassy silicate and common rock forming mineral
                   (SiO2).

QUARTZ             DIORITE  A group  of  plutonic  rocks  having  the
                   composition of diorite but with appreciable quartz
                   and feldspar, i.e. between 5 and 20%.

QUARTZ             GABBRO  A  group  of  plutonic  rocks  having  the
                   composition of gabbro but with appreciable quartz.

QUARTZ             MONZONITE A medium to coarse grained plutonic rock
                   containing  major   plagioclase,   orthoclase  and
                   quartz with minor biotite and hornblende.

QUARTZITE          A  metamorphosed  sandstone  or rock  composed  of
                   quartz   grains  so   completely   cemented   with
                   secondary  silica that the rock  breaks  across or
                   through the grains rather than around them.


                                  A-6



REPLACEMENT        Pertaining to a type of mineral deposit that forms
                   by  partial  or  complete  replacement  of bedrock
                   constituents  by new  minerals,  generally  by the
                   action of hydrothermal fluids.

RESERVE            An estimate  within  specified  accuracy limits of
                   the  valuable  metal or  mineral  content of known
                   deposit  that  may  be  produced   under   current
                   economic conditions and with present technology.

RESOURCE           Pertaining to the quantity or bulk of  mineralized
                   material   without   reference   to  the  economic
                   viability of its extraction (see reserve).

SEDIMENT           Fragmental    material   that    originates   from
                   weathering  of rocks  and that is  transported  by
                   air, water, ice or other natural agents,  and that
                   forms in layers on the Earth's surface at ordinary
                   temperatures in a loose, unconsolidated form; e.g.
                   silt, sand, gravel, etc.

SEDIMENTARY
ROCK               A rock resulting from the consolidation of loose 
                   sediment.

SELECTED           SAMPLE A specimen  of a  mineralized  zone that is
                   not intended to be  representative  of the deposit
                   as a whole.

SCHIST             A  strongly   foliated  rock,  formed  by  dynamic
                   metamorphism,  that can be split into thin  flakes
                   or slabs due to well developed parallelism of more
                   than 50% of the minerals.

SHEARED            A descriptive  term for rock that is deformed as a
                   result  of  stresses  that  cause or tend to cause
                   parts of a body to slide  relative  to each  other
                   along their plane of contact.

SILICA             A generic  term for silicon  dioxide  (SiO2),  the
                   most common form of which is quartz.

SILL               A concordant sheet of igneous rock lying parallel,
                   or nearly so, to bedding or other planar fabric in
                   the country rock.

SOIL SAMPLING      (see geochemical sampling).

SPLIT              A  portion  of a  rock  or  soil  sample  that  is
                   separated from the bulk of the original before the
                   analytical  process so as to provide  material for
                   re-analysis  as a  check  of the  accuracy  of the
                   original procedure should it be required.

STAIN              as in  scorodite  stain;  a thin film of a mineral
                   deposited as part of the weathering process.

STOCK              An igneous intrusion with less than 40 sq. mi. (100
                   sq.  km.)  in  surface  exposure,  usually  but not
                   always discordant with respect to country rock.

STOCKWORK          An intersecting three-dimensional network of veins 
                   or veinlets.

SPHALERITE         A varicoloured  sulphide  mineral (ZnS), the most 
                   important source of zinc.

STRATA             Beds or layers of rock.


                                  A-7



STRIKE             The  course  or  bearing  of  the  outcrop  of  an
                   inclined  bed,  vein  or  fault  plane  on a level
                   surface;   the  direction  of  a  horizontal  line
                   perpendicular to the dip.

STRINGER           A mineral  veinlet  or  veinlets  that  occur in a
                   discontinuous  subparallel  pattern  in  the  host
                   rock.

STRUCTURAL         MAPPING   Geological   mapping  that  focusses  in
                   collection of data  pertaining to the  orientation
                   of beds,  faults  and  fractures  as well as other
                   structures that modify the distribution of bedrock
                   and mineralized zones.

SULPHIDE           MINERAL A mineral  compound  characterized  by the
                   linkage of sulphur with a metal or semimetal.

SURFICIAL
GEOLOGY            The study or geological  mapping of surficial,  
                   unconsolidated  materials.

TALUS              Rock  fragments  of any  size  or  shape  (usually
                   coarse and  angular),  derived  from a steep rocky
                   slope chiefly by gravitational falling, rolling or
                   sliding.

THRESHOLD          The level,  whether  determined  statistically  or
                   arbitrarily, at which a separation is made between
                   anomalous and background  geochemical values for a
                   particular data set.

THRUST             FAULT A  fault  with a dip of 45  degrees  or less
                   over much of its extent, on which the hanging wall
                   appears  to  have  moved  upward  relative  to the
                   footwall.

TRACE              Pertaining  to  assay  values;  as  used  in  this
                   report,  this term  refers to gold  grades of less
                   than 0.01 oz/ton (0.3 gpt).

TRANSVERSE         FAULT   A  fault   that   strikes   obliquely   or
                   perpendicular  to the general  structural trend of
                   the region.

TRANSVERSE         VEIN   A   vein   that   strikes    obliquely   or
                   perpendicular  to the general  structural trend of
                   the region.

TRUEWIDTH          The width of a vein or other structure measured 
                   orthogonal to its


                   strike and dip.

ULTRAMAFIC         Igneous  rocks made  mostly of the mafic  minerals
                   hypersthene, augite, and/or olivine.

UPPER
PROTEROZOIC        The period of geologic time between about 1000 and
                   544 million years before present.

VEIN               An epigenetic  mineral filling of a fault or other
                   fracture in a host rock,  in tabular or  sheetlike
                   form,  often as a precipitate  from a hydrothermal
                   fluid.

VEINLET            A small vein.

VITREOUS           As pertains to minerals, a glassy luster.


                                  A-8



VLF-EM             An     abbreviation     for    the     Very    Low
                   Frequency-Electromagnetic    geophysical    survey
                   technique.

WALL               ROCK The rock adjacent to, enclosing, or including
                   a vein, layer or dissemination of ore minerals.

WEIGHTED           AVERAGE Value calculated from a number of samples,
                   each of which has been  "weighted"  by a factor of
                   the individual sample width.

WORKING            A general term for any type of excavation  carried
                   out   during   the  course  of  mining  or  mining
                   exploration.

ZN                 The chemical symbol for zinc.


                                  A-9



                                                                       
                                                                      Appendix B
Slave Craton Mining Claims
--------------------------

The  following  is a list of the  mining  claims  that  are  covered  under  our
agreement with Tahera:




                                                                                Next
    Tag#        Claim         NTS            Acres          Registered       Anniversary    Type of Property
Jericho Mining 
   Claims
                                                                         
   ML3793       DJB 19      076-L-04         344.0           09-Jun-99        09-Jun-04           Lease
   ML3794       JD 94       076-L-04        2524.0           09-Jun-99        09-Jun-04           Lease
   ML3795       JD 313      076-L-04        2515.0           09-Jun-99        09-Jun-04           Lease
   ML3796       OD 44       076-L-04         422.0           09-Jun-99        09-Jun-04           Lease
   ML3797       OD 45       076-L-04         325.0           09-Jun-99        09-Jun-04           Lease
   ML3798       OD 61       076-L-04         508.0           09-Jun-99        09-Jun-04           Lease
                                        ----------------
                                            6,638.0
                                        ----------------
Jericho Group
   F31092       JD 92       076-L-04       2,272.60          26-Jan-93        26-Jan-04     Lease Applied For
   F31093       JD 93       076-L-04       2,569.60          26-Jan-93        26-Jan-04     Lease Applied For
   F31095       JD 95       076-L-04       2,363.10          26-Jan-93        26-Jan-04     Lease Applied For
   F31096       JD 96       076-L-04       2,582.50          26-Jan-93        26-Jan-04     Lease Applied For
   F31310       JD 310      076-L-03        632.70           26-Jan-93        26-Jan-04     Lease Applied For
   F31311       JD 311      076-L-03        890.90           26-Jan-93        26-Jan-04     Lease Applied For
   F31312       JD 312      076-L-03       1,144.00          26-Jan-93        26-Jan-04     Lease Applied For
   F31314       JD 314      076-L-03       2,118.10          26-Jan-93        26-Jan-04     Lease Applied For
   F31315       JD 315      076-L-03       2,117.60          26-Jan-93        26-Jan-04     Lease Applied For
                                        ----------------
                                           16,691.10
                                        ----------------

   F35015       OD 25       076-E-13       2,255.50          18-Jun-93        18-Jun-04     Lease Applied For
   F35016       OD 26       076-E-13       2,255.50          18-Jun-93        18-Jun-04     Lease Applied For
   F35017       OD 27       076-E-13       2,165.40          18-Jun-93        18-Jun-04     Lease Applied For
   F35018       OD 28       076-E-13        375.10           18-Jun-93        18-Jun-04     Lease Applied For
   F35019       OD 29       076-E-13        444.20           18-Jun-93        18-Jun-04     Lease Applied For
   F35020       OD 30       076-E-13       2,509.60          18-Jun-93        18-Jun-04     Lease Applied For
   F35021       OD 31       076-E-13       2,548.70          18-Jun-93        18-Jun-04     Lease Applied For
   F35022       OD 32       076-E-13       2,582.50          18-Jun-93        18-Jun-04     Lease Applied For
   F35031       OD 41       076-E-13       2,435.90          18-Jun-93        18-Jun-04     Lease Applied For
   F35032       OD 42       076-E-13       2,435.90          18-Jun-93        18-Jun-04     Lease Applied For
   F35033       OD 43       076-E-13       2,420.80          18-Jun-93        18-Jun-04     Lease Applied For
   F35036       OD 46       076-E-13       2,066.00          18-Jun-93        18-Jun-04     Lease Applied For
   F35037       OD 47       076-E-13       2,029.90          18-Jun-93        18-Jun-04     Lease Applied For
   F35038       OD 48       076-E-13       2,029.90          18-Jun-93        18-Jun-04     Lease Applied For
   F35048       OD 58       076-E-14       2,582.50          18-Jun-93        18-Jun-04     Lease Applied For
   F35049       OD 59       076-E-14       2,582.50          18-Jun-93        18-Jun-04     Lease Applied For
   F35050       OD 60       076-E-14       2,582.50          18-Jun-93        18-Jun-04     Lease Applied For
   F35052       OD 62       076-E-14        508.60           18-Jun-93        18-Jun-04     Lease Applied For
   F35053       OD 63       076-E-14       2,582.50          18-Jun-93        18-Jun-04     Lease Applied For
   F35055       OD 65       076-E-14       2,582.50          18-Jun-93        18-Jun-04     Lease Applied For
   F35065       OD 75       076-E-14       2,582.50          18-Jun-93        18-Jun-04     Lease Applied For
                                       -----------------
                                          44,558.50
                                       -----------------









                                                                               
                                       -----------------
   F45947       DJB 17     076-L-03         160.10           06-Jul-94        06-Jul-04     Lease Applied For
                                       -----------------

Jericho Exploration
                                                                                Next
    Tag#        Claim         NTS           Acres           Registered       Anniversary    Type of Property

   F45635       INU 3      076-E-11         77.50            08-Jun-94        08-Jun-04       Mineral Claim
   F44915       INU 5      076-E-11         217.00           08-Jun-94        08-Jun-04       Mineral Claim
   F44916       INU 6      076-E-11         77.50            08-Jun-94        08-Jun-04       Mineral Claim
                                       -----------------
                                            372.00
                                       -----------------

   F48871        PT 3      076-M-02        2,066.0           16-Dec-94        16-Dec-04       Mineral Claim
   F48872        PT 4      076-M-02        1,833.5           16-Dec-94        16-Dec-04       Mineral Claim
                                       -----------------
                                           3,899.5
                                       -----------------

                                       -----------------
   F65378       KIM 1      076-L-04         67.40            04-Sep-98        04-Sep-04       Mineral Claim
                                       -----------------


   F76144        TA 1       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76145        TA 2       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76146        TA 3       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76147        TA 4       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76148        TA 5       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76149        TA 6       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76150        TA 7       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76151        TA 8       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76152        TA 9       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76153       TA 10       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76154       TA 11       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76155       TA 12       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76156       TA 13       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76157       TA 14       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76158       TA 15       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76159       TA 16       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76160       TA 17       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76161       TA 18       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76162       TA 19       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76163       TA 20       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76164       TA 21       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76165       TA 22       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76166       TA 23       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76167       TA 24       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76168       TA 25       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76169       TA 26       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
   F76170       TA 27       86-I-01         2582.5           06-Jun-02        06-Jun-04       Mineral Claim
                                       -----------------
                                           69,727.5
                                       -----------------



                                      -11-





Contwoyto Inuit Owned Lands
                                                                                Next
    Tag#        Claim         NTS           Acres           Registered       Anniversary    Type of Property

                                                                                
CO-08-00-01                076-E-15       20,968.62          01-Jan-95        31-Dec-04       Mineral Claim
CO-08-00-02                076-E-15       19,518.16          01-Jan-95        31-Dec-04       Mineral Claim
CO-08-00-03                076-E-15       12,181.86          01-Jan-95        31-Dec-04       Mineral Claim
CO-08-00-05                076-E-15        4,971.58          31-Dec-99        31-Dec-04       Mineral Claim
CO-08-00-06                076-E-15        7,610.58          31-Dec-00        31-Dec-04       Mineral Claim
                                       -----------------
                                          65,250.80
                                       -----------------

HOOD RIVER CLAIMS - February 2004
   F64824       Hood 3     76-L-10         2582.5            24-Jun-98        24-Jun-06       Mineral Claim
   F64825       Hood 4     76-L-10         2582.5            24-Jun-98        24-Jun-06       Mineral Claim
   F64828      Hood 12     76-L-13         2582.5            24-Jun-98        24-Jun-08       Mineral Claim
   F64829      Hood 14     76-L-13         2582.5            24-Jun-98        24-Jun-08       Mineral Claim
                                      ------------------
                                          10,330.00
                                      ------------------

                                      ------------------
   F48875        PT 7      76-L-15         263.37            16-Dec-94        16-Dec-03       Mineral Claim
                                      ------------------

CO 20 - 00 - 01            76-L-15         6653.08           01-Jan-97        01-Jan-05    IOL - Mineral Claim
CO 20 - 00 - 03 (a)        76-L-14         3008.90           01-Jan-97        01-Jan-05    IOL - Mineral Claim
CO 20 - 00 - 03 (b)        76-L-15         2164.74           01-Jan-97        01-Jan-05    IOL - Mineral Claim
CO 20 - 00 - 04            76-L-15         2901.85           01-Jan-97        01-Jan-05    IOL - Mineral Claim
CO 20 - 01 - 01            76-L-15         6653.08           01-Jan-97        01-Jan-05    IOL - Mineral Claim
                                      ------------------
                                          21,381.64
                                      ------------------

ICE CLAIMS
   F22432       ICE032     76-E-06         2582.5            01-Apr-92        01-Apr-04     Lease Applied For
   F22433       ICE033     76-E-06         2582.5            01-Apr-92        01-Apr-04     Lease Applied For
   F22464       ICE064     76-E-06         2582.5            01-Apr-92        01-Apr-04     Lease Applied For
   F22534       ICE334     76-E-06         2582.5            01-Apr-92        01-Apr-04     Lease Applied For
   F22535       ICE335     76-E-06         2582.5            01-Apr-92        01-Apr-04     Lease Applied For
   F22537       ICE337     76-E-06         2582.5            01-Apr-92        01-Apr-04     Lease Applied For
   ML3464       ICE336     76-E-06         2665.0            14-Feb-96        14-Feb-04           Lease
                                      ------------------
                                          18,160.0
                                      ------------------

DOLLY VARDEN CLAIMS
                                      ------------------
   F23152       DIA 52     76-E-01        2,582.50           28-Apr-04        28-Apr-04     Lease Applied For
                                      ------------------

Rockinghorse Claims - February 2004
   F60840       WC 156     86-I-02          413.2            11-Dec-96        11-Dec-04       Mineral Claim
   F60841       WC 157     86-I-02         1601.15           11-Dec-96        11-Dec-03       Mineral Claim
   F60844       WC 160     86-I-02          826.4            11-Dec-96        11-Dec-06       Mineral Claim
   F60846       WC 162     86-I-02         154.95            11-Dec-96        11-Dec-03       Mineral Claim
   F60847       WC 163     86-I-02         464.85            11-Dec-96        11-Dec-06       Mineral Claim
                                      ------------------
                                          3,460.55
                                      ------------------



                                      -12-





Rockinghorse Claims - February 2004 continued
                                                                             
                                                                                Next
    Tag#        Claim        NTS            Acres           Registered       Anniversary    Type of Property
                                      ------------------
   F50064       SKY 1      86-I-02        2,582.50           20-Aug-99        20-Aug-09       Mineral Claim
                                      ------------------

   F58889       PUD 4      86-I-14         2582.5            14-Jun-99        14-Jun-05       Mineral Claim
   F58890       PUD 5      86-I-14         2582.5            14-Jun-99        14-Jun-05       Mineral Claim
   F56909       PUD 24     86-I-14         2582.5            14-Jun-99        14-Jun-05       Mineral Claim
   F66955       PUD 36     86-I-14         2582.5            14-Jun-99        14-Jun-06       Mineral Claim
   F67117       PUD 39     86-I-14         2582.5            14-Jun-99        14-Jun-04       Mineral Claim
   F67118       PUD 40     86-I-14         2582.5            14-Jun-99        14-Jun-04       Mineral Claim
                                      ------------------
                                          15,495.0
                                      ------------------

                                      ------------------
   F58677       DD 24      86-I-13        2,582.50           11-Apr-96        11-Apr-04       Mineral Claim
                                      ------------------

   F62383        KE 5      86-I-10         447.63            14-May-97        14-May-05       Mineral Claim
   F62941        KE 6      86-I-10         416.63            14-May-97        14-May-05       Mineral Claim
   F63306       KE 22       86-I-7         378.77            14-May-97        14-May-05       Mineral Claim
                                      ------------------
                                          1,243.03
                                      ------------------

   F85901       KEN 1      86-I-09         2582.5            20-Apr-99        12-Mar-09       Mineral Claim
   F66045       KEN 5      86-I-09         2100.35           20-Apr-99        12-Mar-09       Mineral Claim
                                      ------------------
                                          4,682.85
                                      ------------------

   F74768       NAP 1      86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74769       NAP 2      86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74770       NAP 3      86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74771       NAP 4      86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74772       NAP 5      86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74773       NAP 6      86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74774       NAP 7      86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74775       NAP 8      86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74776       NAP 9      86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74777       NAP 10     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74778       NAP 11     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74779       NAP 12     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74780       NAP 13     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F74781       NAP 14     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75430       NAP 15     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75431       NAP 16     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75432       NAP 17     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75433       NAP 18     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75434       NAP 19     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75435       NAP 20     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75436       NAP 21     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75437       NAP 22     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75438       NAP 23     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75439       NAP 24     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75440       NAP 25     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
Rockinghorse Claims - February 2004 continued



                                      -13-




                                                                                Next
    Tag#        Claim        NTS            Acres           Registered       Anniversary    Type of Property
                                                                             
   F75441       NAP 26     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75442       NAP 27     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75443       NAP 28     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75444       NAP 29     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75445       NAP 30     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75446       NAP 31     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75447       NAP 32     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75448       NAP 33     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75449       NAP 34     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75450       NAP 35     86-I-10         831.67            11-Jun-02        11-Jun-04       Mineral Claim
   F75451       NAP 36     86-I-10         1514.99           11-Jun-02        11-Jun-04       Mineral Claim
   F75452       NAP 37     86-I-10         1477.12           11-Jun-02        11-Jun-04       Mineral Claim
   F75453       NAP 38     86-I-10         509.58            11-Jun-02        11-Jun-04       Mineral Claim
   F75454       NAP 39     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75455       NAP 40     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75456       NAP 41     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75457       NAP 42     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75458       NAP 43     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75459       NAP 44     86-I-10         263.74            11-Jun-02        11-Jun-04       Mineral Claim
   F75461       NAP 46     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75462       NAP 47     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75463       NAP 48     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75464       NAP 49     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75465       NAP 50     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75466       NAP 51     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75467       NAP 52     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75468       NAP 53     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75469       NAP 54     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75470       NAP 55     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75471       NAP 56     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75472       NAP 57     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75473       NAP 58     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75474       NAP 59     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
   F75475       NAP 60     86-I-10         2582.5            11-Jun-02        11-Jun-04       Mineral Claim
                                      ------------------
                                         144,052.10
                                      ------------------

   F74338        TL 8      86-I-11         2029.57           24-Jun-93        13-Mar-04       Mineral Claim
   F74352       TL 22      86-I-11         2582.5            24-Jun-93        13-Mar-04       Mineral Claim
   F74353       TL 23      86-I-11         1019.73           24-Jun-93        13-Mar-04       Mineral Claim
   F74354       TL 24      86-I-11         378.53            24-Jun-93        13-Mar-04       Mineral Claim
   F74355       TL 25      86-I-11         2582.5            24-Jun-93        13-Mar-04       Mineral Claim
   F74356       TL 26      86-I-11         2582.5            24-Jun-93        13-Mar-04       Mineral Claim
   F74366       TL 36      86-I-11          64.72            24-Jun-93        13-Mar-04       Mineral Claim
   F74367       TL 37      86-I-11         255.23            24-Jun-93        13-Mar-04       Mineral Claim
   F74368       TL 38      86-I-11         469.09            24-Jun-93        13-Mar-04       Mineral Claim
   F74369       TL 39      86-I-11         471.17            24-Jun-93        13-Mar-04       Mineral Claim
                                      ------------------
                                          12,435.54
                                      ------------------



                                      -14-




                                                                                Next
    Tag#        Claim        NTS            Acres           Registered       Anniversary    Type of Property
                                      ------------------
CO44 -00-01                86-I-11          414.0            01-Jan-97        01-Jan-05    IOL - Mineral Claim
                                      ------------------

                                                                               
   F38623       OK 123     86-I-11         2582.5            18-Jun-93        18-Jun-03     Applied for Lease
   F38627       OK 127     86-I-11         2582.5            18-Jun-93        18-Jun-03     Applied for Lease
   F38628       OK 128     86-I-11         2582.5            18-Jun-93        18-Jun-03        KCEI Lease
   F38629       OK 129     86-I-11         2582.5            18-Jun-93        18-Jun-03     Applied for Lease
   F38648       OK 148     86-I-11         2169.3            18-Jun-93        18-Jun-03     Applied for Lease
   F38649       OK 149     86-I-11         2169.3            18-Jun-93        18-Jun-03     Applied for Lease
   F38652       OK 152     86-I-11         2582.5            18-Jun-93        18-Jun-03     Applied for Lease
   F38653       OK 153     86-I-11         2582.5            18-Jun-93        18-Jun-03     Applied for Lease
   F38654       OK 154     86-I-11         2582.5            18-Jun-93        18-Jun-03     Applied for Lease
   F38665       OK 165     86-I-11         2582.5            18-Jun-93        18-Jun-03     Applied for Lease
                                      ------------------
                                          24,998.60
                                      ------------------

                            Total        471,765.71



                                      -15-



Committee Bay Greenstone Belt Claims

The following is a list of our claims in the Committee Bay Greenstone Belt:

Claim name     Claim No.    NTS Sheet       Recording Date     Anniversary Date

Pick 1         F54799       56K/03          16-Oct-02          16-Oct-10
Pick 2         F54798       56K/03          16-Oct-02          16-Oct-10
Pick 3         F54760       56K/03          16-Oct-02          16-Oct-10
EE 1           F54757       56K/06          16-Oct-02          16-Oct-10
EE 2           F54756       56K/06          16-Oct-02          16-Oct-10
EE 3           F54758       56K/06          16-Oct-02          16-Oct-10
K 1            F60304       56K/11          16-Oct-02          16-Oct-10
K 2            F60305       56K/11          16-Oct-02          16-Oct-10
CAY 1          F60252       56K/09          16-Oct-02          16-Oct-10
CAY 3          F60254       56K/09          16-Oct-02          16-Oct-10
AA 1           F60249       56J/13          16-Oct-02          16-Oct-10
AA 2           F60250       56J/13          16-Oct-02          16-Oct-10
NN 1           F60307       56K/16          16-Oct-02          16-Oct-10
NN 2           F60251       56O/04          16-Oct-02          16-Oct-10
WREN 1         F60231       56J/11          16-Oct-02          16-Oct-12*
WREN 2         F60232       56J/14          16-Oct-02          16-Oct-12*
WREN 3         F60233       56J/14          16-Oct-02          16-Oct-12*
WREN 4         F60234       56J/14          16-Oct-02          16-Oct-12*
WREN 5         F60235       56J/14          16-Oct-02          16-Oct-12*
WEST           F60212       56K/03          16-Oct-02          16-Oct-10
HOST           F54800       56K/03          16-Oct-02          16-Oct-10

o        as confirmed by the mining recorder

(one small additional claim GB-1 will be ours after Bruce Goad receives his pay)


                                      -16-