Miramar Announces Extended & Expanded Production Objectives for Hope Bay Project.

VANCOUVER, British Columbia -- Miramar Mining Corporation (TSX:MAE)(AMEX:MNG)

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

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

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

Strategic Objectives

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

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

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

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

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

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

Phase 1: Doris North

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

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

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

Phase 2: 200,000 oz Annual Production

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

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

Phase 3: Intermediate Producer Status

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

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

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

Year End Financial Results

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

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

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Direct costs for pressure oxidation 2005-2006           $  8,630
Contractor mark-up                                         1,878
                                                        --------
Subtotal                                                  10,508
                                                        --------
Direct costs for site reclamation                          8,434
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Total                                                   $ 18,942
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The Company expects to use its employees for the pressure oxidation process, however, it has included a contractor mark-up in the reclamation estimate in accordance with the new provisions of the Canadian Institute of Chartered Accountants' Handbook Section 3110 "Asset Retirement Obligations". At December 31, 2004, the Company had a total of $10 million on deposit in two reclamation security trusts that will be applied to, in part, offset the reclamation costs as they are incurred.

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

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

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

Operating Results

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

Gold Sales & Hedging

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

Miramar Mining Corporation

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

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

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

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

Forward Looking Statements

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

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

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

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

Anthony P. Walsh, President & CEO

Miramar Mining Corporation

Consolidated Financial Statements of

MIRAMAR MINING CORPORATION

Years ended December 31, 2004 and 2003

AUDITORS' REPORT TO THE SHAREHOLDERS

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

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

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

Chartered Accountants

Vancouver, Canada

February 25, 2005

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



As at December 31, 2004 and 2003

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

Assets

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

Note receivable (note 4)                           -           9,592
Power credits receivable (note 4)              1,945           4,345
Property, plant and equipment (note 7)       165,769         135,270
Cash collateral deposits (note 8)             14,674           6,274
Investment in Northern Orion
 Explorations Ltd. (note 3)                    9,182          10,112
Other assets (note 9)                            707             394
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                                        $    232,277   $     244,482
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Liabilities and Shareholders' Equity

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

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

Shareholders' equity
 Share capital (note 11)                     380,734         371,309
 Contributed surplus                           5,025           1,776
 Deficit                                    (201,437)       (168,978)
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                                             184,322         204,107
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                                        $    232,277   $     244,482
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Nature of operations (note 1)
Commitments and contingencies (note 16)
Subsequent event (note 17)

See accompanying notes to consolidated financials statements.


 ON BEHALF OF THE BOARD:

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

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


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


Years ended December 31, 2004 and 2003


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

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

Expenses
 Cost of sales                                22,872          46,907
 Depreciation, depletion and accretion         1,979           5,248
 General and administration                    4,112           4,222
 Stock-based compensation (note 11 (c))        2,250             868
 Foreign exchange                                 39              69
 Severances and closure (note 7)               1,583           4,995
 Write-down of assets (note 7)                 4,515           7,780
 Write-down of asset retirement
  obligation (note 7)                         10,508               -
--------------------------------------------------------------------
                                              47,858          70,089
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Loss from operations before items
 noted below                                 (35,593)        (23,212)

Equity loss                                     (294)           (509)
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Loss before income taxes                     (35,887)        (23,721)

Income taxes: (note 12)
 Current                                        (431)           (436)
 Future                                        3,859           5,692
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                                               3,428           5,256
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Loss for the period                          (32,459)        (18,465)

Deficit, beginning of the period
 as previously reported                     (169,383)       (151,828)
Adjustment for site reclamation and
 closure costs (note 2(g))                     1,666           1,708
Adjustment for stock based compensation
 (note 2(i))                                  (1,261)           (393)
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Deficit, beginning of the year as
 restated                                   (168,978)       (150,513)
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Deficit, end of the year                $   (201,437)  $    (168,978)
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Basic and diluted loss per share        $      (0.21)  $       (0.14)

Weighted average number of common
 shares outstanding                      153,524,708     132,508,456
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See accompanying notes to consolidated financial statements.

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


MIRAMAR MINING CORPORATION

Consolidated Statements of Cash Flows

(expressed in thousands of Canadian dollars)

Years ended December 31, 2004 and 2003

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

Cash provided by (used in):

Operations:
 Loss for the year                      $    (32,459)  $     (18,465)
 Items not involving cash:
  Depreciation, depletion and accretion        1,979           5,248
  Gain on sale of assets                           -             (45)
  Write-down of assets                        15,023           7,780
  Equity loss                                    294             509
  Stock-based compensation                     2,250             868
  Future income tax                           (3,859)         (5,692)
  Other                                         (408)           (256)
 Net change in non-cash working capital:
  Accounts receivable                           (763)           (420)
  Inventory                                   (2,225)          1,960
  Prepaid expenses                               287            (392)
  Accounts payable and accrued liabilities    (3,063)         (3,117)
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                                             (22,944)        (12,022)
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Investments:
 Expenditures on plant, equipment
  and deferred exploration                   (34,295)        (24,931)
 Sale of short term investments                    -          23,694
 Net proceeds on sale of Northern
  Orion shares (note 3)                          900           5,062
 Purchase of collateral deposits, net         (8,400)             64
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                                             (41,795)          3,889
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Financing:
 Issue of common shares for cash              15,033          61,969
 Proceeds from note receivable (note 4)       10,000               -
--------------------------------------------------------------------
                                              25,033          61,969
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--------------------------------------------------------------------

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

Cash and cash equivalents,
 beginning of the year                        69,921          16,085
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Cash and cash equivalents,
 end of the year                        $     30,215   $      69,921
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--------------------------------------------------------------------

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

See accompanying notes to the consolidated financial statements.

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


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

Years ended December 31, 2004 and 2003

1. Nature of operations:

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

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

2. Significant accounting policies:

a) Basis of preparation:

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

b) Cash and cash equivalents:

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

c) Short-term investments:

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

d) Revenue recognition and inventory:

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

e) Property, plant and equipment:

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

f) Impairment of long-lived assets:

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

g) Provision for site reclamation and closure costs:

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

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

h) Pension expenses and obligation:

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

i) Stock-based compensation plan:

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

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

j) Translation of foreign currency:

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

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

- other assets and liabilities at applicable historical exchange rates

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

Translation gains and losses are included in earnings.

k) Derivative financial instruments:

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

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

l) Income taxes:

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

m) Loss per share:

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

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

n) Estimates:

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

o) Comparative figures:

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

3. Investment in Northern Orion Explorations Ltd.:

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

4. Sale of Bluefish:

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

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

5. Related Parties:

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

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

6. Inventory:

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

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

7. Property, plant and equipment:

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

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

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

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

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

8. Cash collateral deposits:

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

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

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


9. Other assets:

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

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


10. Site closure and reclamation:

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

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

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

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

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

11. Share capital:

(a) Authorized:

500,000,000 common shares without par value.

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

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

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

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

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

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

(c) Stock options:

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

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

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

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

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


(d) Warrants and brokers compensation options:

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

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

12. Income and resource taxes:

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

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

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

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

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

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

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

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

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

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

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

13. Pension plan and other post-retirement benefits:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

14. Business segments:

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

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

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

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

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

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

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

15. Financial instruments:

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

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

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

16. Commitments and contingencies:

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

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

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

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

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

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

17. Subsequent event:

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

MIRAMAR MINING CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

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

OVERVIEW

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

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

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

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

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

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

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

2004 Highlights

- Hope Bay:

- $26.7 million of exploration and development programs completed.

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

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

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

- Back River:

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

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

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

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

Highlights of exploration activities at Hope Bay in 2004 include:

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

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

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

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

EARNINGS AND CASH FLOW

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

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

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

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

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

Selected Financial Data

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

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

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

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


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

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


OPERATIONS OVERVIEW

Revenue

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

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

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

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

Mining Operations

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

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

Operating Costs

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

Exploration and Development Activities

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

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

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

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

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

Capital Programs

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

Accounting for Exploration and Development Cost

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

Asset Retirement Obligation

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

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

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

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

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

Stock-based Compensation

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

FINANCING AND LIQUIDITY

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

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

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

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

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

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

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

Liabilities and Contingencies

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

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

Contractual Obligations

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

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

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

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

Off Balance Sheet Arrangements

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

OUTLOOK

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

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

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

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

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

RISKS AND UNCERTAINITIES

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

FORWARD LOOKING STATEMENTS

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

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

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

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

Miramar Mining Corporation (TSX:MAE) (AMEX:MNG)