NEVADA STAR RESOURCE CORP, 10KSB, 2000-02-28

NEVADA STAR RESOURCE CORP
10KSB, 2000-02-28
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB

(Mark One)
[ X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended August 31, 1999, or

[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to

NEVADA STAR RESOURCE CORP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

YUKON TERRITORY, CANADA 98-0155690
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

10735 STONE AVENUE NORTH
SEATTLE, WASHINGTON 98133
(Address of principal executive offices) (Zip Code)

206-367-2525
(Registrant's telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:

Title of each class Name of each exchange on which
registered
NONE NONE

Securities registered under Section 12(g) of the Exchange Act: NONE

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes (x) No ( )

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

State issuer's revenues for its most recent fiscal year. $ (935,492)

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within 60 days. (See definition of affiliate in Rule 12b-2 of
the Exchange Act.) [Amended in release No. 33-7419 ( 85,938), effective June 13,
1997, 62 F.R. 26387.] $1,347,761

NOTE: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.

<PAGE>

(ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PAST FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No NOT APPLICABLE

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 28,511,430

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them
and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant
to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The
list documents should be clearly described for identification purposes (e.g.,
annual report to security holders for fiscal year ended December 24, 1990).
NONE

Transitional Small Business Disclosure Format (check one): Yes ( ) No (x)

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Nevada Star Resource Corp(together with its subsidiaries, "NSR" or the
"Company"), is engaged in the business of acquiring, exploring and developing
mineral properties, primarily those containing copper, gold, silver and
associated base and precious metals. All of the Company's properties are
currently in the exploration stage, which is in the stage of determining
feasibility for development. No reserves have been identified on any of the NSR
properties.

The Company was incorporated under the laws of the Company Act of British
Columbia, Canada on April 29, 1987. In 1992 the Company made an offer to acquire
certain mineral exploration properties locted in Sonora, Mexico. Those
properties were controlled by a Pacific Rainier, Inc. a privately held company
controlled by Monty D. Moore. At the time of the offer Mr. Moore was not an
affiliate of Nevada Star Resources. The acquisition price, which was eventually
paid through the issuance of shares of the Company to Pacific Rainier, Inc. The
terms of the transaction were approved by the Vancouver Stock Exchange. The
deemed value of the shares to be issued to Pacific Rainier, Inc. was higher than
the current market price for the shares. After the completion of the acquisition
of the properties from Pacific Rainier. Inc., Mr. Moore invested monies in the
Company to enable the Company to continue its exploration activities. Mr. Moore
became the President and a Director of the Company in 1993. Since that time Mr.
Moore has made in excess of $700,000 of interest-free advances to the Company to
fund its operations.

On June 17, 1998 the Company was continued into the Yukon under Section 190 of
the Yukon Business Corporation Act. The Company conducts its operations through
its wholly-owned subsidiaries, Nevada Star Resource Corp. (U.S.), a Nevada
corporation and Nevada Star Resource de Mexico, S.A. de C.V., a wholly-owned
subsidiary of Nevada Star Resource Corp. (U.S.). The Company's executive offices
are located at 10735 Stone Avenue North, Seattle, WA 98133, Tel. (206) 367-2525.
Unless otherwise noted, all dollar amounts are quoted in Canadian Dollars.

EMPLOYEES

The Company has no paid employees. NSR relies primarily upon the use of
consultants to accomplish its exploration activities. None of the Company's
executive officers are employed by the Company. Management services are provided
on an "as-needed" basis without compensation, generally less than five hours per
week. The Company has no oral or writen contracts for services with any member
of management.

One director, Stuart Havenstrite provides approximately 40 hours of geologic
consulting services per week to the Company. Director Rick Havenstrite, P.E.
was employed full-time on the Milford, Utah property to perform mining
engineering services. In March, 1999, Mr. Havenstrite was reduced to time and
compensation. His employment was terminated on May 15, 1999 because the project
was completed. The Company expects that it will re-employ Mr. Havenstrite at
such time as his services are again required. Other consultants are retained on
the basis of ability and experience. There is no preliminary agreement or
understanding existing or under contemplation by the Company (or any person
acting on its behalf) concerning any aspect of the Company's operations pursuant
to which any person would be hired, compensated or paid a finder's fee.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

COMPETITION

There is aggressive competition within the minerals industry to discover and
acquire properties considered to have commercial potential. The Company
competes for the opportunity to participate in promising exploration projects
with other entities, many of which have greater resources than the Company. In
addition, the Company competes with others in efforts to obtain financing to
explore and develop mineral properties.

PROPERTIES

The Company presently operates from office space provided on a rent free basis
by the Company's president, Monty D. Moore. In the event that this space becomes
unavailable in the future the Company will seek to lease office space from an
unaffiliated party at prevailing competitive rates.

GOVERNMENT REGULATION AND ENVIRONMENTAL CONCERNS

The Company is committed to complying and, to its knowledge, is in compliance
with all governmental and environmental regulations. Permits from a variety of
regulatory authorities are required for many aspects of mine operation and
reclamation. The Company cannot predict the extent to which future legislation
and regulation could cause additional expense, capital expenditures,
restrictions, and delays in the development of the Company's U.S. properties,
including those with respect to unpatented mining claims.

The Company's activities are not only subject to extensive federal, state and
local regulations controlling the mining of and exploration for mineral
properties, but also the possible effects of such activities upon the
environment. Future legislation and regulations could cause additional expense,
capital expenditures, restrictions and delays in the development of the
Company's properties, the extent of which cannot be predicted. Also, as
discussed above, permits from a variety of regulatory authorities are required
for many aspects of mine operation and reclamation. In the context of
environmental permitting, including the approval of reclamation plans, the
Company must comply with know standards, existing laws and regulations that may
entail greater or lesser costs and delays depending on the nature of the
activity to be permitted and how stringently the regulations are implemented by
the permitting authority. The Company is not presently aware of any specific
material environmental constraint affecting its properties that would preclude
the economic development or operation of any specific property.

If the Company becomes more active on its U.S. properties, it is reasonable to
expect that compliance with environmental regulations will increase costs to the
Company. Such compliance may include feasibility studies on the surface impact
of the Company's proposed operations; costs associated with minimizing surface
impact; water treatment and protection; reclamation activities, including
rehabilitation of various sites; on-going efforts at alleviating the mining
impact on wildlife; and permits or bonds as may be required to ensure the
Company's compliance with applicable regulations. It is possible that the costs
and delays associated with such compliance could become so prohibitive that the
Company may decide to not proceed with exploration, development, or mining
operations on any of its mineral properties.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

OFFSHORE REGULATION

The Company is aware of comparable environmental regulation in offshore counties
where it operates. The Company is committed to full compliance with the
regulations and has engaged legal counsel in Mexico who will, in part, assist
the Company to assure compliance.

The Company is prepared to engage additional professionals, if necessary, to
ensure regulatory compliance but in the near term expects its activities to
require minimal regulatory oversight. If the Company expends the scope of its
activities in the future it is reasonable to expect expenditures on compliance
to rise. Based upon the experience of other companies with which the Company is
familiar, management believes the costs of environmental regulation offshore
will be somewhat lower than costs typical in the United States.

REPORTS TO SECURITY HOLDERS

You may read and copy any materials filed with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, N. W., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1 (800) SEC-0330. The SEC maintains an Internet site (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding the Company that is filed electronically with the SEC.

ITEM 2. DESCRIPTION OF PROPERTY

MILFORD DISTRICT

PROPERTY LOCATION AND ACCESSIBILITY

The Milford District property consists of 55 patented mining claims, 232
unpatented mining claims, five Utah State leases, and 93 acres of fee land,
aggregating approximately 8,200 acres. The Company has two exploration targets
in the district, the Cortex and OK properties.

The property lies within approximately10 miles northwest of the town of Milford
in Beaver County, Utah. Milford has a population of 1,200 and is a major
division point on the Union Pacific Railroad. Milford has typical facilities
for a town of its size. NSR owns a railroad spur right of way 9 miles east of
the property where sulfuric acid can be received and trucked to the property,
where copper cathodes can be loaded and shipped to market. Electric power
adequate to service the processing facility is available 5 miles from the
property.

The property can be accessed from Milford by traveling 4 miles west-northwest on
Utah State Highway 21, then 6 miles north-northwest on a graveled
county-maintained road. Access is excellent year round.

The property lies at an elevation of 5,000 to 6,200 ft. in moderately rugged
hills surrounded by alluvial pediment. Climate is typical of the Great Basin:
temperatures range from 0F to 100F, with average highs in the summer of 80F;
lows in the summer of 50F; average highs in winter of 40F; and average lows in
winter of 25F. Precipitation averages 10 inches annually with approximately
50% coming as snow.

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NEVADA STAR RESOURCE CORP
FORM 10-KSB

HISTORY

The Milford district was organized in 1872 but had only small and intermittent
production prior to 1962. Most of the early production was from the Old Hickory
tungsten mine and the Montreal iron mine. The pre-1962 production had a total
value of less than $3 million.

Early in the 1960's a group of former US Steel geologists recognized that copper
in this district was intimately associated with magnetite. An extensive ground
magnetic survey of the district showed several strong magnetic anomalies, most
of them buried beneath alluvium. Subsequent drilling demonstrated that most of
the anomalies were associated with significant copper deposits.

Several companies partially mined the deposits delineated by the drilling.
These deposits included the Bawana deposit, located on ground presently
controlled by other parties, and the Hidden Treasure and Maria deposits, now
optioned to Nevada Star. A flotation plant was constructed to process the ores
and later and acid leach circuit was added. The copper concentrate and cement
copper produced from the leaching process was sold to copper smelters for final
processing.

According to NSR, the OK property was mined and, according to published figures,
produced 900,000 tons of copper ore grading 1.25% copper from 1967 until 1974.
The ore was processed at the Essex mill, located 3 miles west-northwest of
Milford. The mill was a combination flotation and acid vat leach facility sized
at 850 tons per day, built to process OK intrusion-hosted ores as well as skarn
ores from the Cortex property. Production from the entire district is reported
as 22,300 tons of copper contained in 2,010,000 tons of ore grading 1.59% Cu

The property lay idle until the early 1990s, when Cortex acquired the Hidden
Treasure Mine and deposit, Maria mine and deposit, Copper Ranch deposit, and
surrounding ground. Cortex conducted confirmation drilling on the Copper Ranch
deposit and did extensive sampling and metallurgical test work on the Maria
deposit. The copper appears to be acid leachable in the Maria ores. Cortex
agreed in late 1997 to sell the property to Nevada Star rather than develop it
itself.

The OK properties lay idle until the early 1990's when Centurion acquired the OK
Mine and surrounding ground and conducted confirmation drilling on the OK mine.
The program also drilled eastward along trend defining additional copper
mineralization in the vicinity of the Mary I mine about one mile to the east.
Centurion decided in late 1997 to option the property to NSR rather than develop
it.

GEOLOGY

Much of the geologic work and geologic interpretations done in the district were
conducted by Peter Joraleman in the 1970's and reported in "Copper Resources of
the Rocky District, Beaver County, Utah, 1980," prepared for the Toledo Mining
company. Much of the discussion given below is from his report and augmented by
more recent data compiled by NSR and MDA.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

The Milford district lies within an east-trending belt of altered granite to
diorite intrusives. Mineralization is dated at Cretaceous through late
Tertiary. Regional controls on mineralization are thought to be deep-seated
crustal structures. The area is on the eastern leading edge of a Late Mesozoic
to Early Tertiary Sevier thrust system with the mountains comprising the hanging
wall of the eastern Mineral Mountains complex. The Mineral Mountains complex
consists of thick Palezoic through mid-Mesozoic carbonate and clastic rocks.
Geology of the Milford district is structurally complex, as it has been
subjected to compression and later extension from the Mesozoic Period through
the Tertiary Period.

Oligocene volcanic rocks consisting of andesite flows and pyroclastic rocks were
extruded over much of the area, and these rocks were then intruded by a series
of Oligocene rocks related to the Mineral Mountain batholith.

The Southern corner of the project is underlain by a fine to medium-grained
grondiorite stock composed of plagioclase, quartz, and biotite with minor
orthoclase, hornblende, and magnetite. there are also small outcrops of quartz
monzonite of the Rocky Mountain Stock.

To the north and northeast of the OK mine, there are several altered porphyritic
dikes which contain abundant magnetite and chalcopyrite within a zone of
disseminated and vein-controlled mineralization. Two small outcrops of quartz
monzonite occur west of the OK within the volcanic rocks.

MINERALIZATION

MINERAL DEPOSIT DESCRIPTIONS

Copper deposits in the Milford district occur as four distinct types:

TYPE 1 copper deposits occur in pipe-shaped deposits entirely contained in
silicified quartz monzonite or granodiorite; the best example of this is the OK
deposit. Nearby on trend is the Mary I deposit which is similar though less
silicified. Chalcopyrite and bornite occur with minor molybedenite. About 75%
of the sulfide minerals have been oxidized to tenorite, chrysocolla, malachite
and azurite. Gold and silver are present, but are not of economic significance
when acid leaching is used to recover the copper.

This type 1 deposit is known to occur only on the OK property. The OK deposit
has been explored with nearly 200 holes drilled by several operators from 1964
until 1997. The OK deposit is approximately 1,200 ft. long, averages 100 ft.
wide, and has been delineated by drilling to a depth of up to 500 ft.
Preliminary pit designs by NSR take the pit to a depth of 400 ft.

The Mary I deposit has been explored with approximately 50 drill holes. The
deposit, as presently defined, is 600 ft. long, 150 ft. wide and has been
delineated by drilling to a depth of 150 ftThese deposits have been delineated
on approximately 100 ft. spacing or closer though the deposit is not completely
drilled out.

TYPE 2 copper deposits occur in bodies of garnet-magnetite skarn adjacent to
quartz monzonite. These deposits form elongated tabular zones of irregular
orientation. Deposits of this type include the Hidden Treasure, Maria, and
Copper Ranch deposits. These deposits are not as continuous as Type I and
require closer drill hole spacing.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

TYPE 3 deposits consist of remobilized copper occurring in sediments and
associated with calcite. Currently the Sunrise deposit is the only known
example of this type. The Sunrise deposit is not related to skarn
mineralization, and is low in magnetite. The Sunrise deposit occurs partly on
Cortex property and partly on claims controlled by others.

TYPE 4 deposits, which are of no apparent economic importance, are iron deposits
consisting of magnetic skarn with no associated copper.

FEASIBILITY STUDY

In 1998 NSR commissioned a feasibility study to evaluate the Company's
properties in the Milford District. Three independent engineering companies
evaluated the property. The Company spent approximately $800,000 on the studies
including data confirmation, ore reserve calculation, pit design, metallurgical
test work, engineering studies and capital cost estimation. The feasibility
study concludes that "open pit mining, acid leaching and solvent
extraction-electrowinning can produce LME grade A cathode copper at the property
and provide positive economic returns at sale prices above $0.75 per pound
copper.

The Company plans to continue property maintenance and exploration during 1999,
but will not commence plant construction or mine development until the price of
copper improves and the status of the resource can be upgraded from
mineralization to reserves.

TERMS OF ACQUISITION

By an agreement dated November 7, 1997 between the Company and Centurion Mines
Corporation (the "Vendor"), the Company will purchase copper properties in four
townships in Beaver County, Utah. Consideration will be the issuance of 2
million common shares of the Company over five years. The vendor also retains a
12% net profits interest to apply to all copper production coming from any
claims. Deferred exploration and development expenditures of $597,003 have been
incurred to date by the Company on the property.

By an agreement dated November 4, 1997 between the Company and Cortex Mining &
Exploration Co. Inc. (the "CME"), the Company will purchase mining claims in
Beaver County, Utah. Consideration will be 2 million common shares of the
Company issued in two tranches: one million shares upon closing and another one
million upon the Company's successful completion of a favourable feasibility
study or upon commencement of commercial production. The CME also retains a 2%
net smelter return royalty which will not exceed 3 million dollars (U.S.) in
aggregate. The Company will also grant to Cortex one million warrants for the
Company's common shares, price at $1.00 U.S. per share.

A finder's fee of 225,000 shares at a deemed price of $0.65 CDN. is payable.

EAGLE (RIO YAQUI) PROPERTY

PROPERTY LOCATION AND AVAILBILITY

The Yaqui placer gold property is located in southeastern Sonora State, Mexico,
about 160 kilometers east-southeast of Hermosillo, the state capital and the
main supply and trading centre in the State. The property consists of the
Eagle, Eagle I, Eagle II and Yaqui I claims comprising 392 hectares (Has) or
approximately 944 acres.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

Nevada Star Resource Corp. (Nevada) obtained an option through an agreement
dated October 29, 1992 as amended March 16, 1993 between Nevada and Monty D.
Moore whereby Nevada obtained an option to acquire a 100% interest, subject to a
2% net smelter return royalty, in certain placer gold concessions situated in
Mexico known as the Eagle Property. Consideration is $95,000 (U.S.) as
reimbursement of the vendor's costs and issuance of 200,000 shares of Nevada in
four equal stages, of which 50,000 shares were issued upon Vancouver Stock
Exchange acceptance for filing on March 30, 1993. Further issuance's are based
on completion of phased work programs and filing of acceptable engineering
reports recommending additional work on the property. This Phase One report
details work in the form of three testing programs, carried out on the property
during June 1992 and October 1993.

The Eagle property on the Yaqui River, is located in a very extensive
gold-bearing gravel district comprising the deposits from ancient and recent
Yaqui River systems. Widespread areas of hand mining operations by generations
of Gambusinos is evidence of the potential profitability of the gravels.
Practically no well engineered modern mining methods or equipment have been used
and the deposits are still largely intact. The property is cut by and nearly
half surrounded by, the Yaqui River in its southward course from the Sierra
Madre Mountains to the Gulf of California. Hydroelectric power dams lie along
the Yaqui River and a major transmission line passes near the property. A
branch substation which taps the major line is located on the property.

Access to the claims is by good, paved, two land highway (No. 16) from
Hermosillo to the Yaqui River and then by desert road two kilometers to the
property.

Physiographically the property is in the Sierras and Llanurus Province, the
strip of basin and range structure which separates the Sierra Madre Mountains
from the main Sonora Desert to the west.

Because of the location of the property at the intersection of a main highway
and a major river, the Eagle property has been provided with excellent access
and hydroelectric power available for hookup in the immediate area where mining,
if proven feasible, will probably commence.

PREVIOUS WORK

In the general area of the Eagle property there is much evidence of ancient
mining, including old abandoned Spanish communities and mine structures as, for
example at El Aguaje. Mining activity dates back more than two hundred years
and most of this activity has been by labor-intensive methods. Extensive areas
of hand mining by Gambusinos can be seen, evidenced by thousands of hand-dug
shafts and the associated waste piles, throughout the district and on the
property. Gambusinos are still actively working the placer gravels of the Yaqui
River system by the traditional hand methods

GEOLOGY

REGIONAL SETTING

Evidence of three periods of Yaqui River development are represented in the
general. The earliest, assumed to be of early Tertiary age, is represented by
gold-bearing, well-indurated conglomerate gravels which are conspicuously
displayed to the north and east of the property.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

The second Yaqui River development, possible of middle to late Tertiary age, is
the source of most of the terrace deposits in the broad river valley system.
Development of this broad river valley with its extensive gravel deposits, was
the product of a very long period. Several of these remnant terraces exist
upstream from the Eagle property .

The third Yaqui River development is represented by the present river, which has
cut below the base of the earlier valleys and lies in a much narrower valley.
The modern valley winds along the earlier (middle or late Tertiary valley) in a
general way, but in places leaves it for several kilometers to cut a new channel
through bedrock before re-entering the old valley.

PROPERTY SETTING

The large area of alluvial gravels that comprises the Eagle property is situated
on the eastern side of the earlier (middle to late Teriary) Yaqui valley,
immediately west of a point where the present Yaqui valley leaves the old valley
and cuts its way through a bedrock canyon for several kilometers on its
southward course. These departures of the modern river from the old valley were
probable caused by major northeast-southwest faulting at the time of the modern
river development.

The Eagle property gravels and the terrace deposit gravels 10 to 20 km north are
all well rounded and are made up primarily of granitic and volcanic rocks,
quartzites and quartz boulders, cobbles and gravel. The gravels and the
accompanying flattened gold are products of a collection process that is
regional in size and has been through at least two periods of valley development
during geologic time, hence, the widespread presence of gold values throughout
all the gravels in the Yaqui River system.

Whereas the terrace deposits ten to twenty kilometers upstream are completely
non-bedded, heterogeneous mixtures of silts, sands, gravels, cobbles and
boulders that were deposited from a flooding river, the deposits on the Eagle
property have a crude bedding. This indicates that although the main gravel
beds are not significantly different than the terrace deposits to the north,
there has been some reworking of the gravels on the property.

It seems likely that the reason such a hugh reserve of gravel has been preserved
on the Eagle property is that when the faulting occurred that forced the river
to cut a new canyon in bedrock, the property area was the downthrown side of the
fault.

TERMS OF ACQUISITION

By a Letter of Agreement dated October 29, 1992 (as amended) the Company may
earn a 100% interest (subject to a 2% net smelter returns royalty) in the rights
to extract gold from mining claims known as Eagle, Eagle I, Eagle II, and Yaqui
located in the Soyopa and Onaves mining districts, State of Sonora, Mexico.
Consideration consists of:

- - a cash payment of $95,500 U.S. for reimbursement of the vendor's
out-of-pocket costs, payable on the earliest occurrence of the following events:
(1) the Company completing a $1,000,000 financing, (2) the first positive cash
flow being generated from the project, or (3) no later than July 31, 1997.
(Paid)

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NEVADA STAR RESOURCE CORP
FORM 10-KSB

- - the issuance of 200,000 shares of the Company's capital stock as follows:
50,000 shares upon the acceptance of the Agreement by regulatory authorities
(issued in fiscal 1994) and 50,000 shares each at the time of filing of the next
three engineers' reports recommending work programs of minimum $25,000 U.S. each
on the project. The first work program was completed in fiscal 1995 and 50,000
shares were issued.

LA CIENEGA

PROPERTY LOCATION AND ACCESS

The camp at la Cienega is located about 90 miles south of the Arizona
border in the State of Sonora, Mexico. The nearest accessible border town,
Nogales, Arizona, is about two and one half hours by well graded and paved
roads.

Trincheras, the nearest town, is about 50 kilometers away over a well
graded dirt road. The nearest railroad and telephone are also here. The
largest nearby city is Caborca about 75 kilometers northwest. It has a
population of approximately 50,000 people.

The area is Sonoran desert and the rainfall averages less than 10 inches
per year. Day time summer temperatures are well over 110 F and this heat is a
major cause of decreased efficiency.

The area is without electrical service, potable water, sewage disposal,
telephones, grocery or fuel stores. The nearest supply center of any size is
Caborca about one hour away.

The camp is a collection of trailers that has been set up near an old ranch
building. An old arrastrar and several concrete tanks and wells are central to
the camp site. A dug well about 30 feet deep with 5 feet of water has been set
up with a gasoline pump near the well. After several attempts at priming, the
pump will deliver about 300 gallons to the concrete pond before sucking air.
Several hours are required for recovery. the well needs cleaning and deepening.

TERMS OF ACQUISITION

By an agreement dated February 28, 1994 between the Company and Pacific Rainier
de Mexico ("PRM"), the Company can earn a 90% interest in mining claims known as
the Rainier 1 through Rainier 6 located in the Golden Triangle District, State
of Sonora, Mexico. Consideration will be repayment of substantiated costs of
$913,099 U.S. expended by PRM on the property, and the issuance of 1,400,000
shares of the Company when a mine is developed and commences production provided
that an independent valuation report confirms a net present value (net of all
costs and previous consideration) for the 90% interest of at least $1,190,000
CDN. This is a non-arm's length transaction. The out-of-pocket costs of
$913,099 U.S. were settled by the issuance of a two-year convertible debenture
bearing interest at 6% and convertible at $0.85 CDN. per share in the first year
and at $0.98 CDN. per share in the second year. Exchange in the conversion is
fixed at $1.40 CDN. for $1.00 U.S. The debenture was converted into 1,596,215
shares at $0.85 CDN. per share.

A letter of intent was signed February 16, 1994 with K.L.S. Enviro Resources
Inc. (formerly K.L.S. Gold Mining Company ("KLS")) to form a joint venture with
the Company to explore and develop the Rainier (La Cienega) Property and the
Eagle (Rio Yaqui) claims. KLS was to have earned a 55% interest in the
properties by spending a minimum of $1,000,000 U.S. on exploration of the
properties over the next 2 years.
<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

In 1995, the agreement with KLS was renegotiated. Under the terms of the new
agreement, KLS will earn a 50% interest in the Rainier (La Cienega) Property.
The Eagle (Rio Yaqui) claims have been excluded from this new agreement. To
earn this interest, KLS must pay to PRM $90,000 U.S. in holding costs, one-half
in cash and one-half in KLS stock. In addition, KLS must pay $120,000 U.S. of
the total $150,000 U.S. advance royalty owing on the Ryan Lode project should
the pre-feasibility study prove positive. The Company will be required to pay
the remaining $30,000 U.S. at this time. Upon payment of the $120,000 U.S. for
the Ryan Lode Project and payment of the $90,000 U.S. to PRM, KLS will have
earned its 50% interest in the Rainier (La Cienega) Property claims.

The Company paid the costs of the pre-feasibility study on the Ryan Lode Project
of $117,218 CDN.

KLS did not complete their portion of the agreement to this point, consequently
they lost their interest in the Rainier (La Cienega) property.

Deferred exploration and development expenditures of $ 327,656 have been
incurred to date by the Company on the property.

The Company owns 100% right, title and interest in and to Mineral Concession
#199518 La Esperanza within the Rainier II claim, Sonora State of Mexico. The
property was acquired on June 6, 1994 by issuing 100,000 shares of the Company
(deemed value $80,000), payment of $9,809 U.S. cash and the retention by Edward
Ingham of a 2% net smelter return.

The Company owns 100% right, title and interest in and to Mineral Concession
#199397 La Japonesa within the Rainier I claim, Sonora State of Mexico. The
property was acquired on June 6, 1994 by issuing 100,000 shares of the Company
(deemed value $80,000), payment of $8,649 U.S. cash and the retention by Donald
Randolph of a 2% net smelter return.

GOLD HILL

Nevada Star Resources has recently optioned the Gold Hill property in Nye
County, Nevada. The property is located six miles north of the Round Mountain
Gold Mine, about 48 miles northeast of Tonapah, Nevada. Claims acquired from
Mr. Manly include 53 unpatented claims and in addition, NSR claimed, and is in
the process of filing, an additional 54 unpatented claims. The option agreement
has been reviewed, there has been a preliminary title search, and a
subcontractor to Mine Development Associates (MDA) helped stake the claim.

Nevada Star Resources (NSR) requested that Mine Development Associates
(MDA) conduct a resource and reserve evaluation on the Gold Hill Project, Nye
County, Nevada for Nevada Star's due diligent and to define a work program. The
property is located about six miles north of Round Mountain, Nevada. The Round
Mountain Mine is presently producing 420,000 ounces of gold per year and has a
reserve or eight million ounces.

The Gold Hill property consists of 104 unpatented claims (3 placer and 101 lode)
of which 53 were optioned from Mr. Buzz Manley of Beatty, Nevada in April, 1995.
Fifty-four claims were staked by NSR but are presently held under a different
name. Since that time NSR has been accumulating data, reviewing the data and
geology, and has performed a resource and reserve analysis on the Gold Hill gold
deposit. The object of the work was to define the needs of the project for the
next phase of work.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

Production in the 1930's showed a sharp increase in the Round Mountain district,
principally reflecting production from the Gold Hill Mine. There was also some
sporadic production between 1950 and 1964. Total production at Gold Hill was
$987,000 at $35 per ounce or about 28,000 ounces. Others report production of
over 34,000 ounces of gold and 200,00 ounces of silver. Grades are estimated to
have been about 0.3 oz Au/ton. All of this production came from the Gold Hill
vein and to a lesser extent associated veins.

Gold Hill had been controlled for the last decade by the Round Mountain Gold
Company, a joint venture of Echo Bay Mining, Homestake and Case Pomeroy. They
have conducted extensive exploration including surface mapping, geochemistry
(rock, soil vegetation), geophysics (resistivity, gravity, and IP), and a
structural evaluation. Their work culminated in drilling, metallurgical test
work, and a resource and reserve evaluation. In 1988, they defined a mineral
inventory of 3.1 million tons grading 0.05 oz Au/ton at 0.025 oz Au/ton
cut off. The mineralization is not economic to develop at current gold prices.

The host rocks at Gold Hill are densely welded rhyolite tuff of the Mount
Jefferson Caldera. The Mount Jefferson tuff lies over the Moores Creek tuff
which in turn lies over the Round Mountain tuff, the host of the Round Mountain
mine. These Tertiary volcanic rocks overlie a volcanic mega-breccia that in
turn overlies Paleozoic mestasediments. The Mount Jefferson Tuff has been
broken down by previous workers (principally L. McMasters of Homestake) into the
upper gray tuff and maroon upper tuff. There also exist quartz latite dikes, a
crystal tuff which may be a part of the Mount Jefferson tuff, lithic tuffs,
waterlain tuff and Tertiary conglomerates. Though these units were mapped by
McMasters, they were not evident in the log RVC or Core. MDA feels that if the
resource is to be well-defined, these unites must be distinguished and separated
for recognition of the structure in the areas. The youngest rock in the area is
the Quaternary-Tertiary pediments. These units are generally composed of
cobbles of the younger maroon tuff and are always completely barren.

The alteration in the area ranges from non-existent to propylitic to argillic to
advanced argillic to silicified. It appears that the gold mineralization is
related to both quartz veining in argillized rock and silicification. The
principal feature in the area is the Gold Hill vein and its sub-parallel veins.
These all strike N75W and dip variably but steeply. In general, the veins dip
southerly near the surface but dip back to the north at depth. These veins are
banded quartz, but can also be composed of crushed quartz and rhyolite. These
veins branch and coalesce and where two period of veining intersect,
higher-grade pods generally exist. The two period of quartz mineralization are
younger, grayer, dense and banded chalcedonic quartz which contains gold of
generally higher grades. The Silver vein, part of the later mineralization, is
lower-grade, dips steeply to the north at the surface and intersects the Gold
Hill vein at about 300 to 400 ft in depth. Where these veins intersect they
produce high-grades of gold and silver. The entire zone is up to 400 ft wide
and is 1,500 ft long, extending from beyond the range front fault on the west
(where it remains open) to near Toquima shaft on the east. The mineralization
extends to the west of the range front fault where one hole hit about 80 ft of
about 0.11 Au/ton.

Structurally, the area is difficult to define due to the lack of distinct
lithologic units. Aside from the prominent N75W mineralized structure there are
north-trending basin and range faults that drop the stratigraphy to the west.
The general dip of the units is difficult to determine but McMaster (oral comm.,
1995) claims that they dip westerly. Mineralization which is apparently

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

stratigraphically-controlled suggests a southwest dip. Previous workers have
recognized two styles of mineralization; near vertical structurally-controlled
mineralization, including veining, and shallow-dipping strata-bound
mineralization.

The principal mineralization is the Gold Hill and associated veins. These
were exploited starting in the 1930's. The vein width averages several feet and
had sharp contacts with the wall rock. In other areas, the material can best be
described as a stockwork or sheeted zone filled with quartz veinlets. It is
difficult to further define the mineralization with the available information,
though it is believed to also be disseminated at least in part. In several
locations low-temperature banded silica was encountered which may represent
at-surface deposits. These are generally barren of precious metal
mineralization. The mineralization is found in both advance argillic rock as
well as silicified material.

TERMS OF ACQUISITION

By an agreement dated December 4, 1997 between the Company and Hagel Augen.
Hagel Augen will earn a 75% working interest in the Gold Hill Property. Hagel
Augen is committed to the following payments and investments on the property:

- - a cash payment of $10,000 U.S. (paid) upon execution of the agreement.
- - a cash payment of $43,000 U.S. (paid) within 90 days of execution of the
agreement.
- - a cash investment of $447,000 U.S. in the property which includes year
1998 property maintenance payments on or before December 31, 1998.
- - a cash investment of $500,000 U.S. in the property which includes year
1999 property maintenance payments on or before December 31, 1999.
- - a cash investment of $500,000 U.S. in the property which includes year
2000 property maintenance payments on or before December 31, 2000.
- - a cash investment of $500,000 U.S. in the property which includes year
2001 property maintenance payments on or before December 31, 2001.
- - a cash investment of $500,000 U.S. in the property which includes year
2002 property maintenance payments on or before December 31, 2002.
- - a cash investment of $500,000 U.S. in the property which includes year
2003 property maintenance payments on or before December 31, 2003.

ALASKA NICKEL-PLATINUM-COPPER PROPERTY

Nevada Star has recently acquired approximately 10,620 acres consisting of 345
of mining claims in the Nicolai nickel-platinum-copper belt in the southern
Alaska Range of Alaska. The mineralization of main exploratory interest is
platinum and associated base and precious metals. All of the Company's claims
are currently in the exploration stage. No commercially mineable ore body has
been delineated on the any claims, nor have any reserves been identified.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

PLATINUM GROUP METALS

Platinum group metals comprise six closely related metals, platinum, palladium,
rhodium, iridium and osmium, which commonly occur together in nature and are
among the scarcest of the metallic elements. The platinum group metals hold a
unique position in the world economy for industrial and environmental
applications. Along with gold and silver, they are known as precious or noble
metals due to their relative stability. The platinum group metals occur as
native alloys in placer (alluvial) deposits, or more commonly, in lode (hard
rock) deposits associated with nickel and copper. Nearly all of the world's
supply of these metals are being extracted from lode deposits in four countries
- - the Republic of South Africa and Russia being the largest contributors with
90% of the worlds production, and Canada and the United States producing about
8%.

Platinum group metals are critical to a number of industries because of their
extraordinary physical and chemical properties - the most important of which are
their attributes for catalysis. Since the mid-1970's and continuing today,
automotive manufacturers use increasing numbers of catalytic converters
containing platinum or platinum-rhodium alloys reduce environmental
unfriendly automobile emissions. In addition, the chemical and
petroleum-refining industries rely upon platinum group metals catalysis to
produce a wide variety of chemical and petroleum products. The jewelry, glass,
electronic, pharmaceutical, dental and investment sectors constitute other large
consumers of platinum group metals.

LOCATION

The property is located on the south side of the central Alaska Range, Alaska,
approximately 100 miles south-southeast of Fairbanks, and approximately 160
miles northeast of Anchorage .

The Eureka Creek Project area lies in the geological entity known as the
Wrangellia Terrain, which typically forms glaciated mountainous regions that
extend to the southeast into the Wrangell Mountains and beyond. Elevations in
the project area vary between 2766 feet in piedmont along the southern edge, to
8847 feet along the glaciated northern edge.

ACCESS

The Richardson and Denali highways allow access to the perimeter of the project
area. Old, unmaintained trails do occur in the project area, but are only
accessible once the glacial runoff subsides in late summer, whereupon the rivers
are passable. Fixed-wing aircraft can access the area via two local gravel
airstrips (Maclaren River and Broxson Gulch), whereas float-equipped aircraft
could land on a few of the larger lakes (e.g., Fish Lake, Sevenmile Lake).
Helicopters offer the best means of accessing remote parts of the project area.
Snowmobiles (winter) and ATVs (summer) can also be used to access the
least-rugged areas. The nearest community is the hamlet of Paxson, which is
situated at the junction of the Denali and Richardson highways. Project field
activity is conducted from Paxson Lodge, and a camp, with cabins and a gravel
airstrip, at the entrance to the East Fork of Broxson Gulch.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

PHYSIOGRAPHY

The project area is on the interior edge of the Pacific Mountain System. The
area is subject to elevation-controlled climate, where central Alaska Range
mountains and alpine valleys are typically glaciated, windy and frequently
cloudy; in contrast to piedmont valleys on the south-side of the Alaska Range
which have a more subdued topography and contain some vegetation. Extended
summer daylight hours occur from approximately the beginning of June to the end
of August. Approximate mean high and low temperatures are 80 F and 55 F in July,
and 14 F and -22 F in January. Average precipitation varies between 4 inches in
April to 20 inches in August.

The elevated part of the project area, north of Eureka Creek, contains
mountainous ridges (highest is 8847') that separate active glaciated valleys and
cirques. Sediment-laden rivers drain from the glaciers into the piedmont
valleys, and eventually into the Delta River. Conifers are sparse and confined
to the banks of larger rivers (e.g., Delta River). Smaller vegetation (e.g.,
alders, heath, grasses, moss and lichen) is more abundant, but is also
restricted to wetter piedmont valleys. Apart from bedrock, the landsurface is
covered by glacial moraine or glacio-fluvial deposits. In addition to minor
overbank or floodplain soil, there are only very thin, incipient soils in
vegetated lowland areas.

Property Geology

The geology of the Eureka Creek Property consists sedimentary, volcanic and
intrusive rocks which are variably folded and faulted. The area is separated by
the Denali Fault and Broxson Thrust Fault into two terranes. To the north of the
Denali Fault the rocks consist of strongly folded and faulted older metamorphic
rocks. To the south of the Denali Fault, the rocks consist of younger
sedimentary and volcanic rocks intruded by mafic and ultramatic rocks.

Property History

The first comprehensive geological study of the region was by Moffit (1912),
followed by a period of inactivity that ended with a regional geology series by
Rose (1965, 1966) and, in the Rainbow Mountains to the east, Hanson (1964). The
most recent mapping that includes the Eureka Creek claims is by Stout (1976).

In 1973, the Alaska Division of Geological and Geophysical Surveys released
results of an airborne magnetometer survey of the Mount Hayes Quadrangle. This
survey defined a number of positive magnetic occurrences. The aeromagnetic
survey delineated the location of mafic and ultramafic rocks which appear to be
favorable targets for massive sulfide mineralization. These positive magnetic
occurrences delineate highly magnetic and conductive areas indicate possible
mineralization. More recently, samples collected in the project area were
included in a regional geochemical study of stream sediments and heavy minerals
by Curtin et al. (1989). These studies show that nickel, chromium and cobalt
geochemical occurrences are present within the project area.

Mineral resource assessment of the Mount Hayes Quadrangle by Nokleberg et al.
(1990), rank the Eureka Creek Project area as having a moderate potential for
containing nickel, copper and chromium mineralization, and placer gold. Active
gold placer mining has not been carried out in the project area since the first
quarter of the century, and largely remains undocumented.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

The project area has not previously been explored by industry for
nickel-copper-platinum group elements mineralization. However, as part of a
regional study for the State of Alaska, Rose (1965) identified more than 18
localities in the Rainy Creek area where copper mineralization was noted. Minor
amounts of Nickel were noted at five of these localities. More extensive
nickel-copper mineralization has also been documented in the Rainbow Mountain -
Canwell Glacier area immediately to the east of Eureka Creek Project area (e.g.,
Saunders, 1961; Kaufman, 1963; Barker, 1988).

EXPLORATION ACTIVITY

Monty D. Moore and Associates, in concert with Tullaree Alaska Inc., began
staking in the Eureka Creek Project area in January 1996. Starting in late
February 1997, and continuing through that summer, further ground was staked and
a reconnaissance geological and geochemical sampling exploration program was
carried out over most of the property.

The 1997 exploration program was helicopter-supported, and entailed
reconnaissance prospecting and geologic orientation, a minor amount of geologic
mapping, and rock and stream sediment geochemical sampling. Four hundred and
fifty-three samples were collected as fist-size grab samples from outcrop and
subcrop, or as chip samples over a particular outcrop distance. The rock
samples were analyzed by Chemex Labs., Inc. (Sparks, Nevada) and Acme Analytical
Laboratories Ltd. (Vancouver, British Columbia). Twenty-eight silt samples were
collected from streams in the project area and analyzed by Chemex Labs, Inc.
(Sparks, Nevada).

Monty Moore and Associates conducted a short staking and exploration program
between July 10 and September 8 1998. During the 1998 program, most of the
staking, sampling, local mapping, and ground magnetometer surveying was
conducted to the west and east of Tangle Lakes in the Amphitheatre Mountains.
Previous mapping, aeromagnetic and geochemical surveys and rock sampling
indicate that the Tangle Lakes area has the greatest potential for
nickel-copper-platinum group elements mineralization in the Eureka Creek Project
area. Following the field component of the 1998 exploration program, an
independent evaluation of the Eureka Creek Project was conducted.

EXPLORATION PROGRAM

It has been recommended that the next phase of exploration for the Eureka Creek
Project should focus on the Tangle Lakes area, and start with a
helicopter-airborne magnetic-EM (electromagnetic) survey over the area of
greatest interest west and east of Tangle Lakes. An airborne survey reveals an
area extending from the east shore of Landmark Gap Lake and from Rusty Lake
northward; and north-south flight lines at 200 m separation, with 1 or 2
east-west cross-lines. This rectangular survey area could be extended to the
north, west and south. Ultimately, if geophysical anomalies and drill targets
can be defined early in the field season, then a drilling program will be
carried out.

TERMS OF ACQUISITION

The property was acquired by way of a gift from Monty D. Moore, a shareholder,
director and president of the Company. On January 5, 1999 the Company entered
into a Memorandum of Understanding with M.A.N. Resources, Inc., ("MAN") a
private company controlled by Monty D. Moore and Robert Angrisano whereby the

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

claims were leased to M.A.N. for ten years on condition that M.A.N. explore and
develop minerals thereon. In return, M.A.N. will earn a net 75% working
interest in the claims upon expending U.S. $75,000 on exploration and
development costs in the first twenty-four months of the lease. To maintain its
working interest at 25%, the Company is required to pay M.A.N. 25% of all
exploration and development costs in excess of the initial U.S. $75,000 spent by
M.A.N. on the claims. Failure to contribute its share will reduce the Company's
interest but not to less than 1% of gross proceeds of sale of minerals from the
claims. The Company does not anticipate that it will be required to begin
payment of its pro rata share of exploration expenses until mid-year 2001.

Additionally, M.A.N. may acquire all right, title and interest of the Company in
the claims in consideration for 106,200 shares in the capital stock of M.A.N. if
tendered on or before the second anniversary date of the lease agreements. The
Memorandum of Understanding, provides that the Memorandum of Understanding will
be superceded and replaced by a formal Mining Lease and Sale Agreement. Until
the Mining Lease and Sale Agreement is executed the Memorandum of Understanding
remains in full force and effect.

ITEM 3. LEGAL PROCEEDINGS

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

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted during the fourth quarter of the fiscal year covered by
this report to a vote of security holders, through the solicitation of proxies
or otherwise.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

(A) MARKET INFORMATION

The Common Stock of the Company is traded on the Canadian Venture Exchange under
the symbol "NEV". The following table shows the high and low sales prices for
the Common Stock during each quarter since January 1, 1998. The sales prices are
set forth in Canadian dollars. At February 10, 2000 the U.S. dollar equivalent
as quoted in the Wall Street Journal was $.6903
<TABLE>
Calendar Year High Closing Low Closing
- -------------- ------------- ------------
<S> <C> <C>
1998:
First Quarter .70 .26
Second Quarter .52 .27
Third Quarter .43 .20
Fourth Quarter .30 .11
1999:
First Quarter .25 .12
Second Quarter .30 .09
Third Quarter .25 .13
Fourth Quarter .22 .09
2000:
February 10 .11 .09
</TABLE>
<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

(B) HOLDERS

There are approximately 121 holders of the Registrant's common equity at the
date hereof.

The Registrant has never paid a dividend. There is no plan to pay dividends for
the foreseeable future.

(D) UNREGISTERED SALES

In May, 1999 the Company issued a total of 2,553,316 shares at a deemed private
of $0.18 per share to settle outstanding debt. All of the shares are restricted
from resale in the United States. The shares were issued to three U.S.
residents, each of whom was an accredited investor. The shares were issued
pursuant to a Section 4(2) exemption from registration under the Act.

Between October, 1998 and August 1999 options to acquire shares were exercised
by two individuals. Both individuals were accredited investors, one of whom is
the president and a director of the Company. An aggregate of 272,445 shares were
issued at an option exercise price of CDN$0.30 per share and 1,519,204 shares
were issued at an option exercise price of CDN$ 0.49 per share. The shares were
issued pursuant to a Section 4(2) exemption from registration under the Act.

In October, 1998 704,727 shares were issued to an unaffiliated third party at a
deemed price of $0.55 per share pursuant to a shares for debt transaction
relating to the LaVirgen property acquisition. The shares were issued pursuant
to a Section 4(2) exemption from registration under the Act.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

PLAN OF OPERATION

NSR's plan of operation for the next twelve months on its properties in the
Milford District in Beaver County, Utah will consist solely of property
maintenance. The company's annual cost to hold the property is about $33,000
including claim holding costs and taxes. All taxes and holding costs are
current.

Pursuant to the terms of the Company's agreement on its Alaska Nickel-
Platinum-Copper property the Company does not anticipate that it will incur
any costs on the property until mid-year 2001.

The Company intends to attempt to negotiate a joint-venture or lease-option
agreement with an unaffiliated third party on its La Cienega property. If the
Company is unsuccessful in its attempts to negotiate joint-venture or
lease-option agreements the Company intends to relinquish its rights to these
mining claims and concessions. The Company is not currently in discussions with
any potential party regarding a joint venture or lease-option.

The Company intends to attempt to negotiate joint-venture or lease-option
agreements with unaffiliated third parties on its Yaqui Placer and Gold Hill
properties. If the Company is unsuccessful in its attempts to negotiate
joint-venture or lease-option agreements the Company intends to terminate the
respective option agreements and relinquish its interests in the properties. The
Company is not currently in discussions with any potential party regarding a
joint venture or lease-option.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

The Company anticipates that it will utilize the services of independent
consultants to accomplish its maintenance work and therefore does not anticipate
that there will be a significant increase in the number of employees.

The Company does not anticipate the purchase or sale of any plant or significant
equipment. The Company currently has sufficient funds to satisfy cash demands
for operations for the next 12 months. The Company has no plans to raise
additional funds in the next twelve months.

At the present time the Company has no current plans, arrangements, agreements
or undertakings to acquire any additional exploration properties.

None of the Company's properties have any proven or probable reserves as defined
by Industry Guide 7.

ITEM 7. FINANCIAL STATEMENTS

Financial Statements of the Company for the fiscal years ended August 31, 1998
and August 31, 1998 audited by Smythe Ratcliffe, are included elsewhere in this
Form 10-KSB.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

During the Registrant's two most recent fiscal years and any later interim
periods neither the principal accountant nor a significant subsidiary's
independent accountant on whom the principal accountant expressed reliance in
its report, resigned (or declined to stand for re-election) or was dismissed.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT
<TABLE>
Name Age Office with the Company Appointed to Office
- ------------------------ --- ------------------------ -------------------
<S> <C> <C> <C>
Monty D. Moore 63 Director and President 1993
Richard W. Graeme 56 Director 1994
Stuart Havenstrite 67 Director 1994
Richard S. Havenstrite 41 Director 1998
Robert Angrisano 45 Director 1999
Kevin Weaver 53 Director 1996
Beverly J. Bullock 49 Secretary 1993
</TABLE>
Monty D. Moore has been the President and a Director of the Company since 1993.
Since 1971 Mr. Moore has been the owner and President of Pacific Rainier
Roofing, Inc., Seattle, Washington. Mr. Moore is a member of the Northwest
Mining Association. Mr. Moore is an officer, director and oprincipal shareholder
of M.A.N. Resources, Inc.

Richard W. Graeme, a Director of the Company, is graduated from the University
of Arizona with a Bachelor of Science Degree with a major in Geological
Engineering. From 1996 to the present Mr. Graeme has been the Vice-president of
Operations for Golden Queen Mining Company, Mojave, California. Mr. Graeme's
responsibilities have included permitting and bringing the Soledad Mountain

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

project into production. From 1993 to 1996 Mr. Graeme was employed as an
Engineer by Mine Development Associates, Reno Nevada. Mr. Graeme is a member of
the American Institute of Mining, Metallurgical and Petroleum Engineers
("AIME").

Stuart Havenstrite, a Director of the Company, has been the owner and sole
employee of HMS Company, a geological and management company located in Sandy,
Utah. Mr. Havenstrite is graduated from Stanford University with a B.S. Degree
in Geology. Mr. Havenmstrite is a member of AIME. Mr. Havenstrite is the father
of Rick Havenstrite.

Rick Havenstrite, a Director of the Company, has been the Manager of the
Company's OK copper project since joining the Company in 1997. From 1996 until
joining the Company Mr. Havenstrite was the Vice-President of Operations for
Centurion Mines Corporation and the manager of the OK copper project. From
1992-1996 Mr. Havenstrite was employed by Arimetco, Inc. as the General Manager
of the Yerington Project. Mr. Havenstrite was responsible for permitting,
geology, engineering, construction and operation of this 15 million ton per year
low grade SX/EW copper project. Mr. Havenstrite, a member of AIME is graduated
from the University of Nevada, Reno with a B.A. Degree in Mine Engineering.

Kevin Weaver, a Director of the Company since 1995, is a land developer and
since 1992 has been the President of Songhees Retirement Park and Seicam
Management, Victoria, Canada

Robert Angrisano, a Director of the Company, is graduated from Portland State
University with a degree in business. Mr. Angrisano has been employed by
Microsoft Corp. since 1993. Mr. Angrisano is currently the Director of
Technology for Microsoft. Mr. Angrisano is an officer, director and principal
shareholder of M.A.N. Resources, Inc.

Beverly J. Bullock, the Corporate Secretary, has been the owner of VanWest
Administrative Services, Ltd., Surrey, B.C. since 1991. VanWest provides
administrative consulting services to private and public companies.

(b) Identification of Certain Significant Employees

The Registrant has no employees.

Two of the directors are related. Richard Havenstrite is the son of Stuart
Havenstrite

(d) Involvement in Certain Legal Proceedings

No Director, or person nominated to become a Director or Executive Officer, has
been involved in any of the enumerated events during the past five years.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant pursuant to Section 240.16a-3 during its most recent fiscal year
and Form 5 and amendments thereto furnished to the Registrant with respect to
the most recent fiscal year, no director has filed a Form 3, additionally Monty
Moore failed to file Form 4 twice and Stuart Havenstrite failed to file one Form
4.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

ITEM 10. EXECUTIVE COMPENSATION

(A) EXECUTIVE OFFICERS

The following table sets forth the compensation paid by the Company to its Chief
Executive Officer and executive officers whose total annual salary and bonus
exceeded $100,000 during the past three calendar years ("Executive Officers").
Except as set forth below, no officer or Executive Officer of the Company
received compensation in excess of $100,000 during the past three calendar
years. This information includes the dollar value of base salaries, bonus awards
and number of stock options granted, and certain other compensation, if any.

<TABLE>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
- ---------------------------------- -------------------------------------------------
Name Other Restricted Securities
and Annual Stock Underlying LTIP All Other
Principal Year Salary Bonus Comp. Awards(1) Options/ Payouts Comp.
Position ($) ($) ($) ($) SARs(#) ($) ($)
- ------------ ---- ------- ------- ------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Monty D.
Moore 1999 $0 $0 $0 $0 445,895(1) $0 $0
President & 1998 $0 $0 $0 $0 330,885(2) $0 $0
Director 1997 $0 $0 $0 $0 115,040(2) $0 $0
</TABLE>

(1) exercisable at CDN $0.30 per share on or before March 2, 2001;
(2) re-priced on March 3, 1999

(B) DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
The Company compensates its directors for attending Directors' Meetings in the
amount of US$300.00 per meeting. In addition, the directors are compensated for
their services in their capacity as consultants, experts or for committee
participation or special assignment by the Company. During the most recently
completed financial year, compensation was paid as follows:

<TABLE>
Director Amount Paid
- ---------------------------- ----------------------------------
<S> <C>
Stuart Havenstrite US$300 (director's fee)
Kevin Weaver US$300 (director's fee)
Robert Angrisano US$300 (director's fee)
Richard W. Graeme US$300 (director's fee)
Rick Havenstrite CDN$36,558 (consulting)
</TABLE>

The Company does not have a formalized stock option plan for the granting
of incentive stock options to the officers, employees and directors. However,
the Company has granted stock options to certain of its directors. The purpose
of granting such options is to assist the Company in compensating, attracting,
retaining and motivating the directors of the Company and to closely align the
personal interests of such persons to that of the shareholders.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

The following table sets forth information concerning individual grants of
options to purchase securities of the Company made during the most recently
completed financial year to some of the directors of the Company:

<TABLE>
% of total Market
Options/ Value of
SARs Securities
Granted to Exercise Underlying
Securities All or base Options
Under Employees price on the
Options/SARs In the $/ Date of
Granted Financial Securites Grant Expiration
Name # (1) Year (2) $/Security Date
- ------------------ ------------- ----------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Richard Graeme 75,000 4.1% $0.30 $0.30 March 2, 2001
Rick Havenstrite 100,000 5.4% $0.30 $0.30 March 2, 2001
Stuart Havenstrite 200,000 10.8% $0.30 $0.30 March 2, 2001
Kevin Weaver 300,000 16.3% $0.30 $0.30 March 2, 2001
Robert Angrisano 600,000 32.5% $0.30 $0.30 March 2, 2001
</TABLE>

(1) Option is for a term of two years.
(2) The exercise price of stock options is determined by the Board of
Directors but shall in no event be less than the 10-day average price of the
common shares of the Company on the Canadian Venture Exchange.

The following table sets forth information concerning the re-pricing
of options to purchase securities of the Company made during the most recently
completed financial year to some of the directors of the Company:

<TABLE>
Securities Old New Old New
Name Under Exercise Exercise Expiration Expiration
Options Price Price Date Date
- ----------------- ----------- --------- --------- ----------------- ----------
<S> <C> <C> <C> <C> <C>
Monty D. Moore 115,040 $0.55 $0.30 March 12, 1999 March 2, 2001
Monty D. Moore 330,855 $0.64 $0.30 November 20, 1999 March 2, 2001
Rick Havenstrite 100,000 $0.64 $0.30 November 20, 1999 March 2, 2001
Richard Graeme 25,000 $0.55 $0.30 March 12, 1999 March 2, 2001
</TABLE>

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth information regarding any person known to the
Company to be the beneficial owner of more than five percent of any class of the
Company's voting securities at December 3, 1999.
<TABLE>
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature of Percent
Percent of Beneficial Owner Beneficial Ownership of Class
- ---------------- ------------------------ ------------------------ --------
<S> <C> <C> <C>
Common Monty D. Moore (1) 4,323,395 (2) 15.16%
10735 Stone Ave.
Seattle, WA 98133

Common Grand Central Silver (3) 2,000,000 7.01%
Mines, Inc.
862 South 500 West St.
Salt Lake City, Utah 84110

Common Robert Angrisano 1,738,656 (4) 6.01 %
2533 - 226th Pl. NE
Redmond, WA 98053
</TABLE>
(1) Includes 713,550 shares owned by Pacific Rainier, Inc. a privately held
mineral exploration company controlled by Mr. Moore.
(2) Does not include 445,895 shares issuable upon the exercise of
outstanding options and warrants
(3) No officer, director or principal shareholder of the Company is
affiliated with Grand Central Silver Mines, Inc.
(4) Does not include 50,000 shares issuable upon the exercise of
outstanding options and warrants

(A) SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth certain information as of December 33, 1999
regarding the number and percentage of shares of common Stock of the Company or
any of its parents or subsidiaries beneficially owned (as such term is defined
in Rule 13d-3 under the Exchange Act) by each director, each of the named
executive officers and directors and officers as a group
<TABLE>
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- --------------- --------------------------------- --------------------- ------------
<S> <C> <C> <C>
Common Monty D. Moore 4,323,395(1)(2) 16.95%
Common Richard W. Graeme 100,000(3) 0.35%
Common Stuart Havenstrite ` 532,234(4) 1.87%
Common Richard S. Havenstrite 110,000(5) 0.38%
Common Robert Angrisano 1,738,656(6) 6.01%
Common Kevin Weaver 13,500 0.05%
Common Total of all officers
and directors (7 individuals): 6,817,785 23.9%
</TABLE>

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

(1) Includes 713,550 shares owned by Pacific Rainier, Inc., a privately held
mining exploration company controlled by Mr. Moore.
(2) Does not include options expiring March 2, 2001 to acquire 445,895
shares of common stock at a price of $0.30 per share.
(3) Does not include options expiring March 2, 2001 to acquire 100,000
shares of common stock at a price of $0.30 per share.
(4) Does not include options expiring March 2, 2001 to acquire 200,000
shares of common stock at a price of $0.30 per share.
(5) Does not include options expiring March 2, 2001 to acquire 52,960 shares
of common stock at a price of $0.30 per share.
(6) Does not include options expiring March 2, 2001 to acquire 50,000 shares
of common stock at a price of $0.30 per share.

There are no arrangements known to the Registrant the operation of which may at
a subsequent time result in the change of control of the Registrant.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(A) TRANSACTIONS WITH MANAGEMENT AND OTHERS

Monty Moore, a shareholder, officer and director has made advances to the
Company which were outstanding in whole or in part at the year ended August 31,
1999 in the amount of $CDN 543,960. There is no written agreement between the
Company and Mr. Moore with regard to the repayment of the monies advanced. The
monies have been advanced on an interest free basis. The monies are expected to
be repaid at the point at which the Company has adequate revenues to make such
payments without restricting the operations of the Company. In the alternative,
upon approval of Mr. Moore and the Board of Directors, the advances may be
converted to equity. On May 17, 1999 the Company converted $CDN 232,037 of
advances to equity at a price of $.18 per share, issuing a total of 1,289,098
shares of common stock. The terms of the transaction were approved by the
Vancouver Stock Exchange.

The Company's Alaska Nickel-Platinum-Copper Property was acquired by way of a
gift from Monty D. Moore, a shareholder, director and president of the Company.
On January 5, 1999 the Company entered into a Memorandum of Understanding with
M.A.N. Resources, Inc., ("MAN") a private company controlled by Monty D. Moore
and Robert Angrisano whereby the claims were leased to M.A.N. for ten years on
condition that M.A.N. explore and develop minerals thereon. In return, M.A.N.
will earn a net 75% working interest in the claims upon expending U.S. $75,000
on exploration and development costs in the first twenty-four months of the
lease. To maintain its working interest at 25%, the Company is required to pay
M.A.N. 25% of all exploration and development costs in excess of the initial
U.S. $75,000 spent by M.A.N. on the claims. Failure to contribute its share
will reduce the Company's interest but not to less than 1% of gross proceeds of
sale of minerals from the claims. The Company does not anticipate that it will
be required to begin payment of its pro rata share of exploration expenses until
mid-year 2001.

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

There have been no other transactions or series of transactions, or proposed
transactions during the last two years to which the registrant is a party in
which any director, nominee for election as a director, executive officer or
beneficial owner of five percent or more of the registrants common stock, or any
member of the immediate family of the foregoing had or is to have a direct or
indirect material interest exceeding $60,000.

The Company's Articles do not prohibit transactions in which the Company's
promoters, management, affiliates or associates directly or indirectly have an
interest. Therefore, there is (always) a "present potential" that the Company
may acquire or merge with a business or company in which the Company's
promoters, management, affiliates or associates directly or indirectly have an
interest, there is however, no present or contemplated intent that such an event
may occur. In the event that such a transaction was proposed, under the rules of
the Vancouver Stock Exchange, any such transaction would be deemed a "Major
Transaction and would be subject to prior shareholder approval and the approval
of the Vancouver Stock Exchange. In structuring any such transaction, the
directors would be bound by their fiduciary duty to act in the best interest of
the Company's shareholders. In the event that management's fiduciary duties were
compromised any available remedy under applicable law would likely be
prohibitively expensive and time consuming.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of the report:

1. Financial Statements

Independent Auditors' Reports

Consolidated Balance Sheets
August 31, 1999 and 1998

Consolidated Statements of Operation and Deficit
for the years ended August 31, 1999, 1998, and 1997

Consolidated Statements of Cash Flows
for the years ending August 31, 1999, 1998, and 1997

Consolidated Statements of Investment In and Expenditures On
Resource Properties
For the years ended August 31, 1999 and 1998

Notes to Financial Statements

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

2. Exhibits required by Item 601

(1) Underwriting Agreement (1)
(2) Plan of Acquisition, reorganization, arrangement, liquidation or
succession. (1)
(3) (i) Articles of Incorporation (2)
(3) (ii) Bylaws. (2)
(4) Instruments defining the rights of security holders, including
indentures. (1)
(9) Voting trust agreements. (1)
(10) Material contracts. (2)
(11) Statement re: computation of per share earnings. (1)
(12) Statements re: computation of ratios. (1)
(13) Annual report to security holders, Form 10Q or quarterly report to
security holders. (1)
(16) Letter re: change in certifying accountant. (1)
(18) Letter re: change in accounting principles. (1)
(19) Subsidiaries of the Registrant. (1)
(22) Publisher report regarding matters submitted to vote of security
holders. (1)
(23) Consents of Experts and counsel.
(24) Power of Attorney. (1)
(99) Additional Exhibits. (1)

(1) These items have either been omitted or are not applicable
(2) Incorporated by reference to previous filing

(b) No reports have been filed on Form 8-K during the last fiscal quarter
covered by this report.

(d) Financial Statements are filed herewith.

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS

Not Applicable

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

NEVADA STAR RESOURCE CORP

By:/s/ Monty D. Moore
-------------------------
MONTY D. MOORE, President
(Principal Executive Officer) and (Principal
Financial Officer)

<PAGE>
NEVADA STAR RESOURCE CORP
FORM 10-KSB

In accordance with the Exchange Act, this report has been signed below by the
following persons representing a majority of the Board of Directors on behalf of
the registrant and in the capacities and on the dates indicated.

2/11/00
-------
MONTY D. MOORE Date
Director

2/11/00
-------
KEVIN WEAVER Date
Director

2/11/00
-------
STUART HAVENSTRITE Date
Director

2/11/00
-------
RICHARD S. HAVENSTRITE Date
Director

2/11/00
-------
ROBERT ANGRISANO
Director

NEVADA STAR RESOURCE CORP.
CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

<TABLE>
INDEX PAGE
----- ----
<C> <S>
AUDITORS' REPORT TO THE SHAREHOLDERS 1

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets 2

Consolidated Statements of Operations and Deficit 3

Consolidated Statements of Cash Flows 4

Consolidated Statements of Investments In and
Expenditures on Resource Properties 5

Notes to Consolidated Financial Statements 6-17

</TABLE>

<PAGE>

AUDITORS' REPORT TO THE SHAREHOLDERS

We have audited the consolidated balance sheets of Nevada Star Resource Corp. as
at August 31, 1999 and 1998 and the consolidated statements of operations and
deficit, cash flows and investments in and expenditures on resource properties
for the years ended August 31, 1999, 1998 and 1997. 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
in Canada which do not differ in any material respects from auditing standards
generally accepted in the United States. 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 August 31, 1999
and 1998 and the results of its operations, its cash flows and the investments
in and expenditures on resource properties for the years ended August 31, 1999,
1998 and 1997 in accordance with generally accepted accounting principles in
Canada applied on a consistent basis. Accounting principles generally accepted
in Canada differ in certain significant respects from accounting principles in
the United States and are discussed in note 11 to the consolidated financial
statements.

Chartered Accountants

Vancouver, British Columbia
January 6, 2000

See notes to consolidated financial statements.

<PAGE>
NEVADA STAR RESOURCE CORP.
CONSOLIDATED BALANCE SHEETS
AUGUST 31
(CANADIAN DOLLARS)
<TABLE>
1999 1998
-------------- --------------
<S> <C> <C>
ASSETS

CURRENT

Cash $ 5,006 $ 217,524
Accounts receivable 5,285 4,105
-------------- --------------
10,291 221,629

INVESTMENTS IN AND EXPENDITURES ON RESOURCE

PROPERTIES (notes 3 and 4) 6,764,456 5,946,032

CAPITAL ASSETS (note 5) 4,333 5,573
-------------- --------------

$ 6,779,080 $ 6,173,234
============== ==============

LIABILITIES

CURRENT

Accounts payable $ 10,810 $ 18,148
Loan payable 0 387,600
Subscriptions payable 0 381,129
Due to shareholder (note 7) 543,960 718,606
-------------- --------------
554,770 1,505,483
-------------- --------------

SHAREHOLDERS' EQUITY

CAPITAL STOCK (note 6) 11,377,738 9,704,111

DEFICIT (5,153,428) (5,036,360)
-------------- --------------

6,224,310 4,667,751
-------------- --------------

$ 6,779,080 $ 6,173,234
============== ==============
</TABLE>
Commitments (note 8)

Approved on behalf of the Board:

/S/ Monty Moore /S/ Stuart Havenstrite
Monty Moore, Director Stuart Havenstrite, Director

See notes to consolidated financial statements.

<PAGE>
NEVADA STAR RESOURCE CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
YEARS ENDED AUGUST 31
(CANADIAN DOLLARS)

<TABLE>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
GENERAL AND ADMINISTRATIVE EXPENSES

Professional fees $ 35,014 $ 31,852 $ 21,235
Consulting 32,702 55,155 55,398
Office and miscellaneous 15,228 21,597 15,374
Shareholder relations 10,305 11,489 15,385
Listing and filing fees 7,527 10,937 9,003
Property management 3,975 47,055 0
Directors' meetings 1,797 860 1,743
Transfer agent fees 1,250 13,771 5,250
Telephone 1,120 5,511 8,060
Bank charges and interest 1,023 1,165 983
Travel 573 7,668 19,944
Property examinations 0 8,737 3,423
Rent 0 0 23,979
Management fees 0 0 12,000
Amortization 1,240 1,617 2,117
------------ ------------ ------------
111,754 217,414 193,894

OTHER ITEMS

Loss on abandonment of mineral properties 0 1,459,495 439,455

Loss (gain) on translation of foreign currencies 5,602 (7,471) 18,588

Interest income (288) (2,618) (1,276)
------------ ------------ ------------

NET LOSS FOR YEAR 117,068 1,666,820 650,661

DEFICIT, BEGINNING OF YEAR 5,036,360 3,369,540 2,718,879
------------ ------------ ------------

DEFICIT, END OF YEAR $ 5,153,428 $ 5,036,360 $ 3,369,540
============ ============ ============

LOSS PER SHARE $ 0.01 $ 0.09 $ 0.04
============ ============ ============

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 26,072,068 19,291,567 16,410,919
============ ============ ============

</TABLE>

See notes to consolidated financial statements.

NEVADA STAR RESOURCE CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED AUGUST 31
(CANADIAN DOLLARS)
<TABLE>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net loss $ (117,068) $(1,666,820) $ (650,661)
------------ ------------ ------------
Items not involving cash
Amortization 1,240 1,617 2,117
Loss on abandonment of mineral properties 0 1,459,495 439,455
------------ ------------ ------------
(115,828) (205,708) (209,089)
------------ ------------ ------------

CHANGES IN NON-CASH WORKING CAPITAL
Accounts receivable (1,180) (2,278) 1,681
Prepaid expenses 0 313 1,750
Accounts payable (7,338) 6,490 (37,291)
Subscriptions payable 0 381,129 0
Loan payable 0 387,600 0
Due to shareholder (95,892) 318,529 338,104
------------ ------------ ------------
(104,410) 1,091,783 304,244
------------ ------------ ------------
(220,238) 886,075 95,155
------------ ------------ ------------

INVESTING ACTIVITIES
Deferred exploration and development costs (705,576) (1,912,068) (220,258)
Acquisition of mineral properties (112,848) (86,494) (765,933)
------------ ------------ ------------
(818,424) (1,998,562) (986,191)
------------ ------------ ------------

FINANCING ACTIVITY
Issuance of shares for cash 826,144 1,240,544 610,740
------------ ------------ ------------

INCREASE (DECREASE) IN CASH (212,518) 128,057 (280,296)
CASH, BEGINNING OF YEAR 217,524 89,467 369,763
------------ ------------ ------------

CASH, END OF YEAR $ 5,006 $ 217,524 $ 89,467
============ ============ ============

SUPPLEMENTAL INFORMATION FOR INVESTING AND FINANCING ACTIVITIES

Shares issued for mineral properties $ 0 $ 2,096,250 $ 0
============ ============ ============
Shares issued for loan settlement,
subscriptions payable and
advances from shareholder $ 847,483 $ 0 $ 170,928
============ ============ ============
</TABLE>
See notes to consolidated financial statements.

<PAGE>
NEVADA STAR RESOURCE CORP.
CONSOLIDATED STATEMENTS OF INVESTMENTS IN AND EXPENDITURES ON RESOURCE
PROPERTIES
YEARS ENDED AUGUST 31
(CANADIAN DOLLARS)
BEGIN 8PT TYPE

<TABLE>
EAGLE RAINIER OK/
(RIO YAQUIL) (LA CIENEGA) LA VIRGEN GOLD HILL BEAVER LAKE PGM
CLAIMS PROPERTY PROPERTY, PROPERTY, PROPERTY PROPERTY,
MEXICO MEXICO MEXICO NEVADA UTAH ALASKA TOTAL
------------ -------------- ---------- ---------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
AUGUST 31, 1997 $ 197,998 $ 1,710,310 $ 959,475 $ 442,932 $ 0 $ 0 $ 3,310,715
------------ -------------- ---------- ---------- ------------- ---------- ------------
EXPENDITURES FOR 1998

Acquisition costs 0 0 0 4,739 2,178,006 0 2,182,745
Labour 0 414 70,147 0 169,135 0 239,696
Property tax 374 100,011 56,059 0 0 0 156,443
Travel 461 6,008 17,424 0 130,059 0 153,952
Accommodation
and meals 165 3,237 3,060 0 56,199 0 62,661
Recording fee 0 0 5,851 0 22,280 0 28,131
Consulting 0 57,153 74,270 0 136,615 0 268,038
Supplies 0 9,465 749 0 102,642 0 112,857
Assays 0 0 18,439 0 256,505 0 274,944
Miscellaneous 38 5,827 9,584 (745) 8,601 0 23,305
Storage 0 0 0 0 43 0 43
Drilling 0 0 244,437 0 236,056 0 480,493
Legal 0 0 0 0 111,504 0 111,504
Loss on abandonment
of property 0 0 (1,459,495) 0 0 0 (1,459,495)
------------ -------------- ---------- ---------- ------------- ---------- ------------
1,038 182,115 (959,475) 3,994 3,407,645 0 2,635,317
------------ -------------- ---------- ---------- ------------- ---------- ------------
BALANCE,
AUGUST 31, 1998 199,036 1,892,425 0 446,926 3,407,645 0 5,946,032
------------ -------------- ---------- ---------- ------------- ---------- ------------
EXPENDITURES FOR 1999

Acquisition costs 0 0 0 38,327 15,235 59,285 112,847
Labour 0 0 0 0 128,604 0 128,604
Property tax 0 0 0 0 28,479 0 28,479
Travel 0 231 0 0 4,525 0 4,756
Accommodation and meals 0 0 0 0 113 0 113
Recording fee 0 0 0 1,546 4,984 0 6,530
Consulting 0 12,045 0 0 36,558 0 48,603
Supplies 0 0 0 905 114,623 0 115,528
Assays 0 0 0 0 50,792 0 50,792
Miscellaneous 0 321 0 1,534 4,672 0 6,527
Storage 0 0 0 1,274 0 0 1,274
Equipment 0 0 0 0 113,232 0 113,232
Legal 0 0 0 0 4,355 0 4,355
Drilling 0 0 0 0 196,784 0 196,784
------------ -------------- ---------- ---------- ------------- ---------- ------------
0 12,597 0 43,586 702,956 59,285 818,424
------------ -------------- ---------- ---------- ------------- ---------- ------------
BALANCE,
AUGUST 31, 1999 $ 199,036 $ 1,905,022 $ 0 $ 490,512 $ 4,110,601 $ 59,285 $ 6,764,456
============ ============== ========== ========== ============= ========== ============

</TABLE>
END 8PT TYPE

See notes to consolidated financial statements.

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

1. NATURE OF OPERATIONS

The Company was incorporated under the laws of British Columbia and was
continued into the Yukon Territory of Canada in 1998. The principal business
activity is the exploration and development of natural resource properties.

These consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, Nevada Star Resource Corp. (U.S.), a Nevada
corporation, and Nevada Star Resource de Mexico, S.A. de C.V., a wholly-owned
subsidiary of Nevada Star Resource Corp. (U.S.). All significant intercompany
balances and transactions have been eliminated.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Investments in and expenditures on resource properties

Acquisition costs of mineral properties, rights and options together with direct
exploration and development expenditures thereon are deferred in the accounts on
a property-by-property basis. The expenditures related to a property from which
there is production, together with the costs of production equipment, will be
depleted and depreciated using the unit-of-production method based upon the
estimated proven reserves. When there is little prospect of further work on a
property being carried out by the Company or when minerals cannot be
economically removed due to the current market price of the minerals, the costs
of the property are charged to operations.

(b) Amortization

Amortization of capital assets is calculated on a declining balance basis at the
following annual rates:

Office equipment - 20%
Computer equipment - 30%

The Company's financial instruments consist of cash, accounts receivable,
accounts payable and due to shareholder. 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 value of these financial instruments
approximate their carrying value, unless otherwise noted.

(d) Loss per share

Loss per share computations are based on the weighted average number of common
shares outstanding during the year.

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(e) 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 amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

(f) Foreign Currency Translation

Amounts recorded in foreign currency are translated into Canadian dollars as
follows:

(i) Monetary assets and liabilities at the rate of exchange in effect as at
the balance sheet date;
(ii) Non-monetary assets at the exchange rates prevailing at the time of the
acquisition of the assets; and,
(iii) Revenues and expenses (excluding amortization which is translated at
the same rate as the related asset), at the average rate of exchange
for the year.

Gains and losses arising from this translation of foreign currency are included
in net loss.

3. REALIZATION OF ASSETS

The Company's investments in and expenditures on resource properties comprise
significantly all of the Company's assets. Realization of the Company's
investments in and expenditures on these properties is dependent on the
attainment of successful commercial production or from the proceeds of their
disposal.

4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES

(a) Eagle (Rio Yaqui) Claims, Sonora, Mexico

- - a cash payment of $95,500 U.S. for reimbursement of the vendor's
out-of-pocket costs (paid).
- - the issuance of 200,000 shares of the Company's capital stock as follows:
50,000 shares upon the acceptance of the Agreement by regulatory authorities
(issued in fiscal 1994) and 50,000 shares each at the time of filing of the next
three engineers reports recommending work programs of minimum $25,000 U.S. each
on the project. The first work program was completed in fiscal 1995 and 50,000
shares were issued.

Deferred exploration and development expenditures of $48,110 Cdn. have been
incurred to date by the Company on the property.

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES (Continued)

(b) Rainier (La Cienega) Property, Sonora, Mexico

By an agreement dated February 28, 1994 between the Company and Pacific Rainier
de Mexico ("PRM"), the Company can earn a 90% interest in mining claims known as
the Rainier 1 through Rainier 6 located in the Golden Triangle District, State
of Sonora, Mexico. Consideration will be repayment of substantiated costs of
$913,099 U.S. expended to date by PRM on the property, and the issuance of
1,400,000 shares of the Company when a mine is developed and commences
production provided that an independent valuation report confirms a net present
value (net of all costs and previous consideration) for the 90% interest of at
least $1,190,000 Cdn. This is a non-arm's length transaction. The out-of-pocket
costs of $913,099 U.S. were settled by the issuance of a two-year convertible
debenture bearing interest at 6% and convertible at $0.85 Cdn. per share in the
first year and at $0.98 Cdn. per share in the second year. Exchange in the
conversion is fixed at $1.40 Cdn. for $1.00 U.S. The debenture was converted
into 1,596,215 shares at $0.85 Cdn. per share in fiscal 1996.

By an amended agreement with K.L.S. Enviro Resources, Inc. ("KLS") in 1995, KLS
will earn a 50% interest in the Rainier (La Cienega) Property. To earn this
interest, KLS must pay to PRM $90,000 U.S. in holding costs, one-half in cash
and one-half in KLS stock. In addition, KLS must pay $120,000 U.S. of the total
$150,000 U.S. advance royalty owing on the Ryan Lode project should the
pre-feasibility study prove positive. The Company will be required to pay the
remaining $30,000 U.S. at this time. Upon payment of the $120,000 U.S. for the
Ryan Lode Project and payment of the $90,000 U.S. to PRM, KLS will have earned
its 50% interest in the Rainier (La Cienega) Property claims.

KLS did not complete their portion of the agreement to this point, consequently
they lost their interest in the Rainier (La Cienega) property.

Deferred exploration and development expenditures of $439,916 Cdn. have been
incurred to date by the Company on the property.

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES (Continued)

On June 12, 1996, the Company signed an option to acquire a copper oxide
property consisting of 1,500 acres of Mexican mining claims controlled by Minera
Virgo SA de C.V. under a renewable 25 year mining exploration license granted to
Minera Virgo in December, 1990.

The agreement provides for a total of $3 million U.S. to be paid to Minera Virgo
over a 3.5 year period and a 3% net smelter royalty on production of the first
50 million pounds of copper as follows:

PAYMENT (U.S.) DUE DATE
- ---------------- --------
$ 25,000 Paid
250,000 Paid
225,000 Paid
500,000 February 19, 1998
1,000,000 February 19, 1999
1,000,000 February 19, 2000
- ----------------
$ 3,000,000
================

The royalty escalates as additional copper is discovered and produced and is
capped at 7% after 300 million pounds of copper have been produced.

During 1996, the Company paid Minera Virgo $25,000 U.S. for an exclusive 75 day
option on the property, during which time the Company conducted its due
diligence review. Subsequent to the review, the Company transferred $250,000
U.S. into trust to be released as part of the $3 million U.S. payment after the
vendor fulfils its obligations. The $250,000 U.S. was paid from trust on
various dates during October 1996 with the remaining portion being paid in
January 1997. In addition, on February 19, 1997 an additional $225,000 U.S. was
paid to Minera Virgo.

The Company had expected to invest approximately $4.8 million U.S. in plant and
equipment on the property and spend $500,000 U.S. in exploration, reserve
certification and condemnation work on the property during and after the due
diligence period.

A finder's fee was payable as follows:

Common shares

(i) 50,000 common shares in the capital stock of the Company upon
acceptance by the Vancouver Stock Exchange of the acquisition of the property.
(Issued)
(ii) 50,000 common shares in the capital stock of the Company on February
19, 1997. (Issued)
(iii) 100,000 common shares in the capital stock of the Company on February
19, 1998.

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES (Continued)

Share Purchase Warrants

(iv) 50,000 non-transferable share purchase warrants, exercisable at a
price of $1 per share after VSE acceptance to June 4, 1997. (Issued)

(v) 50,000 non-transferable share purchase warrants, exercisable at a
price of $1 per share from February 19, 1997 to June 4, 1997. (Issued)

(vi) 100,000 non-transferable share purchase warrants, exercisable at $1.50
per share from February 19, 1998 to June 4, 1998.

In the event the Company arranged plant financing, estimated at $5 million U.S.
and the plant was 75% complete as confirmed by an independent engineer, all of
the unissued common shares and share purchase warrants were to be issued to the
finder.

The property acquisition payment due on February 19, 1998 was not paid, the
Company is in default and loses all rights to the claims. All expenditures on
this property have been charged to operations in the 1998 fiscal year.

(d) Gold Hill Property, Nevada

By an amended agreement dated September 26, 1997 between the Company and Everett
L. Manley (the "Vendor"), the Company has an option to purchase 53 mining claims
in the Round Mountain Mining District, Nye County, Nevada located four miles
north of Round Mountain in consideration of $1,010,000 U.S. over 102 years in
annual payments on October 1, $25,000 in each of 1997, 1998, 1999, $50,000 in
each of 2000 and 2001, $100,000 in each of 2002 and 2003, $140,000 in 2004 and
$200,000 in each of 2005 and 2006. As at August 31, 1998, the Company had paid
$155,000 U.S. to the Vendor.

By an amended agreement dated June 2, 1998 between the Company and Hagel Augen,
the latter will earn a 100% working interest in the Gold Hill Property. Hagel
Augen is committed to the following payments and investments on the property:

- - a cash payment of $53,000 U.S. (paid) upon execution of the agreement.

- - a cash investment of $147,000 U.S. in the property which includes 1998
property maintenance payments on or before December 31, 1998.

- - a cash investment of $400,000 U.S. in the property which includes 1999
property maintenance payments on or before December 31, 1999.

- - a cash investment of $500,000 U.S. in the property which includes year
2000 property maintenance payments on or before December 31, 2000.

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES (Continued)

- - a cash investment of $500,000 U.S. in the property which includes year
2001 property maintenance payments on or before December 31, 2001.

- - a cash investment of $500,000 U.S. in the property which includes year
2002 property maintenance payments on or before December 31, 2002.

- - a cash investment of $500,000 U.S. in the property which includes year
2003 property maintenance payments on or before December 31, 2003.

Deferred exploration and development expenditures of $312,026 Cdn. have been
incurred to date by the Company on the property.

(e) OK Copper Mine, Utah

By an agreement dated November 7, 1997 between the Company and Centurion Mines
Corporation (the "Vendor"), the Company purchased copper properties in four
townships in Beaver County, Utah. Consideration is the issuance of 2 million
common shares of the Company (issued). The Vendor also retains a 12% net
profits interest to apply to all copper production coming from any claims.
Deferred exploration and development expenditures of $1,917,360 have been
incurred to date by the Company on the property.

A finder's fee of 150,000 shares at a price of $0.65 Cdn. was paid in fiscal
1998.

(f) Beaver Lake, Utah

By an agreement dated November 4, 1997 between the Company and Cortex Mining &
Exploration Co. Inc. (the "Vendor"), the Company purchased mining claims in
Beaver County, Utah. Consideration is 2 million common shares of the Company
issued in two tranches: one million shares upon closing (issued) and another one
million upon the Company's successful completion of a favourable feasibility
study or upon commencement of commercial production. The Vendor also retains a
2% net smelter return royalty which will not exceed 3 million dollars (U.S.) in
aggregate. The Company also granted Cortex one million warrants for the
Company's common shares exercisable at $1.00 per share.

A finder's fee of 75,000 shares at a price of $0.65 Cdn. each was paid in fiscal
1998.

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

4. INVESTMENTS IN AND EXPENDITURES ON RESOURCE PROPERTIES (Continued)

(g) PGM Property, Alaska

The Company has acquired approximately 10,620 acres consisting of 345 mining
claims located near Braxon Gulch and Tangle Lakes, Alaska, by way of gift from a
shareholder, director and officer. On January 5, 1999 the Company entered into
an understanding with M.A.N. Resources Inc. ("MAN") whereby the claims were
leased to MAN for ten years on condition that MAN explore and develop minerals
thereon. In return, MAN will earn a net 75% working interest in the claims upon
expending U.S. $75,000 on exploration and development costs within the first
twenty four months of the lease. To maintain its working interest at 25%, the
Company is required to pay MAN 25% of all exploration and development costs in
excess of the initial U.S. $75,000 spent by MAN on the claims. Failure to
contribute its share will reduce the Company's interest but not to less than 1%
of gross proceeds of sale of minerals from the claims. Additionally, MAN may
acquire all right, title and interest of the Company in the claims in
consideration for 106,200 shares in the capital stock of MAN if tendered on or
before the second anniversary date of the lease agreements.

5. CAPITAL ASSETS

1999
ACCUMULATED
--------------------------------------------
COST AMORTIZATION NET
------------ ------------ ------------
Office Equipment $ 15,021 $ 11,565 $ 3,456
Computer equipment 6,234 5,357 877
------------ ------------ ------------
$ 21,255 $ 16,922 $ 4,333
============ ============ ============

1998
ACCUMULATED
--------------------------------------------
COST AMORTIZATION NET
------------ ------------ ------------

Office Equipment $ 15,021 $ 10,701 $ 4,320
Computer equipment 6,234 4,981 1,253
------------ ------------ ------------
$ 21,255 $ 15,682 $ 5,573
------------ ------------ ------------

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

6. CAPITAL STOCK

(a) Authorized
100,000,000 Common shares without par value
(b) Issued
<TABLE>
1999 1998
--------------------------- ---------------------------
NUMBER NUMBER
OF SHARES AMOUNT OF SHARES AMOUNT
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance, Beginning of Year 23,461,738 $ 9,704,111 17,421,685 $ 6,367,317

Issued during year
For cash on exercise of
share purchase options 1,791,649 826,144 1,293,823 509,530
For cash, private placements 0 0 1,013,418 557,380
For cash on exercise of
share purchase warrants 0 0 507,812 189,299
For settlement of debt 3,258,043 847,483 0 0
For resource property
acquisition (note 4(e)(f)) 0 0 3,000,000 1,950,000
For finder's fee 0 0 225,000 146,250
Listing costs 0 0 0 (15,665)
------------ ------------ ------------ ------------
5,049,692 1,673,627 6,040,053 3,336,794
------------ ------------ ------------ ------------
Balance, End of Year 28,511,430 $ 11,377,738 23,461,738 $ 9,704,111
============ ============ ============ ============
</TABLE>
(c) At August 31, the following share purchase options were outstanding

EXERCISE NUMBER OF SHARES
EXPIRY DATE PRICE 1999 1998
- --------------------------- ------------- ------------- ------------

December 21, 1998 $ 0.22 0 150,000
March 12, 1999 $ 0.55 0 215,040
November 20, 1999 $ 0.64 0 430,855
July 20, 2000 $ 0.49 0 1,550,279
March 2, 2001 $ 0.30 2,314,525 0

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

6. CAPITAL STOCK (Continued)

(d) At August 31, the following share purchase warrants were outstanding

EXERCISE NUMBER OF SHARES
EXPIRY DATE PRICE 1999 1998
- --------------------------- ------------- ------------- ------------

September 16, 1998 $ 0.55 0 135,417
February 19, 1999 $ 0.575 0 1,000,000
February 15, 2000 $ 0.70 1,013,418 1,013,418
June 4, 2000 $ 1.00 1,000,000 1,000,000

7. RELATED PARTY TRANSACTIONS

Related party transactions consist of the following:

(a) Management fees of $Nil (1998 - $Nil; 1997 - $12,000) paid to directors,
officers and shareholders. Directors' fees of $2,600 were paid in 1998.

(b) Office and miscellaneous expense includes $Nil (1998 - $Nil; 1997 -
$6,000) paid to a director for secretarial services.

(d) An option to acquire a 100% interest in the Eagle (Rio Yaqui) Claims
(note 4(a)) and an agreement to acquire a 90% interest in the Rainier claims in
Mexico (note 4(b)) are both from a director and officer.

(e) The PGM property claims in Alaska were acquired from a director,
shareholder and officer (note 4(g)).

(f) Investment in and expenditures on resource properties includes $121,675
(1998 - $77,735; 1997 - $30,538) paid in the year to directors (and related
persons) and/or Companies controlled by directors for geological consulting
services and labour.

(g) A shareholder and director has made advances to the Company which were
outstanding in whole or in part at the year-end in the amount of $543,960 (1998
- - $718,606, 1997 - $400,077). These advances are non-interest bearing.

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

8. COMMITMENTS

The Company is committed to minimum rental payments of U.S. $189,950 under
operating equipment leases expiring in 2005. Commitments in each of the next
five years are as follows:

2000 U.S. $49,500
2001 U.S. 49,500
2002 U.S. 49,500
2003 U.S. 31,800
2004 U.S. 9,650

9. INCOME TAX LOSSES

The Company has operating losses which may be carried forward to apply against
future years' income for Canadian income tax purposes. The tax effect has not
been recorded in the financial statements. These losses expire as follows:

AVAILABLE
TO 1999 1998
- --------- ---------- ----------
1999 $ 0 $ 245,000
2000 184,000 184,000
2001 211,000 211,000
2002 338,000 338,000
2003 321,000 321,000
2004 214,000 214,000
2005 204,000 204,000
2006 115,000 0
---------- ----------
$1,587,000 $1,717,000

10. 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 an entity's ability to conduct normal business operations.
It is not possible to be certain that all aspects of the issue affecting the
Company, including those related to the efforts of customers, suppliers, or
other third parties, will be fully resolved.

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

11. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP)

(a) Exploration expenditures

Under Canadian GAAP acquisition costs and exploration expenditures are
capitalized (note 2(a)).

Under US GAAP, exploration expenditures are expensed as incurred until
commercial feasibility thereof is established. Commercial feasibility is
established in compliance with Industry Guide 7. After an area of interest has
been assessed as commercially feasible, expenditures specific to the area of
interest for further development are capitalized. In deciding when an area of
interest is likely to be commercially feasible, management may consider, among
other factors, the results of prefeasibility studies, detailed analysis of
drilling results, the supply and cost of required labour and equipment, and
whether necessary mining and environmental permits can be obtained.

Under US GAAP, mining projects and properties are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
these assets may not be recoverable. If estimated future cash flows expected to
result from the use of the mining project or property and its eventual
disposition are less than the carrying amount of the mining project or property,
an impairment is recognized based upon the estimated fair value of the mining
project or property. Fair value generally is based on the present value of
estimated future net cash flows for each mining project or property, calculated
using estimated mineable reserves and mineral resources based on engineering
reports, projected rates of production over the estimated mine life, recovery
rates, capital requirements, remediation costs and future prices considering the
Company's hedging and marketing plans.

The effect on the statements of operations, shareholders' equity and loss per
share figures are set out below:

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)
<TABLE>
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS FOR THE
YEAR ENDED AUGUST 31

Reconciliation of net loss from
Canadian GAAP to US GAAP

Net loss per Canadian GAAP $ (117,068) $ (1,666,820) $ (650,661)
Acquisition of mineral properties (112,848) (2,182,744) (765,933)
Deferred exploration and
development costs (705,576) (1,912,068) (278,258)
-------------- -------------- --------------
Net loss per US GAAP $ (935,492) $ (5,761,632) $ (1,694,852)
-------------- -------------- --------------

BALANCE SHEET AS AT AUGUST 31

Shareholders' equity per
Canadian GAAP 6,224,310 4,667,751 2,997,777
Adjustment to US GAAP
Acquisition cost and exploration
costs on resource properties (6,764,456) (5,946,032) (3,310,715)
-------------- -------------- --------------
$ (540,146) $ (1,278,281) $ (312,938)
-------------- -------------- --------------
Loss per share in accordance
with US GAAP $ (0.04) $ (0.30) $ (0.10)
-------------- -------------- --------------
</TABLE>
(b) Statements of cash flows

The statements of cash flows have been prepared in accordance with Canadian
GAAP.

Under Canadian GAAP, cash and equivalents is defined as cash net of short-term
borrowings. Under U.S. GAAP, short-term borrowings are considered a financing
activity.

<PAGE>
NEVADA STAR RESOURCE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1999 AND 1998
(CANADIAN DOLLARS)

11. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP) (Continued)

(d) Recent accounting pronouncements

(i) Earnings per share

In February 1997, the Financial Accounting Standards Board issued SFAS 128,
"Earnings Per Share:, and SFAS 129, "Disclosure of Information about Capital
Structure". SFAS 128, which is effective for fiscal years ending after December
15, 1997, including interim periods, requires the presentation of basic and
diluted earnings per share ("EPS"). The Company's adoption of SFAS 128 for U.S.
GAAP purposes results in no difference in net loss disclosure.

(ii) Income tax

Under Canadian GAAP, the future tax benefit related to the non-capital loss
carry forwards have not been recorded in the accounts. Under U.S. GAAP,
companies must follow the requirements of Statement of Financial Accounting
Standards No. 109 (SFAS 109) which requires the use of the asset/liability
method for measurement of tax liabilities, wherein deferred tax assets are
recognized as well as deferred tax liabilities.

The Company has significant non-capital loss carryforwards (note 9). SFAS 109
would require the recognition of a long-term tax asset for the future benefit
expected from the application of these carryforwards to future profitable years.
If it is expected that the entire amount of non-capital loss carryforwards will
not be utilized, then a valuation allowance is applied to the asset to
reasonably state the asset at its expected value. Under SFAS 109, disclosure of
the amount of the valuation allowance is required. As at August 31, 1999, the
valuation allowance is equal to 100% of the deferred tax asset.

(iii) Other items

SFAS 130, "Reporting Comprehensive Income" and SFAS 131, "Disclosures About
Segments of an Enterprise and Related Information" were also issued in 1997.
These standards became effective in 1998, expand or modify disclosures and,
accordingly, have no effect on the Company's consolidated financial position,
results of operations or cash flows.

(e) Stock based compensation

From time to time the Company grants incentive stock options to officers,
directors and consultants. For Canadian accounting purposes there is no
compensation recognition when the option is granted or exercised.

For US GAAP purposes the Company applies APB Opinion No. 25 and related
interpretations in accounting for its stock option plans and, accordingly, no
compensation cost has been recognized because stock options granted under the
plans were at exercise prices which approximate market value at date of grant.
Compensation expense will be recorded when options are granted to management at
discounts to market.

(GRAPHIC OMITTED)

Smythe Ratcliffe
Chartered Accountants

CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS

Board of Directors
Nevada Star Resource Corp
16493 - 26th Avenue
Surrey, B.C. V4P2L1

We hereby consent to the use of our report dated January 6, 2000, for the
years ended August 31, 1999 and 1998 included in the form 10-KSB in
accordance with Section 12 of the Securities Exchange Act of 1934.

/s/ Smythe Ratcliffe
Chartered Accountants

Vancouver, Canada
February 17, 2000

<ARTICLE>5

This schedule contains summary financial information extracted from the
Consolidated Balance Sheets for Nevada Star Resource Corp. at August 31,

1999 and the Consolidated Statements of Operations and Deficit for the
fiscal year ended August 31, 1999 and is qualified in its entirety by
reference to such financial statements. The August 31, 1999 Financial
Statements for Nevada Star Resource Corp. are stated in Canadian Dollars.

</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-END> AUG-31-1999
<CASH> 5,006
<SECURITIES> 5,285
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,291
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,779,080
<CURRENT-LIABILITIES> 544,770
<BONDS> 0
0
0
<COMMON> 11,377,738
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,779,080
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 111,754
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (117,068)
<INCOME-TAX> 0
<INCOME-CONTINUING> (117,068)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (117,068)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)

</TABLE>