DYNA RESOURCE INC, 10SB12G, 2000-04-17

DYNA RESOURCE INC
10SB12G, 2000-04-17

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-SB

GENERAL FORM FOR REGISTRATION OF SECURITIES

(SMALL BUSINESS ISSUERS)

------------------------------------
Under Section 12(b) or 12(g) of the

Securities Exchange Act of 1934

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

DYNARESOURCE, INC.
F/K/A: West Coast Mines, Inc.

(Name of the Small Business Issuer in its charter)

Delaware 94-1589426
- --------------------------------------------------------------------------------
(State of incorporation) (Employer Identification No.)

5215 N. O'Connor Blvd., Suite 200, Irving, Texas 75039
- --------------------------------------------------------------------------------
(Address of principal offices) (Zip Code)

Issuer's contacts: Phone: (800)510-2283; (972)868-9066; Fax: (972)868-9067;
- --------------------------------------------------------------------------------
E-Mail: [email protected]; Web Site: dynaresource.com

Securities to be registered pursuant to Section 12(b) of the Act:
None
----

Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock; $ .01 Par Value
-----------------------------
(Title of Class)

Name of Each Exchange On Which Securities to be Registered:
Nasdaq; Over the Counter
------------------------
Bulletin Board ("OTCBB")
------------------------

DATE OF FILING: MARCH 31, 2000
------------------------------

<PAGE>

FORM 10-SB
DYNARESOURCE, INC.

Table of Contents

PAGE

Forward Looking Statements ....................................... 3
Incorporation of Documents ....................................... 3
Currency and Metric Equivalents ....................................... 3
Glossary of Terms ....................................... 3

PART I. ............................................................. 6

Item 1. Description of Business .................. 6
Business Development / History .................. 6
Business of Issuer / Overview .................. 7
Business of Issuer / Properties .................. 8
Pansy Lee Property .................. 8
San Jose de Gracia Property .................. 8
Business Development / Factors .................. 10
Item 2. Management's Discussion and Analysis .................. 14
Operating Results .................. 16
Financing and Investing .................. 17
Item 3. Properties. .................. 18
Pansy Lee Property .................. 18
San Jose de Gracia Property .................. 19
Item 4. Security Ownership; Beneficial Owners and Management ... 27
Item 5. Directors and Officers .................. 29
Consultants .................. 30
Item 6. Executive Compensation .................. 31
Item 7. Certain Relationships and Related Transactions .......... 31
Stock Issued to Related Parties. Compensation Paid to Officers.32
Item 8. Description of Securities .................. 32

Part II. ............................................................. 33

Item 1. Market Price of Common Stock .................. 33
Item 2. Legal Proceedings .................. 33
Item 3. Changes in and Disagreements with Accountants ........... 33
Item 4. Recent Sales of Unregistered Securities .................. 33
Item 5. Indemnification of Directors and Officers .................. 34

Part F/S.

Item 1. Company Audited Financial Statement, December 31, 1998 ... 34
Exhibit "3.1"
Item 2. Company Audited Financial Statement, December 31, 1999 ... 34
Exhibit "3.2"
Signatures ....................................................... 34

Part III. Exhibits. ............................................... TAB 1

Index to Exhibits ............. 35/Tab 1
Sub-Tab 1: Articles of Incorporation, By-Laws, Amendments ... 1.1 - 1.8
Sub-Tab 2: Property and Related ............................ 2.1 - 2.6
Sub-Tab 3: Financial Statements ............................ 3.1 - 3.4

<PAGE>

PRELIMINARY:
- ------------

Forward Looking Statements:
- ---------------------------

Many statements made by the Company in this Form 10 - SB contain forward-looking
language and information related to the Company. In general, the Company
identifies these forward-looking statements and information through use of
terminology such as "shall", "will", "may", "expect", "intend", "project",
"estimate", "believe", or other similar phrases. The Company bases these such
statements and information on its opinions and assumptions, based upon current
conditions and information currently available to the Company. Because these
statements reflect the Company's views regarding current and future events,
these statements involve uncertainties and risks. Realized future performance
could differ materially and significantly from these forward-looking statements.
Readers should exercise caution in placing any undue reliance upon any such
forward-looking statements.

Incorporation of Financial Statements and Exhibits:
- ---------------------------------------------------

Incorporated into and forming an integral part of this Form 10 S-B are
the audited financial statements for the Company for the years ended December
31, 1998 and December 31, 1999, together with the auditor's report and Notes
thereon. These financial statements are incorporated herein as Part F/S, Items 1
and 2; and attached hereto is Exhibits "3.1." and "3.2.". All financial
information for the Company contained in this Form 10 S-B is prepared in
accordance with accounting principles generally accepted in the United States.

Also incorporated into and forming an integral part of this Form 10 S-B
are the audited and unaudited financial statements for the Company's partner at
the San Jose de Gracia Property, Golden Hemlock Explorations, Ltd., Vancouver,
B.C. Canada, ("Hemlock") for the years ended February, 1999, together with the
auditor's report and notes thereon; and the 9 month unaudited statement ending
November, 1999. The Financial Statements for Hemlock are attached hereto as
Exhibits "3.3" and "3.4". All financial information for Hemlock is prepared in
accordance with accounting principles generally accepted in Canada.

Also incorporated into and forming an integral part of this Form 10 S-B
are the Exhibits attached hereto as Exhibits 1.1. - 1. 8., and Exhibits 2. 1. -
2. 6.

Currency and Metric Equivalents:
- --------------------------------

All dollar amounts are expressed in United States dollars unless
otherwise indicated. The Company's accounts are maintained in US. Dollars.
Business activities of the Company, carried out through a 26.7 % Company owned
subsidiary in Mazatlan, Sinaloa, Mexico, Minera Finesterre S.A. de C.V.
("Minera"), are conducted primarily with the Mexican Peso and occasionally in
U.S. Dollars. Hemlock maintains accounts in Canadian Dollars. Any reference
herein to expenditures made by Hemlock are noted in Canadian Dollars. During the
years referenced herein, the Canadian Dollar equivalent has averaged
approximately 67 % exchange to the U.S. Dollar.

The following factors for converting Imperial measurements into metric
equivalents are provided:

To convert from Imperial To metric Multiply by
---------------------------------------------------------------
<S> <C> <C>

Acres Hectares 0.405

Feet Metres 0.305

Miles Kilometres 1.609

Tons (2000 pounds) Tonnes 0.907

Ounces (troy)/ton Grams/tonne 34.286

</TABLE>

Glossary of Terms:

<PAGE>

Amended and Restated Loan Agreement (the "ARLAG")

(Superseded by the Mine Operating Agreement.)

That specific agreement between the Company and Golden Hemlock
Explorations, Ltd. ("Hemlock"), and Minera Finesterre S.A. de C.V. ("Minera"),
dated December 20, 1996; whereby the Company retained its 24.9 % Net Profits
Interest in the San Jose de Gracia Property, Sinaloa, Mexico. The ARLAG was
superseded by the Mine Operating Agreement ("MOAG") in August, 1998 (See Exhibit
"2.2").

================================================================================

Golden Hemlock Explorations, Ltd.

"Hemlock"

That specific junior resource company, Vancouver, B.C., Canada which is
party to the Mine Operating Agreement (the "MOAG") between the Company, Hemlock,
and Minera Finesterre; and which at the date of this filing retains 73.3 %
Interest in Minera Finesterre S.A. de C.V. ("Minera"), See Glossary below.

================================================================================

Hazen Metallurgy Report

The specific metallurgical report of process development on the Tres
Amigos and related ores at the San Jose de Gracia Property; conducted by Hazen
Research, Inc., Golden, Colorado, in 1999, on behalf of the Company. (See
Exhibit "2.3.")

================================================================================

Indicated Resources:

As defined under the proposed classification in the International
Reserves Definition Initiative, reported in the Bulletin of the Canadian
Institute of Mining and Metallurgy, Vol. 90, No. 1017, Feb. 1998, pp. 44-45, as
follows: "that part of a Mineral Resource which has been explored, sampled and
tested through appropriate exploration techniques; at locations such as
outcrops, trenches, pits, workings and drill holes, which are too widely spaced
or inappropriately spaced to confirm geological and grade/quality continuity;
but which are spaced closely enough to be able to assume geological and
grade/quality continuity, and from which collection of reliable data allows
tonnage/volume, densities, shape, physical characteristics, quality and mineral
content to be estimated with a reasonable but not high level of confidence". And
as referred to by Pamicon at the Tres Amigos area of the San Jose de Gracia
Property. See Part I - Item 3; "San Jose Property"; See "Pamicon Report" -
Exhibit "2.5".

================================================================================

Inferred Resources:

As defined under the proposed classification in the International
Reserves Definition Initiative, reported in the Bulletin of the Canadian
Institute of Mining and Metallurgy, Vol. 90, No. 1017, Feb. 1998, pp. 44-45, as
follows: "that part of a mineral resource, inferred from geological evidence and
assumed but not verified continuity; where information gathered through
appropriate exploration techniques, from locations such as outcrops, trenches,
pits, workings and drill holes, is limited or of uncertain quality and
reliability; but on the basis of which tonnage/volume, quality and mineral
content can be estimated with a low level of confidence". And as referred to by
Pamicon at the Tres Amigos area of the San Jose de Gracia Property. (See Part I,
Item 3 - "San Jose Property"; See "Pamicon Report" - Exhibit "2.5.")

================================================================================

Mine Operating Agreement: ("MOAG")

That specific agreement dated August, 1998, which superseded the
"ARLAG", between the Company and Golden Hemlock Explorations, Ltd. ("Hemlock")
and Minera Finesterre S.A. de C.V. ("Minera"), wherein the Company acquired a
25% interest in Minera, and wherein the Company retained the 24.9% N.P.I. (See
Exhibit "2.2.")

================================================================================

<PAGE>

Minera Finisterre S.A. de C.V. ("MINERA")

Minera Finisterre S.A. de C.V., the Company's 26.7 % owned subsidiary,
incorporated under the laws of Mexico, which holds title to the San Jose de
Gracia Property; and in which the Company would retain 43.75 % of, upon the
completion of the DynaResource Options described in the Mine Operating Agreement
(the "MOAG").

================================================================================

Pamicon Report:

The specific report issued in September, 1999 by Pamicon Developments,
Ltd., Vancouver, British Columbia, Mr. Chuck Ikona, P. Eng.; wherein the San
Jose de Gracia Property is reviewed, Indicated and Inferred Resources are
estimated, and future activities and budgets at the San Jose de Gracia Property
are recommended. (See Part I, Item 3. - "San Jose Property"; See Exhibit
"2.5.").

================================================================================

Pansy Lee Lease / Purchase Agreement:

The specific lease agreement of January, 1998, entered into by the
Company and Newcrest Resources, Inc., Australia, whereby the Company leased its
Pansy Lee Property, Winnemucca, Nevada (See Part I, Item 3. - "Pansy Lee
Property"; See Exhibit "2.1.")

================================================================================

Phase II Exploration Activity Report

The specific activity report describing exploration activities at the
San Jose Property, scheduled to be commenced in late February by the Company.
(See Exhibit "2.6.")

================================================================================

San Jose Production Pro Forma

The specific Production "Projection" of precious metals at the San Jose
Property by Mr. Wayne Henderson, Lockwood Greene Engineers, Dallas, Texas. (See
Exhibit "2.4.").

================================================================================

San Jose de Gracia Property:

The mineral concessions and exploration rights in Northern Sinaloa
State, Mexico, comprising a total of 4,160 hectares more or less, held in the
name of Minera Finisterre. (See Part I, Item 3. - "San Jose de Gracia".)

================================================================================

Interest in Minera Finesterre

That certain specific Interest which represents ownership in the San
Jose Property, which amount of interest retained by the Company is 26.7 % at
December 31, 1999; and, which Interest could accumulate to 43.75 % at year end
December 31, 2001, through the expenditure by the Company of $ 2,000,000. Cnd.
By December 31, 2001.

================================================================================

24.9% N.P.I.:

The Net Profits Interest in the San Jose de Gracia Property retained by
DynaResource, defined under the Mine Operating Agreement as a pre-tax, carried
interest, entitling DynaResource to receive 24.9% of all Available Cash Flow;
including all consideration without limitation, whether cash, stock, or any
other interests, generated from any and all activities which are derived from,
or in any way related to the Property; including without limitation, exploration
of the Property, any mining activities, the sale of any minerals extracted from
the Property, the sale or licensing of any rights to derive minerals or income
from the Property, the sale of any rights in the concessions, and the sale,
transfer, or assignment of any rights or interests whatsoever to directly or
indirectly develop, operate, control or produce the Property", over the life of
the Property. The Net Profits Interest was spun off as a dividend to existing
shareholders by DynaResource in 1998. The Net Profits Interest is more fully
defined and described in the MOAG. (See Exhibit "2.2.")

<PAGE>

PART I:
- -------

Item 1. Description of Business
- -------------------------------

Business Development/History:
- -----------------------------

The Company was incorporated in the State of California on September 28,
1937, under the name West Coast Mines, Inc., to generally engage in all types of
mining, with the right to do everything in connection with the extraction of any
and all kinds of minerals, including: exploration, development, leasing,
purchasing, producing, refining, smelting, joint venturing, investing, and
anything else in any way connected to the mining industry; and, to act as fully
as any corporation be allowed by state and federal law.

In October, 1937, the Company acquired approximately 560 acres of mining
claims in Humboldt County, Nevada, (the "Pansy Lee Property") which claims
surrounded a hard rock mining prospect. (See Part I, Item 3. - "Pansy Lee".) In
connection with the acquisition and development of the Pansy Lee Property, the
Company sought and obtained the approval for the sale of the Company's
securities from the Commissioner of the State of California. The Company
produced precious metals from this Pansy Lee Property until 1942, when the mine
was closed by Executive Order. From 1942 to 1994, the Company was primarily
involved in negotiations involving the leasing or sale of the Pansy Lee Property
to outside parties. Through September, 1994, the Company had 89,573 shares of
common stock outstanding.

In October 1994, the Company issued 97,927 shares in exchange for
approximately 960 Acres of mining claims in Arizona. A majority of new Board of
Directors were installed at this exchange. In December 1994, the Company entered
into a Plan and Agreement of Merger with Resolute Mining Corp., a Nevada
corporation, which was approved by the shareholders on February 16, 1995, and
became effective February 28, 1995. In conjunction with this Agreement of
Merger, Company filed an amendment to its Articles of Incorporation to increase
the authorized number of common stock from 750,000 to 50,000,000 shares and
changed the par value from $1.00 to $0.01 per share. Under this Plan and
Agreement of Merger, 1,312,500 shares of the Company's securities were issued in
exchange for the 5,250,000 outstanding shares of Resolute Mining Corp. Resolute
Mining Corp. was subsequently dissolved There were then issued and outstanding
1,500,000 common shares of the Company, 87.5% of which were owned by former
shareholders of Resolute Mining Corp.

In 1995, the Company acquired a 1.65 % Net Profits Interest in the San
Jose de Gracia Property in Sinaloa State, Mexico (the "San Jose de Gracia
Property) through the capital contribution of $ 33,000. to the holders of the
rights to the San Jose Property. Within the terms of the acquisition of Net
Profits Interest, the Company also reserved the Option to acquire an additional
23.25 % Net Profits Interest in the same property.

In 1996, the Company completed its option at the San Jose Property, and
acquired 23.25 % additional Net Profits Interest in the San Jose through the
Capital Contribution of $ 15,250., and through the Issuance of 451,750 Shares in
exchange for an additional $ 451,750. of Net Profits Interest. Through the terms
of the acquisition of this Net Profits Interest, the Company retained the option
to elect a $ 500,000. Note Receivable, plus certain accelerated payback
provisions on the Note, in exchange for surrender of the Net Profits Interest.
Through year end December 31, 1996 there were 2,671,396 shares of common stock
outstanding.

On January 31, 1997 the Company declared a one-for-four reverse
consolidation of its common stock. In connection with the stock consolidation,
the Company reduced its common shares outstanding from 10,685,586 to 2,671,396.
The number of authorized shares remained at 50,000,000. Any reference to the
Company's shares, including common shares outstanding have been adjusted to
reflect the one-for-four consolidation.

In 1998, the Company acquired 25 % of the outstanding stock of Minera
Finesterre S.A. de C.V., a private Mexican Corporation and the owner of 100 % of
the rights and interest to the San Jose Property, subject to the 24.9 % Net
Profits Interest. $ 733,277. of this acquisition was recorded as Investment.
Pursuant to this acquisition, the Company forgave future consideration including
a $ 500,000. Note and related interest, plus accelerated payback provisions on
cash flows, and elected to retain the Net Profits Interest. Subsequently, the
Company spun off as a dividend its 24.9 % Net Profits Interest. The spin off was
recorded at book value of $ 500,000.

On November 1, 1998, the Company merged with DynaResource, Inc., a
newly formed Delaware corporation. This merger resulted in changing the
Company's name to DynaResource, Inc. and changing the state of incorporation

<PAGE>

from California to Delaware and reducing the Company's authorized common
stock from 50,000,000 to 12,500,000 shares. This business combination was
accounted for as a purchase. (See "Plan and Agreement of Merger", attached
hereto as Exhibit "1.6.".)

In 1999, the Company expended $ 96,270. in exploration costs at the San
Jose Property, which earned the Company an additional 1.7 % Interest in Minera
Finesterre. At year end 1999, the Company owned a total of 26.7 % of Minera
Finesterre.

All shares of the Company rank equally as to voting, and there are no
special preferences, conversion or redemption rights attached to any of the
shares. The address of the head office of the Company is 5215 N. O'Connor Blvd.,
Suite 200, Irving, Texas 75039, Telephone (972) 868-9066.

Subsidiaries
- ------------

The Company owns 26.7 % Interest in Minera Finisterre S.A. de C.V.
("Minera"), which Incorporated March 20, 1980 in Mexico. Minera holds title to
mineral concessions comprising, "the San Jose de Gracia Property", in Sinaloa
State, Mexico. Should the Company complete the option described in the Mine
Operating Agreement ("MOAG" - attached hereto as Exhibit "2.2"), through the
expenditures of $ 2,000,000. Cnd. By December 31, 2001, the Company would then
own 43.75 % of Minera.

Business of Issuer/Overview:
- ----------------------------

The Company is a junior resource company engaged primarily in
exploration of mineral properties. The Company owns an interest in the San Jose
de Gracia mining concessions in Sinaloa State, Mexico, through its 26.7 %
ownership of Minera Finesterre, which holds title to the San Jose concessions
(the "San Jose Property"), (See Part I, Item 3. - "San Jose de Gracia"); and the
Company owns 560 acres of patented mining property in Humboldt County, Nevada,
near Winnemucca (the "Pansy Lee Property"), (See Part I, Item 3. - "Pansy Lee
Property").

The Pansy Lee Property recorded production of Gold, Silver, Copper and
Lead in the late 1930's to 1942 when the Mine was closed by Executive Order
during World War I. Since that time no production has been recorded. The Pansy
Lee Property has drawn the interest from large exploration and production
companies, including Newmont Mining which leased the Pansy Lee Property in the
late 1980's. Most recently the Pansy Lee Property was leased to Newcrest
Resources, Australia in 1998. Although the Winnemucca area in Nevada is well
known for exploration for Gold and Silver and other precious metals, including
most recently the Placer Dome Company which currently is conducting a large
exploration and development project approximately 60 miles east of the Pansy
Lee, there can be no certainty that the Company will be able to negotiate
profitable terms for the Pansy Lee. The Company continues to solicit interest in
the Pansy Lee Property, while it concentrates its own resources on the San Jose
de Gracia Property. In the future, the Company could determine to focus more of
its own resources at the Pansy Lee Property, should conditions warrant at that
time.

Since 1995, the Company has concentrated its own efforts on the San Jose
de Gracia Property, Northern Sinaloa State, Mexico. The San Jose Property has
recorded production of Gold of over 1,000,000 Ounces in the early 1900's. The
Company's technical personnel, and consultants to the Company have described the
potential for significant Gold resources at the San Jose (See Pamicon Report -
Exhibit "2.5."; See Production Pro Forma - Exhibit "2.4."; See Phase II
Exploration Activities - Exhibit "2.6.") Although there can be no certainty that
significant gold reserves or other precious metals will be confirmed at the San
Jose Property, the Company believes the likelihood of proving significant gold
reserves is high. As a result, the Company continues to focus its efforts toward
the exploration and development of the San Jose Property. The Company believes
that upon the completion of its planned and budgeted Phase II exploration
activities at the San Jose de Gracia, (See Phase II Exploration Activity Report
- - Exhibit "2.6.") it will be in position to continue to selectively explore and
develop the San Jose de Gracia property, through its own efforts, through joint
venture arrangements, or otherwise.

In addition to its commitment at the San Jose de Gracia, the Company is actively
seeking other mineral projects, which have the potential for near-term
profitable production, and long term reserves potential. Acquiring and
developing any such future properties will depend upon on specific property
opportunities, market conditions and other factors, some of which factors are
beyond the control of the Company.

<PAGE>

Business of Issuer / Properties:
- --------------------------------

The Company's primary material property is the San Jose de Gracia
property in Sinaloa State, Mexico. Through its 26.7 % owned subsidiary Minera
Finisterre, the Company is engaged in exploration activities in Sinaloa State,
Mexico. The Company's second property is the Pansy Lee Property in Humboldt
County, near Winnemucca, Nevada.

Pansy Lee Property:
- -------------------

In October, 1937, the Company acquired approximately 560 acres of
mining claims in Humboldt County, Nevada, (the "Pansy Lee Property") which
claims surrounded a hard rock mining prospect. (See Part I, Item 3. - "Pansy
Lee".) The Company explored and developed this Pansy Lee, including the driving
of a 900 foot Mine Shaft for production. The Company reported production of
8,000 Oz. Gold, 700,000 Oz. Silver, 110,00 Lbs. Copper, and 2,000,000 Lbs. Lead.
at the Pansy Lee Property. In 1942 the Pansy Lee was shut down by Executive
Order in World War I, and reported little production after that time.

>From 1944 to 1988, the Company involved itself with the leasing of the
Pansy Lee to various parties, including Newmont Mining in 1988. No significant
mining activities were reported from these leasing activities. From 1989 to 1994
no significant property activities were reported.

In 1998, the Company leased the Pansy Lee to Newcrest Resources, Inc.,
Australia, in a 5 year Lease - Purchase Agreement (the "Pansy Lee Lease Purchase
Agreement"). (See Exhibit "2.1.") Newcrest performed sampling, mapping, and
drilling activities at the Property, and reported significantly positive
results. However, Newcrest made a corporate decision to cease all US. Activities
in 1999; and as a result, terminated its lease with the Company. No activity is
being conducted at the Pansy Lee Property at this time. The Company will pursue
offers for lease or purchase at the Pansy Lee, while it focuses its efforts at
the San Jose de Gracia Property.

San Jose de Gracia Property:
- ----------------------------

The claims which comprise the San Jose de Gracia project, consist of
four contiguous groups of mineral claims: San Jose de Gracia I; San Jose de
Gracia II; Santa Rosa; and, Finisterre; the sum total of which comprise 4,160
hectares, more or less.

In 1995, the Company acquired a 1.65 % Net Profits Interest in the San
Jose de Gracia Property in Sinaloa State, Mexico (the "San Jose de Gracia
Property) through the Capital contribution of $ 33,000. to Minera Finesterre
S.A. de C.V. ("Minera"), the holders of the rights and claims to the San Jose
Property. Within the terms of the acquisition of Net Profits Interest, the
Company also reserved the option to acquire an additional 23.25 % Net Profits
Interest in the same property.

In 1996, the Company completed its Option at the San Jose Property, and
acquired additional Net Profits Interest in the San Jose through the Capital
Contribution of $ 15,250., and through the Issuance of 451,750 Shares in
exchange for an additional $ 451,750. of Net Profits Interest. Through the terms
of the acquisition of this Net Profits Interest, the Company retained the option
to elect a $ 500,000. note receivable, plus certain accelerated payback
provisions on the note, in exchange for surrender of the Net Profits Interest.
The election of this option, at the sole determination of the Company, could
occur at the completion of the accelerated payback provisions.

In 1996, Company partners at the San Jose Property, Golden Hemlock
Explorations. Ltd. ("Hemlock") on a net basis, recorded acquisition costs of $
1,630,300. Canadian Dollars ("Cnd.") related to Minera Finisterre, and deferred
exploration costs of $ 396,221. Cnd. related to the San Jose de Gracia Property.
During 1996, the Company retained its 24.9 % Net Profits Interest at the San
Jose Property, without incurring costs attributed thereto.

In 1998, Hemlock incurred property acquisition expenditures of $
92,842. and deferred exploration expenditures of $ 208,596. (total $ 301,438.),
at the San Jose de Gracia project. The principal items of expenditure were
property maintenance, geological reports and salaries.

<PAGE>

In 1998, The Company incurred deferred exploration expenditures of $
35,000., and property acquisition expenditures of $ 85,000. (total of $
120,000.) in providing capital assistance to Hemlock. These expenditures by the
Company strategically positioned the Company to make certain legal claims
against Hemlock and Minera. In 1998, legal proceedings commenced by the Company,
against Hemlock and Minera in connection with the San Jose de Gracia project,
were settled pursuant to the terms of an agreement, the "Mine Operating
Agreement" (the "MOAG" - See Exhibit "2.2."). As part of the settlement, Hemlock
was credited with $ 4,500,000. Cnd. total expenditures at the San Jose Property,
and the Company was credited with $ 1,500,000. Cnd. total expenditures at the
San Jose Property. Among the Company's credited $ 1,500,000. were items of
forgiveness related to a $ 500,000. note receivable and related accelerated
payback provisions. Pursuant to the terms of the MOAG, a 25% equity interest in
Minera Finisterre was transferred by Hemlock to the Company. The Company
retained the 24.9% N.P.I. without incurring any costs attributable thereto;
which Net Profits Interest was subsequently spun off to as a dividend to
existing shareholders. Within the provisions of the MOAG, the Company obtained
the option to earn an additional 18.75 % Interest in Minera (total of 43.75 %
interest in Minera), through the expenditure of $ 2,000,000. Cnd. At the San
Jose project through December 2001. Additional provisions of the MOAG, provided
that Hemlock maintain the maintenance and administration of Minera, and the
maintenance of the San Jose Property.

In 1999, Hemlock recorded $ 125,000. Cnd. in costs associated with
acquisition, and $ 212,250. Cnd. in deferred exploration costs (total of $
337,250. Cnd.) at the San Jose de Gracia project.

In 1999, the Company incurred $ 96,270. in deferred exploration costs at
the San Jose Property, related to compilation of data into a mining software
program, additional sampling and mapping, and the completion of a metallurgical
processing program on the Tres Amigos ores located at the San Jose property
(Hazen Report - See Exhibit "2.3.") . These expenditures earned the Company an
additional 1.7 % Interest in Minera. At year end 1999, the Company owned a total
of 26.7 % of Minera.

The San Jose de Gracia properties are also subject to a 3% net smelter
return royalty ("NSR"), on which the Company has an option to repurchase 2% of
the NSR for US. $3,000,000 until April 23, 2001.

Dollar Amounts Expended/Interest Acquired

Hemlock, expended a total of $ 2,557,845. Cnd. in acquisition costs in
1996 through 1999.

The Company expended a total of $ 500,000, in costs associated with the
acquisition of the 24.9 % Net Profits Interest through 1998. The Company
expended $ 85,000. in 1998 on behalf of Hemlock, towards acquisition costs
associated with the San Jose Property.

The Company and Hemlock have expended the following amounts on
exploration and development costs (including drilling) at the San Jose de Gracia
project for the past four years:

<TABLE>

Hemlock: Cnd. DynaResource: USD.

<S> <C> <C>
1996 $ 396,221. Nil
1997 $ 2,228,324. Nil
1998 $ 208,596. $ 120,000.
1999 $ 212,250. $ 96,270.
-------------- ----------

</TABLE>

Total Through 1999 $ 3,045,391. Cnd. $ 216,270. USD.

In February, 2000 the Company commenced a "Phase II Exploration
Activity" at the San Jose Property. This activity includes sampling, mapping,
trenching, and drilling activities. Full description of this exploration
activity is contained within the "Phase II Exploration Activity Report" attached
hereto as Exhibit "2.6". Activities at the San Jose Property have attracted the
preliminary interest of major mining companies. The Company believes that upon
the completion of its planned and budgeted Phase II exploration activities at
the San Jose de Gracia, it will be in position to continue to selectively
explore and develop the San Jose de Gracia property, through its own efforts,
through joint venture arrangements, or otherwise.

The following sets forth in sequential order the interests earned by the
Company, and the costs expended at the San Jose Property:

<PAGE>

<TABLE>

Capital Costs: San Jose Interest: Terms:

1995 $ 33,000. 1.65 % Net Profits Interest Cash Paid
1996 $ 15,250. Cash Paid
$ 451,750. 23.25 % Net Profits Interest 451,750 Common Shares
-----------

Total $ 500,000. (Total 24.9 % NPI.); or elect:
1. $ 500,000. Note Receivable.
2. $ 1,050,000. Accelerated Payback
Provisions

1997 Nil retained 24.9 % NPI.
<S> <C> <C>

1998 $ 120,000. $ 85,000. acquisition Costs
$ 35,000. exploration Costs
$ 30,000. Satisfaction of Interest receivable
$ 500,000. ($ 500,000.) Satisfaction of note receivable
$ 350,000. ($ 1,050,000.) Satisfaction of accelerated payback
(Discounted)
-----------
Total: $1,000,000. Acquired 25 % Minera Option to acquire 18.75 %
Minera ($ 2,000,000. Cnd.
expenditures at 12/31/01)
retained 24.9 % NPI.

1998 ($ 500,000.) Spin Off 24.9 % NPI. Dividend to existing Shareholders

1999 $ 96,270. acquire 1.7 % Minera Option to acquire 17.08% Minera

(Total held 26.7 %) ($ 1,855,000. Cnd.
at 12/31/01)
</TABLE>

At December 31, 1999 the Company retained ownership of 26.7 % of Minera,
with the remaining option to acquire 17.08 % of Minera through the expenditure
of $ 1,855,000. Cnd. At December 31, 2001.

Business Development/Factors:
- -----------------------------

Body of Commercial Ore/Limited Resources:
- -----------------------------------------

The properties owned by the Company, and properties in which the Company retains
an interest, contain limited bodies of commercial ore. The exploration programs
undertaken and proposed constitute, in the most part, an exploratory search for
ore. There is no assurance that the Company will be successful in its continued
exploration and development activities.

Exploration and Development:

The business of exploring for minerals and mining involves a high
degree of risk. Few properties that are explored are ultimately developed into
producing mines. Major expenses may be required to establish ore reserves, to
develop metallurgical processes and to construct mining and processing
facilities at a particular site. It is impossible to ensure that the current
exploration programs planned by the Company will result in a profitable
commercial mining operation. Unusual or unexpected formations, faulting, fires,
power outages, labour disruptions, flooding, explosions, cave-ins, land slides
and the inability to obtain suitable or adequate machinery, equipment or labour
are other risks involved in the operation of mines and the conduct of
exploration programs. The Company has limited experience in the development and
operation of mines and in the construction of facilities required to bring mines
into production. The Company has relied and may continue to rely upon
consultants for operating expertise. The economics of developing mineral
properties are affected by many factors including the cost of operations,
variations of the grade of ore mined and fluctuations in the price of minerals
produced. Depending on the price of minerals produced, the Company may determine
that it is impractical to commence or continue commercial production. Although
precautions to minimize risk will be taken, processing operations are subject to
hazards such as equipment failure or failure of retaining dams around tailings
disposal areas, which may result in environmental pollution and consequent
liability.

<PAGE>

Mineral Deposits and Production Costs
- -------------------------------------

Mineral deposits and production costs are affected by such factors as
environmental permitting regulations and requirements, weather, environmental
factors, unforeseen technical difficulties, unusual or unexpected geological
formations and work interruptions. In addition, the grade of any ore ultimately
mined may differ from that indicated by drilling results. Production can be
affected by such factors as permitting regulations and requirements, weather,
environmental factors, unforeseen technical difficulties, unusual or unexpected
geological formations and work interruptions. Short term factors relating to ore
reserves, such as the need for orderly development of ore bodies or the
processing of new or different grades, may also have an adverse effect on mining
operations and on the results of operations. There can be no assurance that any
gold, copper or other minerals recovered in small scale laboratory tests will be
duplicated in large scale tests under on-site conditions or in production scale
heap leaching.

Mining Operations
- -----------------

The business of mining is subject to a variety of risks such as cave-ins
and other accidents, flooding, environmental hazards, the discharge of toxic
chemicals and other hazards. Such occurrences may delay production, increase
production costs or result in liability. The Company currently does not carry on
any operations and as a result does not currently maintain liability insurance
against such liabilities. The Company intends to obtain insurance if it
commences operations; the nature of these risks is such that liabilities might
exceed policy limits, the liabilities and hazards might not be insurable, or the
Company might elect not to insure itself against such liabilities due to high
premium costs or other reasons. In such case, the Company could incur
significant costs that could have a materially adverse effect upon its financial
condition.

Title Matters
- -------------

While the Company has investigated title to all mineral claims, and, to
the best of its knowledge, title to all properties is in good standing, this
should not be construed as a guarantee of title. The properties may be affected
by undetected defects in title, such as the reduction in size of the mineral
claims and other third party claims affecting the Company's priority rights, at
the discretion of the Public Registry of Mining in Mexico. The Company's
interests in mineral tenures are comprised of exclusive rights to concessions
acquired through contracts with vendors of individual concessions. The Company
has received governmental permit to conduct operations in exploration and
limited mining activities. Maintenance of such rights is subject to ongoing
compliance with the terms of such permits, and subject to the regulations and
rules of the Public Registry of Mining.

Conflicts of Interest
- ---------------------

Directors of the Company are or may become directors of other reporting
companies, or, have significant shareholdings in other mineral resource
companies; and, to the extent that such other companies may participate in
ventures in which the Company may participate, the directors of the Company may
have a conflict of interest in negotiating and concluding terms respecting the
extent of such participation. The Company and its directors attempt to minimize
such conflicts. In the event that such a conflict of interest arises at a
meeting of the directors of the Company, a director who has such a conflict will
abstain from voting for or against the approval of such a participation or such
terms. In appropriate cases the Company will establish a special committee of
independent directors to review a matter in which several directors, or
management, may have a conflict. In accordance with the laws of Canada, the
directors of the Company are required to act honestly, in good faith and in the
best interests of the Company. In determining whether or not the Company will
participate in a particular program and the interest therein to be acquired by
it, the directors will primarily consider the potential benefits to the Company,
the degree of risk to which the Company may be exposed and its financial
position at that time. Other than as indicated, the Company has no other
procedures or mechanisms to deal with conflicts of interest.

Currency Fluctuations
- ---------------------

The Company maintains its accounts in US. Dollars. Golden Hemlock
Explorations, Ltd. ("Hemlock") maintains it accounts in Canadian dollars.
Company exploration expenses, and expenses incurred through Minera, may be
incurred in US. Dollars, or in Mexican Pesos. As such, the Company is subject to
exchange rate fluctuations and foreign currency fluctuations. Future operations
by the Company may be subject to foreign currency fluctuations and exchange rate
fluctuations, and such fluctuations may materially affect the Company's
financial position and results. The Company has not in the past engaged in
hedging activities.

<PAGE>

Additional Funding Requirements
- -------------------------------

The Company's current operations do not provide any cash flow. In the
past, the Company has relied on sales of equity securities to meet its cash
requirements. The development of the Company's properties may depend upon the
Company's ability to obtain financing through the joint venturing of projects,
private placement financing, public financing or other means. There is no
assurance that the Company will be successful in obtaining the required
financing.

Competition
- -----------

Significant and increasing competition exists for the limited number of
mineral opportunities available in Mexico. As a result of this competition, some
of which is with large established mining companies with substantial
capabilities and greater financial and technical resources than the Company, the
Company may be unable to acquire additional attractive mining properties on
terms it considers acceptable.

Metals Prices
- -------------

The mining industry in general is intensely competitive and there is no
assurance that, even if commercial quantities of mineral resource are
discovered, a profitable market will exist for the sale of same. Factors beyond
the control of the Company may affect the marketability of any minerals
discovered. The Company is extremely sensitive to fluctuations in the price of
gold. The price of various metals recently has experienced significant price
movements over short periods of time; and, is affected by numerous factors
beyond the control of the Company; including, international economic and
political trends, expectations of inflation, currency exchange fluctuations,
interest rates, global or regional consumption patterns, speculative activities
and increased production due to improved mining and production methods. The
supply of and demand for metals are affected by various factors, including
political events, economic conditions and production costs in major producing
regions including the Commonwealth of Independent States. There can be no
assurance that the price of any mineral deposit will be such that the Company's
properties can be mined at a profit.

Foreign Countries and Regulatory Requirements
- ---------------------------------------------

The Company's principal property, the San Jose de Gracia project, is
located in Mexico and mineral exploration and mining activities may be affected
in varying degrees by political and financial instability, inflation, and
haphazard changes in government regulations relating to the mining industry. Any
changes in regulations or shifts in political or financial conditions are beyond
the control of the Company and may adversely affect its business. Operations may
be affected in varying degrees by government regulations with respect to
restrictions on production, price controls, export controls, income taxes,
expropriation of property, environmental legislation and mine safety. Mexico's
status as a country may make it more difficult for the Company to obtain any
required exploration, development and production financing for its properties
due to the increased investment risk. However, it is possible that a
deterioration in economic conditions or other factors could result in a change
in government policies. In addition, social unrest in Mexico could have a
material adverse effect on the Company's activities. The Company's main
interests are in Mexico where the presence of contagious diseases may affect the
Company's ability to carry on operations and obtain personnel.

Environmental and other Regulatory Requirements
- -----------------------------------------------

The current or future operations of the Company, including exploration
and development activities and commencement of production on its properties;
require permits from various foreign, federal, state and local governmental
authorities. Such operations are and will be governed by laws and regulations
governing prospecting, development, mining, production, exports, taxes, labour
standards, occupational health, waste disposal, toxic substances, land use,
environmental protection, mine safety and other matters. Companies engaged in
the development and operation of mines and related facilities generally
experience increased costs, and delays in production and other schedules as a
result of the need to comply with applicable laws, regulations and permits.

Additional permits and studies, which may include environmental impact
studies conducted before permits can be obtained, are necessary prior to
operation of properties in which the Company has interests. There can be no
assurance that the Company will be able to obtain or maintain all necessary

<PAGE>

permits that may be required to commence construction, development or operation
of mining facilities at these properties, on terms which enable operations to be
conducted at economically justifiable costs.

The Company's potential mining and processing operations and exploration
activities are subject to various laws and regulations governing land use, the
protection of the environment, prospecting, development, production, exports,
taxes, labour standards, occupational health, waste disposal, toxic substances,
mine safety and other matters. Such operations and exploration activities are
also subject to substantial regulation under these laws by governmental agencies
and may require that the Company obtain permits from various governmental
agencies. The Company believes it is in substantial compliance with all material
laws and regulations which currently apply to its activities. There can be no
assurance, however, that all permits which the Company may require for
construction of mining facilities and for the conduct of mining operations will
be obtainable on reasonable terms; or that such laws and regulations would not
have an adverse effect on any mining project which the Company might undertake.

Failure to comply with applicable laws, regulations, and permitting
requirements may result in enforcement actions there under, including orders
issued by regulatory or judicial authorities causing operations to cease or be
curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment, or remedial actions. Parties engaged in
mining operations may be required to compensate those suffering loss or damage
by reason of the mining activities and may have civil or criminal fines or
penalties imposed for violations of applicable laws or regulations and, in
particular, environmental laws.

Amendments to current laws, regulations and permits governing operations
and activities of mining companies, or more stringent implementation thereof;
could have a material adverse impact on the Company and cause increases in
capital expenditures or production costs, or reduction in levels of production
at producing properties, or require abandonment or delays in development of new
mining properties.

To the best of the Company's knowledge, the Company is operating in
compliance with all applicable environmental regulations.

Price Fluctuations: Share Price Volatility
- -------------------------------------------

In recent years, the securities markets in the United States and Canada
have experienced a high level of price and volume volatility, and the market
price of securities of many companies, particularly those considered development
stage companies, have experienced wide fluctuations in price, which have not
necessarily been related to the operating performance, underlying asset values
or prospects of such companies. There can be no assurance that continual
fluctuations in price will not occur.

Limited Operating History: Losses
- ----------------------------------

The Company to date has limited experience in mining or processing of
metals. The Company has experienced, on a consolidated basis, losses in most
years of its operations. All activities have been of an exploration and
development nature. There can be no assurance that the Company will generate
profits in the future.

Dividends
- ---------

Investors cannot expect to receive a dividend on the Company's common
shares in the foreseeable future. Capital obtained by the Company, either
through the sale of equity or from generated revenue, is intended by the Company
to finance further development of the Company's properties.

Capital and Other Requirements
- ------------------------------

The Company currently has no commercial operations. It must obtain financing
from the sale of equity to maintain its property interests and to pay general
and administrative expenses for the foreseeable future, until such time as
commercial mineral production may arise from its existing or future projects. At
year end 1999, the Company has necessary capital to complete the Phase II
Exploration activities at the San Jose Property, and will have working capital
reserve through June 30, 2001.

Minera is responsible for annual tax requirements on the concessions comprising
the San Jose district in the total amount of $ 26,700. Hemlock remains obligated
for the payment of these taxes in year 2000. Minera may also become obligated

<PAGE>

to complete the acquisition of 2 mineral concessions within the San Jose de
Gracia district, upon the delivery of proper legal documentation by the vendors.
The total amount of these acquisitions is approximately US $ 70,000., plus
applicable IVA Tax. Hemlock remains obligated for the payments on these two
concessions.

Employees
- ---------

The Company has no employees. Management services are provided Dynacap
Group Ltd., a Texas Limited Liability Company, an affiliate company. An officer
and director of the Company is also a Manager of Dynacap. Minera has three
part-time administration employees and employs on a full-time basis seven other
individuals for security and maintenance at the San Jose de Gracia property.
Minera obligations remain the responsibility of Hemlock.

Reports to Securities Holders:
- ------------------------------

The Company delivers annual reports, including selected financial data,
to shareholders. Copies of Audited Financial Statements are available on request
at the offices of the Company. Audited financial statements for years end
December 31, 1998, and December 31, 1999, together with notes thereto, are
available at the Company's web site: http://www.dynaresource.com.

At the Company's receipt of a "No Comment Letter" from the Securities
and Exchange Commission (the "SEC"), in regard to the form and substance of this
Form 10 S-B filing by the Company, the Company shall prepare and file those
quarterly statements, commonly known as Form "10 - Q", and those annual
statements, commonly known as Form "10 - K", as required by the SEC. As at the
date of the filing of this Form 10 S-B, the Company has not filed any such Form
10-Q or 10-K.

The public may read and copy any materials the Company may file with the
SEC, at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. The public may obtain information about the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The Company anticipates
being an electronic filer of required reports. The SEC maintains an internet
site that contains reports, proxy, information statements, and other information
regarding issuers that file electronically with the SEC. The address of that
site is: (http://www.sec.gov).

Selected information and reports filed by the Company, if filed
electronically, should be available at the SEC web site. Some of this
information, or condensed reports or filings may be available at the Company's
web site at: http://www.dynaresource.com

Item 2. Management's Discussion and Analysis of Operation:
- --------------------------------------------------------------

The goal of the Company is to maximize shareholder value through the
discovery and delineation of mineral resources, reserves, and potential
reserves. Currently, the Company owns no producing properties and consequently,
has no current operating income or cash flow. Operations are funded primarily by
equity subscriptions.

The level of the Company's activities is subject to fluctuation from
year to year, depending on, among other matters, the readiness of the Company's
mineral projects to absorb exploration spending and the availability of
financing to apply to exploration activity. The availability of financing, in
turn, is subject to wide fluctuations, depending upon the trend of equity
markets; the trend of the equity markets related to junior resource exploration
company securities; commodity prices; sentiment of investors; sentiment of
institutional investors; and, recent results from and general outlook for the
exploration programs proposed to be carried out on the Company's projects. The
inter-relation of these factors is complex and difficult to project.

In 1995, the Company acquired a 1.65 % Net Profits Interest in the San
Jose de Gracia Property in Sinaloa State, Mexico through the capital
contribution of $ 33,000. to the owners of the property, Minera Finesterre S.A.
de C.V. ("Minera"). The Company also reserved the option to acquire an
additional 23.25 % Net Profits Interest in the same property. In 1996, the
Company acquired additional Net Profits Interest in the San Jose Property
through the capital contribution of $ 15,250., and through the issuance of
451,750 Shares in exchange for an additional $ 451,750. of Net Profits Interest.
This $ 451,750., had been advanced to the San Jose Project by Dynacap / Mexico
Resource Group, Ltd., a Nevada Limited Liability Company; and had been utilized

<PAGE>

for the acquisition and installation of certain flotation production equipment.
At December 31, 1996, the Company retained a 24.9 % Net Profits Interest at the
San Jose Property. Through the terms of the acquisition of this Net Profits
Interest, the Company retained the option to elect to receive a $ 500,000. note
receivable, plus certain accelerated payback provisions on the note, in exchange
for surrender of the Net Profits Interest. This election, at the sole
determination of the Company, could take place at the completion of the
accelerated payback provisions.

In 1996, the Company partners at the San Jose Property, Golden Hemlock
Explorations. Ltd. ("Hemlock") on a net basis, recorded acquisition costs of $
1,630,300. Canadian Dollars ("Cnd.") related to Minera, and deferred exploration
costs of $ 396,221. Cnd. related to the San Jose de Gracia Property. In 1996,
the Company brought legal claims against Hemlock and Minera, and against certain
named principles of Minera, in effort to protect its Net Profits Interest. The
claims were settled by all parties by the entering into of the Amended and
Restated Loan Agreement at December 20, 1996 (the "ARLAG"), which was superseded
by the Mine Operating Agreement (the "MOAG") in August 1998. (See Exhibit "2.
2."). As a result of the litigation in 1996, and the resulting entering into of
the ARLAG, the Company retained its 24.9 % Net Profits Interest at the San Jose
Property, without incurring any costs associated thereto.

In 1997, Hemlock incurred property acquisition expenditures of $
709,703. Cnd. and deferred exploration expenditures of $ 2,288,324. Cnd. (total
$ 2,998,207. Cnd.), on the San Jose de Gracia project. Again, the Company
retained its 24.9 % Net Profits Interest without incurring any costs associated
thereto. In 1998 Hemlock incurred property acquisition costs of $ 92,842. Cnd.,
and deferred exploration costs of $ 208,596. Cnd. (total of $ 301,438. Cnd.) on
the San Jose de Gracia project.

In 1998, the Company brought additional claims and litigation against
Hemlock and Minera, related to issues involving the ARLAG, and the Company
claimed among other things, the non-compliance therewith. This additional
litigation and claims were settled in August, 1998 through the entering into of
the Mine Operating Agreement (the "MOAG"), whereby the Company acquired 25 % of
the outstanding stock of Minera, the owner of 100 % of the rights to the San
Jose Property, subject to the Net Profits Interest. In regard to the acquisition
of this 25 % interest in Minera, $ 733,277. was recorded by the Company as an
investment. Pursuant to this acquisition, the Company forgave future
consideration including the $ 500,000. note and related interest, plus
accelerated payback provisions on cash flows, and elected to retain the Net
Profits Interest. Subsequently, the Company spun off to existing shareholders as
a dividend its 24.9 % Net Profits Interest. Pursuant to the MOAG, the Company
acquired the option to earn up to an additional 18.75 % Interest in Minera,
through the expenditure of $ 2,000,000. Cnd. in exploration and development
costs on the property by December 31, 2001. (See MOAG, attached as Exhibit
"2.2".)

The Company and its partners believe they made significant progress in
exploration activities conducted at the San Jose de Gracia property in 1997 -
1999 (See Part I, Item 3. - "San Jose Property"; See Pamicon Report attached as
Exhibit "2.5."). However, exploration programs were curtailed in December 1997,
due to Hemlock's exhaustion of funds available for exploration, and in the
Company's views, due to lack of managerial authority over Minera, and activities
at the San Jose Property. Hemlock's activities were confined to care and
maintenance items of Minera and the San Jose, the preparation of an independent
engineering report (the "Pamicon Report"), compilation of data, and negotiations
with the Company.

In 1999, Hemlock recorded $ 125,000. Cnd. in costs associated with
acquisition, and $ 212,250. in deferred exploration costs (total of $ 337,250.
Cnd.) at the San Jose de Gracia project.

In 1999, the Company incurred $ 96,270. in deferred exploration Costs at
the San Jose Property, related to compilation of data into a mining software
program, additional sampling and mapping, and the completion of a metallurgical
processing program on the Tres Amigos ores (Hazen Report - See Exhibit "2.3.") .
These expenditures earned the Company an additional 1.7 % Interest in Minera. At
year end 1999, the Company owned a total of 26.7 % of Minera.

In fall 2000, the Company organized and compiled a Phase II exploration
report, detailing exploration and development activities planned at the San Jose
Property in spring, 2000. Included in this report was a compilation of many
years of data from the San Jose into a mapping software program. This mapping
software enables the company to present a professional perspective of the
estimated current resources in place at the San Jose Property, and the potential
for additional estimated resources. The presentation of this data has recently

<PAGE>

<TABLE>

drawn the attention and interest of major mining companies, as indicated by the
scheduled visit by one major company to the San Jose Property in April, 2000.

Although there can be no certainty that the Company will be successful
in its exploration and development efforts at the San Jose Property, the Company
believes that upon the completion of its planned and budgeted Phase II
exploration activities at the San Jose de Gracia, (See Exhibit "2.6.") it will
be in position to continue to selectively explore and develop the San Jose de
Gracia property, through its own efforts, through joint venture arrangements, or
otherwise.

The Company plans to focus its efforts on the exploration and
development of the San Jose Property, with the goal of confirming significant
gold resources. Additionally the Company will continue to solicit interest for
its Pansy Lee Property.

Operating Results

Deferred exploration and development expenditures incurred by the
Company in 1997 - 1998 at the San Jose de Gracia property were $ 120,000., the
Company recorded these expenditures as Investment. Hemlock expended a total of $
2,300,000. Cnd. In deferred exploration and development expenditures in 1997,
and $ 208,000. Cnd. in 1998.

Deferred exploration and development expenditures incurred in 1999 by
the Company at the San Jose de Gracia property were $ 96,270., these
expenditures were recorded as Investment. Hemlock, expended a total of $
212,000. Cnd. In deferred exploration and development expenditures in 1999.

The expenditures at the San Jose Property in 1997 - 1999 have provided
the foundation for continued exploration and development programs at the
Property (See Pamicon Report - Exhibit "2.5").

Hemlock, expended a total of $ 2,557,845. Cnd. in acquisition costs in
1996 through 1999. The Company expended a total of $ 500,000. in costs
associated with the acquisition of the Net Profits Interest. Additionally, the
Company expended $ 27,015. in 1996 and 1997, and $ 30,170. in 1998 in legal
costs associated with the actions brought by the company against Hemlock and
Minera. These costs are recorded as accounts receivable, together with accrued
interest. In 1998 and 1999 the Company advanced funds to Hemlock in the total
amount of $ 42,800. These costs are recorded as accounts receivable, together
with accrued interest.

The Company and Hemlock have expended the following amounts on costs
associated with the San Jose de Gracia Project in the past 4 years:

Hemlock / Cnd.: DynaResource / USD.:
--------------- --------------------
Acquisition Exploration Acquisition Exploration Legal /Advances
----------- ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>

1996 $ 1,630,300 $ 396,221 $ 500,000 Nil
1997 $ 709,703 $ 2,228,324 Nil Nil $ 27,015.
1998 $ 92,842 $ 208,596 $ 85,000 $ 35,000 $ 30,170.
1999 $ 125,000 $ 212,250 Nil $ 96,270 $ 42,800.
----------- ----------- --------- --------- ---------
</TABLE>

Total '96-'00 $ 2,557,845 $ 3,045,391 $ 585,000 $ 131,270 $ 99,850

The following sets forth in sequential order the interests earned by the
Company, and the costs expended at the San Jose Property:

Capital Costs: San Jose Interest: Terms:
-------------- ------------------ ------

1995 $ 33,000. 1.65 % Net Profits Interest Cash Paid
1996 $ 15,250. Cash Paid
$ 451,750. 23.25 % Net Profits Interest 451,750 Common Shares

----------
Total $ 500,000. (Total 24.9 % NPI.); or elect:
1. $ 500,000. Note Receivable.
2. $1,050,000. Accelerated Payback
Provisions

<PAGE>

1997 Nil retained 24.9 % NPI.

1998 $ 120,000. $ 85,000. acquisition Costs
$ 35,000. exploration Costs
$ 30,000. Satisfaction of Interest
receivable
$ 500,000. ($ 500,000.) Satisfaction of note
receivable
$ 350,000. ($ 1,050,000.) Satisfaction of accelerated
payback (Discounted)
-----------
Total: $1,000,000. Acquired 25 % Minera Option to acquire 18.75%
Minera ($ 2,000,000. Cnd.
expenditures at 12/31/01)
retained 24.9 % NPI.

1998 ($ 500,000.) Spin Off 24.9 % NPI. Dividend to existing
Shareholders

1999 $ 96,270. acquire 1.7 % Minera Option to acquire 17.08%
Minera

(Total held 26.7 %) ($ 1,855,000. Cnd.
at 12/31/01)

At December 31, 1999 the Company retained ownership of 26.7 % of Minera,
with the remaining option to acquire 17.08 % of Minera through the expenditure
of $ 1,855,000. Cnd. At December 31, 2001.

Financing and Investing Activities
- ----------------------------------

In 1996, the Company raised $ 358,865. through the sale of promissory
notes which subscribers subsequently converted into 176,433 common shares of the
company. The Company raised an additional $ 70,573. through the exercise of
options issued with the conversion of the notes above; at the exercise of such
options the Company issued an additional 176,433 common shares.

In 1997, the Company raised $ 160,000. through the sale of promissory
notes which subsequently converted into 40,000 common shares. The Company raised
an additional $ 259,500. through the exercise of options at $ 1.00 / share
(which options were issued at the time of acquisition of $ 451,750. of Net
Profits Interest); in conjunction with the exercise, the company issued 259,500
common shares. The Company raised a further $ 121,500. through the exercise of
81,000 options at $ 1.50 (which options were issued in conjunction with the
acquisition of the $ 451,750. of Net Profits Interest); in conjunction with the
exercise, the company issued 81,000 common shares.

In 1998 and 1999 the company raised $ 733,000. through the sale of
483,000 common shares. In 1998, the company also received $ 50,000. In lease
income from the Pansy Lee Property.

During the period 1996 - December 31, 1999 the Company expended a total
of $ 500,000. in acquisition costs associated with the Net Profits Interest; $
85,000. in other acquisition costs related to the San Jose de Gracia Property; $
131,270. in costs associated with exploration and development at the San Jose de
Gracia; and $ 57,185. in legal costs; and, $ 42,800. in advances made to
Hemlock.

During the prior 4 year period, the company has raised the following
amounts in cash, and has issued common shares in conjunction therewith as shown:

<TABLE>

Amount Raised: Common Shares Issued:
-------------- ---------------------

1996: $ 358,865. 176,433
$ 70,573. 176,433

1997: $ 160,000. 40,000
$ 259,500. 259,500
$ 121,500. 81,000
1998: $ 131,000. Issued in 1999
1999: $ 602,000. 483,000
------------- -------

Total '96 - '00 $ 1,703,438. 1,216,366

</TABLE>

<PAGE>

Liquidity and Capital Resources
- -------------------------------

The Company finances its mineral property acquisition and exploration
costs, and related administration costs, through the issue of equity. The
Company's ability to generate adequate amounts of cash is dependent on its
ability to attract equity investment.

The Company intends to conduct exploration programs on the San Jose de
Gracia property totaling a minimum of $ 250,000. (See Phase II Exploration
Activity Report - Exhibit "2.6.") The Company expects that, upon completion of
the Phase II Exploration Program, it will have a positive working capital
position of $ 150,000. 1999 sampling and mapping programs conducted at the San
Jose de Gracia property have prepared the property for the diamond drilling
program recommended by the Pamicon Report (Exhibit "2.5." ); and as described in
the Phase II Exploration Activity Report (Exhibit "2.6"), which activity is
scheduled for February 25, 2000.

Capital and Other Requirements
- ------------------------------

The Company currently has no commercial operations. It must obtain
financing from the equities market to maintain its property interests and to pay
general and administrative expenses for the foreseeable future, until such time
as commercial mineral production may arise from its existing or future projects.
Upon completion of the Phase II Exploration Activity as described in The Phase
II Activity Report (attached hereto as Exhibit "2.6.") the Company will have
necessary working capital through June 30, 2001.

Minera is responsible for annual tax requirements on the concessions
comprising the San Jose district in the total amount of $ 26,700. Hemlock
retains the liability and obligation for the payment of these taxes. Minera may
also become obligated to complete the acquisition of 2 mineral concessions
within the San Jose de Gracia district, upon the delivery of proper legal
documentation by the vendors. The total amount of these acquisitions is
approximately US. $ 70,000., plus applicable IVA Tax. Hemlock retains the
liability and obligation for payment of these acquisitions by Minera.

Employees
- ---------

The Company has no employees. Management services are provided by
Dynacap Group Ltd, a Texas Limited Liability Company. An officer and director of
the Company is a Manager of Dynacap Group Ltd. Minera Finisterre has three
part-time administration employees and employs on a full-time basis seven other
individuals for security and maintenance at the San Jose de Gracia property.
Hemlock retains the obligation and responsibility for costs associated with the
maintenance of Minera.

Activities:
- -----------

Company activities during 1998 and 1999 focused on acquiring additional
interest in Minera, the holders of 100 % Interest, subject to the 24.9 % Net
Profits Interest, of the San Jose de Gracia Property. The Company also expended
resources in compiling data from the San Jose and organizing next stage
development activities, including the retaining of exploration advisors, First
Point Minerals Corp., Vancouver, B.C. Canada. In February, 2000 the Company
commenced its next stage of activity at the San Jose Property, as advised by
First Point Minerals. (See "Phase II Exploration Activity", attached as Exhibit
"B.6".

Item 3. Properties:
- ----------------------

The Company presently maintains its executive offices at 5215 N.
O'Connor Blvd., Suite 200, Irving, Texas 75039, at a rate of $ 1,250.00 per
month, plus utilized services. The Company renewed its lease for 1 year,
commencing April, 2000.

Pansy Lee Mine, Winnemucca, Nevada:
- ----------------------------------

In October, 1937, the Company acquired approximately 560 acres of mining
claims in Humboldt County, Nevada, which claims surrounded a hard rock mining
prospect. For the next several years, the Company engaged in exploring this
property, including the drilling of a 900 Foot mine shaft and the installation
of a flotation mill circuit for potential production. Although the Company

<PAGE>

reports the following Production from the Pansy Lee Mine in the early 1940's:
8,000 Oz. Gold, 700,000 Oz. Silver, 110,000 Lbs. Copper, and 2,000,000 Lbs.
Lead; the mine was shut down by Executive Order in World War I, with little
production reported thereafter.

From 1944 through 1988, the Company involved itself with the leasing of
its Pansy Lee Property, to various mining entities, including Newmont Mining
(1986-1988). The Company reported no production or profits from such leasing
activities. The Company had no significant mining activity outside of the
property leases during this period, while it negotiated potential mergers with
other mining entities. From 1989 to 1994, the Company had no significant
activity.

In 1998, the Company entered into a 5 Year Lease / Purchase Agreement
with Newcrest Resources, Inc., Australia on the Pansy Lee Property. (See Exhibit
"2.1") Terms of the Lease were as follows:

1. 1st Year (1/23/98): $ 50,000.
2. 2nd Year (1/23/99): $ 100,000.
3. 3rd Year (1/23/00): $ 150,000.
4. 4th Year (1/23/01): $ 250,000.
5. 5th Year (1/23/02): $ 250,000.

A Purchase Price of $ 2,000,000. was to be due at the end of the Lease
at January 23, 2003. The Company retained a 2.5 % Gross Smelter Royalty on any
and all production.

The Company received the first year's Lease Payment from Newcrest in January,
1998. However, Newcrest terminated the Lease in 1999, and ceased all U.S.
operations. During the time of Lease, Newcrest performed the following work on
the property:

o sampling and grid mapping
o IP/resistivity and ground magnetic surveys
o three 1,500 foot reverse circulation holes drilled.

The Company has not performed any recent work of its own on this
property, as it focuses its resources on the San Jose de Gracia Property,
Sinaloa State, Mexico.

San Jose de Gracia Property:
- ----------------------------

The claims referred to as the San Jose de Gracia claims contain
approximately 4,160 hectares of mining concessions. Prior to the Mexican
Revolution in 1910, over 1,000,000 ounces of gold were produced from these
concessions. There has been approximately $ 1,800,000. expended in acquisition
costs, and $ 2,300,000. expended in exploration costs during the period 1996 to
December 31, 1999. This exploration work has provided the confirmation of vein
deposits at the San Jose Property. (See Pamicon Report - Exhibit "2.5.").

The claims which comprise the San Jose de Gracia Project, consist of
four contiguous groups of mineral claims; San Jose de Gracia I; San Jose de
Gracia II; Santa Rosa, and Finisterre. The San Jose de Gracia I claims were
acquired by Minera Finesterre S.A. de C.V. ("Minera") effective May 15, 1997,
from parties at arm's length to the Company, under agreement dated May 15, 1995
in consideration for cash payments totaling $ 690,000. The San Jose de Gracia II
claims were acquired over a two year period, pursuant to an agreement dated May
14, 1994, from parties at arm's length to Minera, in consideration for cash
payments totaling $ 200,000., and assumption of a $ 450,000. term loan. As at
February 28, 1999, all the required cash payments had been made by Minera and
the term loan retired.

Minera obtained an option to purchase interests totaling 100% in the
Santa Rosa claim, from parties at arm's length to Minera and the Company,
pursuant to three separate agreements dated May 15, 1996. The option was
exercisable by making payments totaling $ 250,000. in two equal annual
installments due May 15, 1997 and May 15, 1998, subject to Minera's receipt of
certain legal documentation from the vendors. The initial installment of $
125,000. was made by Minera on the first payment date and since that time
additional payments on account of the remaining purchase price and taxes have
been made to various vendors by Minera as legal documentation has been produced.
Minera estimates the remaining acquisition costs relating to the San Jose claim
to be $ 70,000., including applicable value added tax. The balance of the
acquisition costs will become payable upon the vendors tendering the required
documentation.

<PAGE>

The Finisterre claims were staked by, or on behalf of Minera.
Consideration consisted solely of related filing fees.

The Company completed metallurgy work in 1999 to confirm the ability to
extract gold and other minerals from ores contained at the San Jose Property.
The results of this work confirmed that 87 % - 95 % recoveries of Gold and other
Minerals are possible, using a basic gravity flotation circuit. (See Hazen
Metallurgy Report - "Process Development on Tres Amigos Ores"; attached as
Exhibit "2.3.")

Title to the claims are held in the name of Minera Finisterre S.A. de
C.V., ("Minera") a Mexican Corporation, in which the Company currently holds a
26.7 % of the outstanding common stock and interest related thereto. The
remainder of the Interest in Minera is held by Golden Hemlock Explorations, Ltd.
("Hemlock").

The following information is extracted from a report (the "Pamicon
Report") dated September, 1999, by Pamicon Developments Ltd., Vancouver, British
Columbia, Mr. Charles K. Ikona, P. Eng, a copy of which has been attached to
this Form as Exhibit "2.5.".

Location, Access and Topography
- -------------------------------

The San Jose de Gracia Mining District is located in the northeast
portion of the State of Sinaloa some 156 kilometers northeast of the city of
Culiacan. Access is by a mountainous road 78 kilometers from the municipal seat
of Sinaloa de Leyva, or by air, to a gravel air strip on the property, suitable
for small to medium sized aircraft. The village of San Jose de Gracia is located
in the project area and offers a labor source as well as limited support
facilities. Geographical co-ordinates of the project are 26'09'N latitude and
107'53'W longitude. Topography on the property is characterized by ravines and
low mountain ranges, with moderate to steep slopes. Elevations range between 400
and 700 meters A.S.L. Extensive unpaved roads and tracks offer four-wheel drive
access to much of the project area.

Climate is semi-tropical with a dry season extending from mid November
to the end of June and a rainy season from July to mid November. Summers are hot
with temperatures to 40(degree)C and winters mild. Vegetation consists of
mesquites, thorny bushes and shrubs. Some deciduous trees grow in the ravines
with abundant underbrush growth during the rainy season. Limited surface water
in flooded old workings is available for drilling in several areas of the
property. Process water is available from wells in the main river valley near
the village but may also be available from possible aquifers elsewhere on the
property.

Concessions
- -----------

The following concessions, with the exception of the Santa Rosa Claim previously
described, are 100 % owned by Minera Finisterre:

<TABLE>

CLAIM NAME TITLE OR FILE NUMBER HECTARES
---------- -------------------- --------

<S> <C> <C>
San Jose 190244 27.0000
El Real 190736 2332.0000
Tres Amigos 2 192290 54.4672
Lost Tres Amigos 172216 23.0000
San Sebastian 184463 40.0000
La Nueva Esperanza 209870; formerly 162840 40.0000
Guadalupe 189470; formerly 16335 77.0000
Nuevo Rosario 184999 32.8781
Mina Grande 163578 6.6588
Ampliacion de Santa Rosa 163592 25.0000
Santo Tomas 187348; formerly 178649 312.0000
San Nicolas 163913 55.5490
La Libertad 172433 97.0000
La Union 176214 4.1098
Ampliacion de San Nicolas 183815 17.4234
El Real 2 201128 393.8510
Piedras de Lumbre Uno 201946 40.2753
Piedras de Lumbre 2 201947 34.8484

</TABLE>

<PAGE>

<TABLE>

<S> <C> <C>
Piedras de Lumbre 3 203467 4.3098
Finisterre Fraccion A 203285 18.7856
Finisterre Fraccion B 203286 173.4966
San Miguel 183504 7.0000
Santa Rosa 170557 31.4887
San Andreas 192288 385.0990

</TABLE>

Total "4,160 hectares more or less"

History
- -------

Gold was originally discovered on the property in 1828 near the small
settlement of El Rosario in the north central portion of the area. Work was
restricted to the areas of Mina Grande and Mina San Pablo during this period.
Further work in the 1870's, led to additional production from other original
mines in the area. In 1893 the first ore body in the Purisma Creek area was
discovered. From 1892 - 1895 these ore bodies are reported to have produced some
470,000 ounces of gold at an average grade of 3.48 oz Au/ton.

In 1895 the La Prieta area was discovered which resulted in additional
production. The mines produced until 1910 when the Mexican Revolution halted
mining activities. Total Production during the period 1828 until 1910 is
estimated at 1,000,000 oz. The mines were returned to private control in 1918
with resulting sporadic production until present. This production appears to
have been hampered by lack of financial and technical resources. Material mined
during this later period was salvaged from old operations, with no organized
attempt to define new reserves.

By 1977 the present underlying vendors to Minera Finisterre succeeded in
acquiring control of most of the district, and installed a 70 ton per day
flotation concentrator. Preliminary modem geological surveys of the area were
started in the 1990's by Asarco and Penoles, the Mexican state mining company.
Minera Finisterre subsequently acquired the property and continued some
exploration work, although most of its financial resources were expended in
erecting a 200 ton per day concentrator on the property.

Golden Hemlock Explorations, Ltd., Vancouver, B.C. ("Hemlock") obtained
an option to acquire control of Minera Finisterre and commenced work on the
property in 1997. This development work, performed for Hemlock by Perforaciones
Quest de Mexico (PQM), consisted primarily of core drilling, along with
trenching and mapping.

In 1998 Pamicon examined the results of PQM's work, in order to
calculate possible mineral reserves developed by the drilling, and to review the
general status of the property. Results of this examination were presented in a
Pamicon report of September 1998. Subsequently, during the first half of 1999,
the Company and its agents arranged to collect samples for metallurgical
testing. Thereafter, In July - August 1999, a short survey, sampling, and
mapping program, under the direction of T.C. Scott and M. Mitchell, P.Eng.
(Pamicon), was conducted to address some problems with the PQM data noted in the
1998 review.

Geology
- -------

Geologic characteristics of the San Jose de Gracia Property, including:
A. Regional Tectonics; B. Structural Trends; C. Magmatic Intrusion Trends; and,
D. Mineralization Trends; are described in detail in the Pamicon report.

Review of 1997 Field Work
- -------------------------

The Pamicon review of the 1997 field activities focuses primarily on the
results of the diamond drilling, and the reported trenching conducted by PQM.
Eight areas of the property were tested with 64 drill holes, which produced an
accumulated length of approximately 6500 meters of NQ core. In addition, the
Gossan Cap and the La Purisima were reported to be extensively trenched.

Tres Amigos Structure
- ---------------------

<PAGE>

North (060), provided enough continuity to indicate its tenor and trend. Many
narrow, seemingly spurious hanging wall intercepts were attributed to
intermittent north striking, steeply dipping veins of the Orange Tree grouping.
It is not possible from drill logs to identify these structures with any
certainty, nor, to separate their possible contribution to the grade of the
mineralized blocks depicted.

The recently conducted re-survey of drill holes (August, '99), has
increased the confidence level in the spatial relationship between the various
mineralized intercepts encountered in the Tres Amigos brecciated vein system.
Several auriferous veins, occurring approximately 35 meters into the hanging
wall of the Tres Amigo vein, were previously interpreted as spurious. On
sections east of Section 5078E, these now appear to define a second mineralized
structure (the Quarta Amigo), of similar orientation and character as the Tres
Amigos. The significance of this mineralized breccia vein, possibly en echelon,
lies not only in its ore potential, but also in that it may define a zone of
dilation between the two structures. The mineralized, hanging wall splays of the
Tres Amigos, comprising brecciated quartz-sulfide filled gashes and mineralized
wall rock breccias, would be typical of such an environment. Similarly, the
hanging wall splays of the Quarta Amigo may signal the presence of additional en
echelon structures and dilation zones occurring to the northeast. Conformation
and delineation of these zones could greatly increase the systems mineral
potential.

In preparation of the resource estimate for the Tres Amigos area, the
following observations and their possible inferences were also apparent:

o Based primarily on the distribution of gold, anastomosing or
sheeted mineralized zones are depicted as striking
approximately 060 with a northerly dip which may vary from 20
to 60(degree).

o The mineralized zones appear to crosscut all sedimentary,
volcanic and intrusive lithologies.

o Significant silver, copper, zinc and lead values were
encountered in the drill holes but a definitive correlation
between gold and individual elements is not apparent.

o Several drill holes encountered the sedimentary lithologies
which make up the pre-Tertiary basement rock for the region .
The dramatic difference in the depth of the sediment interface
in adjacent drill holes, as seen in Sections 5037E, 5078E,
5035N and 5080N is in sharp contrast to the regularity of the
Tres Amigos structure. This suggests that considerable
faulting occurred prior to the development of the main
mineralized structures.

o Pamicon also noted that the auriferous, massive-sulfide vein
intersected within the sediments at the bottom of hole SJG 047
is the only significant mineralization encountered below the
Tres Amigos vein to date. Although of undefined orientation,
adjacent drill holes to the west tend to eliminate all but an
easterly dipping structure, that may or may not be directly
related to the development of the overlying dilatation zone.
With a grade of Au 7.5 g/t, Ag 15.5 g/t, Cu 0.09%, Zn 3.18%,
and Pb 0.27% over 7 meters, including 1.5 meters at Au 23.1
g/t, Ag 42.5 g/t, Cu 0.24%, Zn 8.0% and Pb 0.83%, this
structure possibly represents a feeder channel for the
mineralizing fluids that permeated into the Tres Amigos
system. Delineation of this structure is a priority, as it
offers the potential for encountering mineralization in an
environment similar to that of La Prieta; and, it also offers
the potential for manto style mineralization, developed within
calcareous members of the basement sediments.

La Cecena Workings
- ------------------

The La Cecena workings are located 200 meters SW from the Tres Amigos
workings and drifts northerly into the footwall of a mineralized structure
which, based on similarities in orientation and mineral tenor, is interpreted to
be an extension of the Tres Amigos mineralization. Drill hole 97-50, collared
approximately 70 meters to the west of the La Cecena workings, was oriented at
063(degree) at a -80(degree)dip. The intention of drilling this diamond drill
hole was to test the La Cecena structure, which strikes 049' and displays a
variable northerly dip of 45(degree) to 65(degree). The following comments are
based on a review of the drill logs and assays of drill core for this hole.

o Andesite tuffs breccias and porphyries dominate the
lithologies encountered in this 155.5 meter diamond drill
hole. Sedimentary, felsic and andesitic clasts were noted in a
2 meter breccia zone at 73 meters. The rhyolitic sequence was
not encountered, however a 4 meter quartz-feldspar porphyry
dyke (?) Was intercepted at 113.5 meters.

<PAGE>

o A zone of significant mineralization was encountered between
69 and 80 meters that may reflect a continuation of
mineralization encountered in the workings. Encouraging assay
results of 5.2 g/t Au - 16.6 g/t Ag and 8.8 g/t Au - 10.8 g/t
Ag were returned from 2 samples on both the hanging wall and
foot wall of the zone respectively. Sulfide mineralization
associated with the zone include sphalerite, galena and minor
pyrite. Significant copper values of 0.22% reported with the
HW sample and 0.78% Pb with the FW sample. Anomalous precious
and base metal values were returned from the intervening
samples.

o Faulting and brecciation persisted throughout the section
drilled, with prominent graphite on minor slips.

o The dominant alteration is chlorite, with epidote becoming
more pronounced at depth, along with fractures filled with
talc/gypsum.

o Recent surveying and sampling suggests a probable correlation
between Tres Amigos and La Cecena; which upon confirmation
would yield a mineralized structure in excess of 450 meters.

Rudolphos Workings
- ------------------

Drill holes 97-48 and 97-49 were collared 270 meters SE of the Tres
Amigos portal adjacent to the Rudolphos workings and tested a mineralized
structure that lies sub-parallel to the Tres Amigos structure. Hole 97-48, an
inclined hole, penetrated 100 meters of the Lower Volcanic Sequence that
consisted of andesitic tuffs with diorite porphyry clasts, polymictic
conglomerate, rhyolitic tuffs and andesite porphyry. The hole terminated in 20
meters of basement sediments. Hole 97-49, a vertical hole from the same setup,
penetrated similar lithologies comprising 128 meters of the Lower Volcanic
sequence before terminating in 17 meters of basement sediments. A shallow
northerly apparent dip is indicated for the volcanic/sediment interface.

o Hole 97-48 encountered 40 meters of highly anomalous zinc
mineralization between 36 and 76 meters which included several
1-2 meter intervals grading between 1% and 4.8% Zn. Anomalous
Au values up to 2.5 g/t were encountered between 64 and 69
meters.

o Mineralization in 97-48 is of special significance as it is
hosted by heavily quartz veined and brecciated rhyolitic tuff,
with total sulfides of up to 10%.

o The presents of silicified sedimentary clasts within the
quartz veining is strongly suggestive of a hydromagmatic
breccia. Similar breccias have been reported in the Tres
Amigos and La Cecena drilling.

o Hole 97-49 encountered several segments of similar
mineralization with elevated gold values in which andesitic
rocks were the primary host.

o These drill holes indicate that significant mineralization
occurs not only in the andesitic stratigraphy but also within
rhyolitic, volcanic rocks, with structural complexities being
the main controls on the location of mineralization.

o Interpretation of results suggest the presence of at least two
sub-parallel mineralized structures with a moderate NW dip.
Neither, however, appear to correlate with the targeted
Rudolpho surface workings which is in their foot wall.

o Even though initial gold values are low, the drilling has
indicated Rudolphos to represent a strong system of
mineralization, worthy of additional drill testing.

o The spatial relationship of the Tres Amigos and Rudolphos
systems suggests they are not contiguous and represent
separate but similar centers of mineralizing events.

Gossan Cap Area
- ---------------

<PAGE>

surface rock chip sampling conducted during a property inspection by Teck
Resources Inc. in 1996. The drill collars have as yet to be surveyed. Field
mapping and diamond drilling indicates the bedrock of the Gossan Cap area to be
dominated by basement sediments, in contrast to the anticipated Tertiary
volcanics. There are, however, several aspects of the drill results that warrant
comment.

The following observations are based on drill log descriptions:

o Except for the intrusion of a few mafic and felsic dykes, the
rock cored was comprised of siltstone, mudstone, graphitic
black shales and calcareous members of the Paleozoic basement
for the property. No volcanic rocks comparable to those found
overlying the basement rocks at surface appear to have been
encountered in the drill holes.

o Intense fracturing and brecciation is evident throughout the
core.

o Fe and Mn oxides are prominent to a depth of approximately 35
meters, below which sulfides, primarily pyrite, are dominant.

o Drill holes 97-15, 17 and 26 were drilled to depths of 55.77m,
54.86m and 66.45m respectively. All other holes were less than
46 meters in depth.

o Although elevated gold values (100-200 ppb) were encountered
in most holes, few samples returned values >500 ppb Au.

o Trace levels of silver and base metals increase markedly in
the sulfide zones at the bottom of the holes.

o Core recoveries are generally poor in all holes and likely
influenced drill core assay results.

o Gold values attributed to surface sampling are not reflected
in drill core assays.

o Elevated zinc values associated with a quartz veined, tectonic
breccia in Hole 97-15, between 10.6 and 14.8 meters, suggests
that an extension to the mineralized structure at Pozo Mina
Grande, may have been intersected.

Inferred from these observations are the following:

o Surface weathering probably extends to a depth of
approximately 35 meters.

o Either the sediments originally contained only elevated gold
values, or, gold was lost as the result of poor recovery and
/or surface leaching.

o Gold values from surface samples may be residually derived
from erosion of auriferous volcanic cover.

o Mineralized structures within sediments may be sub-vertical,
thus negating their effective detection by vertical drill
holes.

The drilling in the Gossan Cap area has neither confirmed that surface
mineralization continues to depth, nor has it satisfactorily explained the
results obtained from previous surface sampling. However, drilling confirms that
elevated precious and base metal values do occur in structurally prepared areas
within the basement sediments. It will be important to incorporate the data from
the Gossan Cap area into the geological data base for the property, to attempt
to explain the high values from surface trench samples.

La Union Area
- -------------

A total 716.87 meters of diamond drilling in 8 holes tested the down dip
continuity to the fissure veins exposed in the underground workings at La Union.
The diamond drill holes encountered a Lower Volcanic Sequence dominated by
felsic and mafic porphyries, heterolithic breccias and the basement sediments.
Phyllic and argillic alteration is extensive within these well fractured rocks
especially where brecciated quartz-chlorite-sulfide veins were encountered.
Significant assay results of 12.92 g/t. Au over .5 meter intersection, and 8.99

<PAGE>

g/t Au over 1 meter, were encountered. The results are encouraging and the area
requires further evaluation.

La Purisima Area
- ----------------

The lower reaches of the Arroyo Purisima, between the La Cruz and El
Salto workings and the area around Trench 5 were tested with 1,043 meters of
diamond drilling in 14 holes. Bedrock includes a variety of well altered,
andesitic to felsic porphyries, tuffs and breccias that are laced with
silicified zones, stockworks and quartz breccias. Hematitic and argillic
alteration is extensive. Pyrite at 1 to 3% is pervasive.

The core recovery from these 14 holes is extremely poor, and ranged
between 40 and 60%. This sheds doubt on the accurateness of the drill assay
results, and may account for the surprisingly few core samples with Au > 0.2 g/t
from an area where trench sampling commonly returned Au values of 1 to 3 g/t.

Contrary to earlier reports, assays show that elevated gold values occur
in conjunction with anomalous concentrations of base metals in hematitic and
silicic structures, as in hole 97-55 at 24.4m: 5.2 g/t Au, 28 g/t Ag, 0.6% Cu,
1.8% Zn, 0.35% Pb over 3 meters, and at 114 meters: 2.1 g/t Au, 2.9 g/t Ag,
0.08% Pb over 2 meters. Hole 97-56A (location unknown) similarly reports
approximately 1.0 g/t Au with 0.05 Pb over its entire length of 12.2 meters.

Trench 5, within the La Purisima area, is an area of extensive
mechanical excavation. While sample numbers and significant results are shown,
there is no documentation of sample types and lengths, or of the rock types
collected during sampling. It is obvious that there are several areas that
returned very encouraging results. Unfortunately, without substantial geological
data, it is not possible to evaluate the significance of the results at this
time, other than to say that the area should be re-sampled and mapped.

Palos Chinos Area
- -----------------

Drill hole 97-63 (-60/057), was collared on the roadside approximately
100 meters west of the Palos Chinos-Tajo Verde workings. These workings explore
at least two parallel structures oriented at 340/45SW at an elevation of 495
meters (CRM 1981). This elevation appears to equate to 561 meters on the PQM
maps with a surveyed drill collar elevation of 565 meters. A target depth of 80
meters was anticipated. The drill hole intercepted a wide zone of hematicized
breccia and quartz stockworks, which contain up to 5% pyrite and noticeable
chalco-pyrite between 46.4 meters and 87.1 meters. The arithmetic average for
29.6 meters starting at 52.7 m is 2.65 g/t Au, which includes sections grading
9.25 g/t Au over 0.73 meters and 8.45 g/t Au over 2.7 meters. This wide
mineralized structure may possibly be interpreted as extending the Palos Chinos
mineralization an additional 80 meters down dip. The 1999 fieldwork at SJG
included a survey traverse from the Palos Chinos portal to drill hole SJG 063
and the Tajo Verde portal. This will provide spatial control for follow up
drilling.

Dead Zone Area
- --------------

The Dead Zone was tested with Drill Hole 97-64. A soft, medium gray,
andesitic porphyry, characterized by 5 to 10% disseminated, fine grained, black
hematite and streaks of red hematite, was encountered throughout the hole. This
rock was cut by numerous 0.3 to 2.0 cm. gypsum veinlets. The core recovery was
extremely poor (<25%) to a depth of 123 meters; thereafter it improved markedly
(> 95%). As there were no corresponding changes in lithology, etc., the marked
change in core recovery at 123 meters may reflect the depth of surface
weathering.

Assay results for both core and sludge samples are generally low. The
highest value returned for all metals tested was 41 ppm zinc. No change in tenor
is evident below 123 meters. Unfortunately, references to any specific
alteration facies were omitted from the diamond drill logs. However, the
presence of gypsum combined with extremely low metal value possibly suggests an
environment of leaching by acid sulfate, hydrothermal waters.

Reserves
- --------

The following information is condensed from the Pamicon Report. Full
tables and grid sections are included in the Report. Pamicon deduced that the
data contained within its report indicates extensive potential of the San Jose
de Gracia as generally represented by:

o A large property area, geologically favorable for the
deposition of significant concentrations of gold.

<PAGE>

o Historical production estimated to be in excess of 1,000,000
oz. of gold from some 67 known historical workings.

o Recent work by the Company demonstrating potential reserves on
several areas of the project.

The Pamicon Report notes that while a large portion of the property
requires additional geological and geo-technical review prior to determining its
potential; several areas, including the Tres Amigos - La Cecena, Rudolphos,
Palos Chinos, and possibly the La Union and La Purisima areas, have sufficient
results to justify additional immediate work. Of the above mentioned areas, only
the Tres Amigos - La Cecena area has received sufficient work to allow
preliminary estimate of possible tonnage and grades to be made.

Where exposed on surface, the Tres Amigos structure has been developed
by three short adits over a vertical extent of some 25 meters and by several
shallow trenches. The lower adit (Level#1) is the longest at 83 meters. In this
area it appears as a structurally controlled vein type deposit, within competent
rhyolites. General altitude appears to be 060(degree) dipping 50-60(degree) to
the north. Width varies between 2 to 4 meters averaging approximately 3 meters.
The vein is highly silicified, and contains extensive massive sulfides,
primarily pyrite, but including some base metals (Copper, Zinc and Lead). The
most important economic constituent is gold, together with lesser silver.

In 1997 Minera completed 26 diamond drill holes in the Tres Amigos area.
Results from these Drill holes, along with sampling of the adits were employed
for preliminary resource calculations. To date the Tres Amigos area has been
drilled over a strike length of 160 meters to a depth of 250 meters. The La
Cecena area has been included with the Tres Amigos as it is quite possible that
the La Cecena structure as indicated by old workings and drill holes 97-53
represents an extension of the Tres Amigos structure to the south-west. Should
this be the case, a strike length of 450 meters, open to the south / west might
be postulated for the combined area.

Classification of Resources
- ---------------------------

Mineralization in the Tres Amigos area is classified as "Indicated
Mineral Resources", and "Inferred Mineral Resources", in accordance with the
proposed classification under the International Reserves Definition Initiative
reported in the Bulletin of the Canadian Institute of Mining and Metallurgy,
Vol. 90, No. 1017, Feb. 1998, pp. 44-45. It is anticipated that additional work
will allow portions of these to be moved into a "Measured Mineral Resource"
class and possibly into "Proven / Probable Mineral Reserve" upon satisfactory
final resolution of metallurgy and economics. Detailed reserve results on a
section basis, are presented in Appendix C of the Pamicon Report. (See Exhibit
"2.5.")

Interpretation
- --------------

New cross sections were plotted for the Tres Amigos area, employing the
re-survey of the area conducted during August, 1999. These show the main Tres
Amigos zone to have a relatively consistent strike and dip ( 056(degree) @-60
(degree)N) over the area drilled. In addition, several of the new sections
(5078, 5097, 5114E) appear to indicate the presence of a second zone
(tentatively named the Quarta Amigo) sub parallel to the Tres Amigos and some 35
meters in the Hanging wall. Both of these zones appear to be structurally
controlled. Opposing movement on such a set of sub-parallel structures can cause
dilation or wrench type secondary structures between them. The presence of these
may be indicated by a number of intersections which previously were interpreted
as a significant flattening of the main Tres Amigos zone at depth. In addition
section 5078 appears to show the presence of these dilation structures in the
hanging wall of the Quarto Amigo zone. This may indicate the presence of a
third, previously unsuspected zone in this direction. Should this new
interpretation of the controlling structural features prove correct, the
implications for increasing the tonnage potential for the area are significant.

Cutting of Grades and Results
- -----------------------------

Assays from underground sampling and drilling demonstrate an extensive
range in gold grades. Additional information is required to develop a
statistically meaningful method of cutting assays. Cutting of grades at this
time therefore is somewhat arbitrary. Table 2 (Pamicon) shows the tonnage and
grade calculated on sections for various portions of the deposit and the uncut
weighted average grade of 9.4 gm/t gold. Inspection of results show three
tonnage blocks with gold grades substantially above the uncut average (zone T
section 5078, zone C section 5078 and zone C section 5114). On a preliminary
basis cutting the grade of these to the uncut average shows a cut weighted
average grade of 7.4 gm/t gold. No cutting of silver and copper results appear
warranted.

<PAGE>

The Indicated Resource of the Tres Amigos area is therefore 161,696 Tonnes with
an uncut average grade of 9.4 gm/t Gold, 15.15 gm/t Silver and 0.44% copper or a
cut average grade of 7.4 gm/t Gold, 15.15 gm/t Silver and 0.44% Copper.

Inferred Mineral Resource
- -------------------------

On sections 4988E, 5037E and 5046E, significant portions of the main
Tres Amigos structure require fill in drilling as the distance between drill
intersections and/or underground sampling is greater than the described
parameters used for calculation of Indicated Resources. An Inferred Resource of
some 125,000 T can be postulated in this area. Grade is indeterminate but may
approach the Indicated Mineral Resource averages.

Metallurgy
- ----------

In the spring of 1999, personnel under the direction of Mr. Wayne C.
Henderson, P.E. of Lockwood Greene Engineers, Dallas, Texas, visited the
property with the purpose of obtaining samples for metallurgical testing. Six
samples were collected and forwarded to Hazen Research in Golden, Colorado for
test work, under the direction of Mr. Henderson. (Metallurgical report attached
as Exhibit "2.3.")

The objectives of the work conducted by Hazen were to: a. Categorize
the samples mineralogically, and chemically; b. Evaluate gravity separation, for
the recovery of relatively coarse gold and silver; c. Evaluate flotation
processing, as a method to recover gold, silver, and copper; d. Develop
preliminary Process Design Criteria; and, e. Describe any obvious metallurgical
complications.

Hazen summarized the results of their work as follows.

"When the results from the highly oxidized sample and results at course
grinds were ignored, gold recovery varied between 87 and 95%, silver recovery
varied between 67 and 94%, and copper recovery varied between 81 and 97% into a
combined (calculated,) gravity cleaner concentrate and rougher flotation
concentrate. For the sulfide samples, when target conditions (primarily grind
size) were attained, the rougher flotation conditions were visually excellent,
and there were no indications of interference from clays or other components
that can interfere with results. No attempts were made to recover oxidized
minerals."

Of the samples processed at Hazen, three were Tres Amigos, with the
others from elsewhere on the project. As only resource calculations were made on
the Tres Amigos the following comments from Pamicon are made for these samples
only.

Pamicon, September, 1999: "Most of the test work was directed to the
high grade adit sample (Sample 1). Results on this sample both in terms of
recovery and concentrate grade (in gold) were excellent. However, while the Tres
Amigos will undoubtedly produce some material of this grade and mineralogical
tenor, run of Mine feed, considering overall resource and dilution will most
likely be of much lower grade. Although yet to be completed, the possibility of
producing an acceptable grade of concentrate from Run of Mine, Tres Amigos
material, should be considered good".

Phase II Exploration Activity Report:
- --------------------------------------

The Company commenced Phase II exploration activities at the San Jose de
Gracia Property on February 25, 2000. The Company's planned activities during
this phase of work is outlined in the "Phase II Exploration Activity Report")
attached hereto as Exhibit "2.6.".

Item 4. Security Ownership of Certain Beneficial Owners and Management
- --------------------------------------------------------------------------

The following table sets forth the amount and nature of beneficial ownership of
each of the executive officers and directors of the Company and each person
known to be a beneficial owner of more than five percent of the issued and
outstanding shares of the Company as of December 31, 1999. The following table
sets forth the information based on 3,739,907 common shares issued and
outstanding as of December 31, 1999:

<PAGE>

Beneficial Owner Common Shares Percent Ownership
---------------- ------------- -----------------

Great Sands Mining Group Trust 433,000 11.58 %
(Darryl Butler, Beneficial Owner)

K.D. Diepholz 240,926 6.44 %

Douglas Metcalf 50,000 1.34 %

Vantage Ltd. Trust 50,000 1.34 %
(Douglas Metcalf, Beneficial Owner)

Wayne C. Henderson 50,000 1.34 %

Melvin E. Tidwell 48,312 1.29 %

Brad J. Saulter 64,675 1.73 %

Dynacap Group Ltd. 115,124 3.08 %
------- -------

All Officers, Directors
And Beneficial owners as

a Group (6 Persons) 1,052,037 28.13 %
Consultants:

Matrix Group

Beneficial Owner - Charles Smith 125,000 3.34 %
Curtis Sales 25,000 .67 %
------- -------

All Officers, Directors, and
Beneficial Owners as a Group,

Including consultants: 1,202,537 32.15 %

o The Company has issued shares of its common stock for services
in the past 5 years to Dynacap Group Ltd. a Texas Limited
Liability Company, a private consulting firm. Mr. Charles E.
Smith, consultant to the Company, and Mr. K.D. Diepholz,
Chairman and CEO of the Company are the managers of Dynacap
Group Ltd. Mr. Smith and Mr. Diepholz disclaim all but 5 %
ownership of Dynacap Group Ltd.

o Viking Gold Ltd., L.P., a Texas Limited Liability Partnership,
is the holder of 42,476 common shares of the Company. These
shares were received through the exchange of certain
laboratory equipment for shares, and through direct purchase
of common shares and through direct exercise of options of the
Company. Dynacap Group Ltd. is the manager of Viking Gold Ltd.

o There exist 733,000 Options of the Company, which were issued
to Great Sands Mining Group Trust and Vantage Ltd. Trust, the
purchasers of 483,000 common shares in 1998 and 1999, for $
733,000. cash. These 733,000 Options are exercisable at a
price of $ 2.50 for a period of two years terminating November
2001.

o There exist 40,000 "A" Warrants at $ 8.00, and 40,000 "B"
Warrants at $ 12.00; such warrants being issued with the
conversion of promissory notes of the Company into common
shares in 1996. The "A" and "B" Warrants are exercisable
within 90 days of the Company's common stock trading on any
exchange for the average closing bid price over 5 days of $
12.00., and $ 16.00, respectively.

None of the foregoing have any right to acquire additional shares of
the Company. There is no existing arrangement which may result in a change in
control of the Company.

<PAGE>

Item 5. Directors and Executive Officers of Registrant:
- -----------------------------------------------------------

The following table lists the names and ages of the executive officers,
directors and key consultants of the Company. The directors will continue to
serve until the next annual shareholders meeting, scheduled for May, 2000, or
until their successors are elected and qualified. All officers serve at the
discretion of the Board of Directors.

Name Age Position Held Since
----------------------------------------------------------------------
K.D. Diepholz 40 Chairman May 1997
1140 Hidden Ridge Chief Executive Officer May 1997
Irving, Texas 75038 Director 1995

Douglas Metcalf 36 Secretary May 1997
46 Lakeshore Drive North Director May 1995
Westford, Ma. 01886

Wayne C. Henderson 60 Director May 1995
5502 Lafayette Lane Vice-President /
Frisco, Texas 75035 Mineral Properties May 1997

Melvin E. Tidwell 55 Director May 1994
4804 Picadilly Place
Tyler, Texas 75703

Brad J. Saulter 39 Vice President - May 1998
922 Signal Ridge Investor Relations
Rockwall, Texas 75087

K.D. Diepholz - Graduated Lake Land College, Southern Illinois University;
Communications and Business Emphasis; Regional Director - Fidelity Union
Insurance and Investment, Dallas, Texas (1980 -1983); President - KWD Properties
Corporation, Mattoon, Illinois (1983 - 1989); a privately-held Oil & Gas
Exploration and Development Company involved in all phases of The Oil & Gas
Business, and Various Types of Partnerships; Vice President - American
Investment Retirement Corporation, Phoenix, Arizona (1990 - 1991), Involved in
Program Structuring for Pension Accounts; Vice President - Ideal Securities,
Inc., Dallas, Texas (1992); Program Structuring and Marketing Management;
President - DP Phoenix, a Real Estate Investment Company, Phoenix, Arizona (1991
- -1992); Investment Program Structuring, Real Estate Acquisitions, General
Management; Director: Farm Partners, Inc., Dallas, Texas (1992 - Present);
General Management of this General Partner to Precious Metals Limited
Partnership; DP Group Ltd., Dallas, Texas (1993 - Present); President of this
independent Marketing firm; Dynacap Group Ltd., Dallas, Texas (1992 - Present);
President of this Consulting and Management firm, directing the management of
certain Limited Liability Investment Companies; DynaResource, Inc. (f/k/a: West
Coast Mines, Inc.), a Junior Public Mining Company, Dallas, Texas (1994 -
Present); Chairman, Chief Executive Officer, Treasurer, and Director of this
junior resource exploration and development Company. Special Skills in the areas
of Business Development, Project Planning, Corporate Financing, Acquisition
Analysis, Investment Program Interpretation and Structuring.

Douglas E. Metcalf - Graduated Cornell University, B.S. degree 1986; Executive
Vice President - OHMS International, an International Import / Export Consulting
Company (1987 - 1991); President - Quantum Ventures Corporation, a holding
company involved in the development of new business enterprises (1992 -
Present); Secretary and Director - DynaResource, Inc. (f/k/a: West Coast Mines,
Inc.), a junior resource exploration and development Company, 1995 - Present.
Mr. Metcalf has worked extensively with junior mining companies over the past 10
years; with direct involvement in the areas of: recruiting technical personnel;
acquisition of milling and refining equipment; financing; and, acquisition.

Wayne C. Henderson - Research Engineer - Bethlehem Steel Corporation, Homer
Research Laboratories - Bethlehem, Pa.; development of new steel making
processes; Ph.D. Candidate - Lehigh University, Department of Chemical
Engineering, Bethlehem, Pa., developed mathematical modeling procedures which
used real-time data to develop dynamic process models for simulation control;
awarded a National Science Foundation Fellowship; Senior Research Engineer -
Inland Steel Company, East Chicago, Indiana; developed process simulation models

<PAGE>

and process control strategies for a number of steel making processes and
operations; developed forecasting control models for blast furnace, basic oxygen
furnace, continuous casting, and hot and cold rolling mills; responsible for
testing and design confirmation of then novel fluid-bed kiln design for
producing high-reactivity metallurgical lime, resulting in a number of process
and equipment patents; Project Leader - Kennecott Copper Corporation, Lexington,
Massachusetts; led development and operation of 5 TPD Pilot Plant for the
"Cuprion" hydrometallurgical process for extraction and recovery of metals from
deep sea manganese nodules; Staff Process Engineer - Mobile Oil Corporation,
Denver, Colorado; responsible for conventional heap leach and leach uranium
process plant design, process engineering, and metallurgical development; Chief
Process Engineer, Project Manager, Process Engineering Supervisor - Kennecott
Minerals Company, Salt Lake City, Utah; Vice President Operations - Calmet
Corporation, Colorado Springs, Colorado; responsible for day to day operations
of custom toll processing plant (15 TPD) for recovery of gold and silver from
high grade gold and silver ore concentrates using unique pressure cyanidation
technology; Metallurgical Manager - Tonkin Springs Gold Mining Company, Elko,
Nevada; responsible for bio-oxidation refractory gold process development;
designed, constructed, and operated bio-oxidation testing facilities; Project
Manager / Process Manager / Lead Process Engineer - Brown & Root, Inc., Houston,
Texas, 1989 to 1996; provided project consulting for Atec Inc., U.S. Energy,
Sutter Gold Venture, Atlas Goldbar, Inland Gold and Silver, Newmont Mining
Corp., Homestake Mining, Santa Fe Mining, Equity Au, Inc., Dynacap Group Ltd.;
Senior Project Engineer - Lockwood Greene Engineers, Inc., Dallas Texas; 1996 -
Current; Vice-President of Mineral Properties and Director- DynaResource, Inc.
(f/k/a: West Coast Mines, Inc.), a junior resource exploration and development
company, Dallas, Texas, 1996 -Present; provide overall technical analysis of
precious metals properties.

Melvin E. Tidwell, P.E. - Professional Engineer, registered in California in
1977; Control Systems Engineer; Instrument Engineer on over 80 Projects
Worldwide; Instrument Startup Engineer on over 50 Projects Worldwide; Affiliated
/ Associated with following Companies over the past 25 years: Weyerhaeuser
Company, Howe-Baker Engineers, LaGloria Oil & Gas Co., IWATANI Electronics
(Japan), EQM (Mexico), Kyodo Oxygen Co., Ltd. (Japan), Chin Yang Fine Chemical
Co. (South Korea), Hankuk Glass Mfg. Co. (South Korea), Hunt Oil Co., Liquid
Carbonics Co., Celanese Mexicana (Mexico), Grain Power Tucumcari Ltd., Jetco
Chemical Inc., Claiborne Gasoline Co., Conoco, Chevron, Metano Gas (now Exxon),
Union Oil, Texaco Angola, Petrofac, Alfurat (Syrian Oil Co.), Arco, Chevron /
Placer Cego, Tidwell & Associates; with Engineering / Management Experience in
the following Project Areas: Startup & Engineering - $ 160 Million Linerboard
Paper Mill; Chief Instrument Engineer - chemical division; DEA Gas Treating &
Sulfur Recovery Plant; One Part / million H2 Plant; Startup Hydrogen Plants; H2
/ CO Cosorb Plant; Startup H2 / CO synthesis Gas Plant & Cold Box; Startup
Ethanol Plant; Specialities Chemicals Expansion - Foxboro 200 instruments;
Startup & Calibration 75,000 BPD Crude Distillation Facility; Instrument
Engineer - 1st Oxygen Enrichment Cope Unit; Instrument Engineer, Startup &
checkout - 30 TPD Selectox SRU; Instrument Engineer - Offshore Oil & Gas
Production Facility; Lead Instrument Engineer - 60,000 BPD Oil Production
Facility; Instrument Checkout, Calibration, and Inspection prior to startup -
Selectox Sulfur Units (Honeywell TDC 3000 DCS) (Foxboro 760 Electronics
Controllers); Startup Amine Plant and Sulfur Plant, and System Engineering
(Foxboro and Westinghouse PLC); Instrument Engineer, Field Startup and Checkout
- - CCR, HDS, MTBE, Hydrogen and Cryogenic Plants. Founder, President - Tidwell &
Associates, an private engineering consulting Firm (1993 to Present); Director -
DynaResource, Inc. (f/k/a: West Coast Mines, Inc.), - a Junior resource
exploration and development Company, Dallas, (1994 to Present).

Brad J. Saulter - Attended University of Texas, Austin, Texas; Marketing
Department of Metagram, Inc., a Dallas National Marketing Company; Regional
Manager for Lugar, Lynch, & Associates, A Dallas Financial Services Company,
Involved in Sales & Marketing of Various Investment Products; Independent
Marketing Consultant; Series 22 & 63 Securities License; Vice President /
Marketing - Dynacap Group Ltd. (1992 - Present); Director: Farm Partners, Inc.
(1992 - Present), Vice President - Investor Relations - DynaResource, Inc., a
junior resource exploration and development company, Dallas, Texas (1995 to
Present).

Consultants
- -----------

Charles Smith. Mr. Smith graduated from Boston University, Boston, Massachusetts
in 1979 and since that time has been a Certified Public Accountant involved in
all phases of business including the audit of companies and tax matters. He is a
consultant to various companies. Mr. Smith's business affiliations the past five
years follow: Chairman - Dynacap Group, Ltd. - a consulting and management firm
- - 1992 to the present. Sole proprietor as a Certified Public Accountant - 1983
to the present. Sole officer and Director - MC Cambridge, Inc. - a financial
consulting firm - 1997 to present. Sole officer and director - Asset Servicing
Corporation - a leasing company - 1998 to present.

<PAGE>

Curtis Sales - Equity AU, Inc. - Mena, Arkansas (1992 - 1994); Lab Director,
Assistant to Mr. Natvar Patel; West Coast Mines, Inc. -Lake Havasu, Arizona
(1994 - Present); Director of Lab Operations for DynaResource, Inc. (f/k/a: West
Coast Mines, Inc.), a junior resource exploration and development company;
Involved in all laboratory phases of analysis and extraction of precious metals.

To the knowledge of the Company, no present or former director,
executive officer, or person nominated to become a director or executive of the
Company, or consultants to the Company has ever:

1.) Filed a bankruptcy petition by or against any business of which
such person was a general partner or executive officer whether at the
time of the bankruptcy or with two years prior to that time;

2.) Had any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other
minor offenses);

3.) Been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; and

4.) Been found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law, and the
judgment has not been reversed suspended or vacated.

Item 6. Executive Compensation
- ----------------------------------

The Company currently is not paying, and has not during the past three
years, except for the period January 1, 1997 to December 31, 1997 as described
under Item 7. below, paid any cash compensation to officers, directors or
executives. It does not have any pension, profit-sharing, stock bonus, or other
benefit plans. Such plans may be adopted in the future at the discretion of the
Board of Directors.

Item 7. Certain Relationships and Related Transactions
- ----------------------------------------------------------

1n 1996 the Company issued shares of its common stock for the
acquisition of the 24.9 % Net Profits Interest in the San Jose de Gracia
property, Sinaloa, Mexico. These shares were issued to Dynacap / Mexico Resource
Group LLC., a private Nevada Company. The Manager of the Dynacap / Mexico
Resource Group was Dynacap Group Ltd., a Texas Limited Liability Company. At the
time of this share issuance, the Manager of Dynacap Group Ltd. was also a
director of DynaResource.

The Company has paid management consulting fees to Dynacap Group, Ltd.,
a Texas Limited Liability Company, Dallas, Texas. The Chairman and Chief
Executive Officer of the Company is the Manager of Dynacap Group Ltd.

During 1996 and through May, 1997 the Company rented office space from
Dynacap Group Ltd. Total amount paid for rent was recorded at $ 16,880.

The Company is the current owner of 26.7 % interest in Minera
Finesterre S.A. de C.V., ("Minera") a Mexican corporation, the holder of 100 %
rights and claims to the San Jose Property. Golden Hemlock Explorations, Ltd.,
Vancouver, B.C. Canada, ("Hemlock"), is the current owner of 73.3 % of Minera.

The Company advanced $ 42,800. cash on behalf of Hemlock in 1998 -
1999. These advanced amounts are recorded as accounts receivable.

The Company expended $ 27,015. in 1996 and $ 30,170. in 1998 in legal
expenses, in connection with litigation brought by the Company against Hemlock
and Minera. In the resolution agreements to these litigations, the Company was
awarded reimbursement of these total legal costs, ( $ 57,185.), plus related
interest. The Company recorded these amounts as accounts receivable.

The Company is not currently aware of any other material relationships
or related transactions between the Company and any officers, directors or
holders of more than five percent of any class of outstanding securities of the
issuer.

<PAGE>

Stock issued to related parties. Compensation paid to Officers and Directors.
- -----------------------------------------------------------------------------

The Company has issued shares of its common stock for services to
Dynacap Group Ltd., a Texas Limited Liability Company, a private consulting
firm. Mr. Charles E. Smith, consultant to the Company, and Mr. K.D. Diepholz -
Chairman and CEO of the Company, are the Managers of Dynacap Group. . Mr. Smith
and Mr. Diepholz disclaim all but 5 % ownership of Dynacap Group Ltd.

The Company has issued shares for services, and cash compensation as
follows, to related parties or officers during the period 1997 - December 31,
1999:

o In 1997, the Company issued 118,727 shares of its common stock
for services rendered to Dynacap Group Ltd., recorded at $
29,682.

o In 1997, the Company issued 7,500 shares of its common stock
for services rendered to Wayne C. Henderson, a director of the
Company, recorded at $ 1,875.

o In 1997, the Company paid $ 122,260. cash for services
rendered to Dynacap Group Ltd.

o In 1997, the Company paid $ 21,399. cash to K.D. Diepholz,
Chairman, CEO, and Treasurer of the Company for services
rendered; and $ 18,675. to Brad J. Saulter, Vice-President of
the Company for services rendered.

o In 1998, the Company issued 34,714 shares of its common stock
for services rendered to Dynacap Group Ltd., recorded at $
8,679.

o In 1998, the Company paid $ 117,350. cash for services
rendered to Dynacap Group Ltd.

o In 1999, the Company issued 73,000 shares of its common stock
for services rendered to Dynacap Group Ltd., recorded at
$18,250.

o In 1999, the Company paid $ 172,303. cash for services
rendered to Dynacap Group Ltd.

o In 1999, the Company paid $ 1,225. cash to Brad J. Saulter
Vice-president of the Company, for services rendered.

Item 8. Description of Registrant's Securities to be Registered
- -------------------------------------------------------------------

Common Stock:

The Company is authorized to issue 12,500,000 shares of common stock,
par value of $0.01, of which 3,739,907 shares are issued and outstanding as of
December 31, 1999. Holders of Common Stock are entitled to dividends when, as
and if declared by the Board of Directors out of funds available therefore,
subject to any priority as to dividends for Preferred Stock that may be
outstanding. Holders of Common Stock are entitled to cast one vote for each
share held at all stockholder meetings for all purposes, including the election
of directors. The holders of more than 50% of the Common Stock issued and
outstanding and entitled to vote, present in person or by proxy, constitute a
quorum at all meetings of stockholders. The vote of the holders of a majority of
Common Stock present at such a meeting will decide any question brought before
such meeting, except for certain actions such as amendments to the Company's
Certificate of Incorporation, mergers or dissolutions which require the vote of
the holders of a majority of the outstanding Common Stock. Upon liquidation or
dissolution, the holder of each outstanding share of Common Stock will be
entitled to share equally in the assets of the Company legally available for
distribution to such stockholder after payment of all liabilities and after
distributions to preferred stockholders legally entitled to such distributions.
Holders of Common Stock do not have any preemptive, subscription or redemption
rights. They are entitled to cumulative voting rights under the Delaware
Corporations Code. Under cumulative voting, minority shareholders may have the
right to vote one or more members onto the Company's Board of Directors. All
outstanding shares of Common Stock are fully paid and non-assessable. The
holders of the Common Stock do not have any registration rights with respect to
the stock.

Transfer Agent and Registrar
- ----------------------------

The Company's Transfer Agent is: Signature Transfer, Inc., 14675 Midway
Road, Suite 221, Addison, Texas 75001, (972) 788-4193.

<PAGE>

PART II:

Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Matters.
- --------------------------------------------------------------------------------

The Company is organized under the laws of Delaware, and its common
stock is traded on the Nasdaq Over The Counter Bulletin Board Exchange ("OTCBB")
under the symbol "WCMI". On June 27, 1996 the Company's shares were approved for
trading on the Over the Counter Market. The following table sets forth, for the
periods indicated, the high and low bid quotations (as reported by Nasdaq). The
bid quotations set forth reflect inter-dealer prices, without retail mark-up or
mark-down and without commissions; and may not reflect actual transactions. No
dividends on the Company's common stock have been declared or paid since the
Company's inception and no dividends are anticipated in the future. The
Company's retained earnings in the foreseeable future are expected to be
reinvested by the Company into the expansion of its Property development
programs. The Company had 474 registered shareholders at December 31, 1999.

Calendar Quarter Ending High Low
------------------------------------------------------

March 31, 1998 5.00 0.25
June 30, 1998 5.00 0.25
September 30, 1998 5.00 0.25
December 31, 1998 5.00 0.25
March 31, 1999 5.00 0.25
June 30, 1999 5.00 0.25
September 30, 1999 5.00 0.25
December 31, 1999 5.00 0.25

Item 2. Legal Proceedings
- -----------------------------

In 1996 the Company was a plaintiff in legal proceedings brought against
Golden Hemlock Explorations, Ltd. , Vancouver, B.C. Canada ("Hemlock"), Minera
Finesterre S.A. de C.V., a Mexican Corporation, ("Minera"); and other named
defendants. The Company's complaints were settled at December 20, 1996, through
the entering into of the Amended and Restated Loan Agreement (the "ARLAG"). The
ARLAG set forth the Company's right to retain the Net Profits Interest, and the
Company retained certain loan repayment provisions and accelerated payback
provisions related to the Net Profits Interest. The ARLAG was superseded by the
Mine Operating Agreement ("MOAG"), (See Exhibit "2.2") in August 1998. Pursuant
to the terms of the MOAG, Company Legal Fees in the amount of $ 27,015. related
to these legal proceedings were obligated to be paid by Hemlock. The legal fees
were recorded as accounts receivable.

In 1998 the Company was the plaintiff in legal proceedings brought
against Hemlock, Minera, and other named defendants. The Company's complaints
were settled at August, 1998, with the Company acquiring a 25 % Interest in
Minera Finesterre S.A. de C.V., the owners of 100 % Interest of the San Jose de
Gracia Property, subject to the Net profits Interest; and, through the entering
into of the Mine Operating Agreement (the "MOAG"), attached hereto as Exhibit
"2.2." The MOAG sets forth the Company's Option to earn additional interest in
Minera and the San Jose Property by expending $ 2,000,000. Cnd. in exploration
and development costs on the San Jose Property through December, 2001.

At the time of this filing, the company is involved in no legal
proceedings, and does not anticipate any immediate legal proceedings.

Item 3. Changes in and Disagreements with Accountants.
- -------------------------------------------------------

The Company has not had any disagreements with its accountants regarding
accounting and financial disclosure. Since 1996, The Company has engaged Mark L.
Cleland, independent Certified Public Accountant, to conduct the audits of the
company.

Item 4. Recent Sales of Unregistered Securities.

o In 1997, the Company issued 259,500 shares of common stock for
exercise of 259,500 Options at $ 1.00.

o In 1997, the Company issued 81,000 shares of common stock for
the exercise of 81,000 Options at $ 1.50.

<PAGE>

o In 1997, the Company issued 40,394 shares of common stock for
the conversion of $ 160,000. of promissory notes, and related
interest.

o In 1997, the Company issued 126,227 shares of common stock for
services recorded at $ 31,557.In 1998, the Company issued
34,714 shares of common stock for services recorded at $
8,679.

o In 1999, the Company issued 483,000 common shares and 733,000
options exercisable at $ 2.50 for a period of two years
terminating at November, 2001 for $ 733,000. Cash.

o In 1999, the Company issued 73,000 shares of common stock for
services recorded at $18,250.

The Company was the Seller / Issuer of the above securities, and no
underwriters were used. No underwriting discounts, commissions or selling
commissions were paid in connection with any of the prior sales of the company
securities. All company securities issued were issued pursuant to an exemption
from registration provided by Section 4(2) of the Securities Act of 1933 (the
"Act"); in that the transactions did not involve a public offering, and in that
all purchasers or recipients were sophisticated investors who represented their
intention to acquire the Company's securities for investment purposes only and
not with the intent to re-sell or distribute.

Item 5. Indemnification of Directors and Officers
- --------------------------------------------------

Under the laws of Delaware and the Company's Articles of Incorporation,
the Company's directors will have no personal liability to the Company or its
stockholders for monetary damages incurred as the result of the breach or
alleged breach by a director of his duty of care. This provision does not apply
to the directors (i) breach of their duty of loyalty, (ii) acts or omissions not
in good faith or involving intentional violations of law, (iii) illegal payment
of dividends, stock repurchases, or stock redemption, and (iv) approval of any
transaction from which a director derives an improper personal benefit.
Directors may be responsible to the Company's shareholders for damages suffered
by the Company or its shareholders as a result of a breach of their fiduciary
duty.

In so far as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted for directors, officers or
person controlling the Company pursuant to the foregoing provisions, the Company
has been informed that in the opinion of the Securities and Exchange Commission
each indemnification is against public policy as expressed in the Act and is
therefore unenforceable.

PART F/S. FINANCIAL STATEMENTS.
- ---------------------------------------

Incorporated into and forming an integral part of this Form 10 S-B are
the audited financial statements for the Company for the years ended December
31, 1998 and December 31, 1999, together with the auditor's report and Notes
thereon. These financial statements are incorporated herein as Exhibits "3.1."
and "3.2." All financial information for the Company contained in this Form 10
S-B is prepared in accordance with accounting principles generally accepted in
the United States.

Item 1. Company Year End December 31, 1998.
- --------------------------------------------
(Attached as Part III, Section 3, Exhibit "3.1.")

Item 2. Company Year End December 31, 1999.
- --------------------------------------------
(Attached as Part III, Section 3, Exhibit "3.2.")

SIGNATURES
- ----------

Pursuant to the requirements of Section 12(g) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, on March 31, 2000.

DYNA RESOURCE, INC.
By: /S/ K.D. Diepholz
-------------------------------
Mr. K.D. Diepholz; Chairman / CEO
On Behalf of the Board of Directors

<PAGE>

PART III. EXHIBITS.

The following documents are attached as Exhibits to this Form 10 S-B, and filed
as an integral part of this Form 10 :

TAB 1:
- ------

EXHIBIT 1.1. Articles of Incorporation; West Coast Mines, Inc.

EXHIBIT 1.2. By - Laws

EXHIBIT 1.3. Articles of Amendment 1940

EXHIBIT 1.4. Articles of Amendment 1943

EXHIBIT 1.5. Articles of Amendment 1996

EXHIBIT 1.6. Certificate of Merger 1998; Agreement of Merger into
DynaResource, Inc.

EXHIBIT 1.7. Articles of Incorporation; DynaResource, Inc.

EXHIBIT 1.8. Amendment of Articles 1998

TAB 2:
- ------

EXHIBIT 2.1. Pansy Lee Property Lease / Purchase Agreement

EXHIBIT 2.2. Mine Operating Agreement ("MOAG")

EXHIBIT 2.3. Hazen Process Development Report / Tres Amigos Ores
("Hazen Metallurgical Report")

EXHIBIT 2.4. San Jose de Gracia Production Proforma

EXHIBIT 2.5. Pamicon Report

EXHIBIT 2.6. Phase II Exploration Activity Report

TAB 3:
- ------

EXHIBIT 3.1. December 31, 1998 Year End Audited Financial Statement for
the Company

EXHIBIT 3.2. December 31, 1999 Year End Audited Financial Statement for
the Company

EXHIBIT 3.3. February 28, 1999 Audited Financial Statement for Golden
Hemlock Explorations, Ltd.

EXHIBIT 3.4. November 30, 1999 Unaudited Financial Statement for Golden
Hemlock Explorations, Ltd.

SIGNATURES

Pursuant to the requirements of Section 12(g) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on March 31, 2000.

DYNARESOURCE, INC.

By: /S/ K.D. Diepholz
-------------------
Mr. K.D. Diepholz; Chairman / CEO
On behalf of the Board of Directors

EXHIBIT "1.1
WEST COAST MINES, INC.
"ARTICLES OF INCORPORATION"

Department of State Corporation Number 173041
FILED in the office of the Secretary of State
OF THE STATE OF CALIFORNIA Sep 28 1937
FRANK C. JORDAN SECRETARY OF STATE
By /S/ DEPUTY SECRETARY OF STATE

ARTICLES OF INCORPORATION OF WEST COAST MINES, INC.

KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, a majority of whom are citizens and residents of the
State of California, have this day voluntarily associated ourselves together for
the purpose of forming a corporation under the laws of the State of California.

AND WE HEREBY CERTIFY:

FIRST: That the name of said Corporation shall be "WEST COAST MINES,
INC."

SECOND: That the purposes for which it is formed are:

1. To investigate, explore, develop, purchase, lease, option, locate, or
otherwise acquire, own, exchange, sell, or otherwise dispose of, pledge,
mortgage, hypothecate and deal in mines, mining claims, mineral lands, coal
lands, timber lands, real property, water, water rights, and to work, explore,
operate and develop the same, and to extract any and all minerals, or other
products therefrom, and deal in the products and by-products thereof.

2. To purchase, lease, or otherwise acquire, erect, own, operate or sell
quartz and other mills of any and every kind, smelting and ore reduction works,
and saw mills.

3. To search for, prospect, examine, refine, smelt, product, crush,
concentrate, manipulate, and treat gold, silver, lead, and other minerals of
every class and description.

4. To purchase, lease, or otherwise acquire, own, sell, handle, control,
sell of dispose of in any way, letters patent and inventions.

5. To manufacture, buy, sell, import, export, hire, and lease and
generally deal in machinery, pumps, drills, implements, and conveniences
suitable for use in connection with the mining business.

6. To purchase, lease, or otherwise acquire, own, sell, handle, control,
sell or dispose of in any way, bonds and shares of its own capital stock and
that of other companies, and to vote any stock owned by it the same as a natural
person might do.

7. To issue bonds, notes, debentures and other evidences of indebtedness
and secure the payment of the same by mortgage, pledge, deed of trust or
otherwise as the circumstances may justify.

<PAGE>

8. To buy, acquire, and obtain by grant, gift, lease or otherwise, and
to own, possess, use, lease, exchange, sell or mortgage any and all improvements
of whatever character or kind upon real estate, including houses, mills and
buildings of all kinds, fences, walls, manufacturing works, machinery, dams,
flumes, canals, ditches, and pipe lines for water and for other purposes
incident to the conduct of the business of mining and milling, but not for
public purposes, artificial structures and erections of all kinds, trees, vines,
nursery stock and all kinds of plants.

9. To buy, acquire and obtain by grant, gift, lease, or otherwise, and
to own, use, sell, lease, exchange, sell or mortgage any and all water, water
rights, water properties, and any and all rights, titles, and interests in and
to the water rights, water and water properties, and any and all sources of
water supply, rights of way for water, water ditches, canals, pipe lines and
other conduits incidental to the conduct of the business of mining or milling
but not for public purposes.

10. To cultivate, improve and use in any and all ways lands and all and
any kinds of real property, to plant, grow, raise, deal in and harvest any and
all kinds of plants, vines, fruits, nuts, trees, vegetables, grasses and grains.

11. To buy, receive by gift, bequest, or otherwise, hold, sell,
transfer, hypothecate and generally deal in personal property of every kind and
nature.

12. To purchase, receive by grant, gift, or otherwise, to erect,
construct, operate and maintain boarding and lodging houses and to collect and
receive rents, tolls and pay for the same, and to conduct in a general boarding
and lodging business.

13. To act as fully for any other corporation, firm or individual as any
individual could do.

14. To do any and all things incident or necessary to the dong or
performing of any of the aforesaid things, or the concluding of the aforesaid
operations or kinds of business, or any other lawful business not inconsistent
with the laws of the United States, or the State of California, and to have all
rights in connection therewith as though a natural person.

15. To engage generally in all types of mining of every kind and nature
with the right to do everything in connection with the extraction of any and all
kinds of mineral, refining, and reducing the same to a merchantable property
with all the rights of an individual in connection therewith.

16. To purchase, sell, lease, hypothecate, acquire, transfer bonds,
stocks, securities of this and any other corporation individually or
copartnership.

<PAGE>

17. To buy, acquire, and obtain by grant, gift, lease, quitclaim, or
otherwise, and to own, sue, sell, lease, exchange, sell or mortgage, real estate
or any interest therein.

18. To buy, acquire and own, to sell, hypothecate, or to loan money on
any securities issued by this corporation.

The foregoing clauses shall be construed both as objects and powers, but
no recitation, expression or declaration of specific or special powers or
purposes herein enumerated shall be deemed to be exclusive; but it is hereby
expressly declared that all other lawful powers not inconsistent therewith, are
hereby included.

THIRD: The county in this State where the principal office for the
transaction of the business of the corporation is to be located is the County of
Sacramento, State of California.

FOURTH: The amount of the capital stock of the said corporation is Three
Hundred Fifty Thousand Dollars ($350,000.000) divided into three hundred fifty
thousand (350,000) shares of the par value of One Dollar ($1.00) per each share.

FIFTH: The total number of shares actually subscribed is five (5), and
names of the subscribers to the number of shares respectively, for which they
have subscribed, and the amount to be paid by them for such shares is as
follows, to-wit:

Name No. of Shares Amount

W.J. KAMENZIND 1 $1.00
GILBERT BALL 1 $1.00
WAYNE MILLER 1 $1.00
E.D. PALM 1 $1.00
WALTER LEITCH 1 $1.00

<PAGE>

SIXTH: That the number of directors of this corporation shall be five
(5), and that the directors and succeeding directors need not be shareholders of
the corporation; and that the names of the directors who are appointed to serve
and act as such for the first year and until their successors are elected and
qualified, together with their residences, are as follows:

Name Residence

W.J. KAMENZIND 2716 - 6th Avenue, Sacramento, Cal.
GILBERT BALL 2750 Riverside Blvd., Sacramento, Cal.
WAYNE MILLER 2100 - 22nd Street, Sacramento, Cal.
E.D. PALM Fair Oaks, California.
WALTER LEITCH 3949 Folsom Boulevard, Sacramento, Cal.

IN WITNESS WHEREOF, we have hereunto set our hands and seals this 27th day of
September, 1937.

/S/ W.J. Kamenzind
/S/ E.D. Palm
/S/ Wayne Miller
/S/ Gilbert Ball
/S/ Walter Leitch

STATE OF CALIFORNIA )
( ss
COUNTY OF SACRAMENTO)

On this 27th day of September, in the year one thousand nine hundred and
thirty-seven, before me, LUDA N. GROSS, A Notary Public in and for the County of
Sacramento, personally appeared W.J. KAMENZIND, GILBERT BALL, WAYNE MILLER, E.D.
PALM, WALTER LEITCH, known to me to be the persons whose names are subscribed to
the within instrument, and they duly acknowledged to me that they executed the
same.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in the certificate first above written.

/S/ Luda N. Gross

Notary Public in and for the County of Sacramento, State of California.
My commission expires Nov. 8, 1938.

EXHIBIT "1.2"
DYNARESOURCE, INC.
"BY - LAWS"

BY-LAWS OF

WEST COAST MINES, INC.

A California Corporation

ARTICLE I

OFFICES

Section 1. PRINCIPAL OFFICE.

The principal executive office of the corporation is hereby fixed and
located at 1220 Perkins Way, Sacramento, California. The Board of Directors is
hereby granted full power and authority to change said principal office from one
location to another.

Section 2. OTHER OFFICES.

Branch or subordinate offices may at any time be established by the Board
of Directors at any place or places where the corporation is qualified to do
business.

ARTICLE II

SHAREHOLDERS' MEETING

Section 1. PLACE OF MEETINGS.

All meetings of the shareholders shall be held at the place designated by
the President or a majority of Directors in the State of California, or at such
other place as may be designated for that purpose from time to time by the Board
of Directors.

Section 2. ANNUAL MEETINGS.

The annual meetings of the shareholders shall be held on the first Monday
in October in each year at the hour of ten O'clock A.M. but if such day is a
legal holiday then the meeting shall be held at toe same time on the next
business day. At the annual meeting, the shareholders shall elect by plurality
vote a Board of Directors, consider reports of the affairs of the corporation,
and transact such other business as may properly be brought before the meeting.

<PAGE>

Section 3. SPECIAL MEETINGS.

Special meetings of the shareholders, for any purpose or purposes
whatsoever, may be called at any time by the president, or by the Board of
Directors, or by any two or more members thereof, or by one or more shareholders
holding not less than one-tenth (1-10) of the voting power of the corporation.

Section 4. NOTICE OF MEETINGS.

Notices of meetings, annual or special shall be given in writing to
shareholders entitled to Vote by the secretary or assistant secretary, or if
there be no such officer, or in case of his neglect or refusal, by any director
or shareholder.

Such notices shall be sent to the shareholders' address appearing on the
hooks of the corporation or supplied by him to the corporation for toe purpose
of notice, not less than ten (10) days before such meeting.

Notice of any meeting of shareholders shall specify the place, the day and
the hour of meeting, and in case of special meetings, as provided by the
Corporations Code of California, the general nature of the business to be
transacted.

When a meeting is adjourned for forty-five (45) days or more, notice of
the adjourned meeting shall be given as in the case of an original meeting.
Save, as aforesaid, it shall not be necessary to give any notice of the
adjournment or of the business to be transacted at an adjourned meeting other
than by announcement at the meeting at which such adjournment is taken.

Section 5. CONSENT TO SHAREHOLDERS' MEETINGS.

The transactions of any meeting of shareholders, however called and
noticed, shall be valid as though had at a meeting duly held after regular call
and notice, if a quorum be present Either in person or by proxy, and if, either
before or after the meeting, each of the shareholders entitled to vote, not
present in person or by proxy, sign a written waiver of notice or a consent to
the holding of such meeting, or an approval of the minutes thereof. All such
waiver, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.

Any action which may be taken at a meeting of the shareholders, may be taken
without a meeting if authorized by a writing signed by all of the holders of
shares who would be entitled to vote at a meeting for such purposes, and filed
with the secretary of the corporation.

Section 6. QUORUM.

The holders of a majority of the shares entitled to vote thereat, present
in person, or represented by proxy shall constitute a quorum at all meetings of
the shareholders, for the transaction of business except as otherwise provided
by law, by the Articles of Incorporation, or by these By-laws. If, however, such
majority shall not be present or represented at any meeting of the shareholders,
the shareholders entitled to vote thereat, present in person, or by proxy, shall
have power to adjourn the meeting from time to time, until the requisite amount
of voting shares shall be present. At such adjourned meeting at which the
requisite amount of voting shares shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.

<PAGE>

Section 7. VOTING RIGHTS: CUMULATIVE VOTING.

Only persons in whose names shares entitled to vote stand on the stock
records of the corporation on the Jay of any meeting of shareholders, unless
some other day be fixed by the Bach of Directors for the determination of
shareholders of record, then on such other day, shall be entitled to vote at
such meeting.

Every shareholder entitled to vote shall be entitled to one vote for each
or said shares and shall have the right to accumulate his votes as provided in
Section 708, Corporations Code of California.

Section 8. PROXIES.

Every shareholder entitled to vote, or to execute consents, may do so, either in
person or by written proxy, executed in accordance with the provisions of
Section 705, of the Corporations Code of California and filed with the secretary
of the corporation.

ARTICLE III

DIRECTORS: MANAGEMENT

Section 1. POWERS.

Subject to the limitation of the Articles of Incorporation, of the By-laws
and of the laws of the State of California as to action to be authorized or
approved by the shareholders , all corporate powers shall be exercised by or
under authority of, and the business and affairs of this corporation shall be
controlled by a Board of Directors.

Section 2. NUMBER AND QUALIFICATION.

The authorized number of directors of the corporation shall
be until changed by an amendment of this Section 2, Article III of these
By-laws, approved by the vote or written consent of shareholders entitled to
exercise the majority of the voting power of the corporation; further subject to
amendment of the Articles of Incorporation, if required.

Section 3. ELECTION AND TENURE OF OFFICE.

The directors shall be elected by ballot at the annual meet-inc of the
shareholders, to serve for one year and until their successor are elected and
have qualified. Their term of office shall begin immediately after election.

<PAGE>

Section 4. VACANCIES.

Subject to the provisions of Section 305 of the Corporations Code,
vacancies in the Board of Directors may be filled by a majority of the remaining
directors, though less than a quorum, or by a sole remaining director, and each
director so elected shall hold office until his successor is elected at an
annual meeting of shareholders or at a special meeting called for that purpose.

The shareholders may at any time elect a director to fill any vacancy not
filled b the directors, and may elect the additional directors at the meeting at
which an amendment of the By-laws is voted authorizing an increase in the number
of directors.

A vacancy or vacancies shall be deemed to exist in case of the death,
resignation or removal of any director, or if the shareholders shall increase
the authorized number of directors, but shall fail at the meeting which such
increase is authorized, or at an adjournment thereof, to elect the additional
director so provided for, or in case the shareholders fail at any time to elect
the full number of authorized directors.

If the Board of Directors accepts the resignation of a director tendered
to take effect at a future date, the Board, or the shareholders, shall have
power to elect a successor to take office when the resignation shall become
effective.

No reduction of the number of directors shall have the effect of removing
any director prior to the expiration or his term of office.

Section 5. REMOVAL OF DIRECTORS

The entire Board of Directors or any individual director may be removed
from office as provided by Section 303 of the Corporations Code of the State of
California.

Section 6. PLACE OF MEETINGS.

Meetings of the Board of Directors shall be held at any place within or
without the State designated in the notice of the meeting, or if not designated
in the notice, the place designated from time to time by resolution of the Board
or by written consent of all members of the Board. In the absence of such
designation, meetings shall be held at the principal office of the corporation.

Section 7. ORGANIZATION MEETINGS.

The Board shall hold a regular meeting to be known as the "Organization
Meeting". The organization meetings of the Board of Directors shall be held
immediately following the adjournment of the annual meetings of the shareholders
at the same place as the shareholders' meeting; and notice of said meeting shall
not he required.

Section 8. OTHER REGULAR MEETINGS.

Regular meetings of the Board of Directors shall be held at the times and
places specified in an annual schedule adopted by the Board. No notice need be
given of the holding of such regular meetings.

<PAGE>

Section 9. SPECIAL MEETINGS -- NOTICES.

Special meetings of the Board of Directors for any purpose or purposes
shall be called at any time by the president or if he is absent or unable or
refuses to act, by any vice-president or by any two (2) directors.

Written notice of the time and place of special meetings shall be
delivered personally to the directors or sent to each director by mail, or by
telephone, charges prepaid, addressed to him at his address as it is shown upon
the records of the corporation or as it appears in the telephone records, or if
it is not so shown upon the records or is not readily ascertainable, at the
place in which the meetings of the directors are regularly held. In case such
notice is mailed, it shall be deposited in the United States mail at least four
(4) days prior to the time of the holding of the meeting. In case such notice is
delivered personally or telephoned as above pro-vided, it shall be so delivered
or telephoned at least forty eight (48) hours prior to the time of the holding
of the meeting. Such mailing, telephoning or delivery as above provided shall be
due, legal and personal notice to such director.

Section 10. WAIVER OF NOTICE.

When all the directors are present at any directors' meeting, however
called or noticed, and sign a written waiver thereto on the records of such
meeting, or, if a majority of the directors are present, and if those not
present sign in writing a waiver of notice of such meeting, whether prior to or
after the holding of such meeting, which said waiver shall be filed with the
secretary of the corporation, the transactions thereof are as valid as if had at
a meeting regularly called and noticed.

Section 11. ADJOURNMENT AND NOTICE.

A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting to another time arid place. If the meeting is adjourned
for more than twenty-four (24) hours, notice of any adjournment to another time
or place shall be given prior to the time of the adjourned meeting to the
directors ~~no were not pre-sent at the time of the adjournment.

Section 12. QUORUM.

A majority of the number of directors as fixed by the Articles or By-laws
shall be necessary to constitute a quorum for the transaction of business, and
the action of a majority of the directors present at any meeting at which there
is a quorum. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for such
meeting.

Section 13. ACTION WITHOUT A MEETING.

Any action required or permitted to be taken by the Board of Directors of
the corporation under any provision of the General Corporation Law may be taken
without a meeting, if all members of the Board shall individually or
collectively consent in Writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the Board. Such action by
written consent shall have the same force and effect as a unanimous vote of such
directors.

<PAGE>

ARTICLE IV

OFFICES

Section 1. OFFICES.

The officers of the corporation shall be a president, a secretary and a
chief financial officer. The corporation may also have, in the discretion of the
Board of Directors, a chairman of the board, one or more vice-presidents, one or
more assistant secretaries, one or more assistant chief financial officers, and
such other officers as may be appointed in accordance with the provisions of
Section 3. of this Article. Any number of offices may be held by the same person
unless the Articles provide otherwise.

Section 2. ELECTION.

Except as otherwise provided by the articles or bylaws, officers shall be
chosen by the board and serve at the pleasure of the board, subject to the
rights, if any, of an officer under any contract of employment, until he shall
resign or shall be removed or otherwise disqualified to serve, or his successor
shall be elected and qualified.

Section 3. SUBORDINATE OFFICERS, ETC.

The Board of Directors may appoint such other officers as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the By-laws or as
the Board of Directors may from time to time determine.

Section 4. REMOVAL AND RESIGNATION.

Any officer may be removed, either with or without cause, by a majority of
the directors at the time in office, at any regular or special meeting of the
board, or, except in case of an officer chosen by the Board of Directors, by any
officer upon whom such power of removal may be conferred by the Board of
Directors.

Any officer may resign at any time upon written notice to the corporation
without prejudice to the rights, if any, of the corporation under any contract
to which the officer is a party. Any such resignation snail take effect at the
date of the receipt of such notice or at any later time specified herein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.

Section 5. VACANCIES.

A vacancy in any office because of the death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
the by-laws for regular appointments to such office.

<PAGE>

Section 6. CHAIRMAN OF THE BOARD.

The chairman of the board, if there shall be such an officer, shall, if
present, preside at all meetings of the Board of Directors, and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the By-laws. If the corporation has
no president, the chairman of the board is the general manager and chief
executive officer of the corporation.

Section 7. PRESIDENT

Subject to such supervisory powers, if any, as may be given by the board
of Directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
preside at all meetings of the shareholders and in the absence of the chairman
of the board, or if there be none, at all meetings of the Board of Directors. He
shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of
management usually vested in the office of president of a corporation, and shall
have such other powers and duties as may be prescribed by the Board of Directors
or the By-laws.

Section 8. VICE-PRESIDENT.

In the absence or disability of the president, the vice- presidents, in
order of their rank as fixed by the Board of Directors, or if not ranked, the
vice-presidents designated by the Board of Directors, shall perform all the
duties of the president, and when so acting, shall have all the powers of, and
be subject to all the restrictions upon the president. The vice-presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board of Directors or the By-laws.

Section 9. SECRETARY

The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding,
whether regular or special, and if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.

<PAGE>

The Secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the shareholders and their
addresses; the number and classes of shares held by each; and the number and
date of certificates issued for the same; and the number and date of
cancellation of every certificate surrendered for cancellation.

The secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the By-laws or by
the law to be given, and he shall keep the seal of the corporation in safe
custody, and shall have such other powers and perform such other duties as may
be prescribed by the Board of Directors or the By-laws.

Section 10. CHIEF FINANCIAL OFFICER.

The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements , gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in-surplus and surplus arising from a
reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all reasonable times be
open to inspection by any director.

The chief financial officer shall deposit moneys and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors; shall render to the
president and directors, whenever they request it, an account of all his
transactions as chief financial officer and of the financial condition or the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the By-laws.

ARTICLE V

EXECUTIVE AND OTHER COMMITTEES

The Board of Directors may appoint an executive committee, and such other
committees as may be necessary from time to time, consisting of such number of
its members and with such powers as it may designate, consistent with the
Articles of Incorporation and By-laws and the General Corporation Laws of the
State of California. Such committees shall hold office at the pleasure of the
board.

<PAGE>

ARTICLE VI

CORPORATE RECORDS AND REPORTS - INSPECTION

Section 1. RECORDS

The corporation shall maintain adequate and correct accounts, books and
records of its business and properties. All of such books, records and accounts
shall be kept at its principal place of business in the State of California, as
fixed by the Board of Directors from time to time.

Section 2. INSPECTION OF BOOKS AND RECORDS

All books and records provided for in Section 1500 of the Corporations
Code of California shall be open to inspection of the directors and shareholders
from time to time and in the manner pro-vided in Sections 1601 and 1602.

Section 3. CERTIFICATION AND INSPECTION OF BY-LAWS

The original or a copy of these By-laws, as amended or otherwise altered
to date, certified by the secretary, shall be open to inspection by the
shareholders of the company, as provided in Section 213 of the Corporations Code
of California.

Section 4. CHECKS, DRAFTS, ETC.

All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation,
shall be signed or endorsed by such person or persons and in such manner as
shall be determined from time to time by resolution of the Board of Directors.

Section 5. CONTRACTS, ETC. -- HOW EXECUTED.

The Board of Directors, except as in the By-laws otherwise provided, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation. Such
authority may be general or confined to specific instances. Unless so authorized
by the Board of Directors, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement, or to pledge
its credit, or to render it liable for any purpose or to any amount.

Section 6. ANNUAL REPORT.

The annual report of shareholders referred to in Section 1501 of the
California Corporations Code is expressly dispensed with, but the Board of
Directors of the corporation may cause to be sent to the shareholders, not later
than one hundred twenty (120) days after the close of the fiscal or calendar
year, an annual report in such form as may be deemed appropriate by the Board of
Directors.

<PAGE>

ARTICLE VII

CERTIFICATES AND TRANSFER OF SHARES

Section 1. CERTIFICATES FOR SHARES.

Certificates for shares shall be of such form and device as the Board of
Directors may designate and shall state the name of the record holder of the
snares represented thereby; its number, a statement of the right, privileges,
preferences and restrictions of each class of stock and a statement of the
liens, restrictions, obligations or liability of holders as set forth in Section
418 of the Corporations Code. Statements of assessability and restrictions on
transfer shall appear on the face of the certificate and SHALL BE CONSPICUOUS.

Every certificate for shares must be signed by the president or a
vice-president or a vice-president and the secretary or an assistant secretary
or must be authenticated by facsimiles of the signatures of the president and
secretary or by a facsimile of the signature of its president and the written
signature of its secretary or an assistant secretary. Before it becomes
effective, every certificate for shares authenticated by a facsimile of a
signature must be countersigned by a transfer clerk or transfer agent and must
be registered by an incorporated bank or trust company, either domestic or
foreign, as registrar of transfers.

Section 2. TRANSFER ON THE BOOKS.

Upon surrender to the secretary or transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.

Section 3. LOST, STOLEN OR DESTROYED CERTIFICATES.

The corporation may issue a new share certificate or a new certificate for
any other security in the place of any certificate theretofore issued by it,
alleged to have been lost, stolen or destroy-ed, and the corporation may require
the owner of the lost, stolen or destroyed certificate or the owner's legal
representative to give the corporation a bond (or other adequate security)
sufficient to indemnify it against any claim that may be made against it
(including any expense or liability) on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate.

Section 4. TRANSFER AGENTS AND REGISTRARS.

The Board of Directors may appoint one or more transfer agents or transfer
clerks, and one or more registrars, which shall be an incorporated bank or trust
company--either domestic or foreign, who shall be appointed at such times and
places as the requirements of the corporation may necessitate and the Board of
Directors may designate.

<PAGE>

ARTICLE VIII

CORPORATE SEAL

The corporation adopts a seal. The corporate seal shall be circular in
form, and shall have inscribed thereon the name of the corporation, the date of
its incorporation, and the word "California"

ARTICLE IX

AMENDMENTS TO BY-LAWS

Section 1. BY SHAREHOLDERS.

New By-laws may be adopted or these By-laws may be repealed or amended at
their annual meeting, or at any other meeting of the shareholders called for
that purpose, by a vote of shareholders en-titled to exercise a majority of the
voting power of the corporation, or by the written assent of such shareholders.

Section 2. POWERS OF DIRECTORS.

Subject to the right of shareholders to adopt, amend or repeal By-laws, as
provided in Section 1 of this Article IX, the Board of Directors may adopt,
amend or repeal any of these By-laws; but a By-law or amendment thereof fixing
or changing the authorized number of directors must be approved by the vote or
written consent of shareholders entitled to exercise the majority of the voting
power of the corporation.

Section 3. RECORDS OF AMENDMENTS.

Whenever an amendment or new By-law is adopted, it shall be copies in the
book of By-laws with the original By-laws, in the appropriate place. If any
By-laws or By-law is repealed, the fact of repeal with the date of the meeting
at which the repeal was enacted or written assent was filed shall be stated in
said book.

KNOW ALL MEN BY THESE PRESENTS:

That we, the undersigned, being all of the persons appointed to act as the
first Board of Directors of hereby assent to the foregoing By-laws, and adopt
the same as the By-laws of said corporation.

IN WITNESS WHEREOF, we have hereunto set our hands this

CERTIFICATE OF SECRETARY

(Graphic Omitted)

I, the undersigned, do hereby certify:

(1) That I am the duly elected and acting Secretary of

(2) That the foregoing By-laws comprising 12 pages, constitute the
original By-laws of said corporation as duly adopted at the first meeting of the
Board of Directors thereof duly held on

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of said corporation.

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

<PAGE>

WEST COAST MINES, INC.

RESOLUTION OF THE BOARD OF DIRECTORS

A Special Meeting of the Board of Directors of WEST COAST MINES. INC.
was held on FEBRUARY 22ND, 1996 at the Company's Dallas Office at 5430 LBS
Freeway, Suite 1600. Dallas, Texas 73240. Attending the meeting in person, or by
Telephone Conference Call, were: Douglas E. Metcalf, Melvin E. Tidwell, and K.
D. Diepholz, being a quorum of the Directors of the Company, each of whom waived
notice of the meeting.

The President, Mr. Metcalf called the meeting to order. The minutes of
the prior meeting were read and unanimously approved. The President's report was
given. The President then opened the floor to new business whereupon the
following resolutions, after discussion, was properly moved, seconded and
thereafter unanimously approved and adopted:

RESOLVED, that the Corporation approve the original By Laws for the
Company; specifically those By Laws set forth by the Company in 1937,
and since re-typed and accepted by the Company in 1980; such By Laws to
remain now in force until such time as they may be amended by the
current Board of Directors;

RESOLVED, That the Corporation approve all prior actions taken by the
Board of Directors and the President.

There being no further business before the meeting, on motion duly
made, seconded and carried, the meeting was adjourned.

DATED THIS TWENTY - SECOND (22ND) DAY FEBRUARY, 1996.

/S/ Douglas Metcalf /S/ Melvin E. Tidwell
DOUGLAS METCALF, PRESIDENT, DIRECTOR MELVIN E. TIDWELL, DIRECTOR

/S/ K.D. Diepholz

KOY W. (K.D.) DIEPHOLZ, SECRETARY, DIRECTOR

EXHIBIT "1.3"
"ARTICLES OF AMENDMENT 1940"

FILED in the office of the Secretary of State of the State of California MAY 2
1940 PAUL PEEK, Secretary of State By /S/ Deputy Secretary of State

Capital stock chgd. fr. $350,000 to $750,000.

CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF WEST COAST MINES, INC.

KNOW ALL MEN BY THESE PRESENTS:

That we, the undersigned, the president and secretary respectively of
the WEST COAST MINES, INC., do hereby certify as follows:

That a special meeting of the board of directors of said WEST COAST MINES,
INC., was duly held on the 8th day of April, 1940, at the hour of 5 o'clock
P.M., at the office and principal place of business of said corporation, to-wit,
215 Capital National Bank Building, Sacramento, California, at which said
meeting a resolution was regularly proposed, voted upon and adopted by the
unanimous vote of all of said directors, amending the articles of incorporation
of said corporation; that the following is a full, true and correct copy of the
resolution of said board of directors amending the articles on incorporation:

"RESOLVED: That the articles of incorporation of WEST COAST MINES,
INC., amended, by amending Article FOURTH so that it shall, as amended,
read as follows, to-wit:

"FOURTH: The amount of the capital stock of said corporation is Seven
Hundred Fifty Thousand Dollars ($750,000.00), divided into seven
hundred fifty thousand (750,000) shares of the par value of One Dollar
($1.00) per each share."

That said resolution of the Board of Directors was approved on the 1st day
of May, 1940, by the written consent of shareholders holding more that 60% of
the voting power of said corporation, that is to say, holding 195,147 shares of
stock of said corporation out of 324,892 shares entitled to vote at the time
said consent was given; that the following is a full, true and correct copy of
said consent of said shareholders to the amendment of the articles of
incorporation:

"We, the undersigned, shareholders of WEST COAST MINES, INC., holding more
than 60% of the voting power of said corporation, that is to say, holding
195,147 shares of stock of said corporation out of 324,892 shares entitled to
vote, hereby, and by these presents do, consent to, confirm and ratify the
amendment of Article "FOURTH" of the Articles of Incorporation, made by the
Board of directors of WEST COAST MINES, INC., at a special meeting held on the
8th day of April, 1940, at 5 o'clock P.M. by which amendment said Article shall
read as follows:

'FOURTH: The amount of the capital stock of the said corporation is
Seven Hundred Fifty Thousand Dollars ($750,000.00) divided into seven
hundred fifty thousand (750,000) shares of the par value of One Dollar
($1.00) per each share.'

DATED: May 1, 1940
William N. Enos, holding 2,250 shares
Chas. A. Palm, holding 13,000 shares
Clovis T. LaGrave, holding 3,000 shares

<PAGE>

J.W. Peacock, holding 2,650 shares
E.D. Palm, holding 801 shares
D. Schuyler Pulford, holding 6,000 shares
W.E. Truesdale & M.A. Truesdale, holding 5,000 shares
W.J. Kamenzind, holding 162,446 shares"

IN WITNESS WHEREOF, we, the said president and said secretary, have hereunto set
our hands this 2nd day of May, 1940.

WEST COAST MINES, INC.,
By/S/W.J. Kamenzind, President
And/S/Walter Leitch, Secretary

STATE OF CALIFORNIA )
( ss
COUNTY OF SACRAMENTO)

W.J. KAMENZIND and WALTER LEITCH, being by me duly sworn, depose and
say: That they are the President and Secretary respectively of WEST COAST MINES,
INC., that they have read the foregoing certificate and know the contents
thereof and that the same is true of their own knowledge.

/S/ W.J. Kamenzind
- --------------------
/S/ Walter Leitch
- --------------------

Subscribed and sworn to before me this 2nd day of May, 1940.

/S/ Luda N. Gross
- -----------------
Notary Public in and for the County of Sacramento, State of California.

I, the undersigned, secretary of WEST COAST MINES, INC., do hereby
certify that the following is a true and correct copy of a resolution of the
board of directors, duly adopted the special meeting of the board of directors
of said corporation, held on the 8th day of April, 1940, at the hour of 5
o'clock P.M. in the office of said company at 215 Capital National Bank
Building, Sacramento, California; that the same has been duly recorded in the
minutes of said corporation; said resolution is as follows, to-wit:

RESOLVED: that the articles of incorporation of WEST COAST MINES, INC.,
be amended, by amending Article FOURTH so that it shall, as amended, read as
follows, to-wit:

"FOURTH: The amount of the capital tock of said corporation is Seven
Hundred Fifty Thousand Dollars ($750,000.00), divided into seven hundred fifty
thousand (750,000) shares of the par value of One Dollar ($1.00) per each
share."

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of said
corporation at Sacramento, in the State of California, this 8th day of April,
1940.

/S/ Walter Leitch, Secretary
- ----------------------------

EXHIBIT "1.4"
"ARTICLES OF AMENDMENT 1943"

FILED in the Office of the Secretary of State of the State of California
Jun 3 1943
FRANK M. JORDAN, Secretary of State
By /S/ Assistant Secretary of State

CERTIFICATE OF AMENDMENT OF ARTICLES OF

INCORPORATION OF

WEST COAST MINES, INC.

The undersigned, GEO. A. BRIGGS and A. I. DIEPENBROCK, do hereby certify that
they are, respectively, and have been at all times herein mentioned, the duly
elected and acting president and secretary of WEST COAST MINES, INC., a
California corporation, and further that:

One: At a special meeting of the board of directors of said corporation
duly held at its principal office for the transaction of business at Sacramento,
California, at 7:30 o'clock P.M. on the 27th day of May, 1943, at which meeting
there was at all times present and acting a quorum of the members of said board,
the following resolutions were duly adopted:

RESOLVED, by the Board of Directors of WEST COAST MINES, INC., that its
articles of incorporation be amended by the addition thereto of Article Seventh,
and that Article Seventh read as follows:

"SEVENTH: The directors of this corporation are hereby granted power and
authority to levy and collect from time to time, as in their discretion
they my deem advisable, assessments upon all of the shares of stock of
this corporation at any time issued and outstanding, and shall have and
enjoy all of the rights and privileges with reference to such assessments
as are fixed, provided and established by law in respect to corporations
the directors of which have such power of assessment; provided, however,
neither any assessment nor the levy thereof shall create any personal
liability whatsoever of any shareholder of this corporation; and provided
further that said power of assessment shall be limited in its aggregate
to five cents ($0.05) per share."

RESOLVED FURTHER, that the president or a vice president and the secretary
or an assistant secretary of this corporation be and they hereby are authorized
and directed to procure the adoption and approval of the foregoing amendment by
the vote or written consent of shareholders of this corporation holding at least
two-thirds of the voting power, and thereafter to sign and verify by their oaths
and to file a certificate in the form and manner required by Section 362b of the
California Civil Code, and in general to do any and all things necessary to
effect said amendment in accordance with said Section 362b.

Two: The number of shares of said corporation consenting to such amendment
of its articles of incorporation is 454084, and the following is a copy of the
form of written consent executed by the holders of said shares:

CONSENT OF SHAREHOLDERS TO AMENDMENT OF ARTICLES

OF INCORPORATION OF WEST COAST MINES, INC.

We, the undersigned shareholders owing and having issued to us in our
names at least two-thirds (2/3) of all of the outstanding shares of the West
Coast Mines, Inc., do hereby consent to the hereinafter amendment to the
articles of incorporation and request and direct that the Board of Directors of
said corporation take such action as may be necessary in connection with the
hereinafter set forth amendment, and that said articles of incorporation be
amended by the addition thereto of Article Seventh, and that Article Seventh
read as follows:

<PAGE>

"SEVENTH: The directors of this corporation are hereby granted power and
authority to levy and collect from time to time, as in their discretion they may
deem advisable, assessments upon all of the shares of stock of this corporation
at any time issued and outstanding, and shall have and enjoy all of the rights
and privileges with reference to such assessments as are fixed, provided and
established by law in respect to corporations the directors of which have such
power of assessment; provided, however, neither any assessment nor the levy
thereof shall create any personal liability whatsoever of any shareholder of
this corporation; and provided further that said power of assessment shall be
limited in its aggregate to five cents ($0.05) per share."

This consent may be given by signature on one or more counterparts hereof.

IN WITNESS WHEREOF, we have hereunto set our hands and seals and set forth the
number of shares held by each opposite our signatures:

SIGNATURE NUMBER OF SHARES

Three: The total number of shares of said corporation entitled to vote
on or consent to the adoption of such amendment is 661400.

IN WITNESS WHEREOF, the undersigned have executed this certificate of amendment
this 29th day of May, 1943.

/S/ Geo A. Briggs, President of West Coast Mines, Inc.
- ---------------------------------------------------------

/S/ A.I. Diepenbrock, Secretary of West Coast Mines, Inc.
- ---------------------------------------------------------

STATE OF CALIFORNIA )
) ss.
County of Sacramento)

GEO. A. BRIGGS and A.I. DIEPENBROCK, being first duly sworn, each for himself
deposes and says:

That GEO. A. BRIGGS is, and was at all of the times mentioned in the
foregoing Certificate of Amendment, the president of WEST COAST MINES, INC., The
California corporation therein mentioned, and A.I. DIEPENBROCK is, and was at
all of said times, the secretary of said corporation; and each has read said
Certificate and that the statements therein made are true of his own knowledge,
and that the signatures purporting to be the signatures of said president and
secretary thereto are the genuine signatures of said president and secretary,
respectively.

/S/ Geo A. Briggs
- ------------------

/S/ A.I. Diepenbrock
- --------------------

Subscribed and sworn
to before me this 29th day of May, 1943.
/S/ Marion Fritz
- -----------------
Notary Public in and for the County
of Sacramento, State of California.

EXHIBIT "1.5"
"ARTICLES OF AMENDMENT 1996"

ENDORSED FILED in the office of the Secretary of State of the State of
California APR 24 1996 /S/ Bill Jones, Secretary of State

CERTIFICATE OF AMENDMENT

ARTICLES OF INCORPORATION

The Undersigned certify that:

1. They are the President and Secretary, respectively, of:

WEST COAST MINES, INC.
DALLAS, TEXAS OFFICE
III LINCOLN CENTRE
5430 LBJ FREEWAY / SUITE 1600
DALLAS, TEXAS 75240
(214) 369-4005

Fax: (214)369-2807

A California Corporation.

2. Article FOURTH of the Articles of Incorporation of this corporation is
hereby amended to read as follows:

"The amount of Common Stock the Corporation is authorized to issue is:
50,000,000."

"The Par Value of such Common Stock is: $ .01"

3. The foregoing Amendment of Articles of Incorporation has been duly
approved by the Board of Directors of West Coast Mines, Inc.

4. The foregoing Amendment of Articles of Incorporation has been duly
approved by the required vote of the Shareholders of West Coast Mines,
Inc., in accordance with Section 902 of the California Corporations
Code. The total number of outstanding shares of the corporation as of
FEBRUARY 16, 1995, was: 750,000. The number of shares voting in favor
of the Amendment equaled or exceeded the vote required for approval.
The percentage vote required for approval was more than 50 %.

5. We further declare under penalty of perjury under the Laws of the State
of California that the matters set forth in this Certificate of
Amendment are true and correct of our own knowledge.

DATED THIS EIGHTEENTH DAY OF APRIL, 1996.

/S/ Douglas E. Metcalf /S/ K.D. Diepholz
----------------------- -----------------
President Secretary

<PAGE>

A475162

State of California

[graphic omitted]
SECRETARY OF STATE

CORPORATION DIVISION

I, BILL JONES, Secretary of State of the State of California, hereby
certify:

That the annexed transcript has been compared with the corporate record
on file in this office, of which it purports to be a copy, and that same is
full, true and correct.

IN WITNESS WHEREOF, I execute
this certificate and affix the Great Seal of
the State of California this

APR 25 1996

/S/ Bill Jones
-----------------
Secretary of State

[graphic omitted]
The Great Seal of the State of California

EXHIBIT "1.6"
DYNARESOURCE, INC.
"CERTIFICATE OF MERGER"

ENDORSED - FILED

In the office of the Secretary of State
of the State of California

NOV 6 1998

AGREEMENT OF MERGER

also referred to herein as

"PLAN AND AGREEMENT OF MERGER"

West Coast Mines. Inc.
(a California corporation)

Into

DynaResource, Inc.

(a Delaware corporation)

THIS PLAN AND AGREEMENT OF MERGER (the "Agreement"), is dated as of
January 15,1998, and is by and between DynaResource, Inc., a Delaware
corporation (sometimes referred to herein as, the "Acquiring Corporation") and
West Coast Mines, Inc., a California corporation (sometimes referred to herein
as, the "Non-Acquiring Corporation"). Said corporations are hereinafter
sometimes collectively referred to as the "Constituent Corporations".

WITNESETH:

WHEREAS. DynaResource, Inc. desires to acquire West Coast Mines, Inc.
through merger of West Coast Mines, Inc. with and into DynaResource, Inc.; and,

WHEREAS, DynaResource, Inc. desires to issue its Common Stock (the
"Merger Stock") to the shareholders of West Coast Mines. Inc. in consideration
of the merger of West Coast Mines, Inc. into DynaResource, Inc.; and,

WHEREAS, the Boards of Directors of the Constituent Corporations deem it
advisable for the general welfare and advantage of the Constituent Corporations
and their respective shareholders that West Coast Mines, Inc. merge into
DynaResource, Inc. and said corporation desires to so merge;

NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereby agree, in accordance with the
applicable provisions of the laws of the States of California and Delaware; that
West Coast Mines, Inc. shall be merged into DynaResource, Inc., which shall
continue its corporate existence and be the corporation surviving the merger,
and that the terms and conditions of the merger hereby agreed upon (hereafter
called the "Merger) which the parties covenant to observe, keep, and perform,
and the mode of carrying the same into effect, are and shall be as hereafter set
forth:

ARTICLE I

EFFECTIVE DATE OF MERGER

1.1 Effective Date. Consummation of this Agreement shall be effected on
the date on which this Agreement of Merger (~Plan and Agreement of Merger") is
filed in the offices of the Secretary of State of the State of Delaware; and,
upon satisfaction of the requirements of the applicable laws of the State of
California prerequisite to such consummation.

<PAGE>

ARTICLE 2

GOVERNING LAW, INSTRUMENTS, AND BODIES

2.1 Governing Law. The laws which are to govern the Acquiring
Corporation are the laws of the State of Delaware.

2.2 Articles of Incorporation. The Articles of Incorporation of the
Acquiring Corporation shall be the Articles of Incorporation of the Acquiring
Corporation as the same shall be in effect at the effective time of the Merger.

2.3 Bylaws. The Bylaws of the Acquiring Corporation at the effective
time of the Merger shall be the Bylaws of the Acquiring Corporation until the
same shall be altered or amended in accordance with the provisions thereof.

2.4 Directors. The Directors of the Acquiring Corporation at the
effective time of the Merger shall remain the directors of the Acquiring
Corporation until their respective successors are duly elected and qualified, or
their earlier death or resignation.

2.5 Officers. Subject to the authority of the Board of Directors as
provided by law and the Bylaws of the Acquiring Corporation, the officers of The
Acquiring Corporation at the effective time of the Merger shall remain the
officers of the Acquiring Corporation.

ARTICLE 3

CONVERSION OF SHARES

3.1 Conversion Plan. The mode of carrying into effect the Merger
provided in this Agreement, and the manner and basis of converting the shares of
West Coast Mines, Inc. into shares of DynaResource, Inc. are as follows:

(a) The Acquiring Corporation's Common Stock. All of the shares
of Common Stock, par value $.0001 per share, of the Acquiring
Corporation issued and outstanding at the effective time of the Merger
shall be tendered and canceled concurrent with giving effect to the
Merger.

(b) The Non-Aquiring Corporation's Common Stock. At the
effective time of the Merger, each of the issued and outstanding shares
of the $.O1 par value Common Stock of the Non-Acquiring Corporation (or
fraction thereof) shall be converted into and become one (1) share (or
the applicable fraction thereof) of the $.0001 par value Common Stock
of the Acquiring Corporation, and each holder of outstanding shares of
the Common Stock of the Non-Acquiring Corporation, upon surrender to
the Acquiring Corporation of one or more stock certificates for Common
Stock of the Non-Acquiring Corporation for cancellation, shall be
entitled to receive one or more stock certificates for the full number
of shares of the Common Stock of the Acquiring Corporation into which
the Common Stock of the Non-Acquiring Corporation so surrendered shall
have been converted as aforesaid. Each issued share of the
Non-Acquiring Corporation's Common Stock, if any, held in its treasury
at the effective time of the merger shall be canceled and shall not be
converted.

3.2 Surrender of the Non-Acquiring Corporation Certificates. As soon as
practicable after the Merger becomes effective, the stock certificates
representing the Common Stock of the Non-Acquiring Corporation issued and

<PAGE>

outstanding at the time the Merger becomes effective shall be surrendered for
exchange to the Acquiring Corporation as above provided. Until so surrendered
for exchange, each such stock certificate nominally representing Common Stock of
the Non-Acquiring Corporation shall be deemed for all corporate purposes (except
for the payment of dividends, which shall be subject to the exchange of stock
certificates as above provided) to evidence the ownership of the number of
shares of the Common Stock of the Acquiring Corporation which the holder thereof
would be entitled to receive upon its surrender to the Acquiring Corporation.

3.3 Status of The Acquiring Corporation Shares. All shares of Common
Stock of the Acquiring Corporation into which shares of Common Stock of the
Non-Acquiring Corporation are converted as herein provided shall be fully paid
and non-assessable and shall be issued in full satisfaction of all rights
pertaining to such shares of common Stock of the Non-Acquiring Corporation.

3.4 Restriction on Transfer. The shares of the Acquiring Corporation
are to be issued without being registered under the Securities Act of 1933, as
amended (the "Act"), in reliance upon the exemption from registration afforded
by Section 3(a)(9) of the Act. Notwithstanding, such shares shall be restricted
to the extent that the shares surrender in exchange therefore were restricted
and shall be affixed with the same legend(s), if any, as shall have been affixed
upon the certificates surrendered in exchange therefore and, if so restricted,
such shares may be sold or otherwise transferred only pursuant to a registration
statement or in compliance with another exemption from registration.

ARTICLE 4

EFFECT OF MERGER

4.1 The Non-Acquiring Corporation Ceases to Exist. At such time as the
Merger shall become effective, the separate existence of The Non-Acquiring
Corporation shall cease and The Non-Acquiring Corporation shall be merged into
the Acquiring Corporation.

4.2 Acquiring Corporation Succeeds to Rights. etc.. At such time as the
Merger becomes effective, the Acquiring Corporation shall succeed to, without
other transfer, and shall possess and enjoy, all the rights, privileges,
immunities, powers and franchises both of a public and a private nature, and be
subject to all the restrictions, disabilities and duties of the Non-Acquiring
Corporation, and all the rights, privileges, immunities, powers and franchises
of the Non-Acquiring Corporation and all property, real, personal and mixed, and
all debts due to either the Non-Acquiring Corporation or the Acquiring
Corporation on whatever account, for stock subscriptions as well as for all
other things in action or belonging to each of said corporations, shall be
vested in the Acquiring Corporation; and all property, rights, privileges,
immunities, powers and franchises, and all and every other interest previously
held by the Non-Acquiring Corporation shall be thereafter as effectually the
property of the Acquiring Corporation as they were of the Non-Acquiring
Corporation and the title to any real estate vested by deed or otherwise in the
Non-Acquiring Corporation shall not revert or be in any way impaired by reason
of the Merger; provided, however, that all rights of creditors and all liens
upon any property of the Non-Acquiring Corporation shall be preserved
unimpaired, limited in lien to the property affected by such liens at the
effective time of the Merger, and all debts, liabilities and duties of said
corporations, respectively, shall thenceforth attach to the Acquiring
Corporation and may be enforced against it to the same extent as if said debts,
liabilities and duties had been incurred or contracted by the Acquiring
Corporation.

<PAGE>

ARTICLE 5

ACCOUNTING MATTERS

5.1 Assets and Liabilities. The assets and liabilities of the
Non-Acquiring Corporation as at the effective time of the Merger, shall be taken
up on the books of the Acquiring Corporation at the amounts at which they shall
have been carried at that time on the books of the Non-Acquiring Corporation.

5.2 Capital Surplus. The amount of Capital of the Acquiring
Corporation after the Merger, shall be equal to the sum of the aggregate book
value prior to the Merger as shown on the books of the Non-Acquiring
Corporation; which shall be reflected as additional Paid-in Capital, and of the
aggregate Par Value of the Common Stock that will remain issued upon the Merger.
The surplus of the Acquiring Corporation after the Merger, including any surplus
arising in the Merger, shall be available to be used for any legal purposes for
which surplus may be used.

ARTICLE 6

APPROVALS AND FILING

6.1 Approval. This Agreement shall be submitted to the Shareholders of
each Constituent Corporation, as provided by Law and by each respective Articles
of Incorporation, at meetings or otherwise; which shall be accomplished on or
before February 1, 1998, or such later date as the Board of Directors of the
Constituent Corporations shall mutually approve. After such adoption and
approval, and subject to the conditions contained in this Agreement, A
"Certificate of Approval", and A "Certificate of Merger", in substantially the
form annexed and attached hereto as Exhibit A-1. and Exhibit A-2 respectively:
shall be signed, verified, and delivered to the Secretary of the State of
California and the Secretary of the State of Delaware, for filing as provided by
the corporations laws of such states.

ARTICLE 7

REPRESENTATIONS AND WARRANTIES OF THE NON-ACQUIRING CORPORATION

The Non-Acquiring Corporation represents and warrants to the Acquiring
Corporation as follows:

7.1 Organization. The Non-Acquiring Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. The Non-Acquiring Corporation has the corporate power required to
carry on its business; as it is now being conducted, and is qualified to do
business in every jurisdiction in which the character and location of the assets
owned by it, or the nature of the business transacted by it, require
qualification.

7.2 Capitalization. The Non-Acquiring Corporation's capitalization
consists of 50,000,000 authorized shares of $.0001 par value Common Stock. Each
issued share is validly issued, fully paid, non- assessable and each outstanding
share is entitled to one vote. There is no treasury stock held by the Non-
Acquiring Corporation.

7.3 Subsidiaries. The Non-Acquiring Corporation has no subsidiary
corporations.

<PAGE>

7.4 Governmental Authorizations. The Non-Acquiring Corporation has all
licenses, franchises, permits and other governmental authorizations required and
which are valid and sufficient for all business presently carried on by The
Non-Acquiring Corporation.

ARTICLE 8

REPRESENTATIONS AND WARRANTIES The Acquiring Corporation

The Acquiring Corporation represents and warrants to The Non-Acquiring
Corporation as follows:

8.1 Organization. The Acquiring Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Acquiring Corporation has corporate power to carry on its business
as it is now being conducted and is qualified to do business in every
jurisdiction in which the character and location of the assets owned by it or
the nature of the business transacted by it require qualification.

8.2 Capitalization. The Acquiring Corporations capitalization consists
of 50,000,000 authorized shares of Common Stock, par value $.0001 per share, of
which, as of the date hereof, 1,000 shares are issued and outstanding (which
shares will be redeemed and canceled upon the effective date of the merger); and
there are no treasury shares outstanding. Each such share when issued will be
validly issued, fully paid, non-assessable and is entitled to one vote. There
are no Common Stock purchase options outstanding as of the date hereof as to any
of the Acquiring Corporation's Common Stock.

ARTICLE 9

CONDUCT OF BUSINESS PENDING, THE MERGE

9.1 Conduct. From and after the date of this Agreement and prior to the
effective time of the Merger, neither of the Constituent Corporations will,
without the prior written consent of the other:

(a) amend its Articles of Incorporation or Bylaws;

(b) engage in any material activity or transaction or incur
any material obligation (by contract or otherwise) except in the
ordinary course of business;

(c) issue rights or options to purchase or subscribe to any
shares of its capital stock or subdivide or otherwise change any such
shares;

(d) issue or sell any shares of its capital stock or
securities convertible into shares of its capital stock; or

(e) declare or pay any dividends on or make any distributions
whether of cash, stock or other property in respect of any shares of
its capital stock.

9.2 Preservation. >From and after the date of this Agreement and prior
to the effective time of the Merger, the Non-Acquiring Corporation will use its
best efforts to preserve its business organizations intact; to keep available to
the Acquiring Corporation the services of the Non-Acquiring Corporation's
present officers and employees; and to preserve for the Acquiring Corporation
the goodwill of the Non-Acquiring Corporation's suppliers, customers and others
having business relations with it.

<PAGE>

ARTICLE 10

ADDITIONAL AGREEMENTS

The Acquiring Corporation and the Non-Acquiring Corporation further
agree as follows:

10.1 Access and Information. The Acquiring Corporation and the
Non-Acquiring Corporation hereby agree that each will give to the other and to
the other's accountants, counsel and other representatives full access during
normal business hours throughout the period prior to the Merger to all of its
properties, books, contracts, commitments and records, and that each will
furnish the other during such period with all such information concerning its
affairs as such other party may reasonably request. In the event of the
termination of this Agreement each party will deliver to the other all
documents, work papers and other material obtained from the other relating to
the transactions contemplated hereby, whether so obtained before or after the
execution hereof, and will use its best efforts to have any information so
obtained and not heretofore made public kept confidential.

10.2 Expenses. Upon a termination of this Agreement as provided below,
each party will pay all costs and expenses of its performance of and compliance
with all agreements and conditions contained herein on its part to be performed
or complied with, including fees, expenses and disbursements of each party's
accountants and counsel.

10.3 Further Assurances. If at any time the Acquiring Corporation shall
consider or be advised that any further assignment or assurance in law or other
action is necessary or desirable to vest, perfect, or confirm, of record or
otherwise, in the Acquiring Corporation, the title to any property or rights of
the Non-Acquiring Corporation acquired or to be acquired by or as a result of
the Merger, the proper officers and directors of the Non-Acquiring Corporation,
and the Acquiring Corporation, respectively, shall be and they hereby are
severally and fully authorized to execute and deliver such proper deeds,
assignments and assurances in law and take such other action as may be necessary
or proper in the name of the Non-Acquiring Corporation or the Acquiring
Corporation to vest, perfect or confirm title to such property or rights in the
Acquiring Corporation and otherwise carry out the purposes of this Agreement.

ARTICLE 11

CONDITIONS PRECEDENT: TERMINATION: GENERAL PROVISIONS

11.1 Conditions Precedent to the Obligations of The Acquiring
Corporation and The Acquiring Corporation. The obligation of the Acquiring
Corporation to effect the Merger and The Acquiring Corporation's obligation to
issue stock on conversion of the stock of the Non-Acquiring Corporation shall be
subject to the following conditions (which may be waived in writing by the
Acquiring Corporation):

(a) The representations and warranties of The Non-Acquiring
Corporation herein contained shall be true as of and at the effective
time of the Merger with the same effect as though made at such time;
the Non-Acquiring Corporation shall have performed all obligations and
complied with all covenants required by this Agreement to be performed
or complied with by it prior to the effective time of the Merger; and
the Non-Acquiring Corporation shall have delivered to the Acquiring
Corporation a certificate, dated the effective date of the Merger and
signed by its President and its Secretary, to both such effects.

(b) No material change in the corporate status, business,
operations or financial condition of the Non-Acquiring Corporation
shall have occurred since the date hereof, (whether or not covered by
insurance), other than changes in the ordinary course of business, none
of which has been materially adverse in relation to the Non-Acquiring
Corporation, taken as a whole, and no other event or condition of any
character shall have occurred or arisen since that date which shall

<PAGE>

have materially and adversely affected the corporate status, business,
operations or financial condition of the Non-Acquiring Corporation
taken as a whole. Operating costs shall not be considered as other than
a change in the ordinary course of business.

11.2 Conditions Precedent to The Non-Acquiring Corporation's
Obligations. The obligation of The Non-Acquiring Corporation to effect the
Merger shall be subject to the following conditions (which may be waived in
writing by The Non-Acquiring Corporation):

(a) The representations and warranties of the Acquiring
Corporation and the Acquiring Corporation herein contained shall be
true as of and at the effective time of the Merger with the same
effect as though made at such time; the Acquiring Corporation shall
have performed all obligations and complied with all covenants
required by this Agreement to be performed or complied with by it
prior to the effective time of the Merger.

(b) No material change in the corporate status, business,
operations or financial condition of The Acquiring Corporation or The
Acquiring Corporation shall have occurred since the date hereof
(whether or not covered by insurance), other than changes in the
ordinary course of business, none of which has been materially adverse
in relation to the Acquiring Corporation taken as a whole, and no
other event or condition of any character shall have occurred or
arisen since that date which shall have materially and adversely
affected the corporate status, business, operations or financial
condition of the Acquiring Corporation, taken as a whole.

11.3 Termination and Abandonment Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and abandoned at any
time before the effective time of the Merger, whether before or after adoption
or approval of this Agreement by the shareholders of the Merging Corporations
under any one or more of the following circumstances:

(a) By the mutual consent of the Boards of Directors of the
Constituent Corporations;

(b) By either of the Constituent Corporations if any action or
proceeding before any court or other governmental body or agency shall
have been instituted or threatened to restrain or prohibit the Merger
and such Constituent Corporation deems it inadvisable to proceed with
the Merger; or

(c) By either of the Constituent Corporations if the requisite
approval of the shareholders of both Constituent Corporations shall
not have been obtained on or before February 1, 1998, or if the
Articles of Merger and Certificate of Merger shall not have been filed
as provided in Article I hereof on or before February 15, 1998.

11.4 Amendments. Any of the terms or conditions of this Agreement may be
modified or waived at any time before the effective time of the Merger by the
party which is, or the shareholders of which are, entitled to the benefit
thereof upon the authority of the Board of Directors of such party, provided
that any such modification or waiver shall in the judgment of the party making
it not affect substantially or materially and adversely the benefits to such
party or its shareholders intended under this Agreement.

[SIGNATURE PAGES FOLLOW]

<PAGE>

IN WITNESS WHEREOF, this Agreement has been signed by a majority of the
directors of each of the Constituent Corporations and each of the Constituent
Corporations has caused its corporate seal to be hereunto affixed and attested
by the signature of its Secretary, all as of the day and year first above
written.

A MAJORITY OF THE A MAJORITY OF THE DIRECTORS OF
DIRECTORS OF DYNARESOURCE, INC.: WEST COAST MINES, INC.:

/S/ K.D. Diepholz /S/ K.D. Diepholz
- ---------------------------- ---------------------------
Name: Koy W.(K.D.) Diepholz Name: Koy W.(K.D.) Diepholz
Chairman / President Chairman / President

/S/ Mel E Tidwell /S/ Mel E Tidwell
- ---------------------------- ---------------------------
Name: Mel E Tidwell Name: Mel E Tidwell

/S/ Douglas Metcalf /S/ Douglas Metcalf
- ---------------------------- ---------------------------
Name: Douglas Metcalf Name: Douglas Metcalf

Secretary Secretary

/S/ Wayne C. Henderson /S/ Wayne C. Henderson
- ---------------------------- ---------------------------
Name: Wayne C. Henderson Name: Wayne C. Henderson

<PAGE>

EXHIBIT A-1

CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER

The undersigned do hereby state and certify as follows:

1. They are the President and Secretary respectively of West Coast Mines,
Inc., (the "Disappearing Corporation"); a California Corporation.

2. The Agreement of Merger to be executed by and between the Disappearing
Corporation and DynaResource, Inc., a Delaware Corporation (the
"Acquiring Corporation"), in the form attached hereto; was duly
approved by the Board of Directors and Shareholders of West Coast
Mines, Inc., the Disappearing Corporation, as of January 15, 1998.

3. Pursuant to Section 1201 of the California General Corporation Laws, no
vote of the Shareholders of West Coast Mines, Inc. the Disappearing
Corporation, is required; as the Shareholders of the Disappearing
Corporation immediately prior to the Merger, will possess all (more
than five-sixths) of the Voting Power of DynaResource, Inc., the
Acquiring Corporation, immediately subsequent to the Merger.

Each of the undersigned do hereby declare under the Penalty of Perjury under the
Laws of the State of California, that he signed the foregoing Certificate in the
Official Capacity set forth under his Signature below; and that the statements
set forth in this Certificate are true of his own knowledge.

Signed as of January 15, 1998.

/S/ K.D. Diepholz
- -----------------------
Koy (K.D.) Diepholz
President

/S/ Douglas Metcalf
- -----------------------
Douglas Metcalf
Secretary

<PAGE>

EXHIBIT A-2

CERTIFICATE OF MERGER

The undersigned do hereby state and certify as follows:

1. The Constituent Corporations are: DynaResource, Inc., (the "Acquiring
Corporation"); a Delaware Corporation; and West Coast Mines, Inc., (the
"Disappearing Corporation"), a California Corporation.

2. An Agreement of Merger between the Acquiring Corporation and the
Disappearing Corporation above, has been as of January 15, 1998,
approved, executed, certified, and acknowledged; in accordance with
Section 252 of the General Corporation Laws with the State of Delaware.

3. The Acquiring Corporation is the surviving Corporation and its name
shall be DYNARESOURCE, INC.

4. No Amendments to the Certificate of Incorporation of the Acquiring
Corporation are required by the Agreement of Merger, and subsequent to
the Merger, the Certificate of Incorporation of the Acquiring
Corporation shall be its Certificate of Incorporation.

5. The executed Agreement of Merger is on file at the principle place of
business of the Acquiring Corporation, which is: The Towers at Williams
Square, 5215 N. O'Connor Blvd., Suite 200, Irving, Texas 75039.

6. A copy of the executed Agreement of Merger will be furnished by the
Acquiring Corporation on request and without cost, to any Shareholder
of the Disappearing Corporation or to any Shareholder of the Acquiring
Corporation.

Signed as of January 15, 1998.

/S/ K.D. Diepholz
- -------------------------------
Koy (K.D.) Diepholz, President

/S/ Douglas Metcalf
- -------------------------------
Douglas Metcalf, Secretary

<PAGE>

CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER

The undersigned do hereby state and certify that:

1. They are the President and Secretary, respectively of DynaResource,
Inc., a Delaware corporation (the "Acquiring Corporation"

2. The Agreement of Merger to be executed by and between the Acquiring
Corporation and West Coast Mines, Inc. (the "Disappearing
Corporation"), in the form attached hereto was duly approved by the
Board of Directors and shareholders of the Disappearing Corporation, as
of the date of this Certificate.

3. There is only one class of shares and the total number of outstanding
shares is 1,000.

4. The terms of the merger agreement in the form attached were approved by
the unanimous vote of all (100%) of the shares of the Acquiring
Corporation.

As of the date set forth below, in Dallas, Texas, each of the
undersigned does hereby declare under the penalty of perjury under the laws of
the State of California that he signed the foregoing certificate in the official
capacity set forth beneath his signature, and that the statements set forth in
said certificate are true of his own knowledge.

SIGNED as of January 15, 1998

/S/ K.D. Diepholz
- -------------------------------
Koy (K.D.) Diepholz, President

/S/ Douglas Metcalf
- -------------------------------
Douglas Metcalf, Secretary

<PAGE>

CERTIFICATE OF APPROVAL OF AGREEMENT OF MERGER

The undersigned do hereby state and certify as follows:

1. They are the President and Secretary respectively of West Coast Mines,
Inc., (the "Disappearing Corporation"); a California Corporation.

Signed as of January 15, 1998

/S/ K.D. Diepholz
- ---------------------
Koy (K.D.) Diepholz
President

/S/ Douglas Metcalf
- ---------------------
Douglas Metcalf
Secretary

<PAGE>

Great Seal of the STATE OF CALIFORNIA

(Graphic Omitted)

SECRETARY OF STATE

I, BILL JONES, Secretary of State of the State of California, hereby
certify:

That the attached transcript has been compared with the record on file in
this office, of which it purports to be a copy, and that it is full, true and
correct.

IN WITNESS WHEREOF, I execute this certificate and affix
the Great Seal of the State of California this

NOV 12 1998

/S/ Bill Jones
------------------
Bill Jones, Secretary of State

<PAGE>

State of Delaware

Office of the Secretary of State PAGE 1

I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
MERGER, WHICH MERGES:

"WEST COAST MINES, Inc. A CALIFORNIA CORPORATION,

WITH AND INTO "DYNARESOURCE, INC." UNDER THE NAME OF "DYNARESOURCE,
INC.", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE 0F
DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE SECOND DAY OF NOVEMBER, A.D.
1998, AT 9 O'CLOCK A.M.

A FILED COPY 0F THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER 0F DEEDS

/S/ Edward J. Freel
- ------------------------
Edward I. Freel, Secretary of State

AUTHENTICATION. 9392765

DATE: 11-06-98

<PAGE>

STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED O9:00 AM 12/02/1998
981422213 - 2826546

CERTIFICATE OF MERGER

The undersigned do hereby state and certify as follows:

1. The Constituent Corporations are: DynaResource, Inc. (the "Acquiring
Corporation"); a Delaware Corporation; and West Coast Mines, Inc., (the
"Disappearing Corporation"), a California Corporation.

2. An Agreement of Merger between the Acquiring Corporation and the Disappearing
Corporation above, has been as of January 15, 1998, approved, adopted, excuted,
certified, and acknowledged; in accordance with Section 252 of the General
Corporation Laws of the State of Delaware.

3. The Acquiring Corporation is the surviving Corporation and its name shall be
DYNARESOURCE, INC.

4. No Amendments to the Certificate of Incorporation of the Acquiring
Corporation are required by the Agreement of Merger, and subsequent to the
Merger, the Certificate of Incorporation of the Acquiring Corporation shall be
its Certificate of Incorporation.

5. The executed Agreement of Merger is on file at the principle place of
business of the Acquiring Corporation, which is: The Towers at Williams Square,
5215 N. O'Conner Blvd., Suite 200, Irving, Texas 75039.

6. A copy of the executed Agreement of Merger will be furnished by the Acquiring
Corporation on request and without cost, to any Shareholder of the Disappearing
Corporation or to any Shareholder of the Acquiring Corporation.

7. The Disappearing Corporation's Capitalization consists of 50,000,000
Authorized Shares of $.0001 Par Value Common Stock.

Each of the undersigned do hereby declare under the Penalty of Perjury, that he
signed the foregoing Certificate in the Official Capacity set forth under his
Signature below; and that the statements set forth in this Certificate are true
and accurate of his own knowledge.

Signed as of February 3, 1998. DYNARESOURCE, INC.

/S/ K.D. Diepholz
------------------
President

EXHIBIT "1.7"
DYNARESOURCE, INC.
"ARTICLES OF INCORPORATION"

State of Delaware

Office of the Secretary of State

I, EDWARD J. FREEL, SECRETARY OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE
ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF
"DYNARESOURCE, INC.", FILED IN THIS OFFICE ON THE EIGHTH DAY OF DECEMBER, A.D.
1997, AT 9 O'CLOCK A.M.

GREAT SEAL OF THE STATE OF DELAWARE

(Graphic Omitted)

SEAL OF DELAWARE SECRETARY'S OFFICE
(Graphic Omitted)

/S/ Edward J. Freel
- ----------------------------------
Edward J. Freel, Secretary of State

AUTHENTICATION: 8795882
DATE: 12-08-97

<PAGE>

CERTIFICATE OF INCORPORATION

DYNARESOURCE, INC.

The undersigned, a natural person of the age of eighteen years or more,
acting as the Incorporator of a corporation under the Delaware Corporation Laws,
hereby adopts the following Articles of incorporation for such corporation:

ARTICLE I

The name of the corporation Is Dynaresource, Inc.

ARTICLE II

The address of the corporation's initial registered office is 1013
Centre Road, Wilmington, Delaware, and the name of the corporation's
Initial registered agent at such address is Corporation Service
Company, in New Castle County.

ARTICLE III

The purpose or purposes for which the corporation is organized shall be
and include the transaction of any or all lawful business for which
coporations may be incorporated under the General Corporation Law of
the State of Delaware.

ARTICLE IV

The corporation shall have authority to issue fifty million
(50,000.000) shares of its common stock each having a par value of
$.0001. Fully paid common shares of the corporation shall not be
liable for further call or assessment. The authorized common shares of
the corporation shall be Issued at the discretion of the Board of
Directors of the corporation.

Page 1

<PAGE>

ARTICLE V

The name and address of the incorporator of the corporation is James J.
Panipinto, 10440 N. Central Expressway, Ste. 1440, Dallas, Texas 75231.
The powers of the incorporator are to terminate upon the filing of this
Certificate of Incorporation.

ARTICLE VI

The names and mailing addresses of the persons who are to serve as
directors until the first annual meeting of stockholders or until (a)
his successors have been elected and qualified, as provided In the
Bylaws of the corporation, or (b) his earlier death or resignation is
as follows:

Name Mailing Address

Douglas Metcalf 46 Lake Shore Drive North
Westford, Massachusetts 01886

Koy W. (K.D.) Diepholz 5215 Williams Square Ste. 200
Irving, Texas 75039

Melvin E. Tidwell 4804 Pickadilly Place
Tyler, Texas 75703

Wayne C. Henderson 5506 Lafayette Lane
Frisco, Texas 75035

ARTICLE VII

The period of the corporations duration is perpetual.

ARTICLE VIII

The right to accumulate votes in the Election of directors, and/or
cumulative voting by any shareholder of the corporation, is hereby
expressly denied.

Page 2

<PAGE>

ARTICLE IX

The right to preemptive rights to acquire additional, unissued, or
treasury shares of the corporation, or securities of the corporation
convertible into or carrying a right to subscribe to or acquire
additional shares of the corporation is hereby expressly denied.

ARTICLE X

All of the corporation's directors and officers and former directors
and officers and all persons who may have served at the corporation's
request as a director or officer of another corporation in which the
corporation is a creditor or substantial shareholder, shall be
indemnified against expenses actually and necessarily incurred by them
in connection with the defense of any action, suit or proceeding, in
which they, or any of them, are made parties, or a party by reason of
being or having been directors or officers or a director or officer of
the corporation, or of such other corporation, except in relation to
matters as to which any such director or officer or former director or
officer shall be adjudged in such action, suit or proceeding to be
liable for negligence or misconduct. The foregoing right to indemnity
shall include reimbursement of the amounts and expenses paid or
incurred in settlement thereof or a plea of nolo contendere (or other
plea of substantially the same import and effect) which, in the opinion
of counsel for the corporation, appears to be in the interest of the
corporation. Such indemnification shall not be deemed exclusive of any
other rights to which those indemnified may be entitled by law or under
any bylaws, agreement, vote of stockholders or otherwise.

ARTICLE XI

No contract or other transaction between the corporation and any
person, firm; association or corporation and no act of the
corporation shall, in the absence of fraud, be invalidated or in any
way affected by the fact that any of the directors of the corporation
are pecuniarily or otherwise interested, directly or indirectly, in
such contract, transaction or act, or are related to or interested in
such person, firm, association or corporation as a director,
shareholder, officer, employee, member or otherwise any director so
interested or related who is present at any meeting of the Board of
Directors or committee of directors at which action on any such
contract, transaction or act is taken may be counted in determining
the presence of a quorum at such meeting and may vote at such meeting
with respect to such contract, transaction or act with like force and
effect as if he or she were not so interested or related. No director
so interested or related shall, because of such interest or
relationship, be disqualified from holding his or her offiee or be
liable to the corporation or to any shareholder or creditor thereof
for any loss incurred by the corporation under or by reason of such
contract, transaction or act, or be accountable for any gains or
profits he may have realized therein.

Page 3

<PAGE>

THESE ARTICLES OF INCORPORATION OF DYNARESOURCE, INC. ARE HEREBY EXECUTED this
December 5, 1997.

/S/ James Panipinto
- -------------------
James J. Panipinto
Incorporator

STATE OF TEXAS
COUNTY OF DALLAS

THIS INSTRUMENT WAS ACKNOWLEDGED before me J. PANIPINTO, on this December 5,
1997

/S/ M.L. Hilberth
- -----------------
Notary Public, State of Texas

(Notary Stamp)

================================================================================

ORGANIZATIONAL RESOLUTIONS
OF THE BOARD OF DIRECTORS OF
DYNARESOURCE, INC.

The undersigned, being each of the duly and validly constituted
directors listed in the Certificate of Incorporation of DynaResource, Inc., a
Delaware corporation (hereinafter referred to as the "Corporation"), acting
pursuant to authority granted by the Delaware General Corporation Act, hereby
consents that, when the undersigned has executed this consent or an exact
counterpart thereof, the resolutions hereinafter set forth shall be deemed to
have been adopted to the same extent and with the same force and effect as if
adopted at a formal meeting of the Board of Directors of the Corporation, duly
called, noticed and held for the purpose of acting upon proposals to adopt such
resolutions:

Articles of Incorporation

RESOLVED, that the duplicate original of the Certificate of
Incorporation as filed with the Secretary of State of Delaware on
December 7,1997, and the evidence of such filing be inserted in the
minute book of this Corporation; and

Minute Book; Bylaws; Stock Certificate; Corporate Seal

RESOLVED, that the Bylaws submitted to the Board of Directors of this
Corporation on this date are hereby adopted as and for the Bylaws of
this Corporation, and that the Secretary of this Corporation is hereby
instwcted to cause the same to be inserted in the minute book of the
Corporation; the Secretary is further ordered to certify a copy of
those Bylaws and maintain them in the principal office of the
Corporation for the transaction of its business, open for inspection by
the shareholders at all reasonable time during office hours;
and

Page 1

<PAGE>

RESOLVED, FURTHER, that the Corporation shall maintain, as part of
its corporate record, a minute book which shall include, but not
limited to, a record of the Corporation's Articles of Incorporation and
amendments thereto, its Bylaws and amendments thereto, minutes of all
meetings of its directors, and minutes of all meetings of its
shareholders; the time and place of such meetings, whether a meeting
was regular or special, and if special, how the meeting was authorized,
the notice given, the names of those present at directors' meetings,
the number of shares present or represented at shareholders' meetings,
and the proceedings at the meetings; and

RESOLVED, FURTHER, that the form of stock certificates of the
Corporation shall be in substantially the form as those previously
issued by West Coast Mines, Inc., together with such changes as shall
be reasonably required to reflect the name of the Corporation, its
state of incorporation and the par value of the stock, all as shall be
acceptable to the President of the Corporation with the advice of
counsel; and

RESOLVED, FURTHER, that the stock certificates shall be consecutively
numbered beginning with Number 1; that the certificates shall be issued
only when the signatures of the President and Secretary, or a facsimile
thereof, and the corporate seal or a facsimile, are affixed thereto or
impnnted thereon; that each certificate shall state on its face the
name of the person to whom the shares representing the certificate are
issued, the number and class of shares and the designation of the
series, if any, that the certificate represents, the par value of each
share represented by the certificate or the fact that the shares are
without par value, that the corporation is organized under the laws of
Texas; and that the certificates shall set forth in full or in summary
form, or shall incorporate by reference, such statements as are
required by the Articles of Incorporation or the Delaware General
Corporation Laws.

RESOLVED, FURTHER, that the seal affixed at this place is hereby
adopted as the official seal of the Corporation; and

Page 2

<PAGE>

Election of Officers

RESOLVED, that the following persons are hereby elected to be officers
of the Corporation, to hold the office set opposite their respective
names for a period of one year from the date hereof and for so long
thereafter until their respective successors are chosen and qualified,
or until their earlier death, resignation or removal:

Chairman, President & CEO Koy W. (K. D.) Diepholz
Vice President - Mineral Properties Wayne Henderson
Vice President - Investor Relations Brad J. Saulter
Secretary Douglas W. Metcalf
Treasurer Koy W. (K. D.) Diepholz

Issuance of Stock

RESOLVED, that the offers of the following person(s) (hereinafter
called the "Purchaser(s)") to purchase the number of shares of the
authorized and unissued $0.0001 par value common capital stock of the
Corporation set opposite the name(s) of such Purchaser(s), for the
amount set opposite the name(s) of such Purchaser(s):

PURCHASER NO. SHARES AMOUNT

West Coast Mines 1000 $1.00 dollar per share

is/are hereby accepted, such offer(s) being, in the judgment of the
Board of Directors of the Corporation, fair and adequate consideration;

RESOLVED, FURTHER, that the President and Secretary of the Corporation
are hereby instructed, upon receipt of payment from the aforesaid
Purchaser(s), to prepare, execute and deliver to such Purchaser(s)
certificates for the number of shares of the Corporation's $0.01 par
value common capital stock set forth opposite such Purchaser(s)'
name(s) above; and

Fiscal Year

RESOLVED, that the fiscal year of the Corporation shall be the twelve
month period ending December 31 of each calendar year; and

Page 3

<PAGE>

Bank Account

RESOLVED, that the officers of the Corporation are hereby authorized to
select such bank or banks, hereinafter collectively referred to as the
"Bank," as depository of the funds of the Corporation and to establish
and maintain, in the name of and on behalf of the Corporation, such
demand deposit accounts with the Bank as may be necessary to conduct
the business of the Corporation, subject to such terms and conditions
that the officers may from time to time agree to with the Bank; that in
connection with the establishment of such accounts, the officers may
execute the Bank's regular corporate resolution forms which are
incorporated by reference in and made a part of this resolution; and
the Secretary is hereby directed to attach a copy of each executed
corporate resolution form to these resolutions; and

RESOLVED, FURTHER, that the Secretary of the Corporation is hereby
authorized and directed to certify to the Bank that such resolutions
have been duly adopted and are in conformity with the Articles of
Incorporation and Bylaws of the Corporation, to verify to the Bank the
names and specimen signatures of the present officers of the
Corporation authorized to sign on such accounts, and if and when any
new officer is elected or appointed, to verify the fact of that change
and the name and specimen signature of each new officer duly authorized
by the Board of Directors to sign on such accounts; and

Corporate Office

RESOLVED, that offices of the Corporation be established and maintained
at Towers at Williams Square, 5215 N. O'Connor Blvd., Ste 200, Irving,
TX 75039.

Transaction of Business

RESOLVED, that the officers of the Corporation are hereby directed to
obtain, in the name of the Corporation, such licenses and tax permits
as may be required for the conduct of the business of the Corporation
by any federal, state, county or municipal governmental statute,
ordinance or regulation, and to do all things necessary or convenient
to qualify the Corporation to transact its business in compliance with
the laws and regulations of any appropriate federal, state, or
municipal governmental authority; and

RESOLVED, that the Treasurer of the Corporation is hereby authorized to
pay all charges and expenses incident to or arising out of the
organization of the Corporation and to reimburse any person who has
made any disbursement therefor; and

RESOLVED, that the Corporation recognizes that James J. Panipinto has
acted as incorporator of the Corporation solely for the purpose of
incorporating the Corporation, and as an accommodation to the
Corporation and that the Corporation, for such consideration and
action, hereby agrees to indemnify and hold harmless James J. Panipinto
from and against any and all claims and liabilities of any kind which
may be brought against him by reason of his acting on behalf of the
Corporation in such capacities; and such indemnification is provided
for pursuant to the provisions of the Texas Business Corporation Act.

DATED as of January 15, 1998.

/S/ Douglas Metcalf

/S/ Koy W. (K. D.) Diepholz

/S/ Melvin E. Tidwell

/S/ Wayne C. Henderson

Page 5

EXHIBIT "1.8"
DYNARESOURCE, INC.
"ARTICLES OF AMENDMENT"

State of Delaware
Office of the Secretary of State

I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "DYNARESOURCE, INC.", FILED IN THIS OFFICE ON THE THIRTENNTH DAY OF
FEBRUARY, A.D. 1998, AT 9 O'CLOCK A.M.

Great Seal of the State of Delaware
[graphic omitted]

/S/ Edward J. Freel, Secretary of State
- ---------------------------------------
AUTHENTICATION: 8928486
DATE: 02-19-98

<PAGE>

FIRST AMENDMENT TO CERTIFICATE OF INCORPORATION

DYNARESOURCE, INC.
(PURSUANT TO SECTION 241)

1. Article IV of the Certificate of Incorporation of DynaResource, Inc.,
filed pursuant to the Delaware Corporation Laws on December 8, 1997.
has been amended in its entirety, as follows:

The corporation shall have authority to issue twelve million
five hundred thousand (12,500,000) shares of its common stock
each having a par value of $.O1. Fully paid common shares of
the corporation shall not be liable for further call or
assessment The authorized common shares of the corporation
shall be issued at the discretion of the Board of Directors of
the corporation.

2. DynaResource, Inc. has not received any payment for any of its stock.

3. The amendment to the Certificate of Incorporation was adopted by a
majority of the Directors named in the Certificate of Incorporation.

EXECUTED this 02-06-98
/S/ K.D. Diepholz
------------------
President

STATE OF TEXAS ss.
ss.
COUNTY OF DALLAS ss.

THIS INSTRUMENT WAS ACKNOWLEDGED before me by K.D. Diepholz, on this
February 6, 1998, who being known to me stated that he was President of
DynaResource, Inc., that this instrument was the act and said of said
corporation, and that the facts set forth above are true.

/S/ Janice E. Haley
---------------------------------
Notary Public, State of Texas
Comm. Exp. 05-16-99

Notary Stamp

EXHIBIT "2.1"
DYNARESOURCE, INC.
"PANSY LEE LEASE AGREEMENT"

MINERAL EXPLORATION LEASE
WITH OPTION TO PURCHASE

THIS AGREEMENT, is entered into this 23rd day of January 1998 by and
between: West Coast Mines, Inc., a California corporation, Towers at Williams
Square, 5215 N. O'Connor Road, Suite 200, Los Colinas/Irving, TX 75039
hereinafter called LESSOR (whether one or more); and NEWCREST RESOURCES, INC., a
Colorado corporation, 1536 Cole Boulevard, Suite 140, Golden, Colorado 80401,
hereinafter called NEWCREST:

WITNESSETH:

1. That LESSOR, for and in consideration of the sum of $50,000.00
(the "Initial Payment") in hand paid, and of the covenants and agreements
hereinafter contained, has this day granted, leased and let and by these
presents does hereby grant, lease and let unto NEWCREST the exclusive right to
explore for minerals, on the terms and conditions hereinafter set forth, in,
upon and under the following described land situated in Humboldt County, Nevada,
to wit:

Township 36 North, Range 36 East MDB&M

Section 1: Lots 1, 2, 3, 4, S1/2N1/2, Nl/2S1/2, Sl/2SW1/4 TAX
PARCEL NO. 05-361-06

containing 555.40 acres, more or less, hereinafter called the
"Subject Property".

2. This lease shall remain in force for a term of five (5) years from
the date hereof, provided that NEWCREST shall make and tender to the LESSOR the
following annual rental payments:

a. On the first anniversary of this lease, the sum of $100,000.00

b. On the second anniversary of this lease, the sum of $150,000.00

c. On the third anniversary of this lease, the sum of $250,000.00

d. On the fourth anniversary of this lease, the sum of $250,000.00

Failure of NEWCREST to timely pay any rental payment when due shall,
upon ten days prior notice from LESSOR and the failure thereafter of NEWCREST to
make such payment within ten days after receipt of notice, terminate this lease.
NEWCREST shall have no other liability for failure to make rental payment.
Termination of this lease shall relieve NEWCREST of any obligations for payments
of any nature becoming due after the date of termination.

3. NEWCREST shall have the exclusive right for itself and its
employees and contractors to: (a) enter upon and have possession of the Subject
Property, (b) carry out, at its expense, exploration (including road building),
sampling, testing, development and any other studies on the Subject Property,
(c) use any water to which LESSOR has rights or which is appropriated or
otherwise acquired by NEWCREST for its operations on the Subject Property; and
(d) remove from the Subject Property reasonable quantities of rock, ores,
minerals and metals and transport the same for the purpose of sampling
(including bulk sampling), testing and assaying, provided that NEWCREST shall
not conduct commercial mining operations under the terms of this lease. NEWCREST
shall comply with all applicable laws, rules and regulations, including
applicable bonding requirements, and shall carry out its operations in a good
and workmanlike manner in accordance with generally accepted exploration
practices. NEWCREST shall maintain insurance with a reputable insurance carrier
in the amounts customary in the mining industry for projects comparable to the
operations hereunder.

<PAGE>

4. NEWCREST, with the co-operation of LESSOR as required, shall be
responsible for obtaining all appropriate permits or authorizations prior to
commencement of work and shall be responsible for performing any required
reclamation resulting from its work on the Subject Property. NEWCREST shall have
no responsibility for reclamation of, or any form of environmental response or
remediation with respect to, any disturbances or other conditions existing on
the Subject Property as of the date hereof. NEWCREST on behalf of itself and all
of its agents, representatives, employees, licensees, contractors, invitees,
guests, vendors, related or affiliated companies, sublessees and/or assigns
(collectively "NEWCREST) agrees to indemnify and save LESSOR harmless of and
from any and all liability, damage, expense, cause of action, suits, claims or
judgments resulting from: (a) injury to person or property which is proximately
caused by NEWCREST'S possession of or work on the Subject Property including,
without limitation, any act, failure to act, or negligence of NEWCREST; or (b)
the placement of any hazardous materials or environmental wastes on the Subject
Property by NEWCREST. NEWCREST, at its sole cost and expense, shall perform any
reclamation which may be required by any governmental or quasi-governmental
agency and indemnify LESSOR from any damage, loss or injury which may be
incurred as a result of the presence of such substance on the Subject Property.

5. While this Lease remains in force and effect, NEWCREST shall within
sixty (60) days of the last day of each of the first three quarters of each
calendar year furnish LESSOR with a report which summarizes NEWCRESTS activities
on the Subject Property during that quarter. No documents containing scientific
or technical data shall be included with these reports. With the quarterly
report furnished by NEWCREST within sixty (60) days after the last day of each
calendar year (the fourth quarter report), NEWCREST shall furnish LESSOR one
copy of each document in NEWCREST'S possession, exclusive of interpretative
material or opinions, not previously furnished to LESSOR that contains
scientific or technical data generated by NEWCRESTS exploration operations on
the Subject Property during that calendar year. NEWCREST shall not be obligated
to furnish data obtained on adjoining properties. LESSOR agrees to and hereby
indemnifies and holds NEWCREST harmless from and against any and all losses,
claims or liabilities which may be imposed upon or asserted against NEWCREST (by
LESSOR or by any other party or entity) on account of or arising directly or
indirectly from reliance on the content or accuracy of the reports or documents
furnished to LESSOR by NEWCREST under this section. Each report and all
accompanying information, data and documents and all information otherwise
provided by NEWCREST to LESSOR under this Lease shall be treated as confidential
by LESSOR and the contents thereof shall not be disclosed by LESSOR to any third
party other than LESSORS legal advisors and technical consultants without
NEWCRESTS prior written consent; provided, however, that such legal advisors and
technical consultants shall agree in writing to keep such information
confidential as provided herein.

6. LESSOR represents and warrants to NEWCREST that:

a. LESSOR has not transferred or encumbered any interest whatsoever in
the Property by any document which does not appear in the public real property
records of Humboldt County, Nevada;

b. Except for this Lease, LESSOR is not a party to any existing oral or
written contract of any kind (recorded or unrecorded) which does or could have
any impact whatsoever with regard to record, possessory, legal or equitable
title to the Subject Property and/or the exploration of the Subject Property;

c. There are no pending or threatened actions, suits, claims or
proceedings with respect to the Subject Property;

<PAGE>

d. LESSOR owns one hundred percent (100%) of the entire and undivided
record title to the Subject Property, free and clear of any defects, liens or
encumbrances whatsoever.

7. NEWCREST represents and warrants to LESSOR and LESSOR represents and
warrants to NEWCREST, that:

a. That party has the capacity to enter into and perform this Lease and
all transactions contemplated herein and that any required corporate and other
actions necessary in order to authorize entry into and performance of this Lease
have been properly taken;

b. This Lease has been duly executed and delivered by that party and is
valid and binding upon that party in accordance with its terms;

c. The person or persons executing this Lease as or on behalf of that
party is or are fully authorized to do so; and

d. That party will not breach any other agreement or arrangement by
entering into or performing this Lease.

8. OPTION TO PURCHASE. At any time while this lease is in effect,
NEWCREST may, by notice to LESSOR, elect to purchase all of LESSOR'S right,
title and interest in and to the Subject Property for a total purchase price of
$2,000.000.00. The price shall be exclusive of and in addition to the Initial
Payment and all of the rental payments provided for in Section 2 of this lease.
Any rentals not paid at the time NEWCREST elects to purchase LESSOR'S interest
shall be paid in full along with the purchase price. The purchase of the
property shall be consummated no later than thirty days after the date of
receipt by LESSOR of the notice from NEWCREST exercising the Purchase Option, at
a time and place agreed upon by the parties. At the closing of the purchase of
the Subject Property, NEWCREST shall deliver to LESSOR $2,000.000.00 plus the
amount of any unpaid rentals in immediately available funds, and LESSOR shall
deliver to NEWCREST a deed conveying to NEWCREST all of LESSOR'S right, title
and interest in and to the Subject Property together with all rights-of-way,
easements, improvements, structures, fixtures and all other property rights
appurtenant to and/or owned or used by LESSOR in connection with the described
real property, and any right, title and interest in and to any adjoining or
adjacent roads or rights-of-way, all vacated roads and rights of way, all strips
and gores of land adjoining the land, and all water and water rights appurtenant
to the property unless otherwise specifically excluded; subject to and provided,
however, that LESSOR shall retain and reserve for itself a 2-1/2% Gross
Production Royalty, as defined in Exhibit A attached hereto, and paid in the
manner described in Exhibit B attached hereto, on any minerals sold by Newcrest
that were mined within the surface boundaries of the Subject Property extended
downward vertically. As of the time of the closing, the Subject Property shall
be free and clear of all liens and encumbrances. NEWCREST shall pay all closing
costs. Upon the closing of the purchase of the Subject Property, this Lease
shall automatically be terminated effective as of the date of the closing,
provided, however, that all representations and warranties made by the LESSOR
hereunder shall survive closing and delivery of the deed.

9. While this lease is in effect, LESSOR shall timely pay all taxes
and assessments levied on the Subject Property by any state or local
governmental authority, and shall pay when due all encumbrances, liens or other
charges affecting or relating to the Subject Property. If LESSOR fails to make
any of these payments when due, NEWCREST may, but shall not be obligated to,
make them on behalf of LESSOR and, if paid by NEWCREST, NEWCREST shall receive a
corresponding credit toward the purchase price at closing.

10. All notices, payments, consents, requests, demands, waivers or
other communications required or permitted by the terms of this Lease shall be
in writing, and each such communication shall be either personally delivered or

<PAGE>

placed in the United States certified mail, postage prepaid, return receipt
requested. Each communication shall be either delivered or mailed to NEWCREST or
to LESSOR (as appropriate) at their respective addresses for notice set forth in
the initial paragraph of this Lease.

11. The rights and obligations of the parties hereto shall be fully
assignable, provided, however, that the assigning party shall first obtain the
prior written consent to the assignment by the other party, and provided further
that the other party shall not unreasonably withhold such consent. Not
withstanding the foregoing, NEWCREST may assign its rights hereunder only to an
affiliate of NEWCREST or a financially and technically capable and responsible
party. "Affiliate" means any person, partnership, joint venture, corporation or
other form of enterprise which directly controls, is controlled by, or is under
common control with NEWCREST. For purposes of the preceding sentence, "control"
means possession, directly or indirectly through one or more intermediaries, of
the power to direct or cause direction of management and policies through (i)
the legal or beneficial ownership of voting securities or membership interests;
(ii) the right to appoint managers, directors or corporate management; (iii)
contract; (iv) operating agreement; (v) voting trust; or otherwise. It is the
intention of the parties that a "financially and technically capable and
responsible party' shall be a partnership, joint venture, corporation or other
form of enterprise which is able to fund and perform the professional evaluation
and development of the Subject Property. For example, and without limitation, a
party of such significant corporate stature such as Newmont Gold Company,
Homestake Mining Company, Placer Dome Inc., or Barrick Gold Corporation is an
acceptable assignee.

12. The parties agree to execute and deliver such additional or
further formal assurances or other written documents, in proper and recordable
form, as may be reasonably necessary to carry out the intent, purposes and terms
of this Lease including, without limitation, a memorandum of this Lease to be
recorded in the official records of Humboldt County, Nevada. LESSOR shall not
make this Lease of public record without NEWCREST'S prior written consent. If
NEWCREST does not exercise the Option to Purchase, or upon termination of this
Lease, NEWCREST shall deliver to LESSOR a quitclaim deed releasing the recorded
memorandum.

13. This Lease shall inure to the benefit of, and be binding upon and
enforceable by NEWCREST and LESSOR and their respective successors and assigns.

IN WITNESS WHEREOF, the parties have executed this Lease effective as
of the day and year first above written.

NEWCREST: LESSOR:
WEST COAST MINES, INC., a
California corporation

By: /S/ K.D. Diepolz
----------------------------
K. D. Diepholz, Chairman/CEO

STATE OF COLORADO )
) ss
COUNTY OF JEFFERSON)

The foregoing instrument was acknowledged before me on February 12
1998, by R.W. BARKER as President of Newcrest Resources, Inc., a Colorado
corporation.

Witness my hand and official seal.
My Commission expires: 6/20/98.

/S/ Nancy H. Sotak
---------------------
Notary Public

STATE OF TEXAS )
) ss
COUNTY OF DALLAS)

The foregoing instrument was acknowledged before me on 2/3/1998 by K.D.
Diepholz, Chairman/CEO of West Coast Mines, Inc., a California corporation.

Witness my hand and official seal.
My Commission expires: 4/13/2001

/S/ Cindy L. Booker
--------------------
Notary Public

<PAGE>

EXHIBIT A: GROSS PRODUCTION ROYALTY DEFINITION

The term "Gross Production Royalty" ("GPR") as used in the Lease shall
mean the gross proceeds received by NEWCREST from the sale of minerals, or
products derived from minerals, from the Property after deducting the following:

(a) The cost of transporting mineral product from the
concentrator to a smelter, refiner or other place
of treatment, provided that the purpose of the
transportation cost is to transport a concentrate
containing recoverable gold to a smelter for
treatment. No deduction for transportation shall be
allowed with respect to the transfer or conveyance
of gold dore.

(b) All state and federal production taxes, severance
taxes and sales, privilege and other taxes measured
by production or the value of production.

The GPR will be based upon the Sales Price of the specific metals and
commodities as defined below:

(a) Refined gold (gold meeting the specifications of the
London Bullion Market Association) shall be deemed to have been sold during the
month when it is produced, and the Sales Price thereof shall be deemed to be an
amount calculated by multiplying the number of produced ounces by the average
during the same month of the London Bullion Market Associates afternoon gold
price fixings for one ounce of refined gold;

(b) Refined silver (silver meeting the specifications
established for the New York Silver Price published by Handy & Harman) shall be
deemed to have been sold during the month when it is produced, and the Sales
Price thereof shall be deemed to be an amount calculated by multiplying the
number of produced ounces by the average during the same month of New York
Silver spot price quotations published by Handy & Harman for one ounce of
refined silver:

(c) In the case of any minerals other than gold or silver,
Sales Price means the amount calculated by multiplying the number of units of
the refined metal or other mineral product produced during any month by the
average of the daily spot prices during the same month as quoted by the London
Metals Exchange for one unit of that refined metal or mineral product; and

(d) Sales Price shall be determined as set forth in subparts
(a), (b) and (C) above, irrespective of any actual arrangements for the sale or
other disposition of minerals by NEWCREST, specifically including but not
limited to forward sales, futures trading or commodities options trading, and
any other price hedging, price protection or speculative arrangements involving
the possible delivery of gold, silver or other minerals from the Subject
Property. If, for any reason, published prices for minerals produced from the
Subject Property are not available from the sources set forth above, the parties
shall select such other published commodity exchange, producer, trade
publication or other listing as will fairly reflect the spot price at which
sales of such commodities are being effected at the time of sale by NEWCREST.

<PAGE>

EXHIBIT B: GROSS PRODUCTION ROYALTY PAYMENT PROCEDURES

1. Computation of Royalty. If and each time that minerals mined from
the Subject Property are sold by NEWCREST, NEWCREST shall calculate the Gross
Production Royalty ("GPR") realized by NEWCREST in connection with the sale. The
GPR so calculated shall then by multiplied by the Applicable Percentage and
NEWCREST shall pay LESSOR the resulting amount. LESSOR shall have no right
whatsoever to take minerals or royalty "in kind".

2. Treatment and Sale. NEWCREST shall have the right (but not the
obligation) to concentrate, mill, smelt, refine, upgrade or otherwise process or
beneficiate minerals mined from the Subject Property, at locations on or off the
Subject Property. NEWCREST shall not be liable for any values lost in processing
under sound processing practices and procedures, and no royalty shall be payable
to LESSOR with respect thereto. No earned mineral production royalty shall be
payable to LESSOR for or with respect to reasonable quantities of minerals which
are not sold by NEWCREST but are used by NEWCREST for assaying, treatment
amen-ability, metallurgical or other analytical processes or procedures.

3. Commingling. NEWCREST shall have the right of mixing or
commingling, at any location and either underground or at the surface, any
minerals mined from the Subject Property with any ores, metals, minerals, or
mineral products mined from other lands, provided that NEWCREST shall determine
the weight or volume of, sample and analyze all such ores, metals, minerals and
mineral products before the same are so mixed or commingled. Any such
determination of weight or volume, sampling and analysis shall be made in
accordance with sound and generally accepted sampling and analytic practices and
procedures. The weight or volume and the analysis so derived shall be used as
the basis of allocation of earned mineral production royalties payable to LESSOR
hereunder in the event of a sale by NEWCREST of materials so mixed or
commingled.

4. Statements and Payments. Each earned mineral production royalty
payment due to LESSOR hereunder shall be made within thirty days after the end
of the calendar quarter during which minerals are sold. Each such payment shall
be accompanied by an itemized statement setting forth all facts and figures
necessary in order to verify the accuracy of the amount of the payment. Each
payment due to LESSOR hereunder shall be made by a single check. Such payments
shall be made payable to WEST COAST MINES, INC. or to such other persons or
entities as may be designated in writing by LESSOR as the payees for purposes of
payments due to LESSOR under this Lease. Anything to the contrary in this Lease
not with-standing, NEWCREST shall not be in default hereunder for failure to
make any payment to LESSOR in timely fashion if LESSOR fails or refuses to give
NEWCREST written notice designating the persons or entities to be the payees
named on each and every check to be sent to LESSOR by NEWCREST hereunder, and
NEWCREST shall have no duty with respect to the disbursement or application of
any payments to LESSOR after such payments are made in accordance with this
Paragraph 4.

5. Audit. LESSOR shall have a period of ninety days after the receipt
by LESSOR of each statement provided for in Paragrpah 4 of this Exhibit B to
give NEWCREST notice of any objection by LESSOR thereto. If LESSOR fails to
object to a particular statement within ninety days after the receipt by LESSOR
thereof, then, subject only to the provisions of Paragraph 6 ("Adjustments") of
this Exhibit B the accuracy of such statement and the amount of any payment
transmitted therewith shall be conclusive with respect to LESSOR. If LESSOR
objects to the accuracy of a particular statement or the amount of the payment
transmitted thereby within ninety days after the statement is received by
LESSOR, a certified public accountant mutually acceptable to the parties and
retained by LESSOR may promptly audit NEWCREST's relevant books and records at
an office selected by NEWCREST and during NEWCREST's normal business hours. Any
such audit shall be made at the sole expense of LESSOR if the audit determines
that the payment in question was accurate to within three percent (3%). Any such
audit shall be made at the sole expense of NEWCREST if the audit determines that
the payment in question was inaccurate by more than three percent (3%). In any
case, the payment in question shall be adjusted to reflect the results of the
audit.

<PAGE>

6. Adiustments. Any charges, costs or expenses or any adjustments
thereto which are actually made and given to NEWCREST by a purchaser, shipper,
processor or other creditor that were not taken into account in a statement to
LESSOR which accompanied a preceding earned mineral production royalty payment
shall be taken into account in determining the amount of the next earned mineral
production royalty payment, but no such charges or adjustments shall otherwise
affect the conclusiveness of preceding statements or payments.

<PAGE>

MEMORANDUM MINERAL EXPLORATION LEASE

WITH OPTION TO PURCHASE

THIS MEMORANDUM MINERAL EXPLORATION LEASE WITH OPTION TO PURCHASE is
made and entered into effective as of January 23, 1998,

BY AND AMONG

WEST COAST MINES, INC.,
a California corporation,

Towers at Williams Square,

5215 N. O'Connor Road, Suite 200,
Los Colinas/Irving, TX 75039
(referred to below as "LESSOR")

AND

NEWCREST RESOURCES, INC.,
a Colorado corporation

1536 Cole Boulevard, Suite 140
Golden, Colorado 80401
Phone: 303-239-8796
Fax: 303-239-9180

(referred to below as "NEWCREST")

1. Definitions For all purposes of this Memorandum, the following
terms shall have the definitions specified in this Section 1:

(a) "Effective Date" means the date set forth in the initial
paragraph of the Memorandum;

(b) "Lease" means that certain Mineral Exploration Lease with
Option to Purchase between LESSOR and NEWCREST dated as of the Effective Date
for the Property for which this Memorandum is to give record notice.

(d) "Option to Purchase" means the option to purchase the
Property granted to Newcrest in Section 4 of this Memorandum and in Section 7 of
the Lease;

2. Grant and Term of Lease For and in consideration of the mutual
covenants and conditions contained herein and in the Lease, the receipt and
adequacy as consideration whereof is hereby acknowledged by LESSOR, LESSOR has
leased and hereby leases the Property to NEWCREST on the terms and conditions
contained in the Lease. Unless sooner terminated as hereinafter provided, the
Lease shall remain in full force and effect for a term of five (5) years
beginning on the Effective Date and expiring on the fifth anniversary of the
Effective Date.

3. Exclusive Possession While the Lease is in force and effect, and
subject to all of the terms and conditions thereof, NEWCREST shall have the
exclusive right for itself and its employees and contractors to enter upon and
have possession of the Property.

4. Purchase Option At any time while the Lease is in effect, NEWCREST
may, by notice to LESSOR, elect to purchase all of LESSORS right, title and
interest in and to the Property at the price set forth in the Lease. At the
closing of the purchase of the Property, LESSOR shall deliver to NEWCREST a deed
conveying to NEWCREST all of LESSOR'S right, title and interest in and to the
Property free and clear of all liens and encumbrances, subject, however, to the
reservations contained in the Lease. Upon the closing of the purchase of the
Property, the Lease shall automatically be terminated effective as of the date
of the closing.

<PAGE>

5. Assignment/Binding Effect The respective rights and obligations of
LESSOR and NEWCREST hereunder shall be freely assignable, subject, however, to
the conditions contained in paragraph 11 of the Lease. The Lease shall inure to
the benefit of, and be binding upon and enforceable by, NEWCREST and LESSOR and
their respective successors and assigns.

6. Notice All notices, payments, consents, requests, demands, waivers
or other communications required or permitted by the terms of the Lease shall be
in writing, and each such communication shall be either personally delivered or
placed in the United States certified mail, postage prepaid, return receipt
requested. Each communication shall be either delivered or mailed to NEWCREST or
to LESSOR (as appropriate) at their respective addresses for notice set forth in
the initial paragraph of the Lease.

7. Additional Lease Terms Additional terms and conditions of the Lease
are contained in the unrecorded Lease. Nothing contained herein enlarges or
diminishes the respective rights and obligations of either NEWCREST or LESSOR
under their more comprehensive Lease. Information concerning the Lease may be
obtained from NEWCREST at the address for NEWCREST given above.

IN WITNESS WHEREOF, the parties have executed this Memorandum and the
Lease effective as of the day and year first above written.

LESSOR:

NEWCREST: WEST COAST MINES, INC., a
California Corporation

By: /S/ R.W. Barker By: /S/ K.D. Diepholz
- ----------------------------- --------------------------------
Typed name: R. W. BARKER K.D. DIEPHOLZ, Chairman/CEO
Title: President

STATE OF COLORADO )
) ss.
COUNTY OF JEFFERSON)

The foregoing instrument was acknowledged before me on February 12,
1998, R. W. BARKER as President of Newcrest Resources, Inc., a Colorado
corporation.

Witness my hand and official seal.
My Commission expires: 6/20/98

/S/ Nancy H. Sotak
-------------------
Notary Public

STATE OF TEXAS )
) ss.
COUNTY OF Dallas)

The foregoing instrument was acknowledged before me on 2/3/1998 by K.
D. Diepholz, Chairman/CEO of West Coast Mines, Inc., a California corporation.

Witness my hand and official seal.
My Commission expires: 4/13/2001

/S/ Cindy L. Booker
--------------------
Notary Public

<PAGE>

EXHIBIT A

Attached to and made a part of
Memorandum Mineral Exploration

Lease with Option to Purchase
dated January 23, 1998

The Property consists of the following described land situated in
Humboldt County, Nevada, to wit:

Township 36 North, Range 36 East MDB&M

Section 1: Lots 1, 2, 3, 4, S1/2Nl/2, Nl/2S1/2, S1/2SWl/4

TAX PARCEL NO. 05-361-06
containing 555.40 acres, more or less.

wcstrnenx. lse

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

NEWCREST RESOURCES, INC.
1536 COLE BLVD., SUITE 140 PH. 303-239-8796
GOLDEN, CO 80401

CHECK 3453

DATE February 13,1998

PAY TO THE West Coast Mines, Inc. $50,000.00
ORDER OF

Fifty thousand and no/100 ------------------------------ DOLLARS

/S/ R.W. Barker

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

DATE DESCRIPTION
2/13/98 Initial Payment

Mineral Exploration Lease with Option to Purchase Dated 1/23/98

1693-022 AMOUNT $50,000.00

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

RECEIPT

Received this 18th day of February, 1998, Newcrest Resources, Inc.
Check No. 3453 for $50,000.00 as full payment of the Initial Payment for that
certain Mineral Exploration Lease With Option to Purchase dated January 23, 1998
from WEST COAST MINES, INC. to Newcrest Resources, Inc., describing the
following land situated in Humboldt County, Nevada.

Township 36 North, Range 36 East M.D.B.&M.

Section 1: Lots 1, 2, 3, 4, S1/2N1/2, N1/2S1/2, S1/2SW1/4

Containing 550.40 acres

Assessor's Parcel No. 05-361-06

WEST COAST MINES, INC., a
California corporation

TIN: 94-1589426 By: /S/ K.D. Diepholz
---------------------------
K.D. Diepholz, Chairman/CEO

<PAGE>

September 29, 1998

Mr. Koy Diepholz
West Coast Mines, Inc.
Towers at Williams Square
5215 N. O'Conner Rd., Suite 200
Irving, Texas 75039

Dear Mr. Diepholz:

Accompanying this letter is a brief summary of our
activities on West Coast's Pansy Lee mine property
near Winnemucca, Nevada. A more comprehensive report
will be forthcoming later in the year.

If you have any questions please call either Bob
Barker or me at our office in Golden, Colorado.

Best regards,

/S/ Bob McCusker
-----------------
R. T. McCusker
Principal Geologist

<PAGE>

Newcrest Resources, Inc.

1536 Cole Blvd., Suite 140. Golden, CO 80401 U.S.A.
Phone: (303) 239-8796 Fax: (303) 239-9180

TO: Mr. Koy Diepholz/West Coast Mines, Inc.

FROM: Newcrest Resources, Inc.

DATE: September 29, 1998

SUBJECT: Pansy Lee Progress Report, Humboldt County, Nevada

Since finalizing the mining lease with West Coast Mines in January of 1998.
Newcrest has completed detailed geological mapping of Section 1, at a scale of
1:6,000 (1"=500'), conducted a grid soil and rock chip sampling program and
undertaken ground magnetics and time domain IP/resistivity surveys over the
entire project area. Reverse circulation drilling commenced on September 26 and
the first of three to four holes is currently in progress.

Analytical results for 639 soil samples have been received and plotted. Initial
soil sampling was conducted on a 200 ft 200 ft grid. Locally, this grid was
filled in at a 100 ft x 100 ft spacing. All soil samples were sieved to -10+80
mesh and analyzed for Au, Ag, trace and base metals using FA/AA and 32-element
ICP. By far the strongest Au values in soil form a large (1.600 ft x 1,800 ft)
coherent anomaly, as defined by the ~ 30 ppb Au, in an area centered 2,600 ft
northwest of the Pansy Lee mine.

Assay results were also received for 350 rock chip and mine dump samples. In
general, Au values ranged from <5 ppb to over 12 oz Au/t. The higher Au values
are closely associated with narrow zones of highly fractured and brecciated
rock.

Time domain and gradient array IP/resistivity, and ground magnetic surveys were
completed over the project area in late July. Results from the IP survey
indicate the presence of a large, broadly arcuate shaped chargeability anomaly
extending from well north of Gee Hill, southward along the west and southwest
flanks of GEE Hill.

Newcrest expects to drill three to four, 1,500-ft-deep RC holes to test a number
drill targets. These targets include a strong Au and coincident chargeability
anomaly in the NW part of Section 1, the complex structural zone in the vicinity
of the Pansy Lee mine, and an area near the summit of GEE Hill, where broadly
developed hydrothermal alteration occurs. Assay results for the first hole are
pending.

EXHIBIT "2.2"
DYNARESOURCE, INC.
"MINE OPERATING AGREEMENT"
"MOAG"

MINE OPERATING AGREEMENT

This Mine Operating Agreement (the "Operating Agreement") is made
effective as of August 19, 1998, between West Coast Mines, Inc. ("West Coast")
on the one hand and Minera Finisterre, S.A. de C.V. ("Minera" or "Finisterre")
and Golden Hemlock Explorations, Ltd. ("Golden") (collectively
"Finisterre/Golden") on the other hand. For and in consideration of the mutual
covenants contained in this Operating Agreement, and the forbearance of certain
actions, the sufficiency of which is expressly acknowledged and agreed to by the
parties hereto, the parties enter into this Agreement on the terms and
conditions set forth as follows:

RECITALS

WHEREAS, effective as of December 20, 1996, Dynacap/San Jose Resource
Group, L.L.C. ("Dynacap"), West Coast and Finisterre/Golden (collectively the
"Parties") entered into that certain Amended and Restated Loan Agreement (the
"Amended Loan Agreement") setting forth the terms and conditions of the Parties'
respective obligations relating to the Mine as that term is defined therein.
Dynacap has transferred and assigned all its right, title and interest in and to
the Amended Loan Agreement and in and to the Mine to West Coast. Golden has
acquired one hundred percent (100%) of Minera and/or the rights in and to one
hundred percent (100%) of Minera;

Finisterre/Golden has conducted exploration activities at the Mine and
otherwise undertook activities under the Amended Loan Agreement. Disagreements
between the Parties have arisen with respect to the scope of, the interpretation
of, and the performance under the Amended Loan Agreement;

Following the execution of the Amended Loan Agreement, West Coast has
contributed additional sums and consideration to the Mine in an amount not less
than $150,000.00 U.S. Dollars. Disagreements have arisen between the Parties
regarding the purpose and treatment of such payments;

In order to resolve the current disputes between the Parties and to
further progress the exploration, development and operation of the Mine, the
Parties desire to amend and restate the Amended Loan Agreement. West Coast and
Finisterre/Golden hereby further amend and restate the Amended Loan Agreement
and intend that the terms of this Operating Agreement as set forth herein shall
govern and control the obligations, responsibilities, duties and rights of the
Parties from this day forward.

<PAGE>

ARTICLE 1

DEFINITIONS

1.01 For purposes of this Agreement, the following definitions shall be
used:

(a) Available Cash at any point in time means (i) Cash Flow, plus (ii)
decreases in Cash Reserves (as defined in Section 1.01(e)), less (iii) Operating
Expenses, and less (iv) increases in Cash Reserves.

(b) Cash Flow for any period of time means any consideration without
limitation, whether cash, stock, other interests or anything of value, derived
from the Operation of the Mine.

(c) Operating Expenses for any period of time means subject to the
limitations expressed below, the costs, charges, expenses and disbursements
which Finisterre/Golden (or West Coast, as the case may be) shall directly incur
and pay in connection with development, maintenance, operation, management and
production of the Mine, as approved by the Operating Committee (defined in
Article 6 below) and determined in accordance with generally accepted accounting
principles consistently applied. Any indebtedness, including principal and
interest on any indebtedness for which Finisterre/Golden is liable and which was
incurred to finance the Operation of the Mine will not be an Operating Expense,
unless approved unanimously by the Operating Committee. In order for any payment
to qualify as an Operating Expense, such payment must be approved by the
Operating Committee through the operating budget as provided in Article 6.02 or
through written consent of the Operating Committee. Operating Expenses do not
include costs, charges, expenses or disbursements for exploration of the Mine
unless any such funds disbursed and/or contributed for exploration are generated
from production of the Mine and are approved unanimously by the Operating
Committee and disbursed via the Trust Account. Operating Expenses do not include
income taxes paid by Finisterre/Golden or West Coast and do not include interest
or principal paid to West Coast. Operating Expenses do not include property
payments.

(d) Operation of the Mine means any and all activities which are
derived from or in any way related to the Mine, including without limitation,
exploration of the Mine, any mining activities, the sale of minerals extracted
from the Mine, the sale or licensing of any rights to derive minerals or income
from the Mine, the sale of any rights in the Concessions, and the sale,
transfer, or assignment of any rights or interests whatsoever to directly or
indirectly, develop, operate, control or produce the Mine.

(e) Cash Reserves for any period of time means such amounts of cash
(derived from production of the Mine) to be held in the Trust Account described
in Article 4 as the Operating Committee deems necessary for contingent or
unforeseen liabilities or for obligations of Finisterre/Golden arising out of or
related to the business of the Operation of the Mine. The parties anticipate

<PAGE>

that additional funds will be infused by Finisterre/Golden or parties related to
Finisterre/Golden to be deposited into the Capital or Exploration Accounts
described in Article 4. Cash Reserves shall be established and approved by the
Operating Committee for the proper expenditure of any such earmarked cash
infusions into the Capital or Exploration Accounts.

(f) The Mine means the various mineral claims and/or concessions
located in Sinaloa, Mexico described on the attached Exhibit "A," together with
any mineral claims, interest, rights or concessions acquired or optioned by
Finisterre/Golden, its parent or subsidiary companies, successors, assigns,
transferees and related or affiliated companies within a ten-mile radius
(measured from the geographical center point) of the claims and/or concessions
described on Exhibit "A" (the "Concessions") and including any replacement or
successor claims or concessions, and all mining leases and other mining
interests derived from any such claims. The definition of Mine is intended to be
construed as broadly as possible such that all questions regarding rights,
interests, concessions, claims or the like are to be resolved in favor of being
included within the definition of Mine. Finisterre represents and covenants that
Finisterre is the legal owner of the Mine and legal holder of the Concessions.
Equity interest in the Mine is achieved through ownership of stock in
Finisterre.

Election of Net Profits Interest

1.02 Pursuant to Articles 2.04 and 2.05 of the Amended Loan Agreement,
West Coast, at its sole discretion, hereby elects to maintain its 24.9% Net
Profits Interest of Available Cash over the life of the Mine (hereinafter
referred to as the "24.9% Net Profits Interest") as defined and granted in the
Amended Loan Agreement. The 24.9% Net Profits Interest is a pre-tax, carried
interest and is owned by West Coast for so long as the Mine is in existence and
cannot be avoided, diluted, encumbered or hindered in any way without first
obtaining West Coast's prior written consent thereto. The 24.9% Net Profits
Interest shall entitle West Coast to 24.9% of all Available Cash generated from
the Mine over the life of the Mine. West Coast's 24.9% Net Profits Interest set
forth herein is owned and controlled exclusively by West Coast, unencumbered by
any other interest, right, option, lien or agreement.

Loan and Interest Debt Satisfaction

1.03 For good and valuable consideration, including that which is noted
herein, West Coast hereby cancels, forgives, and forever waives any claims that
it has or had to repayment of principal and interest under Articles 1 and 2 of
the Amended Loan Agreement and the December 20, 1996 Promissory Note referenced
therein. In exchange for the debt forgiveness, previous capital contributions
and other good and valuable consideration, Finisterre/Golden grants to West
Coast the 24.9% Net Profits Interest, the shares of stock in Finisterre noted in
Article 2 below, the option described in Article 2.03, and other good and
valuable consideration. West Coast hereby covenants that it will execute
simultaneous with the execution of this Operating Agreement the Cancellation of
Promissory Note attached hereto as Exhibit "B."

<PAGE>

Statements

1.04 On or before the tenth day following the end of each calendar
month, the Operating Committee shall furnish to West Coast: (a) a statement
detailing the Available Cash, and specifying the Cash Flow, decreases in
Reserves, Operating Expenses, exploration expenses, and increases in Reserves
for the preceding month; and (b) payments due under this Agreement for the
preceding month. The Parties hereby covenant and agree to promptly provide and
make available to the Operating Committee all information and data requested by
the Secretary to the Operating Committee, so that the Operating Committee can
provide the statements herein on a timely and informed basis.

24.9% Net Profits Interest Payments

1.05 The Operating Committee as defined below shall be responsible for
determining all payments to be made to West Coast under this Article 1 for their
24.9% Net Profits Interest. Absent any contrary decisions by the unanimous vote
of the Operating Committee, West Coast shall be entitled to payments for their
24.9% Net Profits Interest on the 15th day of each month following any Operation
of the Mine.

Right of First Refusal

1.06(a) West Coast hereby grants a right of first refusal to Golden for
the purchase of the 24.9% Net Profits Interest and its Minera Finisterre stock
should West Coast elect to sell, convey, or otherwise dispose of the 24.9% Net
Profits Interest or its Minera Finisterre stock and hereby covenants and agrees
that West Coast shall offer the 24.9% Net Profits Interest and its Minera
Finisterre stock in writing for purchase by Golden prior to selling, conveying,
or otherwise disposing of the 24.9% Net Profits Interest or its Minera
Finisterre stock to any entity or person at or for the same consideration
offered to such entity or person. Upon receipt of written notice from West
Coast, Golden shall have ten (10) days to elect to exercise its right of first
refusal and thereafter, twenty (20) days to close. Should Golden fail to elect
to exercise its right of first refusal timely, or fail to close timely, Golden's
right of first refusal expires.

1.06(b) Should Golden elect not to continue ownership of Minera or
ownership, operation, development, exploration or production of the Mine, Golden
hereby (1) grants a right of first refusal to West Coast for the purchase of its
interest in Minera and/or the Mine and hereby covenants and agrees that Golden
shall offer its interest in Minera and/or the Mine in writing for purchase by
West Coast prior to selling, conveying, or otherwise disposing of such interest
to any entity or person at or for the same consideration offered to such entity
or person and (2) agrees to assign to West Coast immediately without delay or
condition, its option agreement dated April 23, 1996 (defined as the "126
Agreement" in Article 2.07). Upon receipt of written notice from Golden, West
Coast shall have sixty (60) days to elect to exercise its right of first refusal
and thereafter, one hundred twenty (120) days to close. Should Golden fail to
continue ownership of Minera or ownership, operation, development, exploration
or production of the Mine, such failure shall not diminish, dilute or reduce
Minera's obligations and responsibility to develop the Mine and perform under
this Operating Agreement.

<PAGE>

1.06(c) Upon the sale, transfer, conveyance, assignment or exchange of
any of Finisterre's or Golden's interest, right, ownership, claim or control in
the Concessions or the Mine, all consideration without limitation, including
cash, stock or other interests of value, received for such sale, transfer,
conveyance, assignment or exchange shall be immediately deposited into the Trust
Account and disbursed in accordance with Article 4.01.

1.06(d) Any deviation of Article 1.06(c) above shall specifically
require the unanimous written consent of the Operating Committee.

Value Added Tax

1.07 Any liability for value added tax is the sole liability of
Finisterre/Golden, and such tax shall not reduce any payments to West Coast
under this Operating Agreement. Taxes, such as sales taxes, incurred on
purchases of equipment in connection with the Operation of the Mine may be an
Operating Expense, if such purchase has been approved by the Operating
Committee.

Withholding Tax

1.08 The parties understand that the payments under this Operating
Agreement may be subject to a withholding tax pursuant to the Convention between
United States and Mexico for Avoidance of Double Taxation and Prevention of
Fiscal Evasion with Respect to Income Taxes, which rate is subject to a
reduction to ten percent (10%) upon certain conditions. For so long as the
treaty is in effect, Finisterre/Golden and West Coast shall use their best
efforts to comply with the conditions so as to qualify for ten percent (10%)
withholding tax.

ARTICLE 2

EQUITY INTEREST

2.0 1(a) Transfer of Minera Finisterre Shares. Finisterre/Golden agree
to transfer to West Coast twenty-five percent (25%) of the one hundred percent
(100%) of shares of stock presently issued and outstanding in Minera Finisterre,
S.A. de C.V. Such number of shares shall be calculated by determining the total
number of Minera Finisterre shares outstanding and multiplying such number by
twenty-five percent (25%). Such shares shall be immediately transferred to West
Coast upon execution of this Operating Agreement. Except as provided in Article
2.04 or as otherwise approved by the unanimous vote of the Operating Committee,
West Coast's twenty-five percent (25%) ownership of Minera Finisterre shares,
shall not be diluted or diminished in any way.

2.0 1(b) Private Placement of Golden Shares. Simultaneous with the
final execution of this Operating Agreement, Golden shall submit private
placement documents to West Coast for the private placement of 333,333 shares of
Golden stock at fifteen cents ($. 15) (Cnd.) per share, together with Options
for 333,333 shares of Golden stock, exercisable by West Coast within a two-year
period, at fifteen cents ($.15) (Cnd.) during the first year, and at seventeen
and one-half cents ($.175) (Cnd.) per share during the second year.

<PAGE>

Upon the full and final execution of this Operating Agreement, and upon
West Coast's receipt of the private placement documents described in this
Article 2.01(b) and upon West Coast's receipt of the Finisterre shares described
in Article 2.01(a) above, West Coast shall tender the sum of $50,000.00 (Cnd.)
to Golden. Golden's receipt of the $50,000.00 (Cnd.) is to be used by Golden to
return the Company to regulatory compliance with the Vancouver Stock Exchange.

Capital Contribution Calculation

2.02 For purposes of calculating the equity contributions made by the
parties, the following estimated amounts are hereby agreed to be the capital
contributions of the parties made to date:

Golden $4,500,000.00 (Cnd.) 75%
West Coast $l.500~000.00 (Cnd.) 25%
---------- -------------------------

Total $6,000,000.00 (Cnd.) 100%

The $4,500,000.00 (Cnd.) assigned to Golden is comprised primarily of property
and cash payments and the waiver of the obligations of Golden to contribute
$250,000.00 (U.S.) to the Capital Account (see Article 2.06.). The $1,500,000.00
(Cnd.) assigned to West Coast is comprised primarily of cash payments and
forgiveness of debt, accelerated payback and interest as noted herein. The
contribution calculations contained within this paragraph shall serve as the
basis for future rights for equity contributions provided for under this
Operating Agreement. Thus, the parties' interests in Minera Finisterre will vary
according to the party's actual contribution in accordance with the following
formula:

% = actual expenses of a party x 100
actual expenses of both parties

West Coast Equity Infusions

2.03(a) S350.000.00 (Cnd.) Commitment. Notwithstanding the above, West
Coast will contribute no less than $350,000.00 (Cnd.) on or before December 31,
1999, With respect to this $350,000.00 (Cnd.) contribution by West Coast, Golden
shall have no right to contribute unless agreed to by West Coast. West Coast
shall receive Minera Finisterre stock directly in proportion to the increase in
its capital contribution divided by the total capital contributions made by
Golden and West Coast. The calculations for equity interest shall be made based
upon the total capital contributions by the parties of $6,000,000.00 (Cnd.), and
shall be increased incrementally based upon the percentage of additional
contribution. Therefore, West Coast will earn additional equity interest of four
and thirteen one-hundredth's percent (4.13%) of the additional outstanding
Minera Finisterre stock by contributing $350,000.00 (Cnd.), thereby increasing

<PAGE>

West Coast's total capital contribution to $1,850,000.00 (Cnd.), or twenty-nine
and thirteen one-hundredth's percent (29.13%) of the total $6,350,000.00 (Cnd.)
contributed by the Parties. Thus, at the conclusion of West Coast's $350,000.00
(Cnd.) contribution, West Coast will own twenty-nine and thirteen-hundredth's
percent (29.13%) of the outstanding stock in Minera Finisterre. West Coast's
failure to contribute the $350,000.00 (Cnd.) on or before December 31, 1999,
shall result in the immediate forfeiture of the First and Second Options defined
below. The Option forfeiture shall be Finisterre/Golden's sole remedy for West
Coast's failure to contribute said $350,000.00 (Cnd.)..

2.03(b) West Coast's First Option. West Coast will have the exclusive
option (the "First Option") to contribute up to a total of $650,000.00 (Cnd.) to
acquire or earn additional equity interest (i.e., Minera Finisterre stock) in
proportion to the contributions of the previous Article 2.02 and 2.03(a). The
First Option shall expire December 31, 1999. With respect to any contribution(s)
made by West Coast in connection with this First Option, Golden shall have no
right to contribute unless agreed to by West Coast. West Coast shall receive
Minera Finisterre stock directly in proportion to the increase in its capital
contribution in proportion to the total capital contributions made by Golden and
West Coast. The calculations for equity interest shall be made based upon the
total capital contributions by the Parties of $6,350,000.00 (Cnd.), and shall be
increased incrementally based upon the percentage of additional contribution. By
way of example, West Coast may earn additional equity interest up to a maximum
of six and fifty-seven hundredth's percent (6.5 7%) of the additional
outstanding Minera Finisterre stock by contributing up to $650,000.00 (Cnd.),
thereby increasing West Coast's total capital contribution to $2,500,000.00
(Cnd.) or thirty-five and seven-tenth's percent (35.7%) of the total
$7,000,000.00 (Cnd.) contributed by the Parties. Under this example, West Coast
will own thirty-five and seven-tenth's percent (35.7%) of the outstanding stock
in Minera Finisterre. Golden acknowledges that West Coast is not obligated to
contribute the entire $650,000.00 (Cnd.) and may contribute any amount(s), in
West Coast's sole and absolute discretion, up to $650,000.00 (Cnd.) and earn
equity interest in Minera Finisterre proportionately.

2.03(c) West Coast's Second Option. Assuming West Coast exercises any
portion of the First Option set forth in Article 2.03(b) above, West Coast will
have the exclusive option to contribute additional capital (without opportunity
for Golden to match), in an amount up to and including $1,000,000.00 (Cnd.)
prior to December 31, 2000 (the "Second Option"). Said additional
contribution(s) by West Coast pursuant to this Second Option is to acquire or
earn additional equity interest (i.e., Minera Finisterre stock) in proportion to
the contributions of the previous Articles 2.02 and 2.03(a) and (b). West Coast
shall receive Minera Finisterre stock directly in proportion to the increase in
its capital contribution in proportion to the total capital contributions made
by Golden and West Coast. The calculations for such equity interest shall be
made just as in Article 2.03(a) and (b) above. By way of example, West Coast may
earn additional equity interest up to a maximum of eight and five-hundredth's
percent (8.05%) of the additional outstanding Minera Finisterre stock by
exercising the Second Option and contributing up to an additional $1,000,000.00
(Cnd.), thereby increasing West Coast's total capital contribution to
$3,500,000.00 (Cnd.), or forty-three and three-fourths percent (43.75%) of the
total $8,000.000.00 (Cnd.) contributed by the Parties. Under this example, West
Coast will own forty-three and three-fourths percent (43.75%) of the outstanding
stock in Minera Finisterre. Golden acknowledges that West Coast is not obligated
to contribute the entire $1,000,000.00 (Cnd.) and may contribute any amount, in
West Coast's sole and absolute discretion, up to $1,000,000.00 (Cnd.) and earn
equity interest in Minera Finisterre proportionately.

<PAGE>

2.03(d) With respect to the timing of the contributions referenced in
Articles 2.03(a), (b) and (c), the Parties acknowledge and agree that such
contributions by West Coast shall be deemed contributed when deposited into the
Exploration and/or Capital accounts referenced in Articles 4.02 and 4.03,
respectively. Once the contributions are made to the respective accounts by West
Coast, Golden/Finisterre covenant and agree to immediately cause the issuance
and/or transfer to West Coast of sufficient shares of Minera Finisterre stock
such that West Coast equity ownership of Minera Finisterre will equal its
percentage contributions referenced in Articles 2.03(a), (b) and (c) above. By
way of example only, immediately upon the conclusion of West Coast's commitment
in 2.03(a) and the contribution of $350,000.00 (Cnd.) being deposited by West
Coast into either the Exploration or Capital account, Golden and/or Finisterre
will cause the immediate issuance and/or transfer of sufficient number of shares
to West Coast such that West Coast will own and physically possess twenty-nine
and thirteen one-hundredth's percent (29.13%) of the outstanding stock of Minera
Finisterre.

2.03(e) Notwithstanding anything in Articles 2.03(a), (b), (c) and (d)
above, Finisterre/ Golden shall remain obligated and responsible for prudent and
professional development of the Mine.

Dilution Clause

2.04 The proportionate level of the respective interests of West Coast
and Golden in Minera Finisterre will not change so long as each party
contributes its proportionate share of costs and expenses relating to
exploration or development programs for the Mine, as approved by the Operating
Committee, save and except West Coast's contributions in Articles 2.03(a),
2.03(b) and 2.03(c) above to spend the above-referenced $350,000.00 (Cnd.) and
up to $2,000,000.00 (Cnd.) to earn an additional interest in Minera Finisterre.
Thus, West Coast has a guaranteed right to receive a forty-three and
three-fourth's percent (43.75%) interest in Minera Finisterre through
contributions of an additional $2,000,000.00 (Cnd.) up to December 31, 2000.
Prior to making any further contributions, Golden must provide West Coast the
opportunity to maintain its percentage ownership by a proportionate contribution
equal in percentage to the respective interests of the parties to any
contribution made by Golden. Thus, by example, in order to maintain its
forty-three and three-fourth's percent (43.75%) interest after contribution of
the additional $2,000,000.00 (Cnd.) prior to December 31, 2000, West Coast will
be required to contribute forty-three and three-fourth's percent (43.75%) of any
further contributions by Golden which have been previously approved by the
Operating Committee.

In respect to subsequent programs or expenditures approved by the
Operating Committee, within thirty (30) days of the approval of the program or
expenditure by the Operating Committee, each of West Coast and Golden will give
written notice to the Operating Committee stating whether or not it elects to
contribute its proportionate share of the costs of such program. Failure to give
such notice shall be deemed to be an election not to contribute. If either West
Coast or Golden elects or is deemed to have elected not to contribute its
proportionate share of the costs of a program approved by the Operating

<PAGE>

Committee, then the other party may give notice in writing to the
non-contributing party that it will contribute all of the required expenditures
in addition to its own share of the expenditures. Such party shall then be
entitled to a respective increase in its interest in Minera Finisterre in
proportion to the overall costs expended by such party.

Treatment of Prior Contributions by West Coast

2.05 The twenty-five percent (25%) interest in Minera Finisterre earned
by West Coast noted in Article 2.02 above, includes the following payments
totaling $1,500,000.00 (Cnd.):

1. $85,000.00 (U.S.) (Santa Rosa Claim);

2. $35,000.00 (U.S.) (payments made to Pamicon Developments, Ltd.);

3. $30,000.00 (U.S.) (interest past due from Finisterre/Golden);

4. $500,000.00 (U.S.) (loan satisfaction -- Article 1.03); and

5. $350,000.00 (U.S.) (waiver of accelerated payback).

Because West Coast has received equity credit for each of these
contributions herein, no further liability for these payments shall exist and
West Coast waives any further claims to such amounts. The Parties agree that the
May 14, 1998 Amended Proposal executed by and between West Coast and Golden
regarding contributions to the Santa Rosa claim and additional funding by West
Coast is hereby revoked, cancelled and rescinded and otherwise superseded by
this Operating Agreement.

Golden Contribution

2.06 Golden's obligations as previously provided in Article 4.03 of the
Amended Loan Agreement to contribute $250,000.00 (U.S.) to the Capital Account
is hereby waived.

Completion of 126 Agreement

2.07 Finisterre/Golden hereby represent and agree that they have
satisfied and fulfilled the Option Agreement dated April 23, 1996 between No.
126 Corporate Ventures, Ltd., Golden Hemlock Exploration, Ltd., Ronald H.
Tammekand and Dalton D. Dupasquier (the "126 Agreement"), except for the final
issuance of the remaining thirty percent (3 0%) of Minera stock pursuant to
paragraph 2 of the 126 Agreement. Finisterre/Golden hereby represent and affirm
that they will undertake all necessary actions in order to assure this final
step in the fulfillment of the 126 Agreement and the complete one hundred
percent (100%) acquisition of Minera by Golden on or before thirty (30) days
from the execution of this Operating Agreement. Finisterre/Golden covenant and
agree that they will provide complete and accurate documentation confirming the
fulfillment of the final thirty percent (30%) stock issuance to the Operating
Committee, within fifteen (15) days thereof. Finisterre/Golden also represent
and covenant that the 126 Agreement is valid and in effect, the parties are not
in default or breach and upon closing the remaining thirty percent (30%) of
Minera into Golden, the 126 Agreement will be completely performed with no
obligations, rights or responsibilities remaining.

<PAGE>

ARTICLE 3

INDEMNITY

3.01 West Coast shall never be responsible or liable for payment of all
or any part of the Operating Expenses, debts, indebtedness, costs, expenses, or
liabilities incurred in connection with the Operation of the Mine, nor any
financial obligations or responsibilities of Finisterre and Golden and/or
against any and all such responsibility and liability Finisterre/Golden
covenants with West Coast to indemnify and save it harmless; provided, however,
such costs and expenses may be included as Operating Expenses if approved by the
Operating Committee.

ARTICLE 4

SPECIAL ACCOUNTS

4.01 Trust Account.

As security for performance of obligations and responsibilities as
provided herein, the Operating Committee has established a trust account in the
name of Finisterre (the "Trust Account") with the following bank located in
Dallas, Texas:

NationsBank - Texas ABA Number: 111 0000 25
Las Colinas Branch Acct. Name: Minera/San Jose De Gracia
5201 N. O'Connor Blvd. Acct. Number: 0047 7046 9775
Las Colinas, TX 75039
(972) 401-6262
(972) 401-6270 (FAX)

Finisterre/Golden shall require all purchasers of minerals extracted
from the Mine to make payment for the minerals to the Trust Account.
Finisterre/Golden shall deposit all other cash, gross receipts, stock or any
other consideration received from or in connection with the Operation of the
Mine in the Trust Account. Disbursements from the Trust Account may be made only
with the consent of the Operating Committee.

4.02 Exploration Account.

West Coast shall establish an Exploration Account in which all monies
contributed to or designated for exploration of the Mine shall be deposited.
Such bank account shall be located in Dallas, Texas. Disbursements from the
Exploration Account shall be made in accordance with the exploration budget
approved by the Operating Committee; provided that any disbursements over and
above the exploration budget approved by the Operating Committee may be made
only with the consent of the Operating Committee. Any and all funds deposited
into or disbursed from the Exploration Account shall not be considered Operating
Expenses and shall not be subject to the lien referenced in Article 7.01 of this
Operating Agreement, unless unanimously approved by the Operating Committee as
an Operating Expense with such funds being deposited into and disbursed from the
Trust Account described in Article 4.01.

<PAGE>

4.03 Capital Account.

West Coast shall establish a Capital Account in which funds and other
contributions shall be deposited for production of the Mine. Such bank account
shall be located in Dallas, Texas. Disbursements from the Capital Account may be
made only with the consent of the Operating Committee. Any funds deposited into
or disbursed from the Capital Account shall not be considered Operating Expense,
and shall not be subject to the lien as set forth in Article 7.01 of this
Agreement, unless unanimously approved by the Operating Committee as an
Operating Expense with such funds being deposited into and disbursed from the
Trust Account described in Article 4.01.

4.04 It is the intent of the Parties that all consideration, including
money, funds, stock or other things of value contributed or relating to the Mine
or generated from or in connection with the Operation of the Mine must flow
through one of these three (3) accounts. All capital infusions and injections in
cash or other funds for the exploration, development, maintenance or production
of the Mine must be a deposited into and disbursed from either the Trust
Account, the Exploration Account or the Capital Account, as the case may be;
provided that any and all Operating Expenses must be disbursed through the Trust
Account. The Secretary of the Operating Committee will have signatory authority
on the above Accounts.

ARTICLE 5

BOOKS AND RECORDS

5.01 Finisterre/Golden shall keep and maintain proper books and records
with respect to all income and expenses, including exploration activities,
relating to the Mine. The Operating Committee and West Coast or its
representative shall have access to such books and records at all reasonable
times during business hours. The books shall be kept in accordance with
generally accepted accounting procedures. Finisterre/Golden's books and records
relating to the Mine shall be reviewed annually by a certified public accountant
selected by the Operating Committee. The selected accountant shall (1) annually
prepare and deliver to West Coast and Finisterre/Golden the appropriate tax
returns and all schedules to those returns, and (2) within ninety days following
the end of each calendar year, deliver to each party financial statements,
relating to the Mine, including balance sheets, profit and loss statements, and
statements showing allocations and distributions to each party. The costs of
such accounting services shall be considered an Operating Expense under Section
2.02.

5.02 Finisterre and Golden covenant and agree, at all times, to timely
and properly comply with all laws, statutes, ordinances and the like,
promulgated by any regulatory or governing body including, but not limited to,
the Vancouver Stock Exchange and to maintain all corporate reporting and
existence requirements in conformity therewith.

<PAGE>

ARTICLE 6

MANAGEMENT OF MINING OPERATIONS

General Management of the Mine

6.01 Except as may be otherwise provided in this Agreement, the
management and control of all matters relating to the Mine and/or the Operation
of the Mine shall rest exclusively with the Operating Committee.
Finisterre/Golden are charged with the sole responsibility and obligation to
make all property payments and to keep, restore, renew and/or maintain all
fights, claims, concessions and the like in the Mine as well as the Mine itself
in good standing and valid and enforceable. Finisterre/Golden shall deliver
copies of all documents relating to the acquisition, renewal and maintenance of
all Concessions to the Secretary of the Operating Committee within fifteen (15)
days of the date of such documents. Finisterre/Golden warrant that they will
continue to develop the Mine in a reasonable and timely manner. However, all
material operations of the Mine shall ultimately be under the control of the
Operating Committee, except as expressly delegated by the Operating Committee.

Operating Committee

6.02 Finisterre/Golden and West Coast have appointed an Operating
Committee whose responsibilities include: control and management of all aspects
of the Mine; approval of an annual budget related to Operation of the Mine;
approval of disbursements from the Trust Account, Exploration Account and
Capital Account pursuant to Article 4; approval of all expenditures related to
the Mine pursuant to Section 2.02(c); approval of borrowings or equity
infusions; the establishment of Reserves pursuant to Section 2.02(e); control
and supervision of all negotiations and discussions relating to prospects for
the sale, transfer or exchange of any interests in the Mine; approval of any
sale, transfer or exchange of any interest or rights in the Concessions or the
Mine; approval of information disseminated to the public relating to the Mine;
approval of any transfer of any monies or funds between the accounts referenced
in Article 4; and the discharge of other responsibilities set forth in this
Agreement.

Committee Control of All Activities

6.03 The Operating Committee shall exercise exclusive control over the
exploration, development and production of the Mine. The Operating Committee
shall hire an independent contractor to direct and manage all the exploration,
development and production activities of the Mine. Such independent contractor
shall answer to and be subject only to the Operating Committee.
Finisterre/Golden hereby represent and agree that they will not interfere with
such exercise of control over the independent contractor by the Operating
Committee.

Committee Membership

6.04 The Operating Committee shall be comprised of four (4) persons.
West Coast and Finisterre/Golden shall each designate two (2) persons to serve
on the Operating Committee with each person entitled to one vote. The persons
comprising the Operating Committee may be removed and replaced by majority vote
of the Operating Committee. The initial Operating Committee shall consist of:

Dalton Dupasquier Robin Forshaw
Koy Diepholz Charles Smith

Committee Voting

6.05 All members of the Operating Committee shall cooperate in good
faith towards the common goal of timely, efficient and sound operation and
development of the Mine. Unless otherwise stated herein, the majority vote of
the Operating Committee shall control the activities or decisions of the
Operating Committee. If the vote on any particular item or subject is deadlocked
(i.e., no clear majority), then the members of the Operating Committee shall
diligently and in good faith attempt to resolve the deadlock. If the deadlock
remains, the Operating Committee shall, within five (5) business days after an
impasse is reached, submit the dispute to non-binding mediation in Dallas, Texas
before a mediator mutually agreeable to the members of the Operating Committee.
If, after mediation, the deadlock or impasse remains, then the parties shall
immediately proceed to arbitration under the provisions of Article 9
hereinafter.

Management of the Operating Committee

6.06 One person on the Operating Committee shall be commissioned to
manage the Operating Committee (the "Secretary"). Such Secretary shall be
assigned the tasks of general oversight of the Operating Committee, including
all tasks necessary to assure the proper performance of the Operating
Committee's rights and responsibilities hereunder. West Coast shall have the
authority and responsibility to designate the Secretary of the Operating
Committee through December 31, 2000. Through execution of this Operating
Agreement, West Coast hereby nominates and elects Koy Diepholz as the Secretary
of the Operating Committee. Mr. Diepholz shall serve as the Secretary of the
Operating Committee until written notice of resignation by him or December 31,
2000. Thereafter, the Secretary of the Operating Committee shall be elected by
majority vote of the Operating Committee. If any deadlock in the Operating
Committee develops, the vote shall be resolved in accordance with the guidelines
set forth in Article 6.05 above.

Committee Meetings

6.07 The Secretary of the Operating Committee shall be responsible for
calling all meetings of the Operating Committee either on his own initiative or
upon the request of a member of the Operating Committee. The Secretary shall be
responsible for providing written notice to all Committee members of Committee
meetings. Such Committee meetings shall be set with written notice at least
twenty-one (21) days prior to the meeting date, unless otherwise agreed to by
all of the Committee Members or unless shorter notice is required because of
emergency circumstances. The Secretary shall further be responsible for issuing
the written notice specifying the date, time and place of the meeting, the
business to be transacted at the meeting, and providing all Operating Committee
members with such material and data as may be reasonably required to enable the

<PAGE>

members to reasonably evaluate and determine the position they should take with
respect to any vote. The Operating Committee shall meet in Irving, Texas at the
offices of West Coast, unless otherwise designated by the Secretary. However,
any Operating Committee member may participate by telephone conference or other
appropriate arrangements. Voting of the Operating Committee may be conducted by
verbal, written, facsimile or telex ballot.

Alternate Operating Committee Members

6.08 Provided that prior, written, and majority approval of the
Operating Committee is obtained, any member of the Operating Committee may
appoint an alternative representative by providing at least forty-eight (48)
hours written notice to all other Committee members of the name, address and
telephone number of the alternate to be appointed by the specific Operating
Committee member. Alternate members may attend meetings of the Operating
Committee and, in the absence of the member of the Operating Committee, may act
and/or vote in the place of the appointer member.

Golden Announcement

6.09 Finisterre/Golden represent and agree that, immediately following
the execution and final approval of this Operating Agreement, they will issue a
public announcement through the Golden Board of Directors: (1) commissioning the
Operating Committee to carry out all of its rights and responsibilities herein,
including day-to-day management and control of the exploration activities,
control over the independent contractor hired to control exploration activities,
and control over all other material operations of the Mine; and (2)
acknowledging the general terms of this Agreement, with emphasis on the
anticipated additional contributions and expected regulatory compliance. Such
announcement to be approved by the Operating Committee.

ARTICLE 7

SECURITY

Trust Account Lien

7.01 As security for satisfaction of the obligations as set forth in
this Agreement, Finisterre/Golden grants to West Coast a lien on the Trust
Account established pursuant to Article 4, and agrees to execute all necessary
documentation perfecting this lien at the request of West Coast. The Parties
agree that the Trust Account is set up and Finisterre/Golden covenant and agree
to execute any and all documents required by West Coast and/or necessary to
perfect the lien referenced in this Article.

Equipment Lien

7.02 As further security for repayment of the obligations as provided
herein, Finisterre/ Golden grants to West Coast a lien or liens on the equipment
identified with Exhibit "C" attached to the Amended Loan Agreement and on all

<PAGE>

equipment and other tangible assets purchased in connection with or relating to
the Mine and Finisterre/Golden agrees that the Pledge Agreement executed on or
about December 20, 1996 in connection with the Amended Loan Agreement (Exhibit
"C" thereto) shall remain in full force and effect and guarantee all obligations
herein as if executed herewith.

Foreclosure for Default

7.03 Should Finisterre/Golden default under the terms of this
Operating Agreement, in addition to other remedies available under law, the
liens provided for in Sections 7.01 and 7.02 of this Agreement may be
immediately foreclosed by West Coast.

ARTICLE 8

LEGAL FEES

Finisterre/Golden agrees to pay or reimburse all legal fees incurred
by West Coast in conjunction with this Operating Agreement and the negotiation
and preparation of this Operating Agreement and any amendments or supplements
thereto, and such payment will be considered an Operating Expense under Section
2.02.

ARTICLE 9

ARBITRATION

The parties agree to do business in a fair and cooperative spirit for
mutual benefit and profits, and also agree to solve amicably any dispute,
controversy or difference arising out of or in relation to or in connection with
this Operating Agreement, or for the breach thereof, but in case such dispute,
controversy or difference is not settled by mutual consent and personal
negotiations, the matter will be settled by a panel of arbitrators, composed of
one member selected by Finisterre/ Golden, one member selected by West Coast,
and a third member selected by the two enumerated arbitrators, all in accordance
with the Commercial Rules and Regulations of the American Arbitration
Association, in Dallas, Texas, United States of America. Expenses for such
arbitration shall be borne equally by the parties. The arbitration panel shall
award costs, fees and expenses, including fees for experts and attorneys to the
prevailing party in any arbitration. The proceedings shall be conducted in
English. Each of the parties hereto hereby recognizes and consents to the
jurisdiction of the American Arbitration Association in Dallas, Texas and the
entry of judgment in Texas, Mexico and Canada upon the award rendered by the
arbitrators, by a court having jurisdiction thereof, providing that the parties
thereto serve upon the party to be charged by the demand for arbitration of any
such dispute. The Parties acknowledge that if injunctive relief is required to
preserve the status quo during the pendency of any dispute that any such
injunctive relief may be sought in a court of law in Dallas, Texas, United
States of America.

<PAGE>

ARTICLE 10

GENERAL PROVISIONS

Notices

10.01 All notices, payments and other communications required or
permitted under this Operating Agreement shall be in writing and shall be
effective when delivered to the following addresses:

If to West Coast:

West Coast Mines, Inc.
Towers at Williams Square
5215 N. O'Connor, Suite 200
Irving, Texas 75039
Attn: Koy Diepholz
Phone: (972) 868-9066
Fax: (972) 868-9067

If to Finisterre:

Minera Finisterre, S.A. de C.V.
Av. Camaron Sabalo S/N
Plaza Balboa #9
Mazatlan, Sinaloa, Mexico
Attn: Ron Tammekand
Phone: 011-526-914-3612
Fax: 011-526-916-5258

-- and to --

Dalton Dupasquier
601-43 1 Pacific Street

Vancouver, B.C., Canada V6Z 2P6
Phone: (604) 682-0410
Fax: (604) 682-0412

If to Golden:

Golden Hemlock Explorations, Ltd.
#600 - 700 West Pender Street
Vancouver, B.C., Canada V6C 1G8
Attn: Robin Forshaw
Phone: 604-688-8836
Fax: 604-682-8728

A party may, by written notice so delivered to the others change the address to
which delivery shall thereafter be made.

<PAGE>

Modification and Waiver

10.02 This Operating Agreement may not be altered nor amended, nor any
rights hereunder be waived, except by an instrument in writing executed by the
party or parties to be charged with such amendment or waiver. No waiver of any
term, provision or condition of this Operating Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver, of any such term, provision or condition, or as a waiver of any other
term, provision or condition of this Operating Agreement.

Exchange Rate

10.03(a) The exchange rate to be used to determine the U.S. dollar
amount of any amounts paid in pesos shall be the exchange rate (net of bank
charges) quoted by Banamex in Mexico City to convert pesos to U.S. dollars on
the date on which payment is made in volume equivalent to volume of pesos being
valued for conversion.

10.03(b) The exchange rate to be used to determine the U.S. dollar
amount of any amounts paid in Canadian dollars shall be the exchange rate (net
of bank charges) quoted by Royal Bank of Canada to convert Canadian dollars to
U.S. dollars on the date on which payment is made in volume equivalent to volume
of Canadian dollars being valued for conversion.

Press Releases

10.04 The parties shall consult with each other with regard to all
press releases and other announcements concerning this Operating Agreement or
the transaction contemplated hereby and neither party shall issue any such press
release or make any other announcement without the prior written consent of the
Operating Committee.

Applicable Law

10.05 This Operating Agreement and the transactions contemplated
hereby shall be construed in accordance with and governed by the laws of the
State of Texas. The parties expressly acknowledge and agree that Venue and
Jurisdiction for any dispute resolution, including litigation, mediation and
arbitration shall be Dallas, Texas, United States of America and the parties
agree not to challenge or object to same.

Entire Agreement

10.06 This Operating Agreement constitutes the entire understanding of
the parties with respect to the subject matter hereof and supersedes all
negotiations, prior discussions and prior agreements and understandings relating
to such subject.

<PAGE>

Binding Effect

10.07 This Operating Agreement shall be binding upon and shall inure
to the benefit of the parties hereto, and except as otherwise prohibited, their
respective successors and assigns. Nothing contained in this Operating
Agreement, express or implied, is intended to confer upon any other person or
entity, any benefits, rights or remedies. Finisterre/Golden shall not assign
this Operating Agreement or its obligations under this Operating Agreement,
without the express written consent of West Coast. It is expressly acknowledged
and understood by the Parties that in the event Finisterre or Golden assign this
Operating Agreement or its obligations pursuant to this Operating Agreement,
Finisterre and Golden shall nevertheless remain liable to perform all
obligations of the Operating Agreement.

Execution of Other Instruments

10.08 The parties covenant and agree that they will execute any other
instruments and documents that (i) are requested by West Coast; (ii) may become
necessary or convenient to effectuate and carry out the purposes of this
Operating Agreement; or (iii) may become necessary or convenient to obtain
minimum withholding tax liabilities relating to West Coast's Net Profit
Interests. Finisterre/Golden covenants and warrants that it will obtain express
written approval from its directors regarding the terms and conditions of this
Operating Agreement. Finisterre/Golden covenant and agree to obtain full
approval from the Vancouver Stock Exchange for this Operating Agreement and
provide West Coast confirmation of same.

Headings

10.09 The headings used in this Operating Agreement are used for
administrative purposes only and shall not be considered in construing the terms
of this Operating Agreement.

Effect of Partial Invalidity

10.10 If any one or more of the provisions contained in this Operating
Agreement shall, for any reason, be held invalid, illegal, or unenforceable in
any respect, that invalidity, illegality, or unenforceability shall not affect
any other provision of this Operating Agreement, and this Operating Agreement
shall be construed as if that invalid, illegal, or unenforceable provision had
never been contained in this Operating Agreement.

Joint and Several Obligations

10.11 It is the express intent of the Parties hereto that all the
obligations, responsibilities and liabilities set forth in this Operating
Agreement shall be the joint and several liabilities, obligations and
responsibilities of Finisterre and Golden and that West Coast can enforce the
provisions of this Operating Agreement against Finisterre, Golden or both
Finisterre and Golden, and their respective successors, assigns, parent or
subsidiary, related or affiliated companies.

<PAGE>

EXHIBIT "A"

The following claims and/or concessions are located in the State of
Sinaloa, Mexico and are listed in the Public Registry of Mining and are governed
by the Mine Operating Agreement:

<TABLE>
<CAPTION

Exploration Date of Year of

Concession Name Title Number Title Expiry.
<S> <C> <C> <C>
SAN JOSE 190244 06/12/90 06/12/96
LA NUEVA ESPERANZA 162840 19/12/91 18/12/97
GUADALUPE 163357 05/12/90 04/12/2040
NIJEVO ROSARITO 184999 13/12/89 12/12/2049
EL REAL 190736 29/04/91 28/04/97
TRES AMIGOS 2 192290 19/12/91 18/12/97
TRES AMIGOS 172216 27/10/83 26/10/2033
MINA GRANDE 163578 10/10/78 09/10/2028
AMPLIACION SANTA ROSA 163592 30/10/78 29/10/2028
SANTO TOMAS 178649 13/08/86 12/08/95
SAN NICOLAS 163913 14/12/78 13/12/2028
LALJBERTAD 172433 14/12/83 13/12/2033
LA UNION 176214 26/08/85 25/08/2035
AMPLIACION DE SAN NICOLAS 183815 22/11/88 21/11/2038
SAN SEBASTIAN 184473 06/11/89 05/11/2039

</TABLE>

Also included within the definition of the Mine and the Concessions are all
claims and/or concessions identified and referenced in, and/or referred or
relating to the attached chart and maps.

<PAGE>

The San Jose de Gracia property is a gold - copper project consisting of 24
Concessions located in Sinaloa State, Mexico, particulars of which are as
follows:

------------------------------------------------------------------------------
CLAIM NAME TITLE OR FILE NUMBER HECTARES
------------------------------------------------------------------------------
------------------------------------------------------------------------------
La Nueva Esperanza 209870; formerly 162840 40.0000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Guadalupe 189470 ; formerly 163357 7.0000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Nuevo Rosario 184999 32.8781
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Mina Grande 163578 6.6588
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Ampliacion de Santa Rosa 163592 25.0000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Santo Tomas 187348; formerly 178649 312.0000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
San Nicolas 163913 55.5490
------------------------------------------------------------------------------
------------------------------------------------------------------------------
La Libertad 172433 97.0000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
La Union 176214 4.1098
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Ampliacion de San Nicolas 183815 17.4234
------------------------------------------------------------------------------

<PAGE>

Map 1 of Claims

(Graphic Omitted)

Map 2 of Claims

(Graphic Omitted)

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

Counterparts

10.12 This Operating Agreement maybe executed in any number of
counterparts and each counterpart shall for all purposes be deemed to be an
original.

Gender and Number

10.13 Whenever the context requires, all words in this Operating
Agreement in the male gender shall be deemed to include the female or neuter
gender, all singular words shall include the plural, and all plural words shall
include the singular.

Executed and effective as of the date first written above:

MINERA FINISTERRE, S.A. de C.V.
/S/ Ronald Tammekand
--------------------
By: Ronald Tammekand

Its: President

COUNTRY OF

STATE OF

SUBSCRIBED AND SWORN TO BEFORE ME by the said Ronald Tammekand on
this______ day of______ 1998, to certify which, witness my hand and official
seal.

Notary Public,

My Commission Expires: ______________

MINERA FINISTERRE, S.A. de C.V.

/S Dalton Dupasquier
----------------------
By: Dalton Dupasquier

Its: Director

<PAGE>

EXHIBIT "2.3"
DYNARESOURCE, INC.
"HAZEN METALLURGY REPORT"
TRES AMIGOS ORES

Hazen Research, Inc.
4601 Indiana St. - Golden, Colo. 80403
Tel: (303) 279-4501
FAX: (303) 278-1528

Prepared for

Lockwood Greene Engineers, Inc.
4201 Spring Valley Road
Suite 1500
Dallas, Texas 75244

PROCESS DEVELOPMENT FOR THE
TRES AMIGOS ORE BODY

August 6, 1999

<PAGE>

Hazen Project 9507-04

Prepared by:

/S/ Donald M. Podobnick
- -----------------------
Senior Project Director

Approved by:

/S/ Nick Hazen
- ----------------
President

TABLE OF CONTENTS
================================================================================

Page

INTRODUCTION ............................................................... 1

SUMMARY AND CONCLUSIONS .................................................... 2

RECOMMENDATIONS ............................................................ 4

MINERALOGY ......................................................... 4
GRAVITY SEPARATION ................................................. 4
ROUGHER FLOTATION .................................................. 5
CLEANER FLOTATION .................................................. 5
LOCKED-CYCLE TESTS ................................................. 5
METALLURGICAL MAPPING .............................................. 5

MINERALOGY AND HED ANALYSIS ................................................ 6

PROCESS DEVELOPMENT ........................................................ 7

GENERAL FLOTATION CONDITIONS ....................................... 7
GRIND SIZE VERSUS CONCENTRATE GRADE AND RECOVERY ................... 8
GRAVITY SEPARATION ................................................. 11
OPEN CIRCUIT CLEANING .............................................. 17

APPENDIX A - Mineralogical Investigation of Tres Amigos Gold/Copper Ore Samples

APPENDIX B - Flotation Data Sheets

APPENDIX C - Gravity Separation Data Sheets

APPENDIX D - Gravity Separation Plus Flotation Data Sheets

<PAGE>

INTRODUCTION

Lockwood Greene Engineers, Inc. (Lockwood) is evaluating the
reinstatement of production at the Tres Amigos gold project in Mexico for West
Coast Mines. Mining has reportedly been conducted within the Tres Amigos deposit
and in nearby areas for many years, and has produced significant amounts of
precious metals. Beneficiation processes used in the past have included gravity
separation, amalgamation, and flotation.

In April 1999, Lockwood provided Hazen Research, Inc. with six ore
samples from the deposit for study. The objectives of the work were to:

- Mineralogically and chemically categorize the six ore samples.

- Evaluate gravity separation for the recovery of relatively coarse gold
and silver.

- Evaluate flotation to recover gold, silver, and copper.

- Develop preliminary process design criteria.

- Describe any obvious metallurgical complications.

As discussed herein, these objectives were accomplished, but a bankable
feasibility study and/or decision to reinitiate production in the existing plant
facilities must be supported by more extensive work.

<PAGE>

SUMMARY AND CONCLUSIONS

The six samples were individually crushed, blended, and split into
portions for mineralogical and chemical analyses, grinding evaluations, gravity
separation evaluation, and flotation testing. The majority of the work was
completed on Sample 49733-1, and only preliminary confirmatory work was
completed on the other five samples.

The mineralogical examination of the six samples showed that the sulfide
mineralization in all of the samples is generally fairly coarse grained and, for
the most part, liberated from one another and from gangue at the 10-mesh size.
Mutual sulfide intergrowths and intergrowths with gangue occur in moderate to
minor amounts and, in general, are structurally simple. The feed grades of these
samples varied from less than 0.1 to nearly 0.9 ounce of gold per short ton (oz
Au/st), from less than 0.2 to more than 4 ounce of silver per short ton (oz
Ag/st), and from less than 0.1% to more than 4% copper. The mineralogical
characteristics varied from samples containing high amounts of sulfides with
little oxidation to highly oxidized samples containing little sulfides.

A gravity separation step in the primary grinding circuit was simulated
by stopping the laboratory mill after approximately 50% of the grinding time had
elapsed and passing the pulp over a shaking table. The rougher gravity
concentrate was cleaned, and all middlings and tailings products were returned
to the mill. (The products were decanted and filtered to remove the large amount
of water used in the gravity separation.) Up to approximately 20% of the gold
reported into a gravity cleaner concentrate, but the gravity separation did not
increase the gold recovery over the rougher recovery obtained by flotation
alone. However, because a significant percentage of the gold was recovered into
the gravity concentrate (especially for the higher grade samples) and because of
potential benefits from a gravity circuit (such as preventing gold losses caused
by flattening of gold particles during grinding), a gravity step was
incorporated into the flowsheet.

Flotation was conducted using standard conditions and reagents with a
circuit, including primary grinding, gravity separation, and rougher flotation.
The pH was maintained at or slightly below 9 to minimize depression of any free
gold. Promoter 4037, a dithiophosphate/thionocarbamate formulation produced by
Cytech, at an addition of 0.028 pound per short ton (lb/st), was used as the
primary collector. To eliminate the need for an agitated conditioning tank, the
water-insoluble 4037 was added to the primary grinding mill. Sodium isopropyl
xanthate (SJPX) is a water-soluble collector that requires little or no
conditioning, and 0.04 lb/st was stage added directly to the flotation.
Aerofroth 73 was added on an as-needed basis directly to the flotation cell,
again without conditioning. The Aerofroth 73, a Cytech product, is a blend of
alcohol frothers and hydrocarbon oil. A rougher flotation time of nine minutes
was used.

<PAGE>

For the six samples studied, gold recovery varied between 62 and 95%,
silver recovery varied between 30 and 94%, and copper recovery varied between 14
and 97% into a combined (calculated) gravity cleaner concentrate and rougher
flotation concentrate. The lowest recoveries were associated with a highly
oxidized sample (Hazen 49733-2). When the results from the highly oxidized
sample and results at coarse grinds were ignored, gold recovery varied between
87 and 95%, silver recovery varied between 67 and 94%, and copper recovery
varied between 81 and 97% into a combined (calculated) gravity cleaner
concentrate and rougher flotation concentrate. For the sulfide samples, when
target conditions (primarily grind size) were attained, the rougher flotation
conditions were visually excellent, and there were no indications of
interference from clays or other components that can interfere with results. No
attempts were made to recover oxidized minerals.

There are appreciable differences in hardness and grindability among the
samples, and gold recovery may be reduced by as much as 15% if the target grind
(80% minus 115 mesh) is not maintained. The effect on recovery of a coarse grind
may partially explain the reported recovery problems in the operating plant.

Based on the results of this initial study, it appears that the Tres
Amigos deposit should respond well to the common beneficiation processes of
gravity separation and flotation. The recovery of gold, silver, and copper in
sulfide ore probably will exceed 90% into a combined gravity cleaner concentrate
and rougher flotation concentrate. Based on our experience with other similar
deposits and the flotation characteristics of the sulfide samples, a cleaner
flotation circuit, including regrinding and two stages of cleaning and
scavenging of the first cleaner tailing, should produce a cleaner concentrate
containing marketable copper and gold grades at normal and acceptable
recoveries. Gold losses into the first cleaner scavenger tailings may be
sufficient to warrant additional treatment of this stream. Locked-cycle tests
and/or pilot plant testing will be required to quantify the cleaner concentrate
grades and recoveries.

For future testing, care should be taken to ensure that samples
represent ore blends that will be treated in the plant and that the samples
include dilution from gangue and/or low-grade material that must be mined with
ore. Grades in the ore of up to 4% zinc may result in flotation cleaner
concentrates containing sufficient zinc to incur smelter penalties. Future work
should evaluate depressing the zinc in the rougher and/or cleaner flotation
steps.

<PAGE>

RECOMMENDATIONS

On samples that are representative of material that will be mined and processed,
additional orcontinued testing should include the following.

MINERALOGY

o The observation that precious metals are liberated at relatively coarse
particle size should be confirmed on additional samples and ore types.

GRAVITY SEPARATION

o Additional testing to support the inclusion of a gravity separation unit
operation in the primary grinding circuit should be performed.

o The influence, if any, of a gravity separation test on gold and silver
recoveries should be evaluated in conjunction with both open circuit
cleaning tests and locked-cycle tests.

ROUGHER FLOTATION

o The differences in grinding work indices between ore and rock types
should be defined.

o The primary grind size versus recovery relationship should be evaluated
for all ore or rock types.

o The primary grind size versus concentrate (rougher) grade relationship
should be evaluated for all ore and rock types.

o The influence of pH on the rougher flotation response should be
evaluated for all ore and rock types.

o Additional collectors should be evaluated on both composite samples and
on the more important ore and rock types. We suggest, as a minimum,
evaluating three collectors at three addition levels.

o Additional frothers should be evaluated.

o Depressants for zinc should be evaluated.

<PAGE>

CLEANER FLOTATION

o The regrind product size versus recovery should be evaluated for all ore
or rock types.

o The regrind product size versus the final concentrate grade should be
evaluated for all ore and rock types.

o The influence of pH on the operation of the cleaning circuit should be
evaluated.

o Depressants for zinc should be evaluated.

o Precious metal losses into the first cleaner tailings or into the
tailings from a scavenger flotation step on the first cleaner tailings
should be evaluated. Losses at this point may be reduced by a gravity
circuit in the primary grinding circuit, but may still be high enough to
warrant additional treatment.

LOCKED-CYCLE TESTS

The influence of circulating loads and recycled water should be evaluated with
locked-cycle tests. These results may result in modifications to the procedure
developed in the open circuit tests.

METALLURGICAL MAPPING

The metallurgical response of various ore and host rock types should be
evaluated by testing the procedure developed in the locked-cycle tests on
samples spatially distributed throughout the orebody.

<PAGE>

MINERALOGY AND HEAD ANALYSIS

Polished sections of each of the six ore samples were prepared from minus
10-mesh representative splits of each sample. Incident light microscopic
analysis showed a relatively simple sulfide mineralogy comprised mainly of
pyrite, chalcopyrite, galena, and sphalerite, with minor to trace amounts of
bornite, chalcocite, and cove]Iite. Sample 2 is highly oxidized and contains
abundant, mostly fine-grained hematite, in addition to sulfides and a small
amount of green oxide copper minerals. Sample 6 is moderately oxidized and
carries only minor hematite. The sulfide mineralization in all of the samples is
generally fairly coarse grained and, for the most part, liberated from one
another and from gangue at the 10-mesh size. Mutual sulfide intergrowths and
intergrowths with gangue occur in moderate to minor amounts and in general are
structurally simple. Precious metal mineralization was detected in only two of
the six samples. In Sample 1, native gold was observed as inclusions varying
from less than 5 microns to 35 microns in several pyrite particles, and silver
was found as hessite, a silver telluride sulfide, and gold-bearing native
silver, all occurring intergrown with a single galena particle. Gold was also
observed in Sample 4, a 10-micron inclusion in pyrite. The complete
mineralogical report is included in Appendix A.

<TABLE>

Table I presents the analytical results completed on the six samples and
demonstrates the wide variability in metal contents among the samples.

Table 1. Summary of Head Analyses

=================================================================================================
Hazen Client Au, Ag, Cu, Pb, Zn, Fe, S(T), S ,
Identification Identification oz/st oz/st % % % % % %
=================================================================================================

49733-1 Sample 1 0.863 4.10 4.61 0.10 1.17 13.7 13.5 13.1
- -------------------------------------------------------------------------------------------------

49733-2 Sample 2 0.466 0.86 0.36 0.01 0.02 4.56 0.18 0.12
- -------------------------------------------------------------------------------------------------

49733-3 Sample 3 0.172 0.97 0.95 0.07 0.30 6.18 5.90 5.98
- -------------------------------------------------------------------------------------------------

49733-4 Sample 4 0.566 0.86 0.27 0.70 4.09 10.8 13.1 13.3
- -------------------------------------------------------------------------------------------------

49733-5 Sample 5 0.282 0.19 0.05 0.05 0.23 4.05 3.17 3.05
- -------------------------------------------------------------------------------------------------

49733-6 Sample 6 0.068 0.34 0.15 0.01 0.01 4.52 3.27 3.21

=================================================================================================

</TABLE>

<PAGE>

PROCESS DEVELOPMENT

GENERAL FLOTATION CONDITIONS

In general, the flotation conditions presented in Table 2 were selected
from our experience with other copper orebodies and from preliminary testing on
Sample 49733-1. The target grind, 80% minus 115 mesh, was selected from testing
on Sample 49733-1 and will be easily achieved in practice. To simulate the use
of a gravity separation step in the primary grinding circuit, the laboratory rod
mill was stopped after approximately 50% of the total required grinding time,
the mill was emptied, and the slurry was tabled. The rougher table concentrate
was cleaned on a Gemini table, and the entire gravity cleaner concentrate was
weighed and assayed for gold and silver. The rougher table tailings, the rougher
table middling product, and the Gemini cleaner table tailings were recombined,
decanted, and filtered. The filtered product was returned to the rod mill, and
the grinding step was completed. In the laboratory, because we use so much water
in the gravity circuit and because we need to maintain the proper slurry density
in the second primary grind, we need to employ decanting and filtering
operations. In an industrial flowsheet, these operations would not be required
because the slurry densities can be controlled in a continuous operation.

Table 2 - General Flotation Conditions

(Table Graphic Omitted)

The pH was maintained at or slightly below 9 to minimize depression of
any free gold. Promoter 4037, a dithiophosphate/thionocarbamate formulation
produced by Cytech, was used as the primary collector. To eliminate the need for
an agitated conditioning tank, water-insoluble 4037 was added to the primary
grinding mill. Sodium isopropyl xanthate (SIPX) is a common water-soluble
collector that requires little or no conditioning. Aerofroth 73, also a Cytech
product, is a blend of alcohol frothers and hydrocarbon oil. Aerofroth 73 was
added directly to the flotation cell without conditioning. Complete data sheets
are included in Appendix B.

GRIND SIZE VERSUS CONCENTRATE GRADE AND RECOVERY

This series, conducted on Sample 49733-I, was designed to provide an
initial familiarization with the flotation characteristics of the sample, to
evaluate the importance of grind size, and to appraise the relationship between
lime additions and pH. As the data presented in Table 3 show, flotation produces
very acceptable results, with 95% or more of the gold, silver, and copper being
recovered after nine minutes of flotation. The weight percent floated (30 to
34%) with lower copper head grades could be a concern, but Sample 49733-1 has a
grade of 4.6% copper. This high head grade requires that the weight percent
floating into the rougher concentrate be higher than normally experienced with
lower grades. The appearance of the froth and physical conditions of the
flotation were excellent.

Based on the results from Tests 2671-46, 2671-47, and 2671-48 shown in
Table 3, a five-minute rougher flotation step at a grind size of 136 microns is
adequate for Sample 49733-1. However, at this point, the response of the other
rock types was not known, so slightly conservative conditions (e.g. a grind size
of 80% minus 125 microns and a flotation time of seven minutes) were selected
for additional evaluation in the second series, which is summarized in Table 4.
The pH of Test 2671-55 at 10.2 was higher than the target pH of 9 to 9.5, but
the results are similar to those of Test 2671-57. There is no explanation for
the variation of pH. Test 2671-56 was a scoping test to evaluate zinc depression
by the addition of zinc sulfate (a common depressant for sphalerite) to the
grinding mill. For Test 267 1-55, 61% of the zinc reported into the seven-minute
rougher concentrate, and for Test 267 1-56, 62% of the zinc reported into the
seven-minute rougher concentrate. As shown in Table 4, gold and silver
recoveries were lower with the zinc sulfate. For this program, zinc depressants
were eliminated. Although the gold, silver, and copper recoveries for Tests
2671-55 and 2671-57 are acceptable, middling particles appeared to remain in the
froth after the seven-minute rougher flotation. Based on this observation, the
rougher flotation was extended to nine minutes for the remainder of the program.

<PAGE>

Complete data sheets are included in Appendix B.

Table 3. Grind Size Versus Concentrate Grade and Recovery, Sample 49733-1

(Table Graphic Omitted)

Table 4. Confirmation of Grind Size Versus Concentrate Grade and Recovery,
Sample 49733-1

(Table Graphic Omitted)

GRAVITY SEPARATION

Reportedly, the Tres Amigos deposit has been the site of sporadic gold
mining for many years. Given the available technology, recovery of relatively
coarse gold must have been a principal source of production. Because the
flotation process may not recover coarse gold, a gravity separation step within
the primary grinding circuit would be a relatively inexpensive insurance against
losses of coarse gold. To investigate the influence of particle size of the feed
to a gravity separation, ore ground to 80% passing sizes (P80s) of 1,040, 389,
and 226 microns was treated with a Wilfley shaking table operated as a rougher.
The concentrate was then cleaned, without being reground, with a Gemeni table.
This initial evaluation of a gravity separation step was conducted only on
Sample 49733-1.

As the data in Table 5 show, the P80 grind of 1,040 microns produced a
0.5 weight percent Gemeni cleaner concentrate containing 10% of the gold and 3%
of the silver and assaying 20 oz Au/st and 24 oz Ag/st. The finer grind P80 size
of 389 microns increased the gold and silver recoveries into the Gemeni cleaner
concentrate to 17 and 6%, respectively. However, the concentrate only assayed 16
oz Au/st and 25 oz Ag/st. Decreasing the P80 grind size to 226 microns
apparently increased the Gemeni cleaner concentrate grade to 34 oz Au/st and 27
oz Ag/st while maintaining gold and silver recoveries of 18 and 3%. In our
opinion, the difference in concentrate grades between the P80 grinds of 389 and
226 microns resulted from minor variations in table operation. The lower grade
concentrate contained 1% of the feed weight, while the higher grade concentrate
contained 0.5% of the feed weight, but the difference in weights is less than 10
grams and is probably not significant. The important observations are that 17 to
18% of the gold and 3 to 6% of the silver reported into the gravity cleaner
concentrate at feed sizes that would be easily achieved within the primary
grinding/classification circuit, and that these recoveries are not overly
sensitive to grind size. Based on these results, a gravity separation step was
included in the flowsheet for the remainder of the program.

Complete data sheets are included in Appendix C

<PAGE>

GRAVITY PLUS FLOTATION

The next step in the process development was combining the gravity and
flotation unit operations into one, unified flowsheet. The initial evaluation
was conducted on Sample 49733-1 and confirmatory tests were completed on the
other five samples. To simulate the operation of a gravity circuit located in a
primary grinding/classifying circuit, the laboratory rod mill was stopped after

Table 5. Gravity Separation of Sample 49733-1

(Table Graphic Omitted)

approximately 50% of the grinding time. The mill was emptied, and the slurry was
passed over a Wilfley shaking table.

The Wilfley concentrate was then cleaned on a Gemeni table. The Gemeni
table tailings, the Wilfley table middling product, and the Wilfley table
tailings were recombined to represent the gravity circuit tailings returning to
the grinding mill. Excess water was decanted, and the material was filtered. The
decantation and filtering operations were necessary to reject the large amount
of water diluting the slurry but would not be necessary in an operating plant
where slurry density can be controlled. The filter cake was returned to the rod
mill, and the grind was completed for the flotation step. The data for the
combined flowsheet are summarized in Table 6.

For Sample 49733-1, Test 2671-64, which to this point in the program had
been the only sample studied, the gravity circuit concentrate contained 17% of
the gold and 5% of the silver, which compares with a gold recovery of 17% and a
silver recovery of 6% for the initial testing of the gravity circuit (Table 5).
The rougher flotation concentrate contained 79% of the gold, 89% of the silver,
and 94% of the copper, and assayed 2.3 oz Au/st. 12.5 oz Ag/st, and 14.5%
copper. The metal values recovered into a combined gravity and flotation
concentrate were as follows (numbers in parentheses being the typical results
from Table 3): 96% (97%) of the gold, 94% (96%) of the silver, and 97% (98%) of
the copper. The inclusion of the gravity step did not increase the total
recovery of gold or silver over flotation alone, but the gold and silver in this
particular sample (that we have seen) are not large enough to be lost in the
rougher flotation step. However, we would expect that the gold and silver
recoveries will be higher in a circuit containing a gravity separation when the
flotation is continued through the regrinding and cleaning operations. Any
losses in flotation cleaners should be quantified in the second phase of test
work.

For Sample 49733-2, Test 267 1-65, the recovery into a calculated
combined gravity and rougher flotation concentrate was 62% of the gold, 31% of
the silver, and 14% of the copper. As discussed in the mineralogical report,
Sample 49733-2 is highly oxidized, and the oxidized characteristics of the
sample probably explain the poor results. For this limited program, we did not
attempt to recover oxidized minerals. The handling characteristics during
decanting and filtering also are indicative of the slimy nature of this sample.
The slurry would not form a clear liquor that could be decanted, even though the
slurry was allowed to sit for over an hour. The entire slurry had to be filtered
before the sample could be returned to the grinding mill, and the filtering
operation took most of the day. If this sample represents a major portion of the
orebody, an extensive metallurgical program will be required to develop an
acceptable flowsheet.

<PAGE>

Table 6. Gravity and Flotation Processing, Samples 49733-1 through 49733-6 Page
1 of 2

(Table Graphic Omitted)

Table 6. Gravity and Flotation Processing, Samples 49733-1 through 49733-6

(Table Graphic Omitted)

For Sample 49733-3, Test 2671-67, only 77% of the gold, 90% of the
silver, and 95% of the copper were recovered into a calculated combined gravity
rougher flotation concentrate. However, the screen analysis of the flotation
tailings showed that the grind at 54% minus 100 mesh was significantly coarser
than the target 80% minus 115 mesh. The procedure was repeated using a longer
grinding time (Test 2671-75) to obtain a grind of 84% minus 100 mesh. Results
improved, with 91% of the gold, 92% of the silver, and 97% of the copper
reporting into the calculated combined concentrate. The rougher flotation
concentrate assayed 1.0 oz Aulst, 5.8 oz Ag/st, and 5.8% copper. The improved
flotation recovery demonstrates that on at least some of the ore types, the
grind size will have a significant impact on metallurgical performance. The
longer grind times used to approach the target size indicate significant
differences in the work indices among the samples.

For Sample 49733-4, Test 2671-68, 92% of the gold, 82% of the silver,
and 81% of the copper were recovered into a calculated combined gravity rougher
flotation concentrate. It appears that the apparent low copper recovery is
related more to the low head grade (0.27% copper) of this sample than to true
metallurgical problems. The rougher flotation tailings assayed 0.07% copper.

For Sample 49733-5, Test 2671-69, only 79% of the gold, 56% of the
silver, and 81% of the copper were recovered into a calculated combined gravity
rougher flotation concentrate. However, the screen analysis of the flotation
tailings showed that the grind at 49% minus 100 mesh was significantly coarser
than the target 80% minus 115 mesh. The procedure was repeated using a longer
grinding time, Test .2671-73, and a grind of 63% minus 100 mesh was obtained.
Even though this grind is still coarser than desired, results improved, with 91%
of the gold, 67% of the silver, and 85% of the copper reporting into the
calculated combined concentrate. The rougher flotation concentrate assayed 3.6
oz Au/st, 1.8 oz Ag/st, and 0.7% copper. This demonstrates again that on at
least some of the ore types, the grind size will have a significant impact on
metallurgical performance, and there are significant differences in the work
indices between samples. Low copper (0.05%) and silver (0.19 oz/st) head grades
in this sample contributed to the apparent low recoveries of these two metals.

For Sample 49733-6, Test 2671-66, only 81% of the gold, 54% of the
silver, and 77% of the copper were recovered into a calculated combined gravity
rougher flotation concentrate. However, the screen analysis of the flotation
tailings showed that the grind at 64% minus 100 mesh was significantly coarser
than the target 80% minus 115 mesh. The procedure was repeated using a longer
grinding time (Test 2671-74), and a grind of 83% minus 100 mesh was obtained.
Results improved, with 81% of the gold, 84% of the silver, and 89% of the copper
reporting into the calculated combined concentrate. The rougher flotation
concentrate assayed 0.63 oz Au/st, 1.1 oz

<PAGE>

Ag/st, and 1 .5% copper. These data again demonstrate that the grind
size will have a significant impact on metallurgical performance, and there are
significant differences in the work indices between samples. Low copper (0.15%),
gold (0.068 oz/st), and silver (0.34 oz/st) head grades in this sample
contributed to the apparent low metal recoveries.

Complete data sheets are included in Appendix D.

OPEN CIRCUIT CLEANING

One exploratory test to evaluate recoveries and grades into a flotation
cleaner concentrate following regrinding and two stages of cleaning of the
rougher flotation concentrate in an open circuit was conducted using Sample
49.733-1. A scavenger flotation step to produce a scavenger concentrate for
recycle into the regrind circuit classifiers and a disposable tailings was
included in the flowsheet. The results are summarized in Table 7. Reporting into
the gravity concentrate was 23% of the gold and 7% of the silver. These results
continue to support the inclusion of a gravity separation step into the grinding
circuit; if the amount of gold indicated by this test can be recovered into a
gravity concentrate, it should be removed and not sent to the flotation circuit.
The first flotation cleaner concentrate contained 50% of the gold, 42% of the
silver, and 31% of the copper and assayed 9.3 oz Au/st, 38.7 oz Ag/st, and 31.7%
copper. The flotation second cleaner concentrate contained 45% of the gold, 31%
of the silver, and 21% of the copper and assayed 13.2 oz Au/st, 45.2 oz Ag/st,
and 34.1% copper. The metal recoveries into the second cleaner concentrate
appear low, but based on our experience with other copper ores, optimization of
the cleaning steps will improve metal recoveries without seriously reducing
grade. The visual characteristics of the cleaner flotation were that of a clean
floating ore. This opinion will need to be confirmed by additional testing and
locked-cycle tests.

The complete data sheet is included in Appendix D.

Table 7. Open Circuit Regrinding and Cleaning, Sample 49733-1

(Table Graphic Omitted)

================================================================================

APPENDIX A

Mineralogical Investigation of Tres Amigos Gold/Copper Ore Samples

Hazen Research, Inc.
4601 Indiana Street - Golden, CO 80403
Tel: (303) 279-4501
Fax: (303) 278-1528

August 6, 1999

FEDERAL EXPRESS TRANSMITTAL

Mr. Wayne Henderson
Lockwood Greene Engineers, Inc.
4201 Spring Valley Road

Suite 1500
Dallas, TX 75244

Re: Mineralogical Investigation of Tres Amigos Gold/Copper Ore Samples

Hazen Project 9507-02

Dear Wayne:

The report on the mineralogy of the six Tres Amigos gold/copper ore samples is
enclosed. Because the chances of detecting gold in straight head ore are
ordinarily very slim, all samples were subjected to gravity concentration to
upgrade the gold for observation of a statistically valid number of gold
particles.

Consequently, the emphasis of this investigation has been on examining the
gravity concentrates. Native gold, actually electrum, was detected in all six
samples, and some of the gold is already liberated at 10 mesh. From the overall
observations, it appears that a combination of gravity concentration and froth
flotation should effectively recover the majority of the gold.

If selective flotation is planned for production of separate copper, lead, and
zinc concentrates with attendant depression of pyrite, some of the gold
occurring as fine inclusions in the pyrite might not be recovered. For the most
part, the sulfides are relatively coarse, and liberation should not be a
problem. Sample 2 is highly oxidized; Sample 6 is moderately oxidized.

Please call me if you have any questions.

Best regards,

/S/ Roland Schmidt
- -------------------
Roland Schmidt

Director Mineralogical Laboratory

RS:wlk

Enclosure

<PAGE>

MINERALOGICAL INVESTIGATION OF

TRES AMIGOS GOLD/COPPER ORE SAMPLES

As part of the metallurgical test program on the Tres Amigos gold/copper
ore samples, mineralogical studies were conducted on six head samples to
determine the general mineralogy with emphasis on gold and copper occurrences.
The procedures used and the results of the mineralogical investigation follow.

X-RAY DIFFRACTION ANALYSIS

For determination of the general mineralogy, pulverized portions of the
head samples were analyzed by x-ray diffraction. The results are presented in
Table Al, which show a moderate to major quartz content for all of the samples,
subordinate to major pyrite in Samples 1, 3, 4, 5, and 6, and subordinate potash
feldspar in Sample 5. Samples 2 and 6 are highly to moderately oxidized and show
the presence of hematite.

Table Al. Results of X-ray Diffraction Analysis of Head Samples

(Table Graphic Omitted)

RESULTS OF MICROSCOPIC STUDIES

General Description of Minus 10-mesh Head Ore Samples

To determine gross mineralogical features at relatively coarse size,
polished sections were prepared of minus 10-mesh representative splits of each
sample. Incident light microscopic analysis showed a relatively simple sulfide
mineralogy comprised mainly of pyrite, chalcopyrite, galena, and sphalerite,
with minor to trace amounts of bornite, chalcocite, and covellite. Sample 2 is
highly oxidized and contains abundant, mostly fine-grained hematite, in addition
to sulfides and a small amount of green oxide copper minerals. Sample 6 is
moderately oxidized and carries only minor hematite. The sulfide mineralization
in all of the samples is generally fairly coarse-grained and, for the most part,
liberated from one another and from gangue at the 10-mesh size. Mutual sulfide
intergrowths and intergrowths with gangue occur in moderate to minor amounts and
in general are texturally simple.

Table A2 summarizes the chief differences in sulfide mineralogy among
the six samples.

Table A2. Differences in Sulfide Mineralogy

(Table Graphic Omitted)

Precious metal mineralization was detected in only two out of the six
samples. In Sample 1, native gold was observed as inclusions varying from less
than 5 to 35 microns in several pyrite particles, and silver was found as
hessite, a silver telluride-sulfide, and gold-bearing native silver, all
occurring intergrown with a single galena particle. Gold was also observed in
Sample 4 as a 10- micron inclusion in pyrite.

The precious metal mineralization for all of the samples, plus the
occurrences noted above, are described in greater detail in the following
section.

<PAGE>

Mineralogical Composition of Gravity Concentrates

In order to enable detection of the gold and allow examination of the
statistically valid number of particles, the six samples Were subjected to
gravity concentration to upgrade the gold. In the first step, the minus 8-mesh
samples were crushed to minus 10 mesh and panned to recover any coarse free gold
in its natural state, that is at least at the 10-mesh feed size.

The pan tailings were then ground to minus 100 mesh and tabled on a
Deister laboratory shaking table, followed by panning of the rougher table
concentrate. This latter step recovered gold that was still locked at 10 mesh.

The two sets of pan concentrates were then examined with a binocular
microscope to obtain information on the characteristics of the gold occurrences,
including shape and particle size.

Following the initial microscopic examination, the two pan concentrates
were combined and prepared as polished sections for incident light microscopic
analysis.

The information obtained from the examination of each set of products is
combined and summarized in the following single description for each sample.
Reference to a specific product will be made where pertinent. For Sample 1, some
identifications were made during study of the minus 8-mesh unseparated head ore
sample. For the sake of convenience, this information is included with the
description of the pan concentrates.

Sample 1 - Pan Concentrates

The pan concentrates of Sample 1 consist predominantly of pyrite,
chalcopyrite, galena with minor sphalerite, native gold, and traces of
auriferous silver or high silver electrum, acanthite, hessite, a silver
telluride sulfide, and polybasite. The chief sulfides are mostly liberated from
each other and are quite coarse, up to over 300 microns, with a typical size
range of 75 to 150 microns. The pyrite occurs mostly as angular, sometimes
rounded particles but also often as euhedral crystals. Chalcopyrite is angular,
and galena occurs generally as cubic cleavage fragments.

Gold is plentiful and occurs mostly as liberated, irregular shaped
particles with jagged edges. Size range is from about 5 to about 300 microns,
with an estimated average range of 50 to 100 microns.

A relatively small amount of the gold is intergrown with chalcopyrite
and pyrite and rarely sphalerite in the form of simple intergrowths and
attachments, as well as inclusions varying from less than 5 to 35 microns, which
are more typical for pyrite. All the gold observed is electrum, and electron
microprobe analysis of a typical particle showed 74% gold and 26% silver.
Auriferous silver or high silver electrum, which is present in trace amounts,
assays about 60% silver and 40% gold2.

Comparison of the original 10-mesh pan concentrate with the pan concentrate
derived from the table concentrate showed significantly more gold in the latter
concentrate, indicating that most of the gold was locked at 10 mesh. Also, the
effect of grinding on the gold is apparent in the table-pan concentrate, as the
gold sometimes is flattened or rolled out and has a micro granular surface
texture, which is lacking in the 10-mesh concentrate.

<PAGE>

Sample 2 - Pan Concentrates

The Sample 2 pan concentrates consist predominantly of pyrite and
hematite, with minor chalcopyrite, chalcocite, galena, goethite, barite, and
green oxide copper minerals. Present in minor to trace amounts are bornite,
native gold, covellite, sphalerite, and auriferous silver or silver-rich
electrum. The overall particle size of the chief sulfides is somewhat smaller
than in Sample 1, with a typical range of 50 to 100 microns. Most of the
constituents are liberated from each other.

Gold is abundant, occurring mostly as irregular shaped particles often
with jagged edges, varying from about 5 to 150 microns and occasionally up to
450 microns. The estimated average size range is from 50 to 100 microns. Fairly
frequently, the gold is partially to completely enveloped by goethite.

Comparison of the two pan concentrates shows appreciable gold in both,
indicating substantial liberation at 10 mesh. The gold in the table-pan
concentrate shows the same flattening or rolled out effect noted in Sample 1.

Sample 3 - Pan Concentrates

The Sample 3 pan concentrates consist chiefly of pyrite and galena, with
subordinate chalcopyrite and minor barite, sphalerite, and gold. The pyrite
occurs mostly as euhedral, often somewhat rounded crystals and as angular
particles, while galena occurs generally as cubic cleavage fragments.

The typical size range of the sulfides is from 50 to 100 microns. The
majority of all of the constituents is liberated from each other. Gold is
relatively abundant and occurs as irregular shaped particles, some with ragged
edges, ranging from about 5 to 400 microns and averaging 50 to 100 microns.
Occasionally the gold is intergrown with chalcopyrite or shows thin rims of
goethite. In the two pan concentrates, the concentrate recovered from straight
10-mesh ore shows very little gold, whereas gold is abundant in the table-pan
concentrate, indicating significant locking at 10 mesh. The morphology and
surface characteristics of this sample are similar to those described for
Samples 1 and 2.

Sample 4 - Pan Concentrates

The Sample 4 pan concentrates are comprised of mostly galena, with
slightly less pyrite, subordinate sphalerite, minor gold, and a trace of
auriferous silver or silver-rich electrum.

The galena occurs as cubic cleavage fragments and exhibits a bimodal
size distribution. At the coarser end of the spectrum, galena is nearly 1
millimeter (mm) in size, and at the finer end, it averages 50 to 100 microns.
Pyrite occurs primarily as angular particles and euhedral crystals and shows a
similar size distribution as the galena. All constituents are highly liberated
from each other. Gold is plentiful, occurring mostly as irregular shaped
particles, some with jagged edges. The size range is from 20 to 450 microns,
with an estimated average range of 75 to 150 microns. Occasionally, gold is
intergrown with pyrite, sometimes in the form of up to 20-micron inclusions.

Substantial liberation at 10 mesh is shown by the abundant gold in each
of the two pan concentrates. The presence of significantly coarser gold (up to
450 microns) in the table-pan concentrate indicates that flattening with
attendant "coarsening' ? has occurred. Again in the latter concentrate, the gold
shows the typical micro granular surface texture and sometimes streaks,
resulting from grinding the ore.

<PAGE>

Sample 5 - Pan Concentrates

The Sample 5 pan concentrates consist primarily of pyrite, with
subordinate galena, minor chalcopyrite, sphalerite, barite, and gold and a trace
of auriferous silver or silver-rich electrum. The pyrite occurs as angular
particles and euhedral crystals and varies from about 10 microns to over1 mm,
with a typical range of 50 to 150 microns.

The galena is present as cleavage fragments and covers roughly the
same size range as the pyrite. All the constituents are essentially completely
liberated. Gold is abundant and occurs as liberated irregular shaped particles
and rarely intergrown with pyrite and very rarely with galena. Size variation is
from 10 to 450 microns, and as in Sample 4, the coarsest particles are only
present in the table-pan concentrate.

The average size of the gold in the 10-mesh pan concentrate is 60 to
80 microns; whereas in the table-pan concentrate, it is 150 to 300 microns, and
the same comments apply as for Sample 4.

Sample 6 - Pan Concentrates

The pan concentrates of Sample 6 consist of nearly all pyrite,
occurring as angular and rounded particles and euhedral crystals. Minor
constituents are hematite, chalcopyrite, bornite, and barite, and trace
constituents are gold and auriferous silver?.

Gold is the least abundant of all the samples and occurs mostly as
irregular shaped liberated particles varying from 10 to 300 microns, with the
coarse particles again being prevalent in the table-pan concentrate. The
estimated average size range is 35 to 70 microns. Gold is rarely intergrown with
pyrite.

Figures A1 - A10 illustrate the gold occurrences as observed in the
pan concentrates. The concentrate that contained the most gold (either the pan
concentrates from the 10-mesh ore or from tabling minus 100-mesh pan tailings)
was selected for illustration. For Sample 4, both concentrates were chosen
because of the abundance of gold in each concentrate. A few selected photographs
of the polished sections are also included.

<PAGE>

Figure 1. Sample 1 Table Pan Concentrate (Graphic Omitted)
Photomicrograph illustrating liberated gold (yellow) measuring up to 65-mesh,
galena and pyrite (gray metallic particles) 40x

Figure 2. Sample 1 Minus 8-mesh Head Ore (Graphic Omitted)
Polished section showing gold (almost white) intergrown with pyrite crystal
(cream colored) and chalcopyrite (yellow). Electron microprobe analysis of the
gold showed that it is electrum analyzing 74% Au and 26% Ag. 200x

Figure 3. Combined Pan Concentrates (Graphic Omitted)
Polished section showing liberated gold (light yellow) and gold intergrown with
chalcopyrite (yellow brown). Other particles are pyrite (cream colored) and
galena (medium gray). 200x

Figure 4. Sample 2 Minus 10-mesh Pan Concentrate (Graphic Omitted)
Photomicrograph showing gold particles (yellow), some with goethite coatings
(brown) and mostly hematite (dark gray and brown). Minor sulfides (white
metallic and oxide copper minerals (green). 40x

Figure 5. Sample 3 Table-Pan Concentrate (Graphic Omitted)
Photomicrograph showing coarse gold (yellow) and euhedral pyrite crystals
(square outlines). 40x

Figure 6. Sample 4 Minus 10-mesh Pan Concentrate (Graphic Omitted) Liberated,
tarnished gold (yellow and brown) and galena (light to dark gray). 40x

Figure 7. Sample 4 Table-Pan Concentrate (Graphic Omitted)
Abundant coarse gold (yellow) and galena (light to dark gray). Note the
substantial size difference and difference in color and surface characteristics
of the gold compared to the minus 10-mesh concentrate shown in the previous
Figure.

40x

Figure 8. Sample 4 Combined Pan Concentrate (Graphic Omitted)
Polished section illustrating bimodal size distribution of galena (medium gray,
square outlines). Shown also are liberated gold (light yellow) and sphalerite
(dark gray) intergrown with the second largest galena fragment. 160x

Figure 9. Sample 5 Table-Pan Concentrate (Graphic Omitted)
Coarse "mashed"? gold (yellow) and fine pyrite particles in background.
40x

Figure 10. Sample 6 Table-Pan Concentrate (Graphic Omitted)
Coarse "flattened"? gold (yellow) and fine pyrite in background.
40x

Exhibit "2.4"
DYNARESOURCE, INC.
"Production Pro Forma"
San Jose de Gracia

Lockwood Greene

================================================================================

PRELIMINARY FINANCIAL ANALYSIS

Date: 12-July-1999

From: Wayne C. Henderson

Re: FINANCIAL ANALYSIS OF
PRELIMINARY 1000 STPD
TARGET MILL PRODUCTION

To: Koy D. Diepholz, WCM

cc: Tom Thigpen
Dom Perrotta
Pat Sapinoso

INTRODUCTION:

Earlier estimated Capital Costs were developed for a target 1000 stpd gold ore
Concentrator/Pressure Cyanidation process (08-July-1999). This target was chosen
to be representative of a possible new mill, leaching and gold precipitate
production operation in a remote location (e.g. near the Tres Amigos deposit at
San Jose de Gracia). The novel LTLP (Low-Temperature, Low-Pressure) Oxygen
Cyanidation Process for a gravity/flotation concentrate was chosen as the basis
for design.

A preliminary financial analysis (i.e. calculating the Internal Rate of Return,
IRR, the Net Present Value , NPV, and the NPV/Investment Ratio) was made using
both the Capital Costs on a NEW and on a USED Equipment Basis. A project
duration of a total of 8 years was used.

In addition, for a scenario utilizing an updated and refurbished existing 150
stpd Mill located at San Jose was also looked at. In this Case, project
durations of 3, 4 and 5 years (operations for 2.5, 3.5 and 4.5 years
respectively) were considered.

Tables summarizing Capital Costs (NEW and USED) for Equipment, Operating Costs
(@ 1000 stpd with precip being shipped and 150 stpd with concentrate being
shipped) were developed to use the financial analysis. These tables and the
financial analysis summaries are attached.

DISCUSSION:

Based on the estimated costs to get into production and the other assumptions
for ore grade, etc., the following financial indices were calculated:

Page 1 of 2

<PAGE>

FINANCIAL ANALYSIS SUMMARY

CASE IRR NPV NPV/INV
($MM) (@10% Int.)
- --------------------------------------------------------------------------------
NEW MILL - 1000 stpd
- --------------------------------------------------------------------------------
NEW EQUIPMENT 56.56% 20.01 1.79

USED EQUIPMENT 82.58% 23.18 3.06
- --------------------------------------------------------------------------------
REFURBISHED EXISTING MILL
- --------------------------------------------------------------------------------
150 stpd, 2.5 YR PROJECT 1010.40% 2.087 2.49
150 stpd, 3.5 YR PROJECT 1017.94% 3.045 3.63
150 stpd, 4.5 YR PROJECT 1018.60% 3.916 4.67

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

It should be noted that depending on the acceptable level of project risk (a
function of Corporate Policy), typically any project with an IRR > 35-50% is
usually a good one. Using the estimated Installed Costs for new equipment, the
1000 stpd project still seems to be a relatively-good one even at the current
low gold prices. In addition, the scenario that is based on a Mill with some
used major equipment improved the IRR to >82%.

An additional criteria is the NPV10%/Inv. Ratio. If this value is > 2.0, a
project also is considered to be attractive. The USED equipment scenario at 1000
stpd improves this ratio from 1.79 to 3.06. Thus it would seem that the use of
some used equipment, where available, would be a desirable scenario for a small
tonnage, i.e. 1000 stpd, operation.

Even more attractive as a small-scale project is the use of the existing 150
stpd Mill located at San Jose. With only minimal additional Capital Investment
(primarily for some Mining and Mobile equipment) to refurbish and update the
existing Mill, a potentially very attractive short-term production scenario is
seen. With the very low Capital requirements, the IRR's for either a 3, 4 or 5
year project are all >1000%.

A more meaningful indicator, however, is the NPV10%/Investment Ratio. This
increases from 2.5 (for a 2.5 year production scenario) to 4.7 (for a 4.5 year
production scenario). The existing ore tonnage and grade estimate at the Tres
Amigos area should sustain these short duration mining and processing scenarios.

It would appear that a short-duration production scenario utilizing the existing
Mill at San Jose would be a relatively-attractive, from a financial return,
small-scale project. This seems to be consistent with West Coast Mine's earlier
perceptions that a small-scale project could be financially justified and
rewarding.

Page 2 of 2

<PAGE>

Equipment Costs By Plant Section
1000 STPD Ore

- --------------------------------------------------------------------------------
Area Plant Section Estimated Cost Estimated Cost
New EQUIP. Used EQUIP.
(1999 $U.S.) (1999 $U.S.)
- --------------------------------------------------------------------------------

100 GRINDING CIRCUIT $2,080,980 $1,080,980

200 GRAVITY CIRCUIT $175,000 $115,000

300 FLOTATION CIRCUIT $193,800 $153,800

400 CONCENTRATE REGRIND CIRCUIT $176,950 $112,950

500 PRESSURE CYANIDATION $822,500 $342,500

600 FILTER CIRCUIT $326,950 $215,000

700 PRECIPITATIONCIRCUIT $275,000 $215,000

800 DORE' PRODUCTION NOT INCL. NOT INCL.

900 PLANT UTILITIES $643,300 $643,300

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

TOTAL: $4,694,480 $2,908,480

ESTIMATED INSTALLED COST: $9,400,000 $5,830,000

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

<PAGE>

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

APPROXIMATE OPERATING COSTS
1000 STPD ORE, 330 DAYS/YEAR

ITEM BASIS UNITS UNIT ANNUAL COST/REC.
COST COST OUNCE
- --------------------------------------------------------------------------------
$/UNIT MM $/YR $/RecTOZ

ORE GRADE MINED 0.2918 tr. oz/st
10.0 grams/mt

GOLD MINED 291.8 topd

NET RECOVERY (into ppt.) 92.87% OR 271.0 topd @ $270.00
(@93.0% Net Return) 89,428 topy $251.10
MINING - UNDERGROUND 1,000 stpd ORE $20.00 $6.600 $73.80
(ALL-IN COST)
MILL COSTS (ALL IN):
Milling 1,000 stpd ORE $2.50 $0.825 $9.23
Concentration 1,000 stpd ORE $1.88 $0.619 $6.92
Pressure Cyanidation 100 stpd Conc. $116.44 $3.842 $42.97
Merrill-Crowe Pptn. 271.0 topd $13.20 $1.180 $13.20
Shipping 1,000 lbs/day $0.80 $0.264 $2.95
Maintenance & Repairs 1,000 stpd ORE $995.80 $0.329 $3.67
SUB-TOTAL: $13.659 $152.740

CONTINGENCY/OVERHEAD 10.00% COSTS $1.366 $15.27

TOTAL OPERATING: $45.53 $15.025 $168.01

ANNUAL GROSS REVENUE: $22.455 $251.10

ANNUAL NET REVENUE: $7.430 $83.09

<PAGE>

APPROXIMATE OPERATING COSTS
150 STPD ORE, 260 DAYS/YEAR

ITEM BASIS UNITS UNIT ANNUAL COST/REC.
COST COST OUNCE
$/UNIT MM $/YR $/RecTOZ

ORE GRADE MINED 0.2918 tr. oz/st
10.0 grams/mt

GOLD MINED 43.77 topd

NET RECOVERY (into conc.) 96.50% OR 42.2 topd @ $270.00
(@93.0% Net Smelter Return) 10,982 topy $251.10
MINING - UNDERGROUND 150 stpd ORE $20.00 $0.780 $71.03
(ALL-IN COST)
MILL COSTS (ALL IN):
Milling 150 stpd ORE $2.50 $0.098 $8.88
Concentration 150 stpd ORE $0.28 $0.011 $1.00
Pressure Cyanidation 0 stpd Conc. $0.00 $0.000 $0.00
Merrill-Crowe Pptn. 0.0 topd $0.00 $0.000 $0.00
Conc. Shipping 15 stpd/day $1,000.00 $0.277 $25.26
Maintenance & Repairs 150 stpd ORE $200.00 $0.066 $6.01
SUB-TOTAL: $1.232 $112.175

CONTINGENCY/OVERHEAD 10.00% COSTS $0.123 $11.22

TOTAL OPERATING: $34.75 $1.355 $123.39

ANNUAL GROSS REVENUE: $2.758 $251.10

ANNUAL NET REVENUE: $1.402 $127.71

<PAGE>

<TABLE>

TARGET PROJECT - 1000 STPD ORE FEED TO MILL
NEW EQUIPMENT BASIS

CATAGORY NUMBER UNITS

INTEREST RATE 15.00% % ROR

STONS MINED/PROC. 330,000 stons/yr

AVERAGE GRADE 0.2918 troy oz/st

RECOVERY INTO PPT. 92.87%

GOLD SALES PRICE (NSR) $251.10 troy oz

$ CASH FLOW BY YEAR
1 2 3 4 5 6
7 8
CAPITAL EXPENDITURES
MINE ($500,000)
MILL ($7,050,000) ($2,350,000)
MOBIL EQUIPMENT ($500,000)
WORKING CAPITAL ($751,245) ($1,690,301)
TOTAL INVESTMENT: ($11,151,245)
OPERATING

MINE $20.00 /ston ore ($4,950,000) ($6,600,000) ($6,600,000) ($6,600,000) ($6,600,000)
($6,600,000) ($6,600,000)
MILL $25.53 /ston ore ($6,318,675) ($8,424,900) ($8,424,900) ($8,424,900) ($8,424,900)
($8,424,900) ($8,424,900)

TOTAL: $45.53 /ston ore
($11,268,675)($15,024,900)($15,024,900)($15,024,900)($15,024,900)($15,024,900)($15,024,900)

TONS PROCESSED stons 0 247,500 247,500 247,500 247,500 247,500
247,500 247,500

GOLD PRODUCED troy oz. 0 67,071 89,428 89,428 89,428 89,428
89,428 89,428

GROSS REVENUE $ U.S. $16,841,573 $22,455,431 $22,455,431 $22,455,431 $22,455,431
$22,455,431 $22,455,431

NET REVENUE (CASH FLOW) ($8,801,245) $1,532,597 $7,430,531 $7,430,531 $7,430,531 $7,430,531
$7,430,531 $7,430,531

INTERNAL RATE OF RETURN 56.56% TOTALS:
NPV/ ORE PROC. 1,732,500 stons
INVEST. AU PROD. 603,641 troy oz.
NET PRESENT VALUE (1O%) $20,010,847 1.79
NET PRESENT VALUE (15%) $14,768,907 1.32
NET PRESENT VALUE (20%) $10,889,866 0.98

</TABLE>

<PAGE>

<TABLE>

TARGET PROJECT - 1000 STPD ORE FEED TO MILL
USED EQUIPMENT BASIS

NUMBER UNITS

15.00% % ROR

330,000 stons/yr

0.2918 troy oz/st

92.87%

$251.10 troy oz
<S> <C> <C> <C> <C>

$ CASH FLOW BY YEAR
1 2 3 4 5 6 7
7 8

($500,000)
($4,372,500) ($1,457,500)
($500,000)
($751,245) ($1,690,301)
($7,581,245)

$20.00 /ston ore ($4,950,000) ($6,600,000) ($6,600,000) ($6,600,000) ($6,600,000) ($6,600,000)
($6,600,000)

$25.53 /ston ore ($6,318,675) ($8,424,900) ($8,424,900) ($8,424,900) ($8,424,900) ($8,424,900)
($8,424,900)

$45.53 /ston ore ($11,268,675) ($15,024,900) ($15,024,900) ($15,024,900) ($15,024,900) ($15,024,900)
($15,024,900)

stons 0 247,500 247,500 247,500 247,500 247,500
247,500 247,500

troy oz. 0 67,071 89,428 89,428 89,428 89,428
89,428 89,428

$ U.S. $16,841,573 $22,455,431 $22,455,431 $22,455,431 $22,455,431 $22,455,431
$22,455,431

($6,123,745) $2,425,097 $7,430,531 $7,430,531 $7,430,531 $7,430,531
$7,430,531 $7,430,531

82.58% TOTALS:
NPV/ ORE PROC. 1,732,500 stons
INVEST. AU PROD. 603,641 troy oz.
$23,182,541 3.06
$17,772,026 2.34
$13,740,908 1.81

</TABLE>

<PAGE>

<TABLE>

TARGET PROJECT - 750 ST./WEEK ORE FEED TO MILL

CATAGORY NUMBER UNITS

INTEREST RATE 15.00% % ROR

STONS MINED/PROC. 39,000 stons/yr

AVERAGE GRADE 0.2918 troy oz/st

RECOVERY INTO CONCENTRATE 96.50%

GOLD SALES PRICE (NSR) $251.10 troy oz
<S> <C> <C> <C> <C> <C> <C> <C> <C>

$ CASH FLOW BY YEAR
1 2 3 4 5 6 7
8

CAPITAL EXPENDITURES
MINE ($200,000)
MILL ($100,000)
MOBIL EQUIPMENT ($200,000)
WORKING CAPITAL ($338,813)
TOTAL INVESTMENT: ($838,813)
OPERATING

MINE $20.00 /ston ore ($390,000) ($780,000) ($780,000)
MILL $14.75 /ston ore ($287,625) ($575,250) ($575,250)

TOTAL: $34.75 /ston ore ($677,625) ($1,355,250) ($1,355,250)

TONS PROCESSED stons 19,500 39,000 39,000

GOLD PRODUCED troy oz. 5,491 10,982 10,982

GROSS REVENUE $ U.S. $1,378,777 $2,757,553 $2,757,553

NET REVENUE (CASH FLOW) ($137,661) $1,402,303 $1,402,303

INTERNAL RATE OF RETURN 1010.40%
NPV/ TOTALS:
INVEST. ORE PROC. 97,500 stons
NET PRESENT VALUE (1O%) $2,087,353 2.49 AU PROD. 27,455 troy oz.
NET PRESENT VALUE (15%) $1,862,675 2.22
NET PRESENT VALUE (20%) $1,670,623 1.99

</TABLE>

<PAGE>

<TABLE>

TARGET PROJECT - 750 ST./WEEK ORE FEED TO MILL

CATAGORY NUMBER UNITS

INTEREST RATE 15.00% % ROR

STONS MINED/PROC. 39,000 stons/yr

AVERAGE GRADE 0.2918 troy oz/st

RECOVERY INTO CONCENTRATE 96.50%

GOLD SALES PRICE (NSR) $251.10 troy oz

$ CASH FLOW BY YEAR
1 2 3 4 5 6 7 8
CAPITAL EXPENDITURES
MINE ($200,000)
MILL ($100,000)
MOBIL EQUIPMENT ($200,000)
WORKING CAPITAL ($338,813)
TOTAL INVESTMENT: ($838,813)
OPERATING

MINE $20.00 /ston ore ($390,000) ($780,000) ($780,000) ($780,000)
MILL $14.75 /ston ore ($287,625) ($575,250) ($575,250) ($575,250)

TOTAL: $34.75 /ston ore ($677,625) ($1,355,250) ($1,355,250) ($1,355,250)

TONS PROCESSED stons 19,500 39,000 39,000 39,000

GOLD PRODUCED troy oz. 5,491 10,982 10,982 10,982

GROSS REVENUE $ U.S. $1,378,777 $2,757,553 $2,757,553 $2,757,553

NET REVENUE (CASH FLOW) ($137,661) $1,402,303 $1,402,303 $1,402,303

INTERNAL RATE OF RETURN 1017.94%
NPV/ TOTALS:
INVEST. ORE PROC. 136,500 stons
NET PRESENT VALUE (1O%) $3,045,145 3.63 AU PROD. 38,437 troy oz.
NET PRESENT VALUE (15%) $2,664,446 3.18
NET PRESENT VALUE (20%) $2,346,888 2.80

</TABLE>

<PAGE>

<TABLE>

TARGET PROJECT - 750 ST./WEEK ORE FEED TO MILL

CATAGORY NUMBER UNITS

INTEREST RATE 15.00% % ROR

STONS MINED/PROC. 39,000 stons/yr

AVERAGE GRADE 0.2918 troy oz/st

RECOVERY INTO CONCENTRATE 96.50%

GOLD SALES PRICE (NSR) $251.10 troy oz

$ CASH FLOW BY YEAR
1 2 3 4 5 6 7

CAPITAL EXPENDITURES
MINE ($200,000)
MILL ($100,000)
MOBIL EQUIPMENT ($200,000)
WORKING CAPITAL ($338,813)
TOTAL INVESTMENT: ($838,813)
OPERATING

MINE $20.00 /ston ore ($390,000) ($780,000) ($780,000) ($780,000) ($780,000)
MILL $14.75 /ston ore ($287,625) ($575,250) ($575,250) ($575,250) ($575,250)

TOTAL: $34.75 /ston ore ($677,625) ($1,355,250) ($1,355,250) ($1,355,250) ($1,355,250)

TONS PROCESSED stons 19,500 39,000 39,000 39,000 39,000

GOLD PRODUCED troy oz. 5,491 10,982 10,982 10,982 10,982

GROSS REVENUE $ U.S. $1,378,777 $2,757,553 $2,757,553 $2,757,553 $2,757,553

NET REVENUE (CASH FLOW) ($137,661) $1,402,303 $1,402,303 $1,402,303 $1,402,303

INTERNAL RATE OF RETURN 1018.60%
NPV/ TOTALS:
INVEST. ORE PROC. 175,500 stons
NET PRESENT VALUE (1O%) $3,915,865 4.67 AU PROD. 49,419 troy oz.
NET PRESENT VALUE (15%) $3,361,639 4.01
NET PRESENT VALUE (20%) $2,910,442 3.47

</TABLE>

<PAGE>

TYPICAL GOLD CONCENTRATOR CIRCUIT -
GRAVITY/FLOTATION BENEFICIATION
(Graphic Omitted)

1996 SAN JOSE MILL
DESIGN CONFIGURATION
(Graphic Omitted)

ROSARITA MILL 1999 UPGRADED
CONFIGURATION BASED ON TESTS
(Graphic Omitted)

CASCADE PRESSURE CYANIDATION WITH
HOT MERRILL-CROWE PRECIPATION
(Graphic Omitted)

EXHIBIT "2.5"
DYNARESOURCE, INC.
"PAMICON REPORT"
SAN JOSE de GRACIA

SUMMARY REPORT
of the

SUMMARY REPORT

OF THE

SAN JOSE DE GRACIA PROPERTY

SINALOA STATE, MEXICO

26 degrees O9' North Latitude
107 degrees 53' West Longitude

-Prepared for-
GOLDEN HEMLOCK EXPLORATIONS

-Prepared by-
PAMICON DEVELOPMENTS LIMITED

DATE OF REPORT: SEPTEMBER 1999

<PAGE>

TABLE OF CONTENTS

Page
----

1.0 INTRODUCTION 1
2.0 LOCATION, ACCESS AND TOPOGRAPHY 1
3.0 PROPERTY 2
4.0 HISTORY 3

5.0 GEOLOGY 5
5.1 Regional 5
5.1.1 Regional Tectonics 5
5.2 Property Geology 5
5.2.1 Structural Trends 6
5.2.2 Magmatic Intrusion Trends 6
5.2.3 Mineralization Trends 7

6.0 REVIEW OF 1997 FIELD WORK 8
6.1 Tres Amigos 8
6.2 La Cecena Workings 9
6.3 Rudolphos Workings 10
6.4 Gossan Cap Area 11
6.5 La Union Area 12
6.6 La Purisma Area 12
6.7 Palos Chinos Area 13
6.8 Dead Zone Area 13

7.0 RESERVES AND FUTURE DEVELOPMENT 14
7.1 Resource Calculations 15
7.2 Classification of Resources 15
7.3 Inferred Resource Tres Amigos 15
- 1 gm/t Au cut-off
7.4 Indicated Resources Tres Amigos 17
Nominal 3 gm/t Au Cut-off
7.5 Inferred Mineral Resource 19
Tres Amigos
8.0 METALLURGY 19
9.0 RECOMMENDATIONS 22
10.0 RECOMMENDED BUDGET 24

<PAGE>

1.0 INTRODUCTION

In 1996 Golden Hemlock Explorations entered into an option agreement with the
owners of Minera Finisterre, S.A. de C.V., a private Mexican company to acquire
controlling ownership of Minera Finisterre. Terms of the agreement required
Golden Hemlock to issue shares to the optioners, make property payments and
conduct exploration work on the San Jose de Gracia gold property controlled by
Minera Finisterre. Golden Hemlock has informed the writers that it has satisfied
these commitments and now owns 100% of Finisterre.

The San Jose de Gracia property is located in Sinaloa State, Mexico and consists
of some 4, 160 hectares, more or less. The property controls most, if not all,
of the mineral properties which formed the San Jose de Gracia mining district.
The area was discovered in 1828 with historical gold production from over 67
different occurrences estimated to be in excess of 1,000,000 ounces.*

Potential to develop additional gold reserves in the district is considered
excellent either from high grade underground mining as historically occurred or
from larger tonnage lower grade operations.

This report is intended to summarize available information on the property
including results from work conducted by or for Golden Hemlock from 1996 to the
present date. Recommendations for additional work and proposed budgets for this
work are also included.

Charles Ikona, P.Eng., of Pamicon Developments Limited, examined the property on
behalf of Golden Hemlock between March 6-12, 1996 and made preliminary
recommendations to Golden Hemlock at that time. Other Pamicon personnel, Allan
Montgomery, P.Geo. and T.C. Scott, F.G.A.C., conducted on site work in the
spring of 1997 and July-August, 1999 respectfully.

All monetary figures used in this report are in Canadian dollars except where
otherwise noted.

2.0 LOCATION, ACCESS AND TOPOGRAPHY
The San Jose de Gracia Mining District is located in the northeast portion of
the State of Sinaloa some 156 kilometres northeast of the city of Culiacan.
Access is by a mountainous road 78 kilometres from the municipal seat of Sinaloa
de Leyva or by air to a gravel strip on the property suitable for small to
medium sized aircraft. The village of San Jose de Gracia is located in the
project area and offers a labor source as well as limited support facilities.
Geographical co-ordinates of the project are 26009'N latitude and 107053'W
longitude.

*De Cservine, Brown and Cheng, Consejo De Recursos minerals et al.

<PAGE>

GRAPHIC OMITTED

Figure 1

SAN JOSE DE GRACIA PROPERTY

LOCATION MAP

<PAGE>

<TABLE>

Topography on the property is characterized by ravines and low mountain ranges
with moderate to steep slopes. Elevations range between 400 and 700 metres
A.S.L. Extensive unpaved roads and tracks offer 4 wheel drive access to much of
the project area.

Climate is semi-tropical with a dry season extending from mid November to the
end of June and a rainy season from July to mid November. Summers are hot with
temperatures to 400C and winters mild.

Vegetation consists of mesquites, thorny bushes and shrubs. Some deciduous trees
grow in the ravines with abundant underbrush growth during the rainy season.

Limited surface water in flooded old workings is available for drilling in
several areas of the property. Process water is available from wells in the main
river valley near the village but may also be available from possible aquifers
elsewhere on the property.

3.0 PROPERTY

Golden Hemlock has advised the writers that the following concessions are owned
by Minera Finisterre. The writers have examined documents pertaining to these
but are not in a position to give a definite title opinion. This should be
provided by Golden Hemlock's legal council.

CLAIM NAME TITLE OR FILE NUMBER HECTARES
San Jose 190244 27.0000
El Real 190736 2332.0000
Tres Amigos 2 192290 54.4672
Lost Tres Amigos 172216 23.0000
San Sebastian 184463 40.0000

CLAIM NAME TITLE OR FILE NUMBER HECTARES
La Nueva Esperanza 162840 40.0000
Guadalupe 163357 7.0000
Nuevo Rosario 184999 32.8781
Mina Grande 163578 6.6588
Ampliacion de Santa Rosa 163592 25.0000
Santo Tomas 178649 312.0000

<PAGE>

San Nicolas 163913 55.5490
La Libertad 172433 97.0000
La Union 176214 4.1098
Ampliacion de San Nicolas 183815 17.4234

CLAIM NAME TITLE OR FILE NUMBER HECTARES
El Real 2 201128 393.8510
Piedras de Lumbre Uno 201946 40.2753
Piedras de Lumbre 2 201947 34.8484
Piedras de Lumbre 3 203467 4.3098
Finisterre Fraccion A 203285 18.7856
Finisterre Fraccion B 203286 173.4966

CLAIM NAME TITLE OR FILE NUMBER HECTARES

San Miguel 183504 7.0000

CLAIM NAME TITLE OR FILE NUMBER HECTARES

Santa Rosa 170557 31.4887

CLAIM NAME TITLE OR FILE NUMBER HECTARES

San Andres 192288 385.0990

- --------------------------------------------------------------------------------------------
</TABLE>
Total "4,160 hectres more or less"

4.0 HISTORY

Gold was originally discovered on the property in 1828 near the small settlement
of El Rosario in the north central portion of the area (Figure 5). Work was
restricted to the areas of Mina Grande and Mina San Pablo during this period. In
1852 a local cholera epidemic and news of the gold discoveries in California led
to the abandonment of the properties.

Further work in the area in the 1870's led to additional production from some of
the original mines. In 1893 the first ore body in the Purisma Creek area was
discovered. From 1892 - 1895 these ore bodies are reported to have produced some
470,000 ounces of gold at an average grade of 3.48 oz Au/ton (Figures 4 and 5).

<PAGE>

In 1895 the La Prieta area was discovered which resulted in additional
production. By 1902 the La Prieta and Purisma Creek Mining companies were
amalgamated.

These mines produced until 1910 when the Mexican Revolution halted mining
activities. Production during the period 1828 until 1910 is estimated at
1,000,000 oz.

This consisted of gold production by mercury amalgamation of arrastre and stamp
mill material from 1828 to 1902 and cyanide extraction of stamp mill production
from 1902 through 1910.

The mines were returned to private control in 1918 with sporadic production
until present. This production appears to have been hampered by lack of
financial and technical resources. Material mined was salvaged from old
operations with no organized attempt to define new reserves.

By 1977 the present underlying vendors to Minera Finisterre succeeded in
acquiring control of most of the district and installed a 70 ton per day
flotation concentrator, which produced erratically.

Preliminary modern geological surveys of the area were started in the 1990's by
Asarco and Penoles, the Mexican state mining company. Unrealistic expectations
by the vendors apparently resulted in neither of these companies pursuing the
project. Minera Finisterre acquired the property subsequently and continued some
exploration work although most of their resources were spent in erecting a 200
ton per day concentrator.

In 1994 Consolidated Samarkand Resources Inc. entered into an agreement with
Minera Finisterre to acquire an interest in the property. The agreement was
allowed to lapse in 1996 after Samarkand conducted some preliminary surface and
underground sampling and mapping.

Subsequently Golden Hemlock obtained an option to acquire control of Minera
Finisterre and commenced work on the property in 1997. Work for golden Hemlock
was conducted by Perforaciones Quest de Mexico (PQM) which consisted primarily
of drilling along with some limited trenching and mapping.

During this period PQM also attempted to concentrate a limited amount of
material from one of the mineralized zones (Tres Amigo's) employing the
concentrator previously installed by Minera Finisterre. Due to a lack of
understanding of the metallurgy and apparent lack of grind and flotation
controls this was not successful in producing an economic concentrate grade and
the attempt was abandoned.

In 1998 Pamicon was requested to examine results of PQM's work and comment on
possible reserves developed by the drilling and on the general status of the
property. Results of this work were presented in September 1998.

Subsequently Golden Hemlock and its agents arranged to collect samples for
metallurgical

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS

MAJOR Au, Ag DEPOSITS OF THE

SIERRA MADRE OCCIDENTAL, MEXICO

U.S.A.

GRAPHIC OMITTED

Figure 2

<PAGE>

testing during the first half of 1999. In July - August 1999, a short program
under the direction of T.C. Scott and M. Mitchell, P.Eng., was conducted to
address some problems with the PQM data noted in the 1998 review.

5.0 GEOLOGY

5.1 Regional

The San Jose de Gracia project is located in The Sierra Madre Occidental
Metallogenic Province which extends along a northwesterly trend from Zacatecus
to northern Sonora. The property is located on the western flank of the province
within the Barranca Section which straddles the Sinaloa-Chihuahua-Durango border
(Figure 2).

5.1.1 Regional Tectonics

This metallogenic Province can be considered as a segment of the Circum-Pacific
Belt of gold-rich Porphyry and Epithermal gold deposits. The formation of these
deposit types is the result of tectonic and magmatic processes associated with
the evolution of subduction zones, which develop in response to global
tectonism. The resulting mineral deposits occur in both Island Arc and
Continental environments and, although older examples do exist, the more readily
recognizable examples range in age from the Early Tertiary to Present.

The paleography of Mexico from the Cretaceous to present day reveals that the
area was affected by a sequence of tectonic and magmatic events related the
subduction of the Middle America Trench. In northern of Mexico, subduction gave
way to a system of spreading ridges and transform faults within the Gulf of
California, which translate into the dextral displacement along the San Andreas
Fault system. The tectonic features recognized within the State of Sinaloa were
likely developed in response to these events. In the vicinity of the San Jose de
Gracia property, the N-S trending Grete Graben is cut by an orthogonal set of NE
and NW faults. Together, these structural elements appear to provide the
regional structural framework for the property.

5.2 Property Geology

The geology of the San Jose de Gracia Mining District is described in the
"Geological-Mining Monograph of the State of Sinaloa" as comprising a folded
basement sequence of metamorphosed Paleozoic sandstone, pelite and calcareous
strata. These sedimentary rocks are unconformably overlain by Cretaceous (?)
porphyritic andesites and andesitic volcaniclastic rocks. Both rock types are
intruded by dioritic, quartzo-latitic and rhyolitic stocks. All rock units are
covered with tuff-sized, rhyolitic volcanoclastics. Cheng (1994), based in part
in 1990 mapping by ASARCO and others, suggests the westerly dipping andesitic
and rhyolitic volcanic rocks are most likely Tertiary in age and lie
unconformably upon Paleozoic sediments. This hypothesis is in direct conflict
with Brown and Cheng (1995) which denotes the sediments as belonging to the

<PAGE>

Mesozoic. While it is likely the andesitic and rhyolitic sequences equate,
respectfully, to the lower and upper volcanic units recognized throughout the
Sierra Madre Occidental (Clark et al, 1978), a redbed marker horizon, defined as
separating the two, has yet to be identified on the property. Intrusions
recognized by Cheng (1994) include only diorite and andesite porphyries;
rhyolite porphyry, noted on maps by Consejo de Recursos (1980) and Penoles
(1992), were redefined by Cheng as crystal tuff and included within the
andesitic sequence. However, recent re-examination of drill core and outcrops in
the Tres Amigos area indicate the crystal tuff to be the upper and lower
elements of rhyolitic ignimbrite with an interior spherulitic zone likely
arising from devitrification. This Lignimbrite appears to lie unconformably upon
the basement sediments and be overlain by andesitic tuffs and breccias.

5.2.1 Structural Trends

The most prominent structure in the map area is a NNE, through-going fault
located approximately 1 km west of the La Union workings and appears to
juxtapose the Upper and Lower Volcanic Sequences. This fault and a parallel
fault segment southeast of La Purisima lie subparallel to the trend of the Grete
Graben. The succession of younger fault bounded strata from east to west is
suggestive of a major graben lying to the west or that doming has occurred in
the eastern portion of the property as a result of dioritic intrusions.

A set of complex, near orthogonal structures is concentrated between the
previously mentioned two structures, which given the pattern of dislocation
along the sediment-volcanic interface, suggests the presence of a series of
horst and graben structures with NW axes. Of these, the most prominent, herein
called the El Salto Graben, is bounded to the northeast by the El Salto Fault
and associated deformation zone. The El Salto Fault structure is shown to
truncate all strata but the Upper Volcanic Sequence and displays the greatest
amount of apparent lateral offset seen on the property. The sense of movement
indicated across the orthogonal NW structures is consistent with the
preponderance of NE and SW dipping, normal faults as revealed in the more
detailed mine plans and could accommodate the marked dislocation across the
deformation zone. The reported changes in dip for the volcanic rocks from mainly
NW in the north to SW in the south of the property can be easily accommodated
through a rotation on the normal faults as a result of varying degrees of
relative uplift to the east. These tectonic features suggest an overall
extensional environment for the mineralization at San Jose de Gracia.

5.2.2 Magmatic Intrusion Trends

The linear distribution of magmatic intrusions is readily apparent and strongly
suggests that at least two, parallel, deep seated structures may control the
magmatic events. As these lie parallel to both the NNE fault and Grete Graben
trends, it is likely that the intrusions were syntectonic with periodic
reactivation along the same fault structures that produced the Grete Graben.
While the porphyritic andesites appear be truncated by the orthogonal faulting,
the diorite porphyries, dated regionally at 28Ma, are apparently not. It is
likely that the emplacement of the porphyritic andesites and their segmentation

<PAGE>

by the orthogonal fault set was followed by continued development of the Grete
Graben in advance of the emplacement of the diontic rocks. This sequence of
events is supported by the apparent truncation of the orthogonal fault set to
the west by the main NNE fault and the truncation of the porphyritic andesite by
the parallel fault segment southeast of La Purisima.

A secondary magmatic trend striking WNW is proposed in the area immediately east
of the San Pablo workings and pertains only to the diorite porphyry intrusions.
Along this trend four small plugs are aligned parallel with the axis of the San
Pablo Horst that occurs between the Tres Amigos Graben to the north and the El
Salto Graben to the south. To the east of this second trend, within the Arroyo
Rosario, the emplacement of the dioritic intusions within the basement rocks
provides a mechanism for uplift and rotation on pre-existing structures.

5.2.3 Mineralization Trends

A plot of previous mineralization reveals several distinct trends. These are
similar to many of the trends discussed above. Most noticeable are the two main
groupings of mineralized fissures flanking the San Pablo Horst interpreted to
lie immediately to the north of the San Pablo workings. The southerly grouping,
containing the most extensively exploited veins, displays three distinct and
somewhat orthogonal trends. The strongest of these is a NNW trend defined by
both the Palo Chino workings and La Cruz- Del Anglo workings. It remains
uncertain if these parallel zones are distinct sets of mineralized structures or
a faulted repetition. Almost as prominent is a NE trend which includes the La
Barria and Veta Tierra workings. Less well defined is a NNE trending, en echelon
set that includes San Pablo and Mina Grande. All of these fissures appear to be
located within volcanic stratigraphy and reflect a close spacial and linear
relationship with the basement sediment interface, as well as to a conjugate
fault set.

The northerly mineralization is centered on the Tres Amigos workings.
Examination reveals the presence of NNW, NE and NNE trends, similar to those in
the south. The dominant mineralized trend is oriented NE as defined by the Tres
Amigos-La Cecena workings and is reflected by the subparallel Rudolphos
structure located 250 metres to the south. The change in dominant trend, from NW
to NE, may reflect a change in the dominance of a set of conjugate structures on
either side of the San Pablo Horst.

Vein structures appear less abundant within the basement sediments and trends
are less definable. One exception occurs in the vicinity the La Prieta area
where a NE trend and alteration zone parallels the Tres Amigos trend and is
suggestive of a northeasterly continuation to the Veta Tierra trend.

Mineralization at SJG is not only hosted within fissure veins, but also,
according to drill logs, within a variety of breccia bodies, whose origins are
poorly understood. Mineralization trends relating to this mode of occurrence
while not assessable at present should not be overlooked in future exploration
activities.

<PAGE>

MAP [GRAPHIC OMITTED]

GOLDEN HEMLOCK EXPLORATIONS
- ---------------------------

SANJOSE DE GARCIA PROPERTY
SINALOA STATE, MEXICO

PROPERTY MAP

<PAGE>

The comparison of the structural, magmatic intrusion and mineralization trends
strongly suggest that the evolution of regional tectonics has created the
favorable structural environment which controls the distribution of magmatic
related mineralization at San Jose de Gracia. It is important to reiterate that
the above interpretation is preliminary and will require a detailed
investigation into the temporal and paragenetic sequences related to ore
formation to substantiate.

6.0 REVIEW OF 1997 FIELD WORK

This review of the 1997 field activities focuses primarily on the results of the
diamond drilling and trenching conducted by PQM. Eight areas of the property
were tested with 64 drill holes, which produced an accumulated length of
approximately 6500 meters of NQ core. Subsequently, the Gossan Cap and the La
Purisima were extensively trenched.

6.1 Tres Amigos Structure (Figures 8 - 18)

The 1997 drill program at Tres Amigos comprised 26 holes drilled at various
azimuths because of terrain constraints. While the near orthogonal drill pattern
was not ideal for assessing the Tres Amigos vein structure, extrapolation of
data between the idealized Mine Grid Sections, East (330) and North (060),
provided enough continuity to indicate its tenor and trend. Many narrow,
seemingly spurious hanging wall intercepts were attributed to intermittent north
striking, steeply dipping veins of the Orange Tree grouping. It is not possible,
from drill logs to identify these structures with any certainty nor to separate
their possible contribution to the grade of the mineralized blocks depicted.

The recent survey of drill holes has increased the confidence level in the
spatial relationship between the various mineralized intercepts encountered in
the Tres Amigos brecciated vein system. Several auriferous veins, occurring
approximately 35 meters into the hanging wall of the Tres Amigo vein, were
previously interpreted as spurious. On sections east of 5078E, these now appear
to define, , a second mineralized structure (the Quarta Amigo) of similar
orientation and character as the Tres Amigos. The significance or this
mineralized, possibly en echelon, breccia vein, lies not only in its ore
potential, but also in that may define a zone of dilation between the two
structures. The mineralized, hanging wall splays 0f the Tres Amigos, comprising
brecciated quartz-sulphide filled gashes and mineralized wall rock breccias,
would be typical of such an environment. Similarly, the hanging wall splays of
the Quarta Amigo may signal the presents of additional en echelon structures and
dilation zones occurring to the northeast. Conformation and delineation of these
zones could greatly increase the systems mineral potential.

In preparation of the resource estimate for the Tres Amigos, the following
observations and their possible inferences were also apparent:

<PAGE>

MAP [GRAPHIC OMITTED]

Sam Kpse de Gracoa
Ridp;[jps
DDH 97-48, 97-49

La Cecena
DDH 97-50

<PAGE>

1. Based primarily on the distribution of gold, anastomosing or sheeted
mineralized zones are depicted as striking approximately 060 with a
northerly dip which may vary from 20 to 600.

2. The mineralized zones appear to crosscut all sedimentary, volcanic and
intrusive lithologies.

3. Significant silver, copper, zinc and lead values were encountered in the
drill holes but a definitive correlation between gold and individual
elements is not apparent.

4. Several drill holes encountered the sedimentary lithologies which make up
the pre-Tertiary basement rock for the region. The dramatic difference in
the depth of the sediment interface in adjacent drill holes, as seen in
Sections 503 7E, 5078E, 503 SN and 5080N is in sharp contrast to the
regularity of the Tres Amigos structure. This suggests that considerable
faulting occurred prior to the development of the main mineralized
structures.

5. It should also be noted that the auriferous, massive-sulphide vein
intersected within the sediments at the bottom of hole SJG 047 is the only
significant mineralization encountered below the Tres Amigos vein to date.
Although of undefined orientation, adjacent drill holes in the west, tend
to eliminate all but an easterly dipping structure that may or may not be
directly related to the development of the overlying dilatation zone. With
a grade of Au 7.5 g/t, Ag 15.5 g/t, Cu 0.09%, Zn 3.18% and Pb 0.27% over 7
metres including 1.5 metres at Au 23.1 g/t, Ag 42.5 g/t, Cu 0.24%, Zn 8.0%
and Pb 0.83%, this structure possibly represents a feeder channel for the
mineralizing fluids that permeated into the Tres Amigos system. Delineation
or this structure is a priority as it not only offers the potential for
encountering mineralization in an environment similar to that of I .~
Prieta but also the potential for manto style mineralization developed
within calcareous members of the basement sediments.

6.2 La Cecena Workings (Figure 6)

The La Cecena workings are located 200 meters SW from the Tres Amigos workings
and drifts northerly into the footwall of a mineralized structure which, based
on similarities in orientation and mineral tenor, is interpreted to be an
extension of the Tres Amigos mineralization. Drill hole 97-50, collared
approximately 70 meters to the west of the workings, was oriented at 063~ at a
- -8O0dip. The intention of drilling this diamond drill note was to test the La
Cecena structure, which strikes 0490 and displays a variable northerly dip of
450 to 65g. The following comments are based on a review of the drill logs and
assays of drill core for this hole.

- - Andesite tuffs breccias and porphyries dominate the lithologies encountered
in this 155.5 meter diamond drill hole. Sedimentary, felsic and andesitic
clasts were noted in a 2 metre breccia zone at 73 metres. The rhyolitic
sequence was not encountered, however a 4 metre quartz-feldspar porphyry
dyke (?) Was intercepted at 113.5 metres.

- - A zone of significant mineralization was encountered between 69 and 80
meters that may reflect a continuation of mineralization encountered in the
workings. Encouraging assay results of 5.2 g/t Au - 16.6 g/t Ag and 8.8 g/t
Au - 10.8 g/t Ag were returned from 2 samples on both the hanging wall and

<PAGE>

foot wall of the zone respectively. Sulphide mineralization associated with
the zone include sphalerite, galena and minor pyrite. Significant copper
values of 0.22% reported with the HW sample and 0.78% Pb with the FW
sample. Anomalous precious and base metal values were returned from the
intervening samples.

- - Faulting and brecciation persisted throughout the section drilled with
prominent graphite on minor slips.

- - The dominant alteration is chlorite with epidote becoming more pronounced
at depth along with fractures filled with talc/gypsum. - Recent surveying
and sampling suggests a probable correlation between Tres Amigos and La
Cecena yielding a mineralized structure

in excess of 450 meters.

6.3 Rudolphos Workings (Figure 6)

Drill holes 97-48 and 97-49 were collared 270 meters SE of the Tres Amigos
portal adjacent to the Rudolphos workings and tested a mineralized structure
that lies subparatiel to the Tres Amigos structure. Hole 97-48, an inclined
hole, penetrated 100 meters of the Lower Volcanic Sequence that consisted of
andesitic tuffs with diorite porphyry clasts, polymictic conglomerate. rhyolitic
tuffs and andesite porphyry. The hole terminated in 20 meters of basement
sediments. Hole 97-49, a vertical hole from the same setup, penetrated similar
lithologies comprising 128 meters of the Lower Volcanic sequence before
terminating in 17 meters of basement sediments. A shallow northerly apparent dip
is indicated for the volcanic/sediment interface.

- - Hole 97-48 encountered 40 meters of highly anomalous zinc mineralization
between 36 and 76 meters which included several 1-2 meter intervals grading
between 1 and 4.8% Zn. Anomalous Au values up to 2.5 g/t were encounter
between 64 and 69 meters.
- - Mineralization in 97-48 is of special significance as it is hosted by
heavily quartz veined and brecciated rhyolitic tuff with total sulphides of
up to 10%
- - The presents of silicified sedimentary clasts within the quartz veining is
strongly suggestive of a hydromagmatic breccia. Similar breccias have been
reported in the Tres Amigos and La Cecena drilling.
- - Hole 97-49 encountered several segments of similar mineralization with
elevated gold values in which andesitic rocks were the primary host.
- - These drill holes indicate that significant mineralization occurs not only
in the andesitic stratigraphy but also within rhyolitic volcanic rocks with
structural complexities being the main controls on the location of
mineralization.
- - Interpretation of results suggest the presence of at least two subparallel
mineralized structures with a moderate NW dip. Neither, however, appear to
correlate with the targeted Rudolpho surface workings which is in their
foot wall.
- - Even though initial gold values are low, the drilling has indicated
Rudolphos to represent strong system of mineralization worthy of additional
drill testing.
- - The spacial relationship of the Tres Amigos and Rudolphos systems suggests
they are not contiguous and represent separate but similar centers of
mineralizing events.)

<PAGE>

6.4 Gossan Cap Area

In the vicinity of the Gossan Cap area, which lies to the southeast of the San
Pablo and Mina Grande underground workings, 12 diamond drill holes were
completed. Drilling targeted an auriferous zone identified as a result of
surface rock chip sampling conducted during a property inspection by Teck
Resources Inc. in 1996. The drill collars have as yet to be surveyed.

Field mapping and diamond drilling indicates the bedrock of the Gossan Cap area
to be dominated by basement sediments, in contrast to the anticipated Tertiary
volcanics.

There are, however, several aspects of the drill results that warrant comment.
The following observations are based on drill log descriptions:

- - Except for the intrusion of a few mafic and felsic dykes, the rock cored
comprised siltstone, mudstone, graphitic black shales and calcareous
members of the Paleozoic basement for the property. No volcanic rocks
comparable to those found overlying the basement rocks at surface appear to
have been encountered in the drill holes.
- - Intense fracturing and brecciation is evident throughout the core.
- - Fe and Mn oxides are prominent to a depth of approximately 35 meters below
which sulphides, primarily pyrite, are dominant. - Drill holes 97-15, 17
and 26 were drilled to depths of 55.77m, 54.86m and 66.45m respectively.
All other holes were less than 46 meters in depth.
- - Although elevated gold values (100-200 ppb) were encountered in most holes,
few samples returned values >500 ppb Au.
- - Trace levels of silver and base metals increase markedly in the sulphide
zones at the bottom of the holes.
- - Core recoveries are generally poor in all holes and likely influenced drill
core assay results.
- - Gold values attributed to surface sampling are not reflected in drill core
assays. Discussions with Mr. Montgomery (Pamicon) revealed a high
probability of contamination in trench sample material because the
roadsides and trenches sampled traversed several pre-existing dumps from
various surface workings.
- - Elevated zinc values associated with a quartz veined, tectonic breccia in
Hole 97-15, between 10.6 and 14.8 meters, suggests that an extension to the
mineralized structure at Pozo Mina Grande, may have been intersected.

Inferred from these observations are the following;

- - Surface weathering probably extends to a depth of approximately 35 meters.
- - Either the sediments originally contained only elevated gold values or gold
was lost as the result of poor recovery and/or surface leaching.
- - Gold values from surface samples may be residually derived from erosion of
auriferous volcanic cover.
- - Mineralized structures within sediments may be subvertical thus negating
their effective detection by vertical drill holes.

<PAGE>

6.5 La Union Area

A total 716.87 meters of diamond drilling in 8 holes tested the down dip
continuity to the fissure veins exposed in the underground workings at La Union.
The diamond drill holes encountered a Lower Volcanic Sequence dominated by
felsic and mafic porphyries, heterolithic breccias and the basement sediments.
Phyllic and argillic alteration is extensive within these well fractured rocks
especially where brecciated quartz-chlonte-sulphide veins were encountered. A
summary of the more significant assay results is as follows:

Drill Hole Sample Interval Width Aug/t Ag /gt Cu%

97-27 20.30-21.30 1.0m 8.99 12.50 -
71.63-78.50 6.9m 0.50 23.00 -

97-28 -
97-29 38.10-41.20 3.1m 4.50 8.50 0.10
97-30 36.25-36.75 0.5m 12.92 25.00 0.81
65.20-65.70 0.5m 3.70 177.20 5.22
75.00-78.10 3.1m 4.70 9.00 0.50
97-31 87.00-91.00 4.0m 2.84 6.70 0.34
97-32 -
97-33 93.10-97.10 4.0m 1.90 2.75 0.05
149.10-153.40 4.3m 1.30 6.50 0.05
97-34 45.70-47.70 2.0m 8.90 4.10 0.14

The results are encouraging and the area requires further evaluation.

6.6 La Purisima Area

The lower reaches of the Arroyo Purisima, between the La Cruz and El Salto
workings and the area around Trench 5 were tested with 1043 meters of diamond
drilling in 14 holes. Bedrock includes a variety of well altered, andesitic to
felsic porphyries, tuffs and breccias that are laced with silicified zones,
stockworks and quartz breccias. Hematitic and argillic alteration is extensive.
Pyrite at 1 to 3 % is pervasive.

<PAGE>

The core recovery is extremely poor and commonly ranges between 40 and 60%. This
sheds doubt on the representativeness of the drill assay results and may account
for the surprisingly few core samples with Au > 0.2 g/t from an area where
trench sampling commonly returned Au values of 1 to 3 g/t.

Contrary to earlier reports, assays show that elevated gold values occur in
conjunction with anomalous concentrations of base metals in hematitic and
silicic structures, as in hole 97-5 5 at 24.4m: 5.2 g/t Au, 28 g/t Ag, 0.6% Cu,
1.8% Zn, 0.35% Pb over 3 metres and at 114 metres: 2.1 g/t Au, 2.9 g/t Ag, 0.08%
Pb over 2 metres. Hole 97-56A (location unknown) similarly reports approximately
1.0 g/t Au with 0.05 Pb over its entire length of 12.2 metres.

Trench 5 is an area of extensive mechanical excavation. While sample numbers and
significant results are shown, there is no documentation of sample types and
lengths or of the rock types collected during sampling. It is obvious that there
are several areas that-returned very encouraging results. Unfortunately, without
substantial geological data, it is impossible to evaluate the significance of
the results other than to say that the area should be resampled and mapped.

6.7 Palos Chinos Area (Figure 7)

Drill hole 97-63 (-60/057)was collared on the roadside approximately 100 meters
west of the Palo Chinos- tajo Verde workings. These workings explore at least
two parallel structures oriented at 340/45SW at an elevation of 495 meters (CRM
1981). This elevation appears to equate to 561 meters on the PQM maps with a
surveyed drill collar elevation of 565 meters. A target depth of 80 meters was
anticipated. The drill hole intercepted a wide zone of hematitized breccia and
quartz stockworks, which contain up to 5% pyrite and noticeable chalcopyrite
between 46.4 m and 87.1 m. The arithmetic average for 29.6 meters starting at
52.7 m is 2.65 g/t Au, which includes sections grading 9.25 g/t Au over 0.73
meters and 8.45 g/t Au over 2.7 meters. This wide mineralized structure may
possibly be interpreted as extending the Palos Chinos mineralization an
additional 80 meters down dip. The 1999 fieldwork at SJG included a survey
traverse from the Palos Chinos portal to drill hole SJG 063 and the Tajo Verde
portal. This will provide spatial control for follow up drilling of the above
mineralization.

6.8 Dead Zone Area

The Dead Zone was tested with Drill Hole 97-64. A soft, medium grey, andesite
porphyry, characterized by 5 to 10% disseminated, fine grained, black hematite
and streaks of red hematite, was encountered throughout the hole. This rock was
cut by numerous 0.3 to 2.0 cm gypsum veinlets. The core recovery was extremely
poor (<25%) to a depth of 123 meters; thereafter it improved markedly (<95%). As
there were no corresponding changes in lithology, etc., the marked change in
core recovery at 123 meters may reflect the depth of surficial weathering.

<PAGE>

Assay results for both core and sludge samples are anomalously low. The highest
value returned for all metals tested was 41 ppm zinc. No change in tenor is
evident below 123 meters. Unfortunately, references to any specific alteration
facies were omitted from the diamond drill logs. However, the presence of gypsum
combined with extremely low metal value possibly suggests an environment of
leaching by acid sulphate hydrothermal waters.

7.0 RESERVES AND FUTURE DEVELOPMENT

The previous sections of this report indicate the extensive potential of the San
Jose de Gracia as represented by:

o A large area geologically favourable for the possible deposition of
significant concentrations of gold.

o Historical production estimated to be in excess of 1,000,000 oz. of gold
from some 67 known historical workings.

o Recent work by Golden Hemlock demonstrating potential reserves on several
areas of the project.

While a large portion of the property requires additional geological and
geotechnical review prior to determining its potential several areas including
the Tres Amigos -. La Cecena, Rudolphos and the Palos Chinos areas and possibly
the La Union and La Purisma areas have sufficient results to justify additional
immediate work. Of the above only the Tres Amigos - La Cecena area has received
sufficient work to allow preliminary estimate of possible tonnage and grades to
be made.

Where exposed on surface the Tres Amigos structure has been developed by three
short adits over a vertical extent of some 25 metres and by several shallow
trenches. The lower adit (Level #1) is the longest at 83 metres. In this area it
appears as a structurally controlled vein type deposit within competent
Rhyolites. General altitude appears to be 060~ dipping 50-60~ to the north.
Width varies between 2 to 4 metres averaging approximately 3 metres. The vein is
highly silicified and contains extensive massive sulphides, primarily pyrite but
with some base metals (Copper, Zinc and Lead). The most important economic
constituent is gold along with lesser silver.

In 1997 Golden Hemlock completed 26 diamond drill holes in the Tres Amigos area.
Results from these along with sampling of the adits were employed for
preliminary resource calculations (Figures 8 through 18).

To date the Tres Amigos area has been drilled over a strike length of 160 metres
to a depth of 250 metres.

The La Cecena area has been included with the Tres Amigos as it is quite
possible that the La Cecena structure as indicated by old workings and drill
holes 97-53 represents an extension of the Tres Amigos structure to the
south-west. Should this be the case, a strike length of 450 metres open to the
south-west might be postulated for the combined area.

<PAGE>

7.1 Resource Calculations

As part of the Review of the project carried out by Pamicon in June 1998, golden
Hemlock requested that preliminary calculations of indicated reserves or
resources on the property be conducted. After reviewing the available data it
was noted that while drilling on several areas of the property had encountered
encouraging intersections, only the Tres Amigos had received sufficient drilling
to allow resource calculations. Accordingly only this area was addressed.

Although some questions arose, notably with respect to the existing survey data,
sufficient continuity from adits and drilling was available to allow preliminary
estimations to be made at a nominal 1 gm/ton gold cut-off. At that time it was
recommended that calculations of resources at a higher cut-off grade be deferred
subject to clarification of the survey data and metallurgy.

During 1999 progress on metallurgical testing was made and a re-survey of the
Tres Amigos conducted. The Level #1 adit was also remapped and, in part,
resampled. Re-interpretation of the data incorporating these results has allowed
calculations to be made on a 3 gm/t cut-off as presented in this section. This
re-interpretation, although resolving some points in structural attitudes and
allowing a possible re-interpretation of the controlling structural features,
does not indicate that any significant variation in the overall 1998 resource
calculations will occur. Accordingly the 1998 results at a 1 gm/t cut-off grade
are presented below.

7.2 Classification of Resources

Mineralization in the Tres Amigos' area is classified as Indicated Mineral
Resources and Inferred Mineral Resources in accordance with the proposed
classification under the International Reserves Definition Initiative reported
in the Bulletin of the Canadian Institute of Mining and Metallurgy, Vol. 90, No.
1017, Feb. 1998, pp. 44-45. A summary of these classes is provided in Appendix
B. It is anticipated that additional work will allow portions of these to be
moved into a Measured Mineral Resource class and possibly into Proven/Probable
Mineral reserve upon satisfactory final resolution of metallurgy and economics.

7.3 Inferred Resource Tres Amigos - 1 gm/t Au Cut-off

Methodology

The available information was compiled using a geological data management
program. From the drill pattern used by PQM "best fit" across sections at a
scale of 1:500 were developed at right angles to the apparent strike of the Tres
Amigos structure. In addition to this, a number of holes had been drilled
subparallel to the structure. Accordingly a second set of cross sections was
developed on a "best fit" basis at right angles to this direction of drilling.
Results from this second set were amalgamated with the first set of sections to
develop blocks of mineralization. A Placom KP-90N digital Planimeter was used to
measure areas of the mineralized blocks.

<PAGE>

Grades of intersections were weight averaged using a 1 gm/t gold cut-off value
to establish grade for each block.

The "best fit" approach results in a non uniform spacing between sections.
Lateral influence for each intersection employed were one halfway to an
adjoining section or 10 metres from the end sections.

Downdip continuity was assumed from interpretation where sufficient drill data
was available. Blocks were taken to 8 metres on each side of intersections where
no other information was available. This requirement resulted in not including
significant portions of the projected Tres Amigos structure on sections 5078E,
5060E and 5037E due to lack of drilling in these areas.

Based on the planimeter sections and areas of influence, tonnage calculations
for each mineralized block were made. A Specific Gravity of 2.8 was assumed as
no information on Specific Gravity measurements are available. Mineralized
blocks were then weight averaged to determine total results.

Discussion of Drill Results

In a report dated March 14, 1997, C.K. Ikona presented an estimate of
mineralized resources of the Tres Amigos zone. This was based on sampling of the
underground workings by Cheng, surface trenching, and an assumed 70 metre strike
extension both to the northeast and southwest for a total strike length of 350
metres. Continuity down dip was assumed as 35 metres. This resulted in an
estimate of 96,300 tons grading 4.24 gm/t Au and 0.78% Cu.

The 1997 drill program tested the Tres Amigos zone over a strike distance of 160
metres and indicated probable continuity for this distance. No indication of
termination of the zone along strike is apparent. On sections 51 14E, 5060, 5020
and 4953E the zone was intersected some 30-40 metres down dip. The corresponding
holes on sections 5097E, 5078E, 5037E and 5988E were not drilled. Based on these
results, it appears that the assumptions used by Ikona in his report remain
valid for tonnage calculations. A total of 7 drill intercepts are within the
93,000 ton block estimate. Assay results vary between 1.74 to 6.47 g/t Au. A
similar variation is present in the underground sampling. Accordingly the grade
estimate for the 93,000 tons was not adjusted.

Intersections of apparent Tres Amigo's mineralization were encountered on most
sections to a down dip length of up to 250 metres. These lower intersections
were used to calculate the Inferred Mineral Resource which was added by the 1997
drill program.

In addition, a number of holes reported multiple intersections of mineralization
indicating potential outside the main Tres Amigo's zone. Where sufficient
continuity is apparent, resource blocks are also presented for these
intersections.

<PAGE>

Table 1

Summary of Inferred Resource

Tres Amigos Area, San Jose de Gracia Project

As of May 1998 S.G. = 2.8 cut off= 1 gm/t Au

Table 1

- --------------------------------------------------------------------------------
Description Tonnes g/t Au g/t Ag %Cu %Zn
- --------------------------------------------------------------------------------

A Resources estimated by Ikona, 93,600 4.24 n/a 0.78 n/a
March 1997 to 35 metres below
Tres Amigos workings.

B Indicated Resource on Tres 283,100 4.62 8.79 0.22 0.19
Amigos zone added by 1997
drilling.

C Indicated Resource in other 87,600 2.77 4.9 0.09 0.75
zones in Tres Amigos area
added 1997 drilling.

- --------------------------------------------------------------------------------
Total Indicated Resource 464,300 4.19 n/a 0.30 n/a
- --------------------------------------------------------------------------------

More detailed reserve results on a section basis are presented in Appendix C.

7.4 Indicated Resources - Nominal 3 gm/t Au Cut-off

Interpretation

New cross sections were plotted for the Tres Amigos area employing the survey of
the area conducted during 1999. These show the main Tres Amigos zone to have a
relatively consistent strike and dip (-O56~ @ -600N) over the area drilled. In
addition, several of the new sections (5078, 5097, 51 14E) appear to indicate
the presence of a second zone (tentatively named the Cuarta Amigo) sub parallel
to the Tres Amigos and some 35 metres in the Hanging wall. Both of these zones
appear to be structurally controlled. Opposing movement on such a set of
subparallel structures can cause dilation or wrench type secondary structures
between them. The presence of these may be indicated by a number of
intersections which previously were interpreted as a significant flattening of
the main Tres Amigos zone at depth.

In addition section 5078 appears to show the presence of these dilation
structures in the hanging wall of the Cuarto Amigo zone. This may indicate the
presence of a third, previously unsuspected zone in this direction.

Should this new interpretation of the controlling structural features prove
correct, the implications for increasing the tonnage potential for the area are
significant.

<PAGE>

<TABLE>

Methodology

The resource at a 3 gm cut-off grade was calculated on the sections and
interpretation described previously. Parametres on area of influence of drill
holes, sections and Specific Gravity were the same as discussed for the 1 gm
cut-off grade presented in section 7.3.

Cutting of Grades and Results

Assays from underground sampling and drilling demonstrate an extensive range in
gold grades. Additional information is required to develop a statistically
meaningful method of cutting assays. Cutting of grades at this time therefore is
somewhat arbitrary. Table 2 shows the tonnage and grade calculated on sections
for various portions of the deposit and the uncut weighted average grade of 9.4
gm/t gold. Inspection of results show three tonnage blocks with gold grades
substantially above the uncut average (zone T section 5078, zone C section 5078
and zone C section 5114). On a preliminary basis cutting the grade of these to
the uncut average shows a cut weighted average grade of 7.4 gm/t gold. No
cutting of silver and copper results appear warranted.

Table 2

Indicated Resource

Tres Amigos Area

3 gm/t Au nominal cut-off S.G. = 2.8
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Section Ave t Influence Area Vol. Tonnes g/l Au g/t Ag % Cu Zone
(in) (in) (ml) (mi)
4953E 1.6 27.5 60 1650 4,620 11.59 27.5 0.27 T
4988 3.0 33 97.5 3,217 9,009 3.47 2.0 0.71 T
2.0 33 37.5 1,237 3,465 13.5 3.1 0.02 T
1.5 33 90 2,970 8,316 7.24 5.7 0.05 D
5020 2.36 24 272.5 6,540 18,312 8.25 18.4 1.09 T
7.1 24 260.0 6,240 17,472 4.4 21.0 0.43 D
5037 3.35 20 137.5 2,750 7,700 7.88 5.2 0.75 1
5046 2.4 10.5 97.5 1,023 2,866 4.39 5.2 0.48 T
3.0 10.5 232 2,436 6,820 6.12 26.4 0.05 T&D
2.0 10.5 42.5 446 1,249 3.28 1.6 0.01 D

<PAGE>

5060 3.1 16.0 280 4,480 12,544 5.47 21.4 0.54 T
2.0 16.0 70 1,120 3,136 10.81 16.3 0.38 D
2 16.0 30 480 1,344 14.88 10.9 0.19 D
5078 3.8 18.5 477 8,824 24,700 17.26 14.0 0.38 T
1.55 18.5 85 1,572 4,400 9.7 11.2 0.07 D
2 18.5 60 1,110 3,100 31.35 6.7 0.03 C
2 18.5 57.2 1,058 2,960 3.0 2.7 0.10 D
2 18.5 57.5 1,063 2,776 5.12 2.2 0.10 C
5097 1.65 18.0 90 1,620 4,536 9.1 8.64 0.11 C
2 18.0 47.5 855 2,390 7.78 2.3 0.37 C
2 18.0 77.5 1,395 3,900 5.18 1.9 0.05 D
2 18.0 57.5 1,035 2,900 7.06 20.6 0.58 T
7 18.0 112.5 2,025 5,670 7.5 15.5 0.09
5114E 1.5 18.5 40 740 2,072 5.66 47.3 1.3 T
2.1 18.5 105 1,942 5,439 21.8 37.8 0.63 C
- -------------------------------------------------------------------------------------------------------------
Total uncut 161,696 9.4 15.15 0.44 All
-------------------------------------------------
Total cut (gold only) 161,696 7.4 15.15 0.44 All
- -------------------------------------------------------------------------------------------------------------
</TABLE>

Zones: T = Tres Amigos
D = Dilation zone
C - Cuarto Amigo

7.5 Inferred Mineral Resource

On sections 4988E, 5037E and 5046E significant portions of the main Tres Amigos
structure require fill in drilling as the distance between drill intersections
and/or underground sampling is greater than the described parameters used for
calculation of Indicated Resources. An Inferred Resource of some 125,000 1 can
be postulated in this area. Grade is indeterminate but may approach the
Indicated Mineral Resource averages.

8.0 METALLURGY

The historical gold production from the San Jose de Gracia area was by
amalgamation of arrastre and stamp mill production until 1902 and cyanide
extraction of stamp mill production until 1910. Ore for this processing appears
to have been derived from oxidized and enriched material from above the
paleo-water table level. The small flotation concentrator erected in the area
operated on material salvaged from historical workings and may have included
some primary non-oxidized material but the majority of feed most likely
consisted of higher grade oxidized material. Results from this operation both in
recovery and concentrate grade were reported to be satisfactory.

<PAGE>

The flotation concentrator installed by Minera Finisterre in the mid 1990's
(reported capacity 200 t/d) was constructed primarily to process material from
the Tres Amigos workings. This material is silicified and not oxidized to any
significant degree. Little attempt to investigate the metallurgy, install
adequate grind control and selective flotation appears to have been made. As a
result, gold recoveries were low and concentrate produced of too low a value to
be saleable.

In the spring of 1999 personnel under the direction of Mr. Wayne C. Henderson,
P.E. of Lockwood Greene Engineers visited the property with the purpose of
obtaining samples for metallurgical testing. Six samples were collected and
forwarded to Hazen Research in Golden, Colorado for test work under the
direction of Mr. Henderson. The following description of the samples was
provided by Mr. Henderson.

Sample 1: This is a bulk composite taken from the lower Tres Amigos Adit
over about a 3 meter strike distance. This sample had significant Au, Ag,
Cu and Zn grade, higher than expected than that observed or reported from
previous Tres Amigos mining and processing efforts. The sample was prepared
using hand-gathered, selected vein rock from side-wall and rooffall
material in the Adit.

Sample 2: This is a bulk, near-surface trench composite taken from previous
trenching areas on the Gossan Cap. Although highly oxidized, the Gossan Cap
material was tested to see if it was feasible to concentrate using
beneficiation techniques.

Sample 3: This sample was comprised of composite 1/4-core intervals from a
number of Tres Amigos drill holes. The intent was to obtain a composite
representative of the vein intercepts (with >6 gpt Au) which was
predominately Au and cu mineralization only.

Sample 4: Similar to Sample 3, this Sample was intended to represent
1/4-core intervals in the mineralized vein (with >6 gpt Au) where the
predominate mineralization was Au, Zn and also some Pb.

Sample 5: During the course of the 97 drilling program, a lower ore zone
(called the Sediment Zone), which was a fine-grained rock with little or no
visible sulfide mineralization, was identified which had significant Au
grade. Unfortunately none of the drill holes penetrated this structure and
some early holes did not drill into it since it was not a recognized A
u-bearing formation. This sample represents a composite of intervals from
several drill holes which are typified by: fine-grained rock structure,
little visible sulfides; and low Cu, Zn and Pb.

Sample 6: One of the last exploratory holes drilled in the 97 program was
hole 9 7-63 which drilled at an angle into an ore zone formation indicated
by previous, smaller-scale mining activity at Palo Chino and the possible
connection of the near-surface ore formation with the San Pablo mining
activity. Selected 1/4-core intervals (>3 gpt Au) were combined over a 30

<PAGE>

<TABLE>

meter mineralized zone to get a nominal 15-kg sample for testing.
Unfortunate/v only one drill hole core was available for this formation;
thus the composite Sample 6 ended up lower grade than desired (assay head
of 0. 070 topt or <2.6 g/mt). This would he a marginal mining grade for a
bulk tonnage, near-surface mining. Never-the-less, the metallurgical
response for this material (using a non-optimized scenario based on the
Tres Amigos Adit ore) was acceptable.

Table 3 presents the analytical results completed on the six samples and
demonstrates the wide variability in metal contents among the samples.

Table 3

Summary of Head Analyses (after Hazen)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Client Au Ag Cu Pb Zn Fe 5(T)
Identification gm/f gm/f % % % % %
Sample 1 29.5 140.2 4.61 0.10 1.17 13.7 13.5
Sample 2 15.9 29.4 0.36 0.0] 0.02 4.56 0.18
Sample 3 5.9 33.2 0.95 0.07 0.30 6.18 5.90
Sample 4 19.3 29.4 0.27 0.70 4.09 10.8 13.1
Sample 5 9.6 6.5 0.05 0.05 0.23 4.05 3.17
Sample 6 2.3 11.6 0.15 0.0] 0.01 4.52 3.27
-------------------------------------------------------------------------
</TABLE>

The objectives of the work conducted by Hazen were to:

o Mineralogically and chemically categorize the six ore samples.

o Evaluate gravity separation for the recovery of relatively coarse gold and
silver.

o Evaluate flotation to recover gold, silver, and copper.

o Develop preliminary process design criteria.

o Describe any obvious metallurgical complications.

Hazen summarized the results of their work as follows.

For the six samples studied, gold recovery varied between 62 and 950o,
silver recovery varied between 30 and 94%, and copper recovery varied
between 14 and 97% into a combined (calculated) gravity cleaner concentrate
and rougher flotation concentrate. The lowest recoveries were associated
with a highly oxidized sample (Hazen 49 733-2). When the results from the
highly oxidized sample and results at course grinds were ignored, gold
recovery varied between 87 and 95%, silver recovery varied between 67 and
94%, and copper recovery varied between 81 and 97% into a combined
(calculated) gravity cleaner concentrate and rougher flotation concentrate.

<PAGE>

For the sulfide samples, when target conditions (primarily grind size) were
attained, the rougher flotation conditions were visually excellent, and
there were no indications of interference from clays or other components
that can interfere with results. No attempts were made to recover oxidized
minerals.

Of the samples, three were Tres Amigos (1, 3, 4) with the others from elsewhere
on the project. As only resource calculations were made on the Tres Amigos the
following comments are made for these samples only.

Most of the test work was directed to the high grade adit sample (Sample 1).
Results on this sample both in terms of recovery and concentrate grade (in gold)
were excellent. However, while the Tres Amigos will undoubtedly produce some
material of this grade and mineralogical tenor, Run of Mine feed considering
overall resource and dilution will most likely be of much lower grade.

The other two samples (samples 3 and 4) received only cursory test work. Results
of this work was very promising from a recovery point of view but concentrate
grade was low which will impact negatively on cash flows. The low grade
concentrate may be a result of too coarse a grind and flotation selectivity in
the tests. This is indicated by the mineralogic study of these samples which
appears to indicate that gold occurs as discrete particles which can be
liberated by grinding rather than interstitially with the pyrite.

Although yet to be demonstrated, the possibility of producing an acceptable
grade of concentrate from Run of Mine, Tres Amigos material should be considered
good.

Hazen recommends additional test work prior to circuit design and detailed
economic analysis. For this work care should be taken to ensure that samples
represent ore blends that will be treated in the plant and include dilution
material. The writers concur with this.

9.0 RECOMMENDATIONS

The mineral potential of the San Jose de Gracia mining camp merits further
evaluation facilitated by the continuation of both the in-office review of
historical data and acquisition of new data derived from field work. To
accomplish this, a staged approach to exploration is recommended. An initial
stage should address the following:

Data Base Up Date:

The recent trip to the property resulted in retrieval of most of the data not
previously on file at Pamicon's offices and a considerable backlog exists, in
the cataloguing, processing, and interpretation of this data. It is recommended
that a competent, accredited geologist, with a good background in data and CAD
management, a strong background in volcanic hosted, epithermal systems and
structural geology, be given the tenure and resources to address the task. This
person would also be involved in the collecting and processing of data acquired
during the next round of field activities.

<PAGE>

Road and Camp Rehabilitation:

The field trip to SJG in July, 1999, revealed considerable deterioration of the
roads to San Jose de Gracia and around the mining property. It is estimated that
approximately three weeks of bulldozer supported, road rehabilitation is
required to facilitate future road based exploration activities on the property,
especially if additional drilling is scheduled. The camp compound is also in
need of refurbishment especially in the areas of water supply and refrigeration.
It is recommended that the budget for the next period of field work reflects
these needs.

Geological Mapping and Surveying:

While the addition of drill hole survey data has enabled a more confident
interpretation of the distribution of subsurface mineralization at Tres Amigos,
detailed surface mapping is still required for the correlation of structures,
rock units and mineralization trends. Preliminary data, now on hand in the form
1997 field maps and underground geology maps need to be compiled and placed on
base maps suitable for interpretation, presentation and field use. Detailed
mapping at a scale of 1:500 is required in areas for which drilling is
contemplated and should be completed in advance, perhaps during the road and
camp rehabilitation stage. Additional mapping for the purpose of developing new
drill targets may be conducted during the drilling stage as time and manpower
permit.

Diamond Drilling:

A drill program based on encouraging 1997 drill results is recommended for the
property. Initially, three areas should be tested. These include: the Tres
Amigos - La Cecena structure, the Palos Chinos - hole SJG 063 structure and the
Rudolphos structure. This work should accommodate the completion of current
drill sections where necessary and further test the interpreted mineralized
structures laterally and to depth. This could be accomplished with a Stage One
drill program of approximately 12 drill holes with an accumulated length of 2000
meters. The amount of drilling and priority of collar locations is, however,
subject to corporate objectives and budgeting directives.

A second stage of work, comprising diamond drilling and mapping, would not only
continue to develop the mineral potential within the above target areas but
begin exploratory drill investigations of promising targets as derived from the
review of historical data and supported by current detailed mapping.

<PAGE>

10.0 RECOMMENDED BUDGETS

A budget totaling $625,000 Cdn is presented. For corporate purposes we have been
asked to prepare this on a two stage basis. The second stage recommendations are
not dependent upon results of the first stage. It would be preferable from an
efficiency point of view to conduct the second stage in conjunction with the
first to eliminate a number of redundant costs. The first stage, however can be
viewed as a stand alone program, if necessary. Details of these budgets are
presented in Appendix A.

Respectfully submitted.

/S/ Charles K. Ikona
- ---------------------------
Charles K. Ikona, P.Eng.

/S/ T. Cameron Scott
- ---------------------------
T. Cameron Scott, FGAC

<PAGE>

<TABLE>

APPENDIX A

DETAILED RECOMMENDED BUDGETS

EXPLORATION BUDGET: PHASE 1 - 1999
CLIENT: GOLDEN HEMLOCK
PROJECT: 1200 FOOT DRILLING PROGRAM - 45 DAYS
TOTAL BUDGET $313,649.44

WAGES

GENERAL EXPLORATION DAYS RATE TOTAL
Project Geologist 1 90 450.00 40,500
Senior Geologist 1 45 375.00 16,875
Geologist 1 45 350.00 15,750
Samplers 2 45 50.00 4,500
Caretaker 6 45 25.00 6,750
Cook 1 45 275.00 12,375
Preseason Wages 1 10 450.00 4,500
-----
$101,250

RENTALS NO. RATE
Office Equip. 45 30.00 1,350
Hand Held Radios 5 45 5.00 1,125
Rock Saw-Core 45 50.00 2,250
Rock Saw-Still 45 20.00 900
Truck 4x4 2 45 100.00 9,000
-----
$14,625

SUBCONTRACTS NO. RATE
Fixed Wing 5 Trips 300.00 1,500
Cat Hours 150 Hours 100.00 15,000
Survey 5,000
Drilling 1,200 Feet 35.00 42,000
------
$63,500

CHEMICAL ANALYSES NO. RATE
Core 200 Samples 25.00 5,000
Rock 100 Samples 25.00 2,500
-----
$7,500

MATERIALS AND SUPPLIES DAYS RATE
Camp Upgrade 15,000
Camp Equipment 1,000
Camp Food 45 300.00 13,500
Camp Fuel-Gas 2,000
Camp Fuel-Propane 2,000
Field Supplies 5,000
-----
$38,500

SUPPORT NO DAYS RATE
Travel-Airfare 5 Round Trips 600.00 3,000
Travel-Hotels/Motels (Mid Program Break) 5,000
Travel-Meals (Mid Program Break) 2,000
Travel-Auto. Exp 4,000
Expediting 2,000
Freight 6,000
Telephone - Satelite 5,000
-----
$27,000

REPORTS & REPRODUCTIONS
Maps and Publications 2,500
Reproductions 2,500
Drafting 5,000
Report 15,000
------
$25,000

PROJECT SUPERVISION
7% on subcontracts on 63,500 4,445
15% on expenses on 112,625 16,894
------
$21,339
--------
$298,714
--------
CONTINGENCY $14,936
--------
TOTAL BUDGET $313,649
========
</TABLE>

<PAGE>

<TABLE>

EXPLORATION BUDGET: PHASE 2 - 1999
CLIENT: GOLDEN HEMLOCK
PROJECT: 3500 FOOT DRILLING PROGRAM - 30 DAYS
DATE: 23-Sep-99
TOTAL BUDGET $312,957.75 Canadian Dollars

WAGES
GENERAL EXPLORATION DAYS RATE TOTAL
<S> <C> <C> <C> <C> <C>

Project Geologist 1 60 450 27,000.00
Senior Geologist 1 30 375 11,250.00
Geologist 1 30 350 10,500.00
Samplers 2 30 50 3,000.00
Caretaker 6 30 25 4,500.00
Cook 1 30 275 8,250.00
Preseason Wages 1 10 450 4,500.00
---------
$69,000.00
RENTALS NO. DAYS RATE
Office Equip. 30 30 900.00
Hand Held Radios 5 30 5 750.00
Rock Saw-Core 30 50 1,500.00
Rock Saw-Still 30 20 600.00
Truck 4x4 2 30 100 6,000.00
---------
$9,750.00

SUBCONTRACTS NO. RATE
Fixed Wing 5 Trips 300 1,500.00
Cat Hours 50 Hours 100 5,000.00
Survey 5,000.00
Drilling 3,500 Feet 35 122,500.00
----------
$134,000.00

CHEMICAL ANALYSES NO. RATE
Core 350 Samples 25 8,750.00
Rock 100 Samples 25 2,500.00
--------
$11,250.00

MATERIALS AND SUPPLIES DAYS RATE
Camp Equipment 1,000.00
Camp Food 30 300 9,000.00
Camp Fuel-Gas 2,000.00
Camp Fuel-Propane 2,000.00
Field Supplies 2,500.00
--------
$16,500.00

SUPPORT NO. RATE
Travel-Airfare 5 Round Trips 600 3,000.00
Travel-Hotels/Motels (Mid Program Break) 1,500.00
Travel-Meals (Mid Program Break) 1,000.00
Travel-Auto. Exp 2,000.00
Expediting 2,000.00
Freight 2,500.00
--------
Telephone - Satelite $14,500.00

REPORTS & REPRODUCTIONS
Maps and Publications 2,500.00
Reproductions 2,500.00
Drafting 2,500.00
Report 15,000.00
---------
$22,500.00

PROJECT SUPERVISION
7.0% on subcontracts on 134,000 9,380.00
15% on expenses on 74,500 11,175.00
---------
$20,555.00
----------
$298,055.00

CONTINGENCY $14,902.75
----------
TOTAL BUDGET $312,957.00
===========
</TABLE>

<PAGE>
APPENDIX B

RESOURCE DEFINITIONS:

EXCERPTED FROM

DRAFT OF INTERNATIONAL
RESOURCE/RESERVE
DEFINITIONS

CIM BULLETIN VOL. 90, NO. 1017 PP. 44-45
FEBRUARY 1998

Indicated Mineral Resource

An indicated mineral Resource is that part of a Mineral Resource which has been
explored, sampled and tested through appropriate exploration techniques at
locations such as outcrops, trenches, pits, workings and drill holes which are
too widely spaced or inappropriately spaced to confirm geological and
grade/quality continuity but which are spaced closely enough to be able to
assume geological and grade/quality continuity and from which collection of
reliable data allows tonnage/volume, densities, shape, physical characteristics,
quality and mineral content to be estimated with a reasonable but not high level
of confidence.

Inferred Mineral Resource

An Inferred Mineral Resource is that part of a Mineral Resource inferred from
geological evidence and assumed but not verified continuity where information
gathered through appropriate exploration techniques from locations such as
outcrops, trenches, pits, workings and drill holes is limited or of uncertain
quality and reliability but on the basis of which tonnage/volume, quality and
mineral content can be estimated with a low level of confidence.

<PAGE>

<TABLE>

APPENDIX C

INTERSECTIONS INCORPORATED IN RESOURCE CALCULATIONS
AND
INFERRED RESOURCES 1 GM/T Au Cut-off

Inferred Resource
Tres Amigos Zone
>From 1997 Drilling

lgm/t Au cut off S.G.= 2.8

- ----------------------------------------------------------------------------------------
Section Ave t Influence Area Vol. Tonnes g/t g/t %Cu %Zn
(m) (m) (m2) (m3) Au Ag
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

4988E 2.0 35 40 1,400 3,900 13.53 3.10 0.02 0.50
5020E 5.8 24.5 927 22,600 63,000 3.28 11.51 0.35 0.20
5037E 8.0 20 132.5 2,650 7,400 2.25 5.5 0.06 0.20
8.0 20 112 2,240 6,300 3.12 23.38 0.78 0.29
5060E 3.2 20.5 57.5 1,180 3,300 1.74 14.08 0.26 0.11
12.6 20.5 1447.5 29,700 83,000 5.41 8.81 0.22 0.24
5078E 9.35 18.5 1895 35,000 98,000 5.37 8.76 0.21 0.17
5097E 4.0 19.5 242 4,700 13,000 1.56 5.0 0.15 0.05
6.0 19.5 95 1,850 5,200 2.59 1.63 0.04 0.02
- ---------------------------------------------------------------------------------------
283,100 4.64 9.29 0.23 0.19
==========================================
</TABLE>

Note: Drilling on sections 4953E and 5114E is within reserve block estimated
by Jkona previously and not included in above reserves.

<PAGE>

<TABLE>

Inferred Resource
Other Zones

Tres Amigos Drill Area From 1997 Drilling

lgm/t Au cutoff S.G. = 2.8

- -------------------------------------------------------------------------------------------
Section Ave t Influence Area Vol. Tonnes g/t g/t Ag %Cu %Zn
(m) (m) (m2) (m3) Au
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

4988E 3.0 35 25 875 2400 5.28 6.2 0.03 3.15
2.7 35 40 1,400 4000 2.76 4.38 0.05 2.69
5020E None
5037E None

5060E 6 20.5 412.5 8,450 23600 4.64 2.7 0.03 0.14
5078E 5.6 18.5 510 9,400 26400 4.29 3.82 0.12 0.50
5097E 6.5 19.5 215 4,200 11700 2.31 4.62 0.17 0.30
6 19.5 102 2,000 5600 1.47 4.37 0.10 0.23
2.8 19.5 45 900 2400 3.8 13.9 0.4 0.07
5.6 19.5 100 2,000 5500 1.27 5.22 0.05 1.0
7 19.5 110 2,100 6000 7.51 15.4 0.09 3.42
- -------------------------------------------------------------------------------------------
87600 2.77 4.9 0.09 0.75
==========================================
</TABLE>

(Detailed Assay Table Graphic Omitted) p01
(Detailed Assay Table Graphic Omitted) p02
(Detailed Assay Table Graphic Omitted) p03
(Detailed Assay Table Graphic Omitted) p04
(Detailed Assay Table Graphic Omitted) p05

<PAGE>

APPENDIX D

BIBLIOGRAPHY

Boyd, Robert T. (June 15, 1994): A preliminary evaluation of the San Jose de
Gracia Gold Property for Consolidated Samarkand Resources Inc.

Brown, Robert F. and Charlie X. Cheng (1995): Report on the San Jose de Gracia
Project.

Brown, Robert F. and Charlie X. Cheng (1995): Report on the San Jose de Gracia
Project Sinaloa, Mexico. Unpublished company document prepared for Consolidated
Samarkand Resources Incorporated, l8p.

Cheng, Charlie, X. (1994): Preliminary Report on the Exploration Project of San
Jose de Gracia Gold Property, Sinaloa, Mexico. Unpublished company document
prepared for consolidated Smaarkand Resources Incorporated, 9p.

Clark, K.F., P. Damon and M. Shafiqullah (1980): Age Trends of Igneous Activity
in Relation to Metallogenesis in the Southern cordillera; (source of article
unknown); National Science Foundation Grants EAR-781 1535 (Damon-Shafiqullah),
INT-7811535 (Damon-Salas), INT-73-07420-A02 (Clark-Salas).

Clark, K.F., R.R. Dow and R.D. Knowling (1978): Fissure Vein Deposits Related to
Continental Volcanic and Subvolcanic Terrains in Sierra Madre Occidental
Province, Mexico. In 5th IAGOD Quadrennial symposium, pp. 189-201.

Consejo De Recursos Minerals (1992): Geological - Mining Monograph of the State
of Sinaloa (pp 8--84).

Corbett, G.J. and T.M. Leach (1998): Southwest Pacific Rim Gold-Copper System.
Unpublished Short Course Notes, Corbett Geological Services, 235 p.

de Cservina, Z. (Unknown Date): Mexico-Geotectonics and Mineral Deposits, New
Mexico Geological Society, Special Publication Number 6, pp. 18-25.

Henderson, Wayne c. (1999): Reports on Sampling and Metallurgical Testing for
San Jose de Gracia Project.

Ikona, Charles, K. and M. Mitchel (1998): Inferred Mineral Reserves, Tres Amigos
Area.

Ikona, Charles K. (1996): Summary Report of the San Jose De Gracia Property for
Golden Hemlock Explorations.

Jebrak, M. (1997): Hydrothermal Breccia in Vein-type Ore Deposits: A Review of
Mechanisms, Morphology and Size Distribution. Ore Geology Reviews, vol. 12,
1997, pp. 111-13

<PAGE>

Lunceford, R. (1996): Sample Descriptions, San Jose de Gracia Property, Sinaloa
de Levya, Sinaloa, Mexico. Unpublished company memorandum prepared for Teek
Resources Incorporated.

McDowell, F.W. and (?) Keizer, (1987): Timing of Mid-Tertiary Volcanism in the
Sierra Madre Occidental Province. In Geological Society of America (GSA)
Bulletin, vol. 88, 1997, pp. 1479-1487.

Miscellaneous: Maps and Preliminary Drill Logs. Perforaciones Quest de Mexico to
Golden Hemlock.

Podobnik, Donald M. and Nick Hazen (1999): Process Development for the Tres
Amigos Orebody.

Poulsen, R.F. and Dube, (1997): Gold Deposits and Their Geological
Classification. In., eds., Gubins, A.G., Geophysics and Geochemistry at the
Millennium - Proceedings of Exploration 97, Fourth Decennial International
Conference on Mineral Exploration, pp. 209-220.

Scott, T. Cameron and Jason K. Dunning (1998): Preliminary Summary of the
Geological Environment for the San Jose de Gracia Property.

Sillitoe, R.H., (1985): Ore Related Breccias in Volcanoplutonic Arcs. Economic
Geology, vol. 80, 1985, pp. 1467-1514.

Sillitoe, R.H. (1997): Characteristics and Controls of the Largest Porphyry
Copper-Gold and Epithermal Gold Deposits of the Circum Pacific Region.
Australian Journal of Earth Sciences, vol. 44, 1997, pp. 373-388

<PAGE>

APPENDIX E

STATEMENT OF QUALIFICATIONS

ENGINEER'S CERTIFICATE

I, CHARLES K. IKONA, of 5 Cowley Court, Port Moody, in the Province of British
Columbia, DO HEREBY CERTIFY THAT:

1. I am a Consulting Mining Engineer with offices at Suite 611, 675 West
Hastings Street, Vancouver, British Columbia.

2. I am a graduate of the University of British Columbia with a degree in
Mining Engineering (1966).

3. I am a member in good standing of the Association of Professional Engineers
of the Province of British Columbia.

4. My experience has encompassed a wide range of geological environments and
has allowed considerable familiarization of exploration and production of
both lode and placer deposits.

5. I have no interest in the project reported on herein or in the securities
of any company associated with the project.

6. This report is based on my examination of the San Jose de Gracia project
area in March 1996 and on information provided by Minera Finisterre.

7. Permission is hereby given to Golden Hemlock Explorations for use of this
report for purposes required by regulatory authorities.

DATED at Vancouver, B.C. this 26th day of Sept, 1999.

/s/ Charles K. Ikona
- --------------------------
Charles K. Ikona, P.Eng.

<PAGE>

STATEMENT OF QUALIFICATIONS

I, T. Cameron Scott of 3925 Fourth Avenue, Port Alberni, in the Province of
British Columbia, DO HEREBY CERTIFY THAT:

1. I am a graduate of the University of British Columbia (1973) and hold a
B.Sc. in Geology.

2. 1 am a Fellow of the Geological Association of Canada.

3. My primary employment since 1963 has been in the field of mineral
exploration.

4. My experience has encompassed a wide range of geological environments and
has allowed considerable familiarization with prospecting geophysical,
geochemical and exploration drilling techniques.

5. This report is based on data generated by myself under the direction of
Charles K. Ikona, P.Eng., on information contained in the various reports
listed in the Bibliography and work conducted by myself on the property in
July-August, 1999.

6. I have no interest in the property described herein, nor in securities of
any company associated with the property, nor do I expect to receive any
such interest.

7. Permission is hereby given to Golden Hemlock Explorations for use of this
report for purposes required by regulatory authorities.

Dated at Vancouver, B.C., this 28th day of September, 1999.

/s/ T. Cameron Scott
- ------------------------------
T. Cameron Scott, B.Sc., FGAC

EXHIBIT "2.6"

DYNARESOURCE, INC.
"PHASE II EXPLORATION

GOLDEN HEMLOCK EXPLORATION

PHASE II EXPLORATION

February 2000

[GRAPHIC OMITTED]

INTRODUCTION

Exploration on the San Jose de Gracia property will focus on identifying areas
of:

1. High-grade, vein-hosted gold mineralization amenable to underground mining
methods.

2. Disseminated gold mineralization developed adjacent to veins and amenable
to bulk mining methods.

Six main target areas have been identified in the property including from
southwest to northeast the La Purisima, Palo Chinos, Veta Tierra - Santa
Edwiges, San Pablo, La Prieta and Tres Amigos - La Cecena zones (Figure 1). The
attributes of the various target areas are presented in Table 1.

Table 1. Characteristics of the main target areas on the San Jose de Gracia
property.

(Table Graphic Omitted)

Regional-scale uplift in the San Jose de Gracia area has tilted the strata and
mineralizing system to the southwest. Geological mapping and geochemical
sampling suggest that the deepest portions of the vein system are exposed in the
northeast at Tres Amigos. Here the veins comprise gold bearing, base-metal rich
quartz+chlorite breccia veins and stockworks. The veins are hosted within
structurally controlled envelopes of chlorite+sericite alteration and
silicification. At Veta Tierra - Santa Edwiges and Palo Chinos areas, gold is
hosted within crustiform quartz and quartz+chlorite breccia and stockwork veins
containing pyrite, chalcopyrite with Au:Ag ratios of 1:2. Alteration in these
areas is pervasive and characterized by an assemblage of
sericite/illite+chlorite+quartz. Further to the southwest, broad zones of
pervasive clay alteration are exposed along the top of La Purisima ridge. SW
tiling and changes in the style of alteration and mineralization suggest that
the La Purisima, Palo Chinos and Veta Tierra - Santa Edwiges are near the top of
the mineralizing system and exhibit the greatest vertical potential for gold
mineralization. Based on our current understanding of the vein systems at San
Jose de Gracia, the targets with the best exploration potential include:

1. La Purisima, La Prieta since they are the main areas of past production an
have seen little or no modern exploration.

2. Palo Chinos for both vein and disseminated gold potential.

3. Veta Tierra - Santa Edwiges since it may represent the northeast and up-dip
extension of the La Purisima vein system.

<PAGE>

Figure 1. Geology of the San Jose de Gracia property (red lines correspond to
the surface trace of the main gold bearing veins on the property).

(Graphic Omitted)

PHASE 2 - PROPOSED WORK

The objectives this stage of exploration on the San Jose de Gracia are to
advance exploration on the main target areas equally through diamond drilling,
underground and surface exploration. Upon the completion of this phase of
exploration, Golden Hemlock Exploration will be in the position to focus future
exploration activities on those targets with the best chance of success.

Exploration activities on the property are separated into two segments
commencing in early February and ending at the end of April. For the first
month, exploration will concentrate on underground re-habilitation and surface
trenching and mapping. Expenditures during this stage of exploration are
projected to be CND$ 85,000. Subsequent to initial surface and underground
exploration, a drill will be mobilized to the property during the second month.
A 1,250 metre, 12 hole drill program with a projected cost of CND$ 268,000 is
proposed during this stage of exploration. Total expenditures are projected to
be CND$ 353,000. Exploration expenditures for each stage and for the proposed
exploration are presented in Appendix 1.

Surface Exploration

Surface exploration will entail:

o Continued 1:1,000 property scale geological mapping outside of the areas
covered during Phase 1.

o Detailed mapping in the main veins.

o Hand trenching along the surface trace of the main vein targets.

o Follow-up silt sampling and prospecting to the north and east of Tres
Amigos.

Twenty-four trenches, totaling 725 metres are proposed for the Palo Chino, Veta
Tierra, San Pablo and La Cecena - Tres Amigos areas (Table 2). The purpose of
surface trenching is to confirm the along strike continuation of these vein
systems prior to drilling. For the location of individual trenches see Figures
2, 4, 6 and 8. Information obtained from detailed geological mapping and
trenching along the trace of these vein systems will be used to more effectively
locate drill holes proposed for the second stage of exploration.

Table 2. Proposed trenching

---------------------------- ----------------------------
Trench Method Length Trench Method Length
(m) (m)
============================ ============================

PC-01 By hand 20 SP-02 By hand 25
PC-02 By hand 50 SP-03 By hand 25
PC-03 By hand 40 TA-01 By hand 25
PC-04 By hand 40 TA-02 By hand 25
PC-05 By hand 35 TA-03 By hand 25
VT-01 By hand 30 CE-01 By hand 40
VT-02 Mechanical 30 CE-02 By hand 40
VT-03 By hand 30 CE-03 By hand 25
VT-04 By hand 30 CE-04 By hand 20
Vt-05 By hand 30 CE-05 By hand 25
VT-06 By hand 30 HI-01 By hand 30
SP--1 By hand 25 HI-02 By hand 30
---------------------------- ----------------------------

Silt sampling to the east and west of Tres Amigos identified a large area of
anomalous gold mineralization (Figure 2). Several historical workings in the
area, including a number along the northeast trace of the La Prieta vein system,
are likely responsible for some of the anomalies. Continued exploration in this
area will include:

o Follow-up stream sediment sampling to determine the aerial extent of
anomalous gold mineralization.
o Prospecting to identify the source gold mineralization.
o Property scale geological mapping.

<PAGE>

Figure 2. Northeast target area showing the location of stream sediment samples
gold grade (Au in ppb).

(Map Graphic Omitted)

Golden Hemlock
Explorations LTD
- ----------------

San Jose de Gracia

Northeast
Target Area

<PAGE>

<TABLE>

Underground Exploration

The focus of underground exploration will be re-habilitate the Del Angelo mine
beneath La Purisima ridge. Historically the vein systems beneath La Purisima
ridge have produced the bulk of the gold mined at San Jose de Gracia. To
evaluate the up-side exploration potential of the La Purisima vein systems the
de Angelo mine will be re-opened so that we can begin mapping and sampling the
areas of historic mining. Mapping and sampling of the stopes will provide us
with very important information about:

o The grade and controls on the distribution of mineralization.

o The area of historical mining.

This information will provide insight into where additional resources might be
located for drill testing. Underground re-habilitation will also focus on

o Providing access to several of the stopes and sub-levels within the San
Pablo, Veta Tierra - Ste. Edwiges and San Pablo mines so that these areas
can be mapped and sampled.

o Opening up several of the historical workings, i.e. La Cecena, Los Hilos.
Mapping and sampling of the veins within these old workings will increase
our understanding of the continuity of the main vein systems.

Underground re-habilitation will employ a professional miner and several of the
miners already on the Minera Finisterre payroll. Local help will be hired to
muck out some of the portals and caved areas.

Diamond Drilling

A 12 hole, 1250 metre drill program is proposed to evaluate the Palo Chino, Veta
Tierra, San Pablo and the south west extension of the Tres Amigos vein system.
The drill program is designed to test the upside exploration potential of each
of these targets with a series of wide-spaced (50 metres) drill holes located
along strike and/or down-dip of known areas. The location, and depth to target
for each drill hole is presented in Table 3a, and Figures 3, 5,6,8 and 10.

Table3a. Locations for the proposed drill holes (Note: hole locations are
subject to change with additional surface and underground exploration).

- ------------------------------------------------------------------------------------------------------------------
Hole_id Easting Northing Target Priorty Elevation Azimuth Dip Depth_tp_ Depth
Target
==================================================================================================================
Hole A 213503.5 2898079 Tres Amigos Initial 650 110 -90 95 115
Hole B 213463.1 289063 Tres Amigos Initial 650 130 -85 110 130
Hole C 213676 2898158 Tres Amigos Initial 603.5 190 -80 70 90
Hole D 212888.9 2897316 San Pablo Initial 658 130 -80 80 100
Hole E 212866.4 2897273 San Pablo Initial 662 130 -80 85 105
Hole F 212933.1 2897362 San Pablo Initial 646 170 -90 65 85
Hole H 213052.2 2896897 Veta Tierra Initial 745 140 -60 60 80
Hole I 213030.5 2896905 Initialeta Tierra Initial 735 160 -60 70 90
Hole L 212842.4 2896423 Palo Chinos Initial 585 57 -62 85 105
Hole M 212806.8 2896460 Palo Chinos Initial 585 57 -62 85 105
Hole N 212881.8 2896333 Palo Chinos Initial 565 57 -53 80 100
Hole O 212807.9 2896381 Palo Chinos Initial 560 57 -60 105 125
- ------------------------------------------------------------------------------------------------------------------
1230
</TABLE>

To locate each drill hole, longitudinal sections were constructed for each vein
target. Sample information from underground chip samples and drill hole
intercepts were compiled on the longitudinal sections and grade x thickness
plots were constructed (Figures 4, 7, 9 and 11) and blocks for the explored
(sampled) portions were calculated to characterize the volume, grade and width
of each vein (Tables 3 to 6). Subsequent to this, the pierce point of the
proposed drill holes were plotted on the longitudinal sections to provide the
most information about each target. In the following section, each vein target
and the location of the proposed drill holes are discussed.

<PAGE>

<TABLE>

Included in this proposal is an addition 860 metres of follow-up drill holes
that can be considered subsequent to results from the initial phase of drilling
(Table 3b). The six drill holes, with the exception of drill hole R, are
included in the discussions for each target area, but are not included in the
budget. The location of drill hole R, located in the La Purisima area will
located pending additional surface work.

Table 3a. Locations for the proposed follow-up drill holes (Note: hole locations
are subject to change with additional surface and underground exploration).

TRES AMIGOS - LA CECENA

Three diamond drill holes totaling 335 metres are proposed for the Tres Amigos
vein between the West Tres Amigos adit and La Cecena (Figure 3). Currently the
Tres Amigos vein has been traced on surface for approximately 520 metres along
strike and for 200 metres down dip. The vein strikes southwest and dips 50
degrees to the northwest, and is known to bifurcate (split into two veins) in
the La Cecena area. Drilling in 1997 primarily tested the Tres Amigos vein down
dip of the main workings and identified a northeast plunging shoot of high-grade
mineralization averaging greater that 10 gpt Au/metres (Block A in Figure 4).

Drill holes A to C are directed to test the vein along strike of the main area
drilled in 1997 (Figure 4). To evaluate the utility of the proposed drill hole,
the volume of the vein to be tested by holes A to C (Block B) was compared with
the area of known mineralization (Block A; Table 4). Based on our current
knowledge, holes A to C will test a similar area of the vein as was explored in
1997. Currently, the grade and width of the area to be tested (Block B) is lower
than was previously tested, but this is based on limited sampling in the La
Cecena and West Tres Amigos adits.

Table 4. Estimated size and grade of mineralized blocks for the Tres Amigos vein
(tonnes are calculated using an s.g. of 2.7 g/m3).

----------------------------------------------------------------------------
Zone Block Type Width Au_gpt Polygon_area Tonnes
============================================================================
Tres Amigos Block A Assumed 2.60 5.90 19.050 133,731
Tres Amigos Block B Inferred 1.26 4.18 23,400 79,607
----------------------------------------------------------------------------

<PAGE>

Figure 3. Tres Amigos area showing the location of proposed drill holes and
trenches.

(Graphic Omitted)

San Jose de Garcia
Tres Amigos - La Cecena Area
Proposed Drill holes & Trenching

<PAGE>

Figure 4. Longitudinal along the Tres Amigos vein. Intercepts reflect Au grade x
thickness of the vein.

(Graphic Omitted)

The fourth drill hole assigned to test the Tres Amigos vein system is located
along strike to the southwest (Figure 5). The location of this drill hole is
approximate and is contingent on positive results from drill holes A to C.
Additional surface mapping in the area during the next stage of exploration will
also be used to better locate drill hole Q.

Figure 5. Proposed drill hole Q and trenches from La Cecena, southwest to Los
Hilos.

(Graphic Omitted)

SAN PABLO

Previous exploration has not focused on the San Pablo vein despite the grade and
potential width of the vein defined by chip sampling. The Vein is currently
exposed on three levels for 130 metres along strike and 50 metres down dip
(Figures 6 and 7). The vein strikes southwest and dips 45 to 70 degrees to the
northwest. Based on the areas of underground mining, gold mineralization may be
hosted within steeply plunging ore shoots that have yet to be identified by
re-sampling of the vein.

Four drill holes (holes D to G) totaling 440 metres are proposed for the San
Pablo vein. The drill holes will be located to test the down dip potential of
the vein along its known strike, and to locate potential ore shoots down dip of
the main area of mining. Currently, sampling of the San Pablo vein has outlined
a small area with a robust gold grade of 9.4 gpt Au (Table 5). The proposed
drilling will more than double the area tested and provide a better
understanding of the size of this target. Surface work in the area will
concentrate on tracing the vein along strike to the northeast and southwest.

Table 5. Estimated size and grade of mineralized blocks for the San Pablo vein
(tonnes are calculated using an s.g. of 2.7 g/m3).

(Table Graphic Omitted)

Figure 6. Location of proposed drill holes and trenches for the San Pablo vein.

(Graphic Omitted)

<PAGE>

Figure 7. Longitudinal along the San Pablo vein. Intercepts reflect Au grade x
thickness of the vein

(Graphic Omitted)

VETA TIERRA - SANTA EDWIGES

The Veta Tierra - Santa Edwiges vein has been traced for 250 metres along strike
and 90 metres down dip (Figures and 9). The vein strikes southwest and dips 50
degrees to the northwest and in the Santa Edwiges underground the vein averages
21 gpt Au over 0.7 metres. This area, which may form the northeast and up-dip
extension of the Del Angelo mine, beneath La Purisima Ridge, contains at least
two other know veins and several flat veins. A second southwest striking,
northwest dipping vein is exposed in the La Union underground. This vein, in
conjunction with a shallow northwest dipping flat vein in the hangingwall, was
the focus of drilling during 1997 (Figure 9). Although several high-grade
samples were collected from the La Union vein in the underground (up to 202 gpt
Au/0.4 metres), drilling failed to return similar grades (up to 8.8 gpt Au/1
metre, SJG97-34). None of the holes drilled in 1997 intercepted the Veta Tierra
- - Santa Edwiges vein.

The second vein is located to the southeast of the Veta Tierra - Santa Edwiges
vein (Figure 8). It has been traced through a series of old workings and
sub-crop for 275 metres along strike. Up-coming exploration will concentrate on
tracing this vein along strike by trenching and detailed mapping.

To date, underground sampling of the Veta Tierra - Santa Edwiges vein has
defined two small areas of mineralization (Blocks E and F, Table 6).

<PAGE>

Table 6. Estimated size and grade of mineralized blocks for the Veta Tierra -
Santa Edwiges vein (tonnes are calculated using an s.g. of 2.7 g/m3).

(Table Graphic Omitted)

Four drill holes (drill holes H to K); totaling 365 metres are proposed to test
the vein down dip and between the underground workings at Veta Tierra and Santa
Edwiges. These four drill holes will test a much larger area of the vein than
has currently been explored and will significantly add to recognizing the
up-side potential of this vein.

Figure 8. Location of proposed drill holes and trenches for the Veta Tierra -
Santa Edwiges vein.

(Graphic Omitted)

Figure 9. Longitudinal along the Veta Tierra vein. Intercepts reflect Au grade x
thickness of the vein.

(Graphic Omitted)

PALO CHINOS

The Palo Chinos vein has been traced for 300 metres underground and 100 metres
down dip. The vein strikes northwest and dips 45 degrees to the southwest.
Several northeast striking veins cross cut the main Palo Chinos vein (Figure
10). Based on underground samples, higher-grade mineralization may be localized
at the intersection of the Palo Chinos and these northeast striking cross veins.
Additional underground sampling and mapping will focus on substantiating the
controls on mineralization at Palo Chinos. Two type of mineralization at Palo
Chinos, including:

1. Vein hosted - contained within crustiform quartz veins and siliceous
hematite-pyrite mineralization

2. Lower grad, disseminated gold mineralization within the hanging wall.

The second style of mineralization has the potential to be a bulk mineable
target, given the orientation of the Palo Chino vein and the slope of the
topography to the southwest.

To date Exploration has defined two blocks of mineralization (Blocks H and J;
Table 7 and Figure 11). To increase our understanding of the Palo Chino area, 5
drill holes (holes L to P), totaling 565 metres are proposed for the Palo Chinos
vein. Drilling will focus on testing the vein along strike and down dip of the
drill hole SJG97-63 intercept (15.5 metres of 3 gpt Au). The drill holes will be
spaced at 50 metre centers and test an area equal to our current understanding
of the vein.

<PAGE>

Table 7. Estimated size and grade of mineralized blocks for the Palo Chinos vein
(tonnes are calculated using an s.g. of 2.7 g/m3).

----------------------------------------------------------------------------
Zone Block Type Width Au_gpt Polygon_area Tonnes
============================================================================
Palo Chinos Block H Assumed 1.25 6.49 14,900 50,288
Palo Chinos Block I Assumed 15.50 3.06 2,500 104,625
Palo Chinos Block J Inferred 15.55 3.06 14,000 587,790
----------------------------------------------------------------------------

Figure 10. Location of proposed drill holes and trenches for the Veta Tierra -
Santa Edwiges vein.

( Map Graphic Omitted)

In addition to drilling, the Palo Chino vein will be trenched along its surface
trace to provide additional information about the extent of lower grade
disseminated gold mineralization within the hanging.

<PAGE>

<TABLE>

Figure 11. Longitudinal along the Palo Chino vein. Intercepts reflect Au grade x
thickness of the vein.

(Graphic Omitted)

Budget for Phase 2 Explorations

GOLDEN HEMLOCK - SAN JOSE de GRACIA Project

Phase 2 Budget (as of February 9, 2000)
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Item Description Person # Rate CND$ Days Amount CND$
==============================================================================================================
Technical Geologists Project Geo. $400.00 54 $21,600.00
Expenses Geologist $275.00 59 $16,225.00
Other $325.00 0 $0.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $37,825.00

Non-Technical Camp Manager Luis Dredger $184.00 59 $10,856.00
Expenses Domestic Cook 1 $15.05 59 $887.95
Helper/Laundry 1 $15.05 54 $812.70
Assistants Field Assistants 2 $19.35 30 $1,161.00
Core Geotech 1 $19.35 29 $561.15
Core Splitting 1 $18.28 29 $529.98
Trenchers 8 $18.28 30 $4,386.00
Underground 4 $19.35 30 $2,322.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $21,516.78

Travel Air Vancouver to Culican 4 $850.00 $3,400.00
Air Guimichil - SJG 6 $80.00 $480.00
Charter 2 $600.00 $1,200.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $5,080.00

Accommodation Meals 18 $30.00 $540.00
Hotel 9 $50.00 $450.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $990.00

Analytical Rock Samples

Au + ICP Surface 75 $21.71 $1,628.25
Trenching 150 $21.71 $3,256.50
Underground 300 $21.71 $6,513.00
Drilling 400 $21.71 $8,684.00

Silt Samples 100 $16.10 $1,610.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $21,691.75

Surface Work Excavator/Hoe $250.00 0 $0.00
Mob/Demob $0.00
Fuel 200 $1.25 0 $0.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $0.00

Road Prep Excavator/Hoe $250.00 7 $1,750.00
Mob/Demob $0.00
Fuel 200 $1.25 7 $1,750.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $3,500.00

Diamond Drilling Mob/Demob $5,000.00
Water Truck $300.00 24 $7,200.00
Drilling 1250 $145.00 $181,250.00
Fuel 200 $1.35 24 $6,480.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $199,930.00

<PAGE>

GOLDEN HEMLOCK - SAN JOSE de GRACIA Project
Phase 2 Budget cont'd

Item Description Person # Rate CND$ Days Amount CND$

Underground Technical 1 $400.00 6 $2,400.00
Re-hab* Miner 1 $100.00 30 $3,000.00

Equipment $5,000.00
Supplies $5,000.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $15,400.00

Transportation Truck Rental $0.00
Fuel $4,200.00
Maintenance $5,600.00
Freight $1,000.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $10,800.00

Communications

Telephone Rental 3 $67.50 $202.50
Calls $1,300.00
Fax $500.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $2,002.50

Camp Supplies

Equipment $1,500.00
Generator $100.00 59 $5,900.00
Supplies $2,000.00
Food - GHE 4 $15.00 59 $3,540.00
Food - Drilling 5 $15.00 24 $1,800.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $14,740.00

Field Supplies All inclusive 2,500.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $2,500.00

Reporting Geologists Project Geo $400.00 17 $6,800.00
Geologist $275.00 11 $3,025.00

Drafting $500.00 5 $2,500.00
Printing 0 $500.00

Drill hole Program $4,200.00 1 $4,200.00
- --------------------------------------------------------------------------------------------------------------
Sub-total $17,025.00

Total $353,001.03
</TABLE>

*Funds not used during this portion of the exploration project will be diverted
to drilling.

Approved by:

On February 10, 2000

/S/ Dalton Dupasquier /S/ K.D. Diepholz
- --------------------- ---------------------
Dalton Dupasquier Koy Diepholz

<PAGE>

MARK L. CLELAND

CERTIFIED PUBLIC ACCOUNTANT

17430 CAMPBELL ROAD, SUITE 114
DALLAS, TEXAS 75252
972-735-0033 FAX 972-735-0035

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders
of Dynaresource, Inc.
Irving, Texas

I have audited the accompanying balance sheet of DynaResource, Inc. as of
December 31, 1998 and the related statements of operations and accumulated
deficit, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit. The financial
statements of DynaResource, Inc. of December 31, 1997 audited by other auditors
whose report dated March 7, 1998, expressed an unqualified opinion on those
statements.

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

In my opinion, based on my audit and the report of other auditors, the financial
statements referred to above present fairly, in all material respects, the
financial position of DynaResource, Inc. as of December 31, 1998, and 1997, and
the results of their operations and their cash flows for each of the two years
in the period ended December 31, 1998 in conformity with generally accepted
accounting principles.

/S/ Mark L. Cleland

Dallas, Texas
March 8, 1999

<PAGE>

DYNARESOURCE, INC.

BALANCE SHEETS
December 31, 1998 and 1997

ASSETS

CURRENT ASSETS: 1998 1997
---------- -----------
Cash $ 149,663 $ 304,692
Accounts receivable - 89,986 29,585
Interest receivable - 8,460 -
Marketable securities 1,500 8,076
Other current assets 5,000 12,000
---------- -----------
Total Current Assets 254,609 354,353

PROPERTY:

Equipment (net) 34,636 41,683
Mining Properties (net 175,798 675,798
---------- -----------
Total Property 210,434 717,481

OTHER ASSETS:
Investment 847,737 -
Deposits 2,900 2,900
---------- -----------
Total Other Assets 850,637 2,900

TOTAL ASSETS $1,315,680 $ 1,074,734
========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:

STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value;
12,500,00 and 50,000,000
shares authorized; 3,183,907
and 3,149,193 shares issued
and outstanding at December
31, 1998 and 1997 Respectively $ 31,839 $ 31,492
Additional paid-in capital 2,793,261 2,653,929
Accumulated deficit (1,428,915) (1,508,182)
Treasury stock - at cost (80,505) (102,505)
Total Stockholders' Equity 1,315,680 1,074,734
---------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,315,680 $ 1,074,734

See accompanying notes

<PAGE>

DYNARESOURCE, INC.

STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1998 and 1997

1998 1997
REVENUE: --------- ----------

Income $ 50,000 $ -
Interest income 16,972 8,057
--------- ----------
Total Revenue 66,972 8,057

OPERATING EXPENSE:
Consulting 126,029 188,209
Depreciation 7,046 3,857
General and Administrative 81,331 95,008
--------- ----------
Total Operating Expense 214,406 287,074
--------- ----------

OTHER (INCOME) EXPENSE
Interest Expense - 1,608
Settlement Income (733,277) -
Write down marketable securities 6,576 9,500
--------- ----------
Total Other Expense (726,701) 11,108
--------- ----------
NET INCOME (LOSS): $ 579,267 $ (290,125)
========= ==========

Weighted average shares outstanding 3,158,039 2,702,514
========= ==========

INCOME (LOSS) PER SHARE $0.18 ($0.11)
========= ==========

See accompanying notes

<PAGE>

<TABLE>

DYNARESOURCE, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
December 31, 1998 and 1997

Common Treasury Paid in Accumulated
Shares Amount Shares Amount Capital Deficit
--------- -------- -------- ------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>

Balance, December 31, 1996 2,642,072 $26,421 - $ - $2,033,421 ($1,218,057)
--------- -------- -------- ------ ---------- ------------

Exercise of options and warrants 340,500 3,405 375,345

Acquire treasury shares 63,386 121,449

Issue treasury shares (15,200) (18,944) 53,756

Shares issued for notes payable
and accrued interest 40,394 404 161,112

Shares issued for services 126,227 1,262 30,295

Net loss (290,125)
--------- -------- -------- ------- ---------- ------------
Balance, December 31, 1997 3,149,193 31,492 48,186 102,505 2,653,929 (1,508,182)
--------- -------- -------- ------- ---------- ------------

Shares issued for services 34,714 347 8,332

Unissued shares 131,000

Issue treasury shares (7,400) (37,000)

Acquire treasury shares 10,000 15,000

Nonmonetary dividend (500,000)

Net income 579,267
--------- -------- -------- ------- ---------- ------------
Balance, December 31, 1998 3,183,907 $31,839 50,786 $80,505 $2,793,261 $(1,428,915)
========= ======== ======== ======== ========== ============

</TABLE>

See accompanying notes

<PAGE>

<TABLE>

DYNARESOURCE, INC.

STATEMENTS OF CASH FLOWS For The Years Ended December 31, 1998 and 1997

1998 1997
-------- ---------
<S> <C> <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $579,267 $(290,125)
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Depreciation 7,046 3,857
Write-down of marketable securities-related party 6,576 -
Settlement income (733,277) -
Issuance of common stock for interest - 1,516
Issuance of common stock for services 8,679 31,557
Changes in working capital:
(Increase) decrease in

Accounts receivable - related party (60,400) (29,585)
Interest receivable - related party (8,460) -
Other current assets 7,000 17,500
Increase (decrease) in

Interest payable - (989)
-------- ---------
NET CASH USED BY

OPERATING ACTIVITIES: (193,569) (266,269)
-------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Equipment purchased - (30,450)
Investment in mining company (114,460) -
Investment in marketable securities - related party - (8,076)
Deposit - (2,900)
-------- ---------
NET CASH USED BY

INVESTING ACTIVITIES: (114,460) (41,426)
-------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes - 145,000
Repay note payable - (6,000)
Unissued stock 131,000 -
Treasury stock purchased (15,000) (128,949)
Treasury stock issued 37,000 80,200
Exercise of options and warrants - 378,777
-------- ---------
NET CASH PROVIDED
BY FINANCING ACTIVITIES: 153,000 469,028
-------- ---------

NET INCREASE IN CASH: (155,029) 161,333

CASH AT BEGINNING OF YEAR: 304,692 143,359
-------- ---------

CASH AT END OF YEAR: $149,663 $ 304,692
======== =========

</TABLE>

See accompanying notes.

<PAGE>

DYNARESOURCE, INC.

STATEMENT OF CASH FLOWS
For the Years Ended December 31, 1998 and 1997

SUPPLEMENTAL DISCLOSURE OF

CASH FLOW AND NON-CASH ACTIVITIES

1998
- ------

The Company spun-off as a dividend its 24.9% net profits interest in the San
Jose de Gracia mining property in Sinaloa, Mexico. This tranaction was recorded
at book value in the amount of $500,000.

The Company acquired 25% of the outstanding common stock of Minera Finesterre
S.A. de CV., the owner of 100% interest (subject to the 24.9% net profits
interest) of the San Jose de Gracia mining property. $733,277 of this
acquisition is recorded as settlement income.

The Company issued 34,714 shares of its common stock to related parties for
consulting fees in the amount of $8,679.

1997
- -----

The Company issued 40,394 shares of its common stock to payoff notes payable
issued that year including related interest totaling $161,516.

The Company issued 126,227 shares of its common stock to related parties for
consulting fees in the amount of $31,557.

See accompanying notes.

<PAGE>

DYNARESOURE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997

Note A - Nature of Business and Summary of Significant Accounting Policies:

History:
The Company, West Coast Mines, Inc., was organized September 28, 1937, as a
California corporation. The Company was organized for the purpose of seeking,
investigating, and, if such investigation warrants, acquiring assets,
properties, and businesses and to engage in any substantial business
opportunities.

The Company merged with Resolute Mining Corp., a Nevada corporation, on February
28, 1995. This business combination was accounted for as a purchase.

In 1994 the Company filed an amendment to its articles of incorporation to
increase the authorized number of common stock from 750,000 shares to 50,000,000
shares and changed the par value of its common stock from $1.00 to $0.01 per
share.

On November 1, 1998, the Company merged with DynaResource, Inc, a newly formed
corporation, domiciled in the state of Delaware. This merger resulted in
changing the Company's name to DynaResource, Inc., changing the state of
incorporation from California to Delaware and reducing the Company's authorized
common stock from 50,000,000 shares authorized to 12,500,000 shares authorized.
This business combination was accounted for as a purchase.

Basis of Accounting:
It is the Company's policy to prepare its financial statements on the accrual
basis of accounting in accordance with generally accepted accounting principles.
Revenue is recorded as income in the period in which it is earned and expenses
are recognized in the period in which the related liability is incurred.

Cash and Cash Equivalents:
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with a maturity of three months or less to be cash
equivalents. The Company places its cash investments in high quality financial
institutions. At times, cash balances may be in excess of the FDIC insurance
limit.

Property:
Property is carried at cost. Upon retirement or disposal, the asset cost and
related accumulated depletion are removed from the accounts and any resulting
gain or loss is included in the determination of net income.

Expenditures for geological and engineering studies, maintenance and claim
renewals are charged to expense when incurred. Additions and significant
improvements are capitalized and depleted.

<PAGE>

DYNARESOURCE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997

Note A - Nature of Business and Summary of Significant Accounting Policies
(continued):

Long-Lived Assets

The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from these estimates

Generally accepted accounting principals require recognition of impairment of
long-lived assets in the event of net book value of such assets exceed the
future undiscounted cash flows attributable to such assets. Consequently, the
Company assesses its assets annually for impairment and writes down any amounts
necessary as a result of the assessment.

Income Tax:
The Company is subject to the greater of federal income taxes computed under the
regular system or the alternative minimum tax (AMT) system.

Earnings (Loss) per Common Share:
Earnings (loss) applicable to common stock is based on the weighted average
number of shares of common stock and common stock equivalents outstanding during
the year. The inclusion of common stock equivalents in the loss per share
computation have not been included because they would be anti-dilutive under the
treasury stock method.

Reverse stock split:
On January 31, 1997, the Company declared a one-for-four reverse stock split of
its common stock. In connection with the stock split, the Company reduced common
shares outstanding from 10,685,586, to 2,641,966. All share and per share data
have been restated for all periods presented to reflect the stock split.

Note B - Accounts receivable - related party:

Included in accounts receivable - related party are amounts of $30,170 and
$27,015 for reimbursement of legal fees spent during 1998 and 1997 respectively.
Both of these amounts accrue interest at a rate of 12% per annum. Also included
in this account is a note receivable from the same related party in the amount
of $32,800. This note accrues interest at a rate of 10% per annum.

Note C - Marketable securities:

The Company purchased shares of a related party during 1997. These shares are
considered trading securities. In accordance with the Company's policy of
impairment of long-lived assets these securities were written down in amounts of
$6,576 and $9,500 1998 and 1997 respectively.

<PAGE>

DYNARESOURCE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997

Note D - Other current assets:

Prepaid expenses:
The Company recorded prepaid accounting and legal expenses in the amounts of
$5,000 and $12,000 for 1998 and 1997 respectively.

Note E - Furniture and Equipment:

Furniture and equipment is stated at cost and consists of the following:

1998 1997
------- -------
Office furniture $22,376 $22,376
Lab equipment 14,306 14,306
Computer and peripherals 6,289 6,289
Office equipment 3,448 3,448
------- -------
46,419 46,419
------- -------

Less accumulated depreciation (11,783) (4,736)
------- -------
$33,636 $41,683
======= =======

Depreciation has been provided for using the straight-line method over estimated
useful lives of three to seven years.

Note F - Mining Properties:
1998 1997
-------- --------
Pansey Lee mine (560 acres) $631,737 $631,737
Impairment allowance (501,915) (501,915)
-------- --------
Subtotal 129,822 129,822
Wikiup Claim (640 acres) 45,976 45,976
Mining interest/note receivable 0 500,000
-------- --------
Total $175,798 $675,798
======== ========

<PAGE>

DYNARESOURCE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997

Note F - Mining Properties (continued):

Mining interest/note receivable:

The Company owned a 24.9% net profits interest in the San Jose de Gracia mining
property in Sinaloa, Mexico. The property includes all mining concessions now
held or subsequently obtained within a 10 mile radius from the core of the
property.

As stated within the mine operating agreement on the San Jose de Gracia
property:

The Company has no obligation to make additional advances to any party
in connection with this mining interest.

"Available cash" is defined as: "cash flows", less operating expenses,
adjusted for increases or decreases in cash reserves.

"Cash flows" is defined as : any consideration, including gross cash
receipts from operation of the mine.

"Operation of the mine" is defined as all income generating activity,
which is derived from, or in any way related to, the San Jose property;
including without limitation, the sale of minerals extracted from the
property, the sale or licensing of any rights to derive minerals or
income from the property; the sale of any rights in the concessions:
and the sale, transfer, or assignment of any rights whatsoever to
develop, operate, or produce the San Jose property.

"Operating expenses" is defined as: the costs, charges, expenses and
disbursements incurred in connection with development, maintenance,
operation, management and production of the mine. Expressly excluded
from such costs are exploration costs and property acquisition &
maintenance costs.

"Cash reserves" is defined as amounts of cash, derived from production
of the mine, held in trust for contingent or unforeseen liabilities or
obligations arising out of operation of the mine.

This mining interest was spun off and distributed as a dividend in 1998.

<PAGE>

DYNARESOURCE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997

Note G - Investment:

The Company acquired 25% of the outstanding common stock of Minera Finesterre
S.A. de CV (Minera), a private Mexican corporation, by way of a litigation
settlement. Minera owns a 100% interest in the San Jose de Gracia mining
property in Sinaloa, Mexico. Pursuant to this settlement the Company forgave
future consideration including a $500,000 note and related interest, plus
accelerated payback provisions on cash flows, and elected to retain the 24.9%
net profits interest. Subsequent to this settlement the Company spun off and
distributed as a dividend the 24.9% net profits interest.

Note H - Related party transactions:

The Company paid $126,029 and $193,891 in stock and cash to related parties for
consulting and other fees during 1998 and 1997 respectively.

The Company rented office space from a related party on a month to month basis
until May, 1997. The amount paid to a related party for rent amounted to $7,140.

Note I - Stockholders' Equity:

During the first quarter of 1997, the Company issued notes which converted at
$4.00 per share into 40,000 shares of the Company's common stock. Upon the
conversion of such notes into common stock, 40,000 "A" Warrants, exercisable at
$8.00 per share; and 40,000 "B" Warrants, exercisable at $12.00 per share were
issued. All such "A" and "B" Warrants terminate 90 days after the Company's
common stock reaches the market price of $12.00 and $16.00 per share
respectively.

Of the 451,750 stock options outstanding during 1997, 264,000 were exercised at
a price of $1.00 per share and another 76,500 shares were converted at $1.50 per
share. The remaining options expired on November 1, 1997.

On November 1, 1998 the Company authorized a dividend of the mining
interest/note receivable referred to in Note F. This dividend was paid to
DynaResource Properties, Inc., a private Delaware corporation. At the Record
Date, the shareholders of DynaResource Properties, Inc. were identical to
DynaResource, Inc. This nonmonetary transaction is charged against retained
earnings at book value.

<PAGE>

DYNARESOURCE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997

Note I - Stockholders' Equity (continued):

During 1998 the Company received $131,000 for 131,000 shares of its common
stock. These shares have not been issued as of December 31, 1998 and are shown
as paid in capital. These shares do not participate in the nonmonetary dividend.

Treasury Stock:
During 1997 the company acquired 63,386 shares of its own common stock ranging
in price from $1.50 to $2.00 per share. The company reissued 15,200 of these
shares for a price of $5.00 per share. These transactions were accounted for on
a first in first out basis.

During 1998 the company sold 7,400 shares from treasury and acquired 10,000
shares.

There are 50,746 and 48,186 common shares held in treasury at the end of 1998
and 1997 respectively.

Note J - Revenue:

The Company received $50,000 during 1998 from a five year lease/sale agreement
on its Humboldt County, Nevada (Pansey Lee) 560 acre mining property. The terms
of the lease are as follows:

A. 1st year (1/23/98): $ 50,000
B. 2nd year (1/23/99): $ 100,000
C. 3rd year (1/23/00): $ 150,000
D. 4th year (1/23/01): $ 250,000
E. 5th year (1/23/02): $ 250,000

Total Lease payments receivable $ 800,000
Sale price option $2,000,000
Total Lease & Sale $2,800,000

If lessor decides to purchase property prior to end of lease term, all lease
payments are immediately due and payable.

The Company retains a 2.5% gross royalty on any and all production.

<PAGE>

DYNARESOURCE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997

Note J - Revenue (continued):

Settlement income:

The company recorded $733,277 as income in the settlement for 25% of the stock
of Minera referred to in Note G.

Note K - Income Taxes:

The Company has net operating loss carryforwards of approximately $800,000 at
December 31, 1998 that is available to offset its future income tax liability.

No deferred tax asset has been recognized for the operating loss carryforward as
it is more likely than not that All or a portion of the net operating loss will
not be realized and any valuation allowance would reduce the benefit to zero.

MARK L. CLELAND

CERTIFIED PUBLIC ACCOUNTANT

17430 CAMPBELL ROAD, SUITE 114
DALLAS, TEXAS 75252
972-735-0033 FAX 972-735-0035

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders
of DynaResource, Inc.
Irving, Texas

I have audited the accompanying balance sheet of DynaResource, Inc. as of
December 31, 1999 and 1998 and the related statements of operations and
accumulated deficit, and cash flows for each of the two years ended December 31,
1999. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audits.

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

In my opinion, based on my audits, the financial statements referred to above
present fairly, in all material respects, the financial position of
DynaResource, Inc. as of December 31, 1999, and 1998, and the results of their
operations and their cash flows for each of the two years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.

/S/ Mark L. Cleland
- --------------------
Dallas, Tesas
February 17, 2000

<PAGE>

<TABLE>

DYNARESOURCE, INC.

BALANCE SHEETS
December 31, 1999 and 1998

ASSETS

CURRENT ASSETS: 1999 1998
---------- ----------
<S> <C> <C>

Cash $ 416,140 $ 149,663
Accounts receivable - related party 109,946 98,446
Marketable securities - related party 50 1,500
Other current assets - 5,000
---------- ----------
Total Current Assets 526,136 254,609

PROPERTY:

Equipment (net) 27,590 34,636
Mining Properties (net) 175,798 175,798
---------- ----------
Total Property 203,388 210,434

OTHER ASSETS:
Investment 944,007 847,737
Deposits 2,900 2,900
---------- ----------
Total Other Assets 946,907 850,637

---------- ----------
TOTAL ASSETS $1,676,431 $1,315,680

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:

STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value; 12,500,00
shares authorized; 3,739,907 and 3,183,907
shares issued and outstanding at December 31,
1999 and 1998 respectively $ 37,399 $ 31,839
Additional paid-in capital 3,380,535 2,793,261
Accumulated deficit (1,704,761) (1,428,915)
Treasury stock - at cost (36,742) (80,505)
---------- ----------
Total Stockholders' Equity 1,676,431 1,315,680
---------- ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,676,431 $1,315,680
========== ==========

</TABLE>

See accompanying notes.

<PAGE>

DYNARESOURCE, INC.

STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1999 and 1998

1999 1998
---------- ----------
REVENUE:

Income $ - $ 50,000
Interest income 10,895 16,972
Dividend income 449 -
---------- ----------
Total Revenue 11,344 66,972

OPERATING EXPENSE:
Consulting 191,778 126,029
Depreciation 7,046 7,046
General and Administrative 94,624 81,331
---------- ----------
Total Operating Expense 293,448 214,406
---------- ----------

OTHER (INCOME) EXPENSE
Settlement Income - (733,277)
Gain on sale of securities (7,708) -
Write down marketable securities 1,450 6,576
---------- ----------
Total Other Expense (6,258) (726,701)
---------- ----------

NET INCOME (LOSS): $(275,846) $579,267
========== ==========

Weighted average shares outstanding 3,482,657 3,158,039
========== ==========

INCOME (LOSS) PER SHARE ($0.08) $0.18
========== ==========

See accompanying notes.

<PAGE>

<TABLE>

DYNARESOURCE, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
December 31, 1999 and 1998

Common Treasury Paid in Accumulated
Shares Amount Shares Amount Capital Deficit
--------- ------- ------ -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>

Balance, December 31, 1997 3,149,193 $31,492 48,186 $102,505 $2,653,929 ($1,508,182)
--------- ------- ------ -------- ---------- -------------
Shares issued for services 34,714 347 8,332

Unissued shares 131,000

Transfer treasury shares (7,400) (37,000)

Acquire treasury shares 10,000 15,000

Nonmonetary dividend (500,000)

Net income 579,267
--------- ------- ------ -------- ---------- -------------
Balance, December 31, 1998 3,183,907 31,839 50,786 80,505 2,793,261 (1,428,915)
--------- ------- ------ -------- ---------- -------------

Issuance of previously

unissued shares 131,000 1,310 (1,310)

Shares issued 352,000 3,520 607,925

Transfer treasury shares for services (27,611) (43,763) (36,861)

Issue shares for services 73,000 730 17,520

Net income (275,846)
--------- ------- ------ -------- ---------- -------------
Balance, December 31, 1999 3,739,907 $37,399 23,175 $ 36,742 $3,380,535 $(1,704,761)

</TABLE>

See accompanying notes.

<PAGE>

<TABLE>

DYNARESOURCE, INC.
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1999 and 1998

1999 1998
--------- ---------
<S> <C> <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(275,846) $579,267
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Depreciation 7,046 7,046
Write-down of marketable securities - related party 1,450 6,576
Settlement income - (733,277)
Issuance of common stock for services 25,153 8,679
Adjust for prior year treasury stock issuance 9,444 -
Changes in working capital:
(Increase) decrease in

Accounts receivable - related party (11,500) (68,860)
Other current assets 5,000 7,000
Increase (decrease) in

Interest payable - -
--------- ---------
NET CASH USED BY

OPERATING ACTIVITIES: (239,253) (193,569)
--------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in mining property (96,270) (114,460)
Investment in marketable securities - related party - -
Deposit - -
--------- ---------
NET CASH USED BY

INVESTING ACTIVITIES: (96,270) (114,460)
--------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock issued 602,000 -
Unissued stock - 131,000
Treasury stock purchased - (15,000)
Treasury stock issued - 37,000
Exercise of options and warrants - -
--------- ---------
NET CASH PROVIDED
BY FINANCING ACTIVITIES: 602,000 153,000
--------- ---------

NET INCREASE IN CASH: 266,477 (155,029)

CASH AT BEGINNING OF YEAR: 149,663 304,692
--------- ---------

CASH AT END OF YEAR: $ 416,140 $149,663
========= =========

</TABLE>

See accompanying notes.

<PAGE>

DYNARESOURCE, INC.

STATEMENT OF CASH FLOWS
For the Years Ended December 31, 1999 and 1998

SUPPLEMENTAL DISCLOSURE OF

CASH FLOW AND NON-CASH ACTIVITIES

1999
- -----

The Company issued 73,000 shares of its common stock to related parties for
consulting fees in the amount of $18,250.

The Company transferred 27,611 shares from its treasury to a related party for
services valued at $6,903.

1998
- -----

The Company spun-off as a dividend its 24.9% net profits interest in the San
Jose de Gracia mining property in Sinaloa, Mexico. This transaction was recorded
at book value in the amount of $500,000.

The Company issued 34,714 shares of its common stock to related parties for
consulting fees in the amount of $8,679.

See accompanying notes.

<PAGE>

DYNARESOURE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1999

Note A - Nature of Business and Summary of Significant Accounting Policies:

History:
The Company was organized September 28, 1937, as a California corporation under
the name West Coast Mines, Inc.. The Company was organized for the purpose of
seeking, investigating, and, if such investigation warrants, acquiring assets,
properties, and businesses and to engage in any substantial business
opportunities.

The Company merged with Resolute Mining Corp., a Nevada corporation, on February
28, 1995. This business combination was accounted for as a purchase.

Expenditures for geological and engineering studies, maintenance and claim
renewals are charged to expense when incurred. Additions and significant
improvements are capitalized and depleted.

<PAGE>

DYNARESOURCE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1999

Note A - Nature of Business and Summary of Significant Accounting Policies
(continued):

Long-Lived Assets

Earnings (Loss) per Common Share:
Earnings (loss) applicable to common stock is based on the weighted average
number of shares of common stock and common stock equivalents outstanding during
the year. The inclusion of common stock equivalents in the loss per share
computation has not been included because they would be anti-dilutive under the
treasury stock method.

Note B - Accounts receivable - related party:

Included in accounts receivable - related party are amounts paid by the Company
for the benefit of that same party and also for funds advanced. This related
party owns a percentage of Minera Finesterre S.A. de CV, a private Mexican
corporation and owner of 100% interest of the San Jose de Gracia mining property
located in Sinoloa, Mexico, as described in Note G to these financial
statements. The Company has negotiated interest receivable at various rates for
different periods of time. The balance of the amount advanced and spent on the
related party's behalf and the related interest amounted to $108,446 and $98,446
at the end of 1999 and 1998 respectively. Also included in this account is an
amount receivable from another related party in the amount of $1,500.

Note C - Marketable securities:

<PAGE>

DYNARESOURCE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1999

Note D - Other current assets:

Prepaid expenses:
The Company recorded prepaid legal expenses in the amounts of $5,000 for 1998.

Note E - Furniture and Equipment:

Furniture and equipment is stated at cost and consists of the following:

1999 1998
------- -------
Office furniture $22,376 $22,376
Lab equipment 14,306 14,306
Computer and peripherals 6,289 6,289
Office equipment 3,448 3,448
------- -------
46,419 46,419

Less accumulated depreciation (18,829) (11,783)
------- -------
$27,590 $34,636
======= =======

Depreciation has been provided for using the straight-line method over estimated
useful lives of three to seven years.

Note F - Mining Properties:
1999 1998
-------- --------
Pansey Lee mine (560 acres) $631,737 $631,737
Impairment allowance (501,915) (501,915)
-------- --------
Subtotal 129,822 129,822
Wikiup Claim (640 acres) 45,976 45,976
-------- --------
Total $175,798 $175,798
======== ========

<PAGE>

DYNARESOURCE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1999

Note F - Mining Properties (continued):

Mining interest/note receivable:

As stated within the mine operating agreement on the San Jose de Gracia
property:

The Company has no obligation to make additional advances to any party
in connection with this mining interest.

"Available cash" is defined as: "cash flows", less operating expenses,
adjusted for increases or decreases in cash reserves.

"Cash flows" is defined as : any consideration, including gross cash
receipts from operation of the mine.

"Cash reserves" is defined as amounts of cash, derived from production
of the mine, held in trust for contingent or unforeseen liabilities or
obligations arising out of operation of the mine.

This net profits interest was spun off and distributed as a dividend to the then
existing shareholders in 1998.

<PAGE>

DYNARESOURCE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1999

Note G - Investment:

In 1998 the Company acquired 25% of the outstanding common stock of Minera
Finesterre S.A. de CV, a private Mexican corporation and the owner of 100%
interest of the San Jose de Gracia mining property, by way of a litigation
settlement. In 1999 the Company spent $96,270 on exploration costs on the San
Jose de Gracia property to earn an additional 1.7% in Minera Finesterre S.A. de
CV for a total ownership interest of 26.7%. Pursuant to this settlement the
Company forgave future consideration including a $500,000 note and related
interest, plus accelerated payback provisions on cash flows, and elected to
retain the 24.9% net profits interest. Subsequent to this settlement the Company
spun off and distributed as a dividend the 24.9% net profits interest.

Note H - Related party transactions:

The Company paid $191,778 and $126,029 in stock and cash to related parties for
consulting and other fees during 1999 and 1998 respectively.

Note I - Stockholders' Equity:

During 1998 the Company received $131,000 for 131,000 shares of its common
stock. These shares were issued during 1999 and did not participate in the
nonmonetary dividend. During 1999 the Company received $602,000 for 352,000
shares of its common stock. In conjunction with the Company's receipt of the
$733,000 received in 1998 and 1999 the Company issued 733,000 common stock
options exercisable at a price of $2.50 per share. These common stock options
expire August 15, 2001.

Treasury Stock:
The Company may from time to time purchase and resell its own common stock in
order to raise additional capital. These transactions are recorded as treasury
stock and any resulting gain or loss is recorded as additional paid in capital.

<PAGE>

DYNARESOURCE, INC.

NOTES TO FINANCIAL STATEMENTS
December 31, 1999

Note I - Stockholders' Equity (continued):

Treasury Stock (continued):
During 1998 the company sold 7,400 shares from treasury and acquired 10,000
shares.

There were 23,175 and 50,786 common shares held in treasury at the end of 1999
and 1998 respectively.

There are 733,000 options outstanding at December 31, 1999. Each option is
exercisable for one share common stock at a price of $2.50 per share and expires
August 15, 2001.

There are 40,000 "A" warrants outstanding at December 31, 1999. Each of these
warrants entitles the holder to purchase one share of the Company's common stock
at a price of $8.00 per share within 90 days of the stock reaching a market
price of $12.00 per share.

There are 40,000 "B" warrants outstanding at December 31, 1999. Each of these
warrants entitles the holder to purchase one share of the Company's common stock
at a price of $12.00 per share within 90 days of the stock reaching a market
price of $16.00 per share.

Note J - Revenue:

In 1998 the Company received $50,000 from a five-year lease/sale agreement on
its Humboldt County, Nevada (Pansey Lee) 560 acre mining property. The lessor
did not pay the second year's lease payment and the lease was subsequently
terminated.

Settlement income:
In 1998 the company recorded $733,277 as income in the settlement for 25% of the
stock of Minera Finesterre S.A. de CV referred to in Note G of these financial
statements.

Note K - Income Taxes:

The Company has net operating loss carryforwards of approximately $900,000 at
December 31, 1999 thatis available to offset its future income tax liability.

No deferred tax asset has been recognized for the operating loss carryforward as
it is more likely than not that all or a portion of the net operating loss will
not be realized and any valuation allowance would reduce the benefit to zero.

EXHIBIT "3.3"
Golden Hemlock Explorations, Ltd.
"AUDITED FINANCIAL STATEMENT"
February 28, 1999

GOLDEN HEMLOCK EXPLORATIONS LTD.

Consolidated Financial Statements

February 28, 1999 and 1998

Index:
-----

Auditors' Report Consolidated Balance Sheet

Consolidated Statement of Operations and Deficit

Consolidated Statement of Changes in Financial Position

Notes to Consolidated Financial Statements

Consolidated Schedule of Deferred Exploration and

Development Expenditures

<PAGE>

ELLIS FOSTER

CHARTERED ACCOUNTANTS
1650 West 1st Avenue
Vancouver, B.C., Canada V6J 1G1
Telephone: (604) 734-1112 Facsimile: (604) 734-1502
E-Mail: [email protected]

Auditors' REPORT

To the Shareholders of

GOLDEN HEMLOCK EXPLORATIONS LTD.

We have audited the consolidated balance sheets of Golden Hemlock
Explorations Ltd. as at February 28. 1999 and 1998 and the
consolidated statements of operations and deficit and changes in
financial position 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 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 February 28, 1999 and 1998 and the results of its
operations and the changes in its financial position for the years
then ended in accordance with generally accepted accounting
principles. As required by the Company Act of British Columbia, we
report that, in our opinion, these principles have been applied on a
basis consistent with that of the preceding year.

Vancouver, Canada
July 6, 1999
Chartered Accountants

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Consolidated Balance Sheet
February 28, 1999 and 1998

--------------------------------------------------------------------------
1999 1998
--------------------------------------------------------------------------
ASSETS

Current

Cash $ 1,255 $ 10,205
Accounts receivable 46,464 401,190
Prepaid expenses and deposits 13,030 18,311
--------------------------------------------------------------------------
60,749 429,706
Mineral interests (note 2) 4,928,785 5,024,548
Capital assets (note 3) 399,420 542,449
--------------------------------------------------------------------------
$5,388,954 $ 5,996,703
==========================================================================
LIABILITIES

Current

Accounts payable and accrued liabilities $ 522,735 $ 1,070,229
Loans payable (note 4) 280,000 385,000
Due to related parties 119,640 508,647
-------------------------------------------------------------------------
922,375 1,963,876
Long-term debt (note 5) - 683,250
-------------------------------------------------------------------------
922,375 2,647,126
--------------------------------------------------------------------------
SHAREHOLDERS EQUITY
Share capital (note 6) 11,244,240 10,563,980
deficit (6,777,661) (7,214,403)
--------------------------------------------------------------------------
4,466,579 349,577
--------------------------------------------------------------------------
$ 5,388,954 $ 5,996,703
==========================================================================

Approved by the Directors

Robin T. Forshaw Dalton Dupasquier

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Consolidated Schedule of Deferred Exploration and
Development Expenditures
Years Ended February 28, 1999 and 1998

- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
Amortization 60213 4372
Assays . 8824
Drilling . 22722
Equipment rental . 8431
Freight . 7505
Fuel costs 2179 48480
Geological fees 50000 .
Maintenance and repairs 5653 26856
Project costs . 41931
Rights and permits 33056 .
Salaries 41206 62589
Sundry 6357 6304
Supervision 6387 10387
Supplies . 40370
Travel 3545 33473

Increase in deferred exploration and
development expenditures 11988 60100
Deferred exploration and development
expenditures, beginning of year 48449 3005

Deferred exploration and development
expenditures, end of year 9557 63105
================================================================================

<PAGE>

<TABLE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Consolidated Statement of Changes in Financial Position
Years Ended February 28, 1999 and 1998
- ------------------------------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>

Cash provided by (used for) operating activities
Net income (loss) for the year $ 436,742 $ (943,382)
Items not invoMng cash
Gain on settlement of debt (431,227) -
Gain on disposition of subsidiary interests (529,725) -
Loss on disposal of capital asset 9,508 30,922
Amortization 63,931 13,137
Foreign exchange 44,466 70,070
Decline in fair market value of marketable securities - 12,250
- ------------------------------------------------------------------------------------------------------
(406,305) (817,003)
Net change in non-cash working capital items 387,773 759,251
- ------------------------------------------------------------------------------------------------------
(18,532) (57,752)
- ------------------------------------------------------------------------------------------------------
Cash provided by (used for) investing activities
Acquisition of mineral interests (92,842) (709,703)
Deferred exploration and development expenditures (208,596) (2,288,324)
Net assets realized on disposition of subsidiary interests 209,586 -
Acquisition of capital assets - (515.982)
Proceeds from disposal of capital assets 59,214 57,622
- ------------------------------------------------------------------------------------------------------
(32,638) (3,456,387)
- ------------------------------------------------------------------------------------------------------
Cash provided by (used for) financing activities
Issuance of share capital for cash 105,000 2,453,906
Share issue costs - (59,737)
Proceeds from convertible loans - 355,000
Repayment of convertible loans (105,000) -
Advances from related parties, net 42,220 -
Repayment of loan payable - (230,597)
- ------------------------------------------------------------------------------------------------------
42,220 2,548,572
- ------------------------------------------------------------------------------------------------------
Decrease in cash positIon (8,950) (965,567)
Cash position, beginning of year 10,205 975,772
- ------------------------------------------------------------------------------------------------------
Cash position, end of year $ 1,255 $ 10,205
======================================================================================================
</TABLE>

<PAGE>

<TABLE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Notes to Consolidated Financial Statements
February 28, 1999 and 1998
- --------------------------------------------------------------------------------
Significant Accounting Policies

(a) Basis of Consolidation

These consolidated financial statements include the accounts
of the Company and its 75% (1998 - 70%) owned subsidiary,
Miners Finisterre S.A. de C.V. (Finisterre), a Mexican
incorporated company.

(b) Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amount of revenues and expenses during the
period. Actual results may differ from those estimates.

Capital assets are recorded at historical cost. Amortization
is charged to earnings in amounts sufficient to allocate the
costs over their estimated useful lives using the following
annual rates and methods prorated from initial utilization:
<S> <C> <C> <C>

Office equipment and furniture 10% per annum, straight-line basis
Mining machinery and equipment 10% per annum, straight-line basis
Automotive equipment 25% per annum, straight-line basis
Computer equipment 25% per annum, straight-line basis
</TABLE>

(d) Mineral Interests

The Company is in the development stage and defers all
expenditures related to its mineral interests until such time
as the properties are put into commercial production, sold or
abandoned. Under this method, all direct costs related to the
exploration for and development of the mineral interests are
capitalized and do not necessarily reflect current or future
values. If the property is put into commercial production, the
expenditures will be depleted based upon the proven reserves
available. If the property is sold or abandoned, the
expenditures will be written off. The Company does not accrue
the estimated future costs of maintaining in good standing its
mineral interests. Management has determined each property to
be a cost centre.

Ownership in mineral interests involves certain inherent risks
due to the difficulties in determining the validity of certain
claims as well as the potential for problems arising from the
frequently ambiguous conveyancing history characteristic of
many mineral properties. The Company has investigated
ownership of its mineral properties and, to the best of its
knowledge, ownership of its interests is in good standing.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Notes to Consolidated Financial Statements
February 28, 1999 and 1998
- --------------------------------------------------------------------------------
Significant Accounting Policies (continued)

(e) Property Option Agreements

From time to time, the Company may acquire or dispose of
properties pursuant to the terms of option agreements. Due to the
fact that options are exercisable entirely at the discretion of
the optionee, the amounts payable or receivable are not recorded.
Option payments are recorded as mineral interests costs or
recoveries when the payments are made or received.

(f) Foreign Currency translation

Assets and liabilities denominated in foreign currencies are
translated into Canadian dollars at exchange rates in effect at
the balance sheet date for monetary items and at exchange rates
prevailing at the transaction dates for non-monetary items.
Revenues and expenses are translated at average exchange rates
prevailing during the period except for amortization which is
translated at historical exchange rates.

Gains and losses on translation are included as income for the
period except for those arising on the translation of long-term
monetary items of Canadian and integrated foreign operations
which are deferred arid amortized over the lives of those items.

2. Mineral Interests

The Company's mineral interest is as follows:

Net Deferred
Acquisition Exploration Total Total
Costs Expenditures 1999 1998
---------------------------------------------------------------------------
San Jose de Gracia $2,035,644 $2,893,141 $4,928,785 $5,024,548
===========================================================================

The San Jose de Gracia project, located in the State of Sinaloa, Mexico,
consists of four (4) contiguous groups of mining properties, as follows:

(a) San Jose de Gracia I

Pursuant to an agreement dated May 15, 1995, and subject to a 50%
net smelter return royalty, the Company acquired the rights to
explore and mine on a number of mineral claims (La Nueva
Experanza, Guadalupe, San Nicolas, Mine Gaflcle, La Union,
Ampliacion de Santa Rosa, Santo Tomes. Ampliacion de Santo Tomas,
Nuevo Rosario, and La Libertad) for a period of two years.

The Company has the option to purchase the properties, mining
equipment and improvements on the properties at the end of the
two years by making cash payments totalling US$690,000. The
Company has made cash payments totalling US$690,000 to the
properties' owners, extinguishing the royalty interest.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Notes to Consolidated Financial Statements
February 28, 1999 and 1998
- --------------------------------------------------------------------------------
2. Mineral Interests (continued)

(b) San Jose de Grads II

Pursuant to an agreement dated May 14, 1994 and subject to a 10%
net smelter returns royalty, the Company acquired the rights to
explore and mine on several mineral claims (El Real, Tres Amigos,
Tres Amigos II, and San Sebastian) located in the state of Sinaloa
Mexico for a period of twenty seven months.

Consideration included twenty-four monthly payments of US$8,333
for a total of US$200,000 and the assumption of a term loan of
US$450,000. After the end of the twenty seven months and receipt
of all payments, the vendors will transfer the titles of the
mineral claims to the Company. As at February 28, 1999, the
Company had made cash payments totalling $200,000 to the vendors
and paid the term loan of US$450,000 of the properties' owner,
extinguishing the royalty interest.

Pursuant to three agreements dated May 15, 1996 and subject to a
50% net smelter returns royalty, the Company acquired the right to
explore and mine the Santa Rosa mineral claims located in the
state of Sinaloa, Mexico for a period of two years.

The Company has the option to purchase 68.8% of the property by
making cash payments totalling US$172,000.

As at February 28, 1999, the Company has made cash payments
totalling approximately US$138,000.

(d) Finisterre

Finisterre consists of various mineral claims (San Jose,
Finisterre Fraction A, Finisterre Fraccion B, El Real II, El Real
Ill Piedra do Lumbre I, Piedra de Lumbre II, Piedra de Lumbre ill,
Finisterre II and Finisterre IV) located in the State of Sinaloa,
Mexico. Except for filing fees, the Company does not have to pay
any additional consideration for these properties.

The Company holds these properties through its subsidiary, which it
acquired pursuant to an option agreement April 23, 1996. This agreement
provided the Company an initial 70% interest in Finisterre, and the
option to acquire the remaining 30% interest in three stages by making
aggregate exploration expenditures over a 36 month period totalling
$3,500,000 and by issuing additional treasury shares, subject to
regulatory approval, based upon certain periodic calculations of proven
and probable reserves, such shares to be issued in an amount determined
at the rate of $10 per ounce of proven and probable reserves of gold in
the first year and $20 per ounce in the second and subsequent years, the
number of shares issuable to be determined by the market price of the
Company's shares at the valuation dates. To date no such valuations have
been completed and no such shares issued.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Notes to Consolidated Financial Statements
February 28, 1999 and 1998
- --------------------------------------------------------------------------------

2. Mineral Interests (continued)

The San Jose properties are subject to a 3% net smelter return
royalty, upon which the Company has the option to purchase a
213 interest for the payment of $US3,000,000; this option
expires April 23, 2001.

In August 1998, the Company entered into an agreement with
West Coast Mines, Inc. of Dallas, Texas (`West Coast"),
materially altering the terms and conditions of its option to
acquire the remaining 30% of Finisterre and the terms and
conditions pertaining to the long-term debt described in Note
5. The essential terms of this agreement which apply to the
Company's assets and liabilities are summarized as follows:

(a) It was agreed that the Company's option to acquire the
remaining 30% of Finisterre had been fulfilled. The
requirement to issue additional shares based upon
reserve calculations remains in effect.

(b) West Coast elected to convert the US$500,000 principal
balance of the long-term debt described in Note 5 into
a retained 24.9% net profits interest, as defined ("the
24.9% NPI"). The Company retains a right of first
refusal on the 24.9% NPI.

(c) West Coast agreed to waive its right to interest
payments aggregating US$1,050,000 and to payments in
respect of interest accrued at 6% pursuant to the
December 1996 agreement, and to waive the repayment of
certain cash advances which had been made by West Coast
to the Company during the period March 1, 1998 to July
31, 1998, namely Cdri$50,000 plus US$85,000 (translated
as Cdn$121,550).

(d) The waivers and conversions described in (ii) and (iii)
preceding were ascribed a total value of $1,500,000
calculated as:

Conversion of US$500,000 loan $ 683,250
Waiver of US$ advances 121,550
Waiver of CND$ advances 50,000
Waiver of accrued interest 82,500
-----------------------------------------------
Total measured obligations 937,300
Waiver of future considerations 562,700
-----------------------------------------------
$1,500,000
===============================================

In consideration of the value ascribed to the waivers
of interest entitlements and other amounts. West Coast
acquired 25% of the outstanding shares of Finisterre.

<PAGE>

<TABLE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Notes to Consolidated Financial Statements
February 28, 1999 and 1998
- --------------------------------------------------------------------------------
2. Mineral Interests (continued)

(e) West Coast committed to contribute $350,000 by December
31, 1999 for the first phase of development at the San
Jose properties. Upon completion of this phase, West
Coasts equity interest in Finisterre, subject to the
24.9% NPI, would increase to 29.13%.

(f) West Coast acquired the option to contribute up to
Cdn$650,000 by December 31, 1999 for a second phase of
development at the San Jose properties. Upon funding
this second phase, West Coast's equity interest in
Finisterre, subject to the 24.9% NPI, would increase to
35.7%.

(g) West Coast acquired the option to contribute up to
Cdn$1,000,000 by December 31, 2000 for a third phase of
development at the San Jose properties. Upon funding
this third phase, West Coast's equity interest in
Finisterre, subject to the 24,9% NPI, would increase to
43.75%.

As at February 28, 1999 the Company had received the balance of
30% of Finisterre shares described above and had conveyed 25%
of Finisterre shares to West Coast Mines, Inc. (formerly
DynaResource, Inc.), leaving the Company with a net interest in
Finisterre of 75%.

3. Capital Assets

Capital assets are comprised as follows:

1999 1998
------------------------------------ ---------
Accumulated Net Book Net Book
Cost amortization value value
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Office equipment, furniture
and computer equipment $ 24,535 $ 6,970 $ 17,565 $ 21,438

Mining machinery and
equipment 415,604 74,850 340,754 397,877
Automotive equipment 66,764 25,663 41,101 123,134
-------------------------------------------------------------------------
$506,903 $107,483 $ 399,420 $542,449
=========================================================================
</TABLE>

4. Loans Payable

The loans were issued with a one-year term, maturing October
23, 1998. Outstanding principal amounts plus accrued interest
at 10 per cent before and after maturity were not repaid at
the maturity date. Subsequent to February 28, 1999 the lenders
agreed to accept payment of these loan balances, plus accrued
interest to April 30, 1999 of $46,180, by the issue of
1,306,350 shares of the Company after giving effect to the
proposed five for one consolidation of capital referred to in
Note 6(d). The lenders were related parties at the time these
loans were made but had ceased to be related parties at the
time the repayment terms were negotiated.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Notes to Consolidated Financial Statements
February 28, 1999 and 1998
- --------------------------------------------------------------------------------
5. Long-term Debt

The Company's long-term debt is comprised as follows:
1999 1998
---------------------------------------------------------------------------
Loan payable (US$500,000) $ - $ 683,250
===========================================================================

Prior to the agreement of August 1998 described in Note 2, the
principal financial terms relating to this loan were pursuant to an
amended loan agreement dated December 20, 1996, and required the
Company to make interest payments to the lender as follows:

(a) 70% of the available cash generated by mining operations on
Finisterres mining claims until the lender had received
US$550,000;

(b) thereafter, 60% of the available cash generated by mining
operation on Finisterre's mining claims until the lender had
received aggregate interest payments in the total cumulative
amount of US$800,000;

(C) thereafter, 50% of the available cash generated by mining
operations on Finisterres mining claims until the lender had
received aggregate interest payments in the total cumulative
amount of US$1,050,000;

(d) thereafter, 24.9% of the available cash generated by mining
operations.

In addition, commencing February 16, 1996, if interest payments
during each twelve month period preceding each anniversary date were
to amount to less than 6% per annum on all unpaid principal during
that period, a minimum interest charge of 6% became due and payable.

The principal was due and payable on the earlier of July 24, 2010 or
30 days after the lenders receipt of aggregate interest payments of
US$1,050,000, and the loan was secured by a fixed charge over certain
mining equipment.

Among the effects of the August 1998 agreement was the cancellation
of the interest obligations in items (a) to (c) above and in respect
of the 6% per annum accruals, and the conversion of the principal
amount of the loan into a 24,9% net profits interest.

<PAGE>

<TABLE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Notes to Consolidated Financial Statements
February 28, 1999 and 1998
- -----------------------------------------------------------------------------------------------------------------
6. Share Capital

Authorized: 100,000,000 common shares without par value.

Issued:
1999 1998
---------------------------- ------------------------
Number of Number of State
Shares Stated Value Shares Stated Value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <

Balance, beginning of year 19,426,656 $10,623,717 8,343,490 $4,426,028

Common shares:
Issued for cash 500,000 105,000 3,533,500 2,344,800
Issued in settlement of debt 2,739,300 575,260 - -
Issued pursuant to conversion
of loans payable - - 1,200,000 660,000
Issued pursuant to conversion
of special warrants - - 5,695,428 3,072,058
- -----------------------------------------------------------------------------------------------------------------
22,666,956 11,303,977 18,772,418 10,502,886
Shares reserved to exercise
special warrants - - 21,738 11,725
Subscribed for but unissued - - 632,500 109,106
- -----------------------------------------------------------------------------------------------------------------
22,665,956 11,303,977 19,426,656 10,623,717
Share issuance costs - (59,737) - (59,737)
- -----------------------------------------------------------------------------------------------------------------
Balance, end of year 22,665,956 $11,244,240 19,426,656 $10,563,980
=================================================================================================================

</TABLE>

(a) During the year the Company issued the following common shares:

(i) 632,500 common shares for cash pursuant to private placement
agreements at the price of $0.1725 per share for total
proceeds of $109,106. These common shares were subscribed
for, and the related proceeds received, during the preceding
fiscal year, and the related addition to share capital
accounted for in that year.

(ii) 500,000 common shares for cash pursuant to the exercise of
employees' and directors' stock options at the price of
$0.21 per share for total proceeds of $105,000.

(iii) 2,739,300 common shares at a deemed price of $0.21 per
share for a total amount of $575,260 on the settlement of
certain debt of the subsidary.

(b) As at February 28, 1999, the Company had outstanding share
purchase warrants enabling the holders to purchase 632,500
additional common shares at the price of $0.20 per share expiring
December 31. 1999.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Notes to Consolidated Financial Statements
February 28, 1999 and 1998
- --------------------------------------------------------------------------------
6. Share Capital (continued)

(c) As of February 28, 1999, the Company had granted directors' and
employees' incentive stock options enabling the holders to
purchase 540,000 additional common shares at the price of $0.21
per share expiring May 16 and 22, 1999. These options expired
unexercised.

(d) At the 1998 annual meeting the shareholders approved a
consolidation of the Company's authorized and issued share
capital on a one new share for five old share basis, such that
the 22,665,956 shares issued are to be consolidated to 4,533,191
issued shares and such that the authorized capital of 100,000,000
shares is to be consolidated to 20,000,000 authorized shares; and
also to an increase, subsequent to the consolidation, of the
authorized capital back to 100,000,000 shares. This transaction
is subject to regulatory approval.

7. Related Party Transactions

Included in accounts payable and accrued liabilities is $169,807
(1998 - $8,372) due to officers and directors of the Company.

Loans payable consist of $280,000, being the unpaid balance of
unsecured cash advances made by two persons who were directors of
the Company at the time the advances were made (note 4).

The amounts classified as "Due to related parties" consists of
unsecured cash advances to the Company's subsidiary made directly
or indirectly by a person who became a director subsequent to the
making of the advances.

During the year the Company entered into the following
transactions with related parties:

(a) paid management fees of $60,000 (1998 - $60,000) to a
director;

(b) paid salaries, benefits and severance of $60,807 (1998 -
$88,800) to a director in his capacity as a senior officer
of the subsidiary;

(c) paid for contract exploration services totalling $Nil (1998
- $1,102,813) to a company of which a director was a
significant shareholder;

(d) settled debt to the company referred to in (c) above of
$575,260 by the issue of 2,739,300 shares;

(e) agreed to a waiver of US$295,800 (Cdn$431,227) of the amount
classified as "Due to related parties" and recorded a gain
on settlement of the debt of the same amount.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Notes to Consolidated Financial Statements
February 28, 1999 and 1998
- --------------------------------------------------------------------------------
6. Subsequent Events

(a) In April 1999 the Company entered into a further agreement in
principle with DynaResource, Inc. This proposed agreement, which
is subject a) to the completion of a formal binding agreement, b)
to the approval of the respective boards of directors of the
Company and of DynaResource. Inc., and C) to regulatory approval
which has not yet been filed for nor obtained, contains the
following essential terms which would apply to the Company's
assets and liabilities should this agreement be completed as
proposed:

(i) The Company will acquire from DynaResource, Inc. the 25% of
Finisterre shares previously transferred to DynaResource,
Inc. pursuant to the August 1998 agreement described in Note
2.

(ii) in consideration of the acquisition of these shares of
Finisterre from DynaResource. Inc. the Company will cause to
be issued to DynaResource. Inc. from its treasury that
number of shares such that following their issuance
DynaResource. Inc. shall own 25% of the issued share capital
of the Company.

iii) The number of shares to be issued to DynaResource, Inc.
described in the preceding paragraph is to be calculated
after giving effect to the proposed consolidation of share
capital described in Note 8(c) and after giving effect to a
number of other proposed share issuances including the
following: a) the settlement of shares for debt described to
in Note 8(b); b) the issue by private placement described in
Note 8(c); C) the issue of shares in respect of mineral
resources established on the San Jose properties described
in Note 2.

(iv) The commitment by DynaResource to contribute $350,000 to
exploration of the San Jose properties is replaced by a
commitment by DynaResource to make a private placement in
equity of the Company in the amount of $290,000, after
giving effect to the proposed consolidation of share capital
described in Note 6(d). During the period January to June
1999, DynaResource expended approximately $60,000 for
engineering studies related to the San Jose properties.

(v) DynaResource is to be granted the right to participate in
future equity or debt financings by the Company to the
extent of not less than 37.5% of funds to be raised.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Notes to Consolidated Financial Statements
February 28, 1999 and 1998
- --------------------------------------------------------------------------------

8. Subsequent Events (continued)

(b) Subsequent to February 28, 1999 the Company agreed with creditors
of the Company, including its subsidiary, to settle an aggregate
$857,491 in indebtedness by the issue of 3.429,964 shares at the
issue price of $0.25 per share, such shares to be issued after
giving effect to the share consolidation described in note 6(d).
This amount includes the loan and interest balances referred to
in Note 4. These transactions are subject to regulatory approval.

(c) Subsequent to February 28, 1999 the Board of Directors agreed to
seek shareholder and regulatory approval for an additional
consolidation of the Company's authorized and issued share
capital on a one new share for five old share basis, after giving
effect to the proposed consolidation described in note 6(d), and
to offer a private placement of up to $500,000 by way of
debentures convertible into units of the Company's common equity
at a price to be determined in accordance with regulatory policy.

9. Income Taxes

The parent company has non-capital losses available to offset
against future income taxes purposes of $2,375,245 which expires
follows:

2000 $ 512,871
2001 119,845
2002 152,530
2003 259,332
2004 547,566
2005 458,856
2006 324,245
--------------
$ 2,375,245
==============

The Company is not entitled to the tax benefit of $353,625 worth
of expenditures incurred on its mineral interests as this amount
was financed using flow-through shares.

10. Comparative Figures

Certain 1998 comparative figures have been reclassified to
conform with the financial statement presentation adopted for
1999.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Notes to Consolidated Financial Statements
February 28, 1999 and 1998
- --------------------------------------------------------------------------------
11. Financial Instruments

The Company's financial instruments consist of cash, accounts
receivable, accounts payable and accrued liabilities, loans
payable, amounts due to related parties and long-term debt.
Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest, currency or
credit risks arising from these financial instruments. The fair
values of these financial instruments approximate their carrying
values, unless otherwise noted.

12. Uncertainty due to the Year 2000 Issue

The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive
systems may recognize the Year 2000 as 1900 or some other date,
resulting in errors when information using Year 2000 dates is
processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something
other than a date. The effects of the Year 2000 Issue may be
experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may
range from minor errors to significant systems failure which
could affect the Company's ability to conduct normal business
operations. It is not possible to be certain that all aspects of
the Year 2000 Issue affecting the Company, including those
related to the efforts of customers, suppliers, or other third
parties, will be fully resolved.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Consolidated Schedule of Deferred Exploration and
Development Expenditures
Years Ended February 28, 1999 and 1998
- --------------------------------------------------------------------------------

1999 1998
--------------------

Amortization $ 60,213 $ 69,908
Assays - 74,360
Drilling - 1,398,978
Equipment rental - 8,431
Freight - 7,505
Fuel costs 2179 48,480
Geological fees 50000 -
Maintenance and repairs 5653 92,392
Project costs - 304,075
Rights and permits 33,056 -
Salaries 41,206 62,589
Sundry 6,357 6,304
Supervision 6,387 75,923
Supplies - 105,906
Travel 3,545 33,473
- --------------------------------------------------------------------------------

Increase in deferred exploration and
development expenditures 208,596 2,288,324

Deferred exploration and development
expenditures, beginning of year 2,684,545 396,221
- --------------------------------------------------------------------------------

Deferred exploration and development
expenditures, end of year $2,893,141 $ 2,684,545
================================================================================

EXHIBIT "3.4"
GOLDEN HEMLOCK EXPLORATIONS, LTD.
"UNAUDITED STATEMENT"
NOVEMBER 30, 1999

<TABLE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Quarterly Report

Nine Months Ended November 30, 1999

Consolidated Balance Sheet
November 30, 1999 - unaudited

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

1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C>

ASSETS

Current

Cash and term deposits $ 43,721 $ 6,531
Accounts receivable 88,578 65,433
Prepaid expenses and deposits 14,007 15,165
- ------------------------------------------------------------------------------------
146,306 87,139
Mineral interests 5,254,774 5,309,633
Capital assets 359,208 422,798
- ------------------------------------------------------------------------------------
$ 5,760,288 $ 5,819,770
====================================================================================
LIABILITIES

Current

Accounts payable and accrued liabilities (Note 1)$ 610,597 $ 683,682
Loans payable to directors (Note 1) 280,000 280,000
Due to shareholders (Note 1) 112,350 508,647
Private placement advances (Note 1) 564,050 -
- ------------------------------------------------------------------------------------
1,566,997 1,472,329
Long term debt - 683,250
- ----------------------------------------------------------------------------------
1,566,997 2,155,579
- ------------------------------------------------------------------------------------
SHARE CAPITAL AND DEFICIT
Share capital 11,244,240 11,244,240
Deficit (7,050,949) (7,580,049)
- ------------------------------------------------------------------------------------
4,193,291 3,664,191
- ------------------------------------------------------------------------------------
$ 5,760,288 $ 5,819,770
====================================================================================
</TABLE>

Approved by the Directors: "Robin T. Forshaw" "Lawrence D. Barr"
Director Director

<PAGE>

<TABLE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Consolidated Statement of Operations and Deficit
Nine Months Ended November 30, 1999 - unaudited

1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C>

Administrative expenses
Amortization $ 2,771 $ 3,718
Investor relations - 7,000
Management fees 80,796 45,000
Office, rent, telephone 13,658 94,951
Professional fees 107,968 76,803
Salaries 35,637 90,818
Shareholder information 2,259 2,457
Transfer agent and regulatory fees 5,036 8,031
Travel 4,793 9,230
- ------------------------------------------------------------------------------------
252,918 438,008
- ------------------------------------------------------------------------------------
Other expense (income)
Interest expense (income) - net 12,651 (113,585)
Loss on foreign exchange 7,719 40,627
- ------------------------------------------------------------------------------------
20,370 (72,363)
- ------------------------------------------------------------------------------------
Loss for the period 273,288 365,645
Deficit, beginning of period 6,777,641 7,214,404
- ------------------------------------------------------------------------------------
Deficit, end of period $ 7,050,929 $ 7,580,049
====================================================================================
Loss per share $ (0.1) (0.02)
====================================================================================
</TABLE>

Note 1: Creditors holding $386.911 in accounts payable and accrued
liabilities, $280,000 for loans payable to directors and $112,350 for amounts
due to shareholders, being an aggregate $779,261, have agreed to accept
3,117.044 common shares issued at the price of $0.25 per share, after giving
effect to a proposed one for five consolidation of the Company's shares approved
by the 1998 annual meeting, but before giving effect to a further proposed one
for five consolidation approved by the 1999 meeting, in settlement of the
Company's indebtedness in the amounts listed. The share consolidations and
shares for debt agreements are subject to regulatory approval. The private
placement advances are expected to convert into equity in due course, as
described in Schedule C.

<PAGE>

<TABLE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Consolidated Statement of Cash Flow
Nine Months Ended November 30. 1999

- -------------------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>

Cash provided by (used for)
operating activities
Loss for the period $ (273,288) $ (365,645)
Items not involving cash
Amortization 2,771 3,718
Loss on foreign exchange 7,719 40,627
- -------------------------------------------------------------------------------------
(262,798) (320,705)
Net change in non-cash working capital items 29,760 (80,868)
- -------------------------------------------------------------------------------------
(233,038) (401,573)
- -------------------------------------------------------------------------------------
Cash provided by (used for)
investing activities
Acquisition of mineral interests (3,208) (103,217)
Acquisition of capital assets (4,522) -
Deferred exploration and development
expenditures, net of depreciation and amortization (28O,816) (133,877)
- -------------------------------------------------------------------------------------
(288,546) (237,094)
- -------------------------------------------------------------------------------------
Cash provided by (used for)
financing activities
Receipt of debenture subscriptions 564,050
Issuance of share capital for cash -
Issuance of share capital to settle debt - 575,260
Proceeds from disposal of capital assets - 59,732
Repayment of loans from directors - (105,000)
- -------------------------------------------------------------------------------------
564,050 634,992
- -------------------------------------------------------------------------------------
Increase (decrease) in cash position 42,466 (3,675)
Cash position, beginning of period 1,255 10,206
- -------------------------------------------------------------------------------------
Cash position, end of period $ 43,721 $ 6,531
=====================================================================================

</TABLE>

<PAGE>

<TABLE>

GOLDEN HEMLOCK EXPLORATIONS LTD.

Schedule of Consolidated Deferred Exploration and Development Expenditures
Nine Months Ended November 30, 1999

- ----------------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>

Amortization and depreciation $ 41,965 $ 48,919
Assaying and metallurgy 121,400 -
Fuel costs 179 1,995
Geological fees 101,495 50,000
Maintenance and repairs 2,701 5,974
Permits and rights 27,640 -
Salaries 25,330 26,978
Sundry 489 5,636
Supervision - 6,443
Travel 1,582 3,505
- ----------------------------------------------------------------------------------
Increase in deferred exploration and
development expenditures 322,781 182,068
Deferred exploration and development expenditures
beginning of period 2,893,141 2,684,545
- ----------------------------------------------------------------------------------
Deferred exploration and development
expenditures, end of period $ 3,215,922 $ 2,866,613
=================================================================================

</TABLE>

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD. Schedule B
QUARTERLY REPORT Page 1

November 30, 1999

1. Current year-to-date information: During the current year to date a
director has been paid management fees of $45,000.

2. (a) Securities issued during the period September 1, 1999 to November 30,
1999: None.

See Schedule C for a description of agreements to issue shares on the
settlement of debt and convertible debentures which had not been
finalized at November 30, 1999; these are subject to regulatory approval.

2. (b) Options granted during the period September 1,1999 to November 30,
1999: None.

3. (a) Particulars of authorized and issued capital:

The authorized capital of the Company consists of 100,000,000 common
shares without par value.

Issued and outstanding: 22,665,956 shares for $11,244,240 net of share
issue costs.

See Schedule C for a description of certain proposed alterations to share
capital.

3.(b) Options, warrants and convertible securities outstanding:

Share purchase warrants outstanding as at November 30, 1999: Warrants
expiring December 31, 1999 to acquire up to 632,500 common shares at the
exercise price of $0.20 per share, based upon the issued capital as at
December 31, 1997 and before giving effect to any share consolidation(s)
or related alteration(s) in exercise price. These warrants expired,
unexercised.

See Schedule C for a description of certain proposed issues of
convertible securities.

Stock options outstanding as at November 30, 1999: None.

3.(d) List of directors:

Lawrence D. Barr, Dalton Dupasquier, Robin T. Forshaw, Marvin A. Mitchell

Mr. Koy Diepholz of Dallas, Texas is to appointed to the Board upon
reinstatement of trading of the company's shares on the Canadian Venture
Exchange.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD. Schedule B
QUARTERLY REPORT Page 2
November 30, 1999

4. Additional Information - Mineral interests
Mineral interests are comprised as follows:

Balance Additions Balance
February 28 during November 30

1999 period 1999
----------------------------------
Net acquisition costs $ 2,035,644 $ 3,208 $ 2,038,852
Deferred exploration
- per schedule 2,893,141 322,781 3,215,922
----------------------------------
Total $ 4,928,785 $325,989 $ 5,254,774
================================================================================

A number of optionors of a mineral property for which option payments were due
in May 1996 and May 1997 have to date not delivered satisfactory legal
documentation entitling them to receive option payments otherwise due to them.
The amounts involved are $US76,000 plus related value added taxes of
approximately $US13,650. in accordance with the Company's accounting policies,
these payments will be recorded when the option payments are made. It is
possible the optionors may deliver the requisite documentation at any time.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS, LTD. Schedule C
QUARTERLY REPORT Page 1
NOVEMBER 30, 1999

Management Discussion

General

Management of your company continue to work diligently towards the reinstatement
of trading of the Company's shares on the Canadian Venture Exchange ("CDNX").
The principal tasks have been the discharge of the majority of the Company's
indebtedness, devising a program and budget for ongoing development of the San
Jose de Gracia gold project, and the securing of new financing for that
exploration work and for the Company's ongoing working capital needs. A filing
for reinstatement of trading was made with CDNX in November 1999, and further
filings have subsequently been made.

Corporate

Within the filing for reinstatement of trading are three matters also requiring
regulatory approval:

1. Settlement of corporate debt by issuance of shares; 2. Further share
consolidation; and 3. Acquisition of the remaining 25% interest in Minera
Finisterre for shares. Altbough the above will resu1t in dilution of
shareholders' ownership, management is of the opinion they are required to
render the company capable of raising new equity to meet the listing
requirements of the Canadian Venture Exchange and continue exploration on the
San Jose de Gracia project.

Investor relations for the third quarter consisted of management responding to
investor and investment advisor queries.

Recommended Work Programs for San Jose de Gracia

During the quarter a program of one month duration was carried out on the
property The program of mapping and sampling was designed to delineate areas of
interest and define drill targets for the next phase of exploration. Management
of your company is very satisfied with the results of that program.

As a result a program has been proposed for the next phase. The program calls
for 1700 meters of drilling in four target areas expecting to commence in
February 2000.

Financial Highlights

As described in the interim financial statements, the Company has entered into
agreements which are subject to regulatory approval with creditors holding an
aggregate $779,261 in indebtedness to accept 3,117,044 shares, to be issued on
the basis of incorporating the first one for five consolidation approved by the
shareholders in 1998 but then subject to the second one for five consolidation
approved by the shareholders in 1999. The Company has further entered into
agreements which are snbject to regulatory approval with a number of private
placement investors in respect of convertible debentures for purposes of
discharging the Company's remaining indebtedness, of funding the first phase
exploration program on the San Jose de Gracia project, and of providing
uncommitted working capital to meet the listing conditions required by CDNX. The
private placement agreements provide that these debentures will be convertible
into units consisting of one share and one one-year non-transferable warrant, to
be priced at the average trading price of the Company's shares during the first
20 days of post-reinstatement trading. The Company expects to hold open the
current round of private placements by way of these convertible debentures until
a total of approximately $1,000,000 has been raised. The Company expects to file
an Annual Information Form pursuant to securities legislation such that the
shares issuable on the conversion of the debentures will be subject to a four
month hold period.

<PAGE>

GOLDEN HEMLOCK EXPLORATIONS LTD. Schedule C
QUARTERLY REPORT Page 2

NOVEMBER 30, 1999

Conclusion

Shareholders and management have endured a very long period during which the
Company's financial condition and financing capacity have been severely
impaired, with the consequence that there has been no trading capacity or
liquidity available. Management believe that the alterations to the Company's
capita1ization recently approved are allowing Golden Hemlock, soon to be known
as Central Coast Minerals Ltd., to raise the funding needed to continue to seek
significant mineral potential at San Jose de Gracia. Our engineering reports are
clear on this potential, and we expect that the reinstatement of trading and
recommencement of drill programs in Mexico will take place in the fourth fiscal
quarter.

ON BEHALF OF THE BOARD OF DIRECT0RS
"Robin T. Forshaw" Vancouver, British Columbia
Robin T. Forshaw, President January 29,2000

MARK L. CLELAND
CERTIFIED PUBLIC ACCOUNTANT
17430 CAMPBELL ROAD, SUITE 114
DALLAS, TEXAS 75252
972-735-8840 FAX 972-735-0035

To the Board of Directors and Stockholders of DynaResource, Inc.

I consent to incorporation by reference in the registration statement on Form
10SB of DynaResource, Inc. of my report dated February 17, 2000, relating to the
balance sheets of DynaResource Inc. as of December 31, 1999 and 1998 and the
related statements of operations and accumulated deficit, stockholders' equity
and accumulated deficit, and cash flows for each of the two years ended December
31, 1999.

/S/ Mark L. Cleland
- --------------------
Mark L. Cleland

Dallas, Texas
April 7, 2000