Mindex ASAAnnual Report 1998

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Table of Contents:Mindex at a Glance

Goal Statement

1998 Highlights

Report to the Shareholders

Report from the Board of Directors

Income Statement

Balance Sheets

Statements of Cash Flow

Accounting Principles

Notes to the Annual Accounts 1998

Auditor's Report

Analytical Information

Prospect Portfolio

Resource Statement

The JORC Code

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Analysis Procedures

Metals and Minerals

Shareholder Information

Activity Report

– Mine Development

– Mineral Exploration

– Grass Roots Concessions

Maps

Environmental Report

Local Assistance Work

The Board of Directors

Management

Glossary

Addresses

Project management and design: Monsen & Co as

Mindex– at a Glance

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Mindex ASA is an international exploration company, basedin Norway. The company is an emerging producer of gold inGreenland, and nickel and cobalt in the Philippines. It alsohas an attractive exploration portfolio of gold and basemetal projects in Ghana and Norway. Mindex has beenlisted on the Oslo Stock Exchange (OSE; MDX) sinceOctober 1996.

The company's first mine is on schedule to be located in southern Greenland. The Government of Greenland is anequal partner at the Nalunaq gold deposit. The mine is estimated to come into production in late 2000. In 1998,the partners conducted a successful drilling and adit exploration program. Based on results from this program,current in-house resource estimates are 200 000 ounces of indicated resources, and 225 000 ounces of inferredresources. An independent consultant, MRDI, has completeda positive pre-feasibility study. Due to the well-defined structure of the deposit's mineralized vein, Mindex believesthat the deposit could host a target resource of 1.8 millionounces of gold.

In the Philippines, Mindex has commenced feasibility workat its 100% controlled Mindoro Nickel Project. This projectwill utilize revolutionary high-pressure acid-leaching (HPAL)technology. In a positive pre-feasibility study, KvaernerMetals estimated that it could produce 40 000 tonnes ofnickel a year at an operating cost of $1.06 per pound, or$0.30 per pound after cobalt credits. The project's projected operating cost will be in the lowest quartile of the industry.Based on drilling and test-pitting in a limited area of theconcession, the company has identified 40 million tonnes of measured and indicated resources averaging 0.96%nickel and 0.07% cobalt. In total, the concession could host a total of 180 million tonnes of laterite nickel ore.

Mindex owns 51% of the Hwini-Butre gold concession inGhana where a Canadian exploration company is earninginto the concession by conducting and paying for all of the exploration through feasibility. So far the operator hasidentified four gold deposits that are all open along strikeand depth. In addition to the defined deposits, there areseveral drill targets on the concession.

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Mindex Goal StatementOur goal is to develop and operate projects with thefollowing criteria:• Low production cost.• Possibility of extending life of mine through continued

exploration.• Located in countries with medium to low political risk.

Our projects will enable us to:• Provide shareholder value through capital appreciation.• Generate earnings even in the face of low commodity

prices. • Enhance the living standard of the local populations

where we operate.• Produce in the least intrusive manner possible to

local environment.

1999 Goals• Initiate the feasibility study for the Nalunaq gold deposit,

arrange financing, start mine planning and design.• Continue the feasibility study for the Mindoro Nickel

Project.• Extend Hwini-Butre resource drilling.• Advance the Røros zinc concession in Norway.

Key Projects• 50% - Nalunaq Gold Project, Greenland• 100% - Mindoro Nickel Project, The Philippines• 51% - Hwini-Butre Gold Project, Ghana

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1998 HighlightsEncouraging results from the 50%-owned Nalunaq lode gold deposit in Greenland. The 27 hole (5 341m) core drilling program had an average grade of 31.5g Au/t over 1.0m. The 290m adit in Nalunaq had an average grade of 32g Au/t over 1.0m.

A positive pre-feasibility study by MRDI calculated a millfeed grade of 27g/t gold after mining and dilution losses.Testwork demonstrated 96% gold recovery.

A measured resource of 40 million tonnes was estimated inthe lower Kisluyan area of the Mindoro laterite nickel deposit.The average grade was 0.96% nickel and 0.07% cobalt. A global resource is estimated at 175 million tonnes (dry).

A positive pre-feasibility study by Kvaerner Metals (Davy) was completed for the 100%-controlled Mindoro Nickel Project in the Philippines. The study determined that the cash cost for the nickel-cobalt project could be in the lowestquartile of the nickel industry at $1.06 per pound of nickel,or $0.30 per pound of nickel after cobalt credits. Fertilizer(ammonium sulfate) is a valuable secondary by-product.

Mindex secured control of the Pamplona Sulfur Deposit in the Philippines. Sulfur represents a large part of theMindoro Nickel Project's cash costs, and will provide about 30% of the project’s energy requirements.

Mindex entered into a royalty agreement for the acquisitionof 100% of a small high grade nickel-cobalt laterite deposit(above 1.6% Ni). This ore will be mixed with the ore fromthe Mindoro deposit for the Mindoro Nickel Project.

Discovery of the Father Brown Zone gold deposit at the 51% Mindex-owned Hwini-Butre concession in Ghana. An average gold content of 8.23 g/t Au over 7.1m truewidth makes this an exceptional discovery.

In addition to the Father Brown Zone, the adjacentAdoikrom gold deposit was expanded to 325m of strikelength at 4.2 g/t Au over 9.9m. These deposits form part of a large mineralized system.

Mindex acquired 105 km2 of claims in central Norway, effectively controlling the Røros mining province. This massive sulfide district with stratiform copper-zinc mineralization was mined for 333 years. Historical minesexploited copper only - Mindex will evaluate the zinc potential. 23% of the 412 grab and channel samples thatMindex has processed had zinc values greater than 10%,48% of these samples were over 5% zinc.

Key Financials(NOK) 1998 1997

Cash 14 183 528 38 445 316Equity 65 466 944 48 239 000Debt 2 013 626 1 011 523Assets 67 480 569 49 250 523Net Profit (Loss) (12 248 176) (14 058 035)

1998 was a successful year for Mindex ASA. The Company managed to movetwo of its three main exploration projects into a pre-feasibility stage, while theresources increased substantially at the third project. The pre-feasibility studieson both the Nalunaq gold deposit in Greenland and the Mindoro Nickel Projectin the Philippines were positive. These two projects now represent the coreassets of Mindex ASA.

During the year Mindex has completed the third phase of the resource drilling program on Mindoro, Philippines, and an expanded drilling -and aditingprogram on Nalunaq, Greenland. The Company has been able to achieveencouraging results due to a very focused exploration -and development work.More specifically, the Company has focused on the projects where value can beoptimized.

Mindex has initiated a feasibility study for the Mindoro Nickel Project basedon the positive pre-feasibility study by Kvaerner Metals. The Company has already defined enough resources for more than 30 years of production (40 000 t/y nickel scenario). The feasibility study will include work such as more detailed drilling (less space between the drill holes), an EnvironmentalImpact Study, more metallurgical testing, as well as detailed design of the process. The feasibility study is estimated to take 12-24 months, all dependingon availability of funding.

The latest development for the new Australian laterite producers providesgood news for Mindex's shareholders. Specialists in the nickel industry withexperience from high-pressure acid-leaching (HPAL) have never been in doubtwhether the improved process (originally from the 1950's) will work or not.Centaur Mining's Cawse project has just delivered “close to LME-grade” nickelto the market and has delivered cobalt sulfide on a regular basis. PrestonResource's Bulong project has also delivered intermediate nickel products andAnaconda's Murrin Murrin is expected to deliver its first metal soon. All projectshave experienced some commissioning problems. This is however quite normalfor large metal projects that apply new or modified technology. What stillremains to be seen is exactly how cheap the producers will be. CentaurMining's estimate is $0.90-1.00 per pound of nickel in production cost for itsCawse project – almost half of the average for the nickel industry and morethan three times as high as what Kvaerner Metals has estimated for our ownMindoro Nickel Project.

In Greenland, we have received a positive pre-feasibility study from MRDICanada (H.A. Simons) on our 50%-owned Nalunaq gold project. In a 250 tonnes per day scenario, MRDI estimates a production cost of USD 190/ounceand an annual production of 74 000 ounces. Increasing the mine to 500 tonneper day, MRDI estimates that the production cost will be down to USD 160 perounce for annual production of 148 000 ounces. Based on Mindex's detailedknowledge of the deposit, we believe that the MRDI pre-feasibility study can be

Report to the Shareholders

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Annual

Report

1998

improved on substantially, both in terms of production cost and size of theresource. A bankable feasibility study is planned to be concluded by the beginning of next year, which means that the mine could commence operationby the end of next year. From year 2001, the Nalunaq mine will become asound income generator for Mindex.

Also pleasing is the fact that the mine will provide employment for the local population in Greenland as well as an income source for the Government. This fits in well with the Government's mandate to diversify and grow their economy through resource development and tourism.

Last year I wrote that Norway has been severely under-explored for severaldecades and that the country offers great opportunities within mineral exploration. As a consequence, Mindex initiated a regional exploration program in the old Røros-Meråker copper district. Initial results from field workand compilation of production data strongly indicate that the region is in fact a zinc district even more than a copper district. Copper was the exploited metalfor 333 years of mining history in the region, but the interesting fact is that zinccould not be exploited at the time due to lack of suitable technology. Mindexwill therefore focus on the zinc potential in the region and plans to conduct aregional airborne magnetic survey with the target of identifying a large zincdeposit.

Due to strategic decisions, some of our grass root projects did not receivemuch attention during 1998. However, the activity level on some of these prospects may pick up in the future. In addition, Mindex decided to drop all of the exploration targets in Vietnam, the Hovde and Kleivåsen concessions inNorway, the Lubang polymetallic concession, as well as two marginal gold properties in the Philippines (Abra and Roxas).

Anders HvideManaging DirectorOslo, Norway, April 9, 1999

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Reportfrom the Board

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FinancialStatements

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Report from the Board of DirectorsMindex ASA has during 1998 become an "emerging producer". Successful exploration work has advanced twoprojects into the development stage where independent consultants have provided positive pre-feasibility studies.The Mindoro Nickel Project is the result of Mindex's early involvement and systematic exploration work in thePhilippines. The Nalunaq Gold Project is the result of the successful merger in 1997 with Nordic Minerals AS.These two projects represent examples of how Mindex can either develop a prospect from an early stage oracquire a prospect with the potential of reaching production in the near future.

According to the pre-feasibility study by MRDI Canada, the Nalunaq gold mine is likely to commence operationby the end of next year. MRDI has estimated that the mine can produce 75-145 000 ounces of gold per year ata production cost of USD 160-190 per ounce. The mine may have an annual gross revenue of NOK 170-335million (USD 22-44 million). At a gold price of USD 280-300 per ounce, the Nalunaq mine should produce ahealthy profit to Mindex ASA. Mindex and its partner NunaMinerals AS have already entered into a dialoguewith international lending institutions with regard to the financing of a mine in Nalunaq. The Board is of the opinion that competitive financing of this project is available due to its sound economics.

A positive pre-feasibility study was received on the Mindoro Nickel Project from Kvaerner Metals in August.According to Kvaerner Metals, the Mindoro Nickel Project has the potential to become one of the industry'slowest-cost nickel producers. During the latter part of 1998, continued drilling and sampling activities have proven that the nickel deposit on Mindoro is continuous and very homogenous. Since Kvaerner Metals' pre-feasibility study, Mindex has improved on the project economics by acquiring the rights to a large sulfur depositon an island nearby the Mindoro nickel deposit. The local sulfur could lower the production cost substantiallycompared to imported sulfur. In addition, a contracted gas pipeline will pass within four kilometers of the locationof Mindex's proposed nickel process plant, and reduce the estimated production cost of the project.

Mindex is considering several alternative ways of financing the feasibility phase of the project, including entering into a partnership with an industrial or financial company, or financing the feasibility phase throughequity. Considering what is the best alternative for Mindex and its shareholders, three main points should beevaluated: Positive results from three similar HPAL nickel projects in Australia are likely to increase the value ofMindex's own nickel project; An increase of drill holes on the concession will reduce the geological risk; A substantially reduced feasibility study cost estimate from Kvaerner Metals means that Mindex has the optionto finance the work through equity. Based on the above-mentioned points, the Board believes that financing thecontinued development of the Mindoro Nickel Project through equity is the most attractive alternative. A similarstrategy has been taken by other emerging nickel producers in Australia.

The gold exploration on the Hwini-Butre concession has developed favorably during 1998. The drilling program has during the year increased the size of the deposits substantially. The future drilling program will aim at increasing the size of the deposits.

Mindex ASA presently has 5 employees, 2 full-time consultants, and 14 employees in the Philippines. During 1998 Mindex ASA has continued to build the Company's professional expertise. In connection with the increased maturity of the Company's main projects, experienced and knowledgeable personnel have beenhired for key positions.

The holding company Mindex ASA incurred a net loss of NOK 8 575 917 for 1998. The loss is proposed covered by the legal reserve fund. On a consolidated basis the net loss is NOK 12 248 176. The Board is planning to increase the equity of the company through equity placements in order to cover for estimated operating losses until the Company realizes a positive cash flow from operations. The Board may also considerborrowing money based on the Company's mineral assets. The Company does not harm the environment more than what is normal for advanced exploration. As of March 1998, the Company had more than 3 000 shareholders. Information on the shares owned by the members of the Board, salary paid to the ManagingDirector, and fees paid to the auditor Deloitte & Touche are included in Note 9 to the annual accounts.

Oslo, April 9. 1999

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Anders UlsethBrian Jepsen,Chairman

Wollert Hvide jr.

Annual

Report

1998

Income Statement

Group Group Mindex ASA Mindex ASA1998 1997 Notes All amounts in NOK 1998 1997

OPERATING REVENUE371 312 O Consultant fee 371 312 O

OPERATING EXPENSES2 455 925 5 23O O56 7 Exploration expenses 1 819 O76 1 781 3833 869 763 3 456 358 9 Personnel expenses 3 O81 813 2 5O3 O697 73O 388 6 11O OO3 1O Other administrative & general expenses 5 931 496 5 O84 742

61O 67O 1 588 3O3 5 Depreciation 148 133 88 28414 666 745 16 384 72O TOTAL OPERATING EXPENSES 1O 98O 519 9 457 478

(14 295 433) (16 384 72O) OPERATING LOSS (EBIT) (1O 6O9 2O7) (9 457 478)

FINANCIAL INCOME & FINANCIAL EXPENSES743 754 1 955 O27 Interest income 729 787 1 941 O89

1 472 O16 391 864 Other financial income 1 472 O16 3O8 82O(1 O47) (2 872) Interest expenses (1 O47) (2 872)

(167 466) (17 334) Other financial expenses (167 466) (17 334)2 O47 257 2 326 685 NET FINANCIAL ACCOUNTS 2 O33 29O 2 229 7O3

(12 248 176) (14 O58 O35) LOSS BEFORE TAXES (EBT) (8 575 917) (7 227 775)O O 11 Taxes O O

(12 248 176) (14 O58 O35) NET LOSS FOR THE YEAR (8 575 917) (7 227 775)

Appropriation of net loss for the yearTransferred from legal reserve fund 8 575 917 7 227 775TOTAL 8 575 917 7 227 775

(O.3O) (O.42) 12 Earnings per share (O.21) (O.21)(O.3O) (O.42) 12 Earnings per share, fully diluted (O.21) (O.21)

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Balance Sheets December 31

Group Group Mindex ASA Mindex ASA1998 1997 Notes All amounts in NOK 1998 1997

ASSETSCURRENT ASSETS

14 183 528 38 445 316 1 Cash and cash equivalents 13 591 396 38 174 9741 162 713 533 OO8 2 Accounts receivable 5O5 1O8 273 53715 346 241 38 978 324 TOTAL CURRENT ASSETS 14 O96 5O3 38 448 511

LONG TERM ASSETSO O 3 Shares in subsidiaries 16 517 2O7 1 586 793O O 4 Loans to subsidiaries 36 638 348 23 344 O18

113 863 1 471 OO2 Long term receivables O 1 445 4454 897 882 4 4O3 175 5 Machinery, Vehicles & Equipment 569 563 423 89O2O 1OO 417 3 282 974 6 Exploration concessions 4 512 651 2 933 O2O27 O22 166 1 115 O48 7 Capitalized exploration costs 16 776 13O O52 134 328 1O 272 199 TOTAL LONG-TERM ASSETS 75 O13 899 29 733 16667 48O 569 49 25O 523 TOTAL ASSETS 89 11O 4O2 68 181 677

LIABILITIES AND SHAREHOLDERS’ EQUITYCURRENT LIABILITIES

51O 9O5 327 922 Accounts payable 5O1 161 327 922768 562 371 882 Payroll tax and social security 754 2O3 371 882734 158 311 719 Other short term debt 229 864 147 32O

2 O13 626 1 O11 523 TOTAL CURRENT LIABILITIES 1 485 228 847 124

SHAREHOLDERS’ EQUITY21 741 985 19 431 O64 Share capital 21 741 985 19 431 O64

(43 483 969 shares, each NOK O.5O)Legal reserve fund 65 883 189 47 9O3 489Total restricted equity 87 625 174 67 334 553

43 724 959 28 8O7 936 Other equity O O65 466 944 48 239 OOO 8 Total shareholders’ equity 87 625 174 67 334 55367 48O 569 49 25O 523 Total liabilities & equity 89 11O 4O2 68 181 677

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Statements of Cash Flow

Group Group Mindex ASA Mindex ASA1998 1997 All amounts in NOK 1998 1997

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

(12 248 176) (14 O58 O35) Net loss for the year (8 575 917) (7 227 775)61O 67O 1 588 3O3 + Depreciation 148 133 88 284

(629 7O5) (192 497) +/- Changes in receivables (231 571) (273 537)182 983 (4 37O 883) +/- Changes in accounts payable 173 239 (4 346 183)819 119 527 6O2 +/- Changes in accruals 464 865 363 2O5

(11 265 1O8) (16 5O5 51O) = Net cash provided by (used in) (8 O21 25O) (11 396 OO6)operating activities

CASH USED IN INVESTING ACTIVITIES(1 1O5 377) (2 689 826) Investment in Machines, Vehicles and Equipment (293 8O6) (436 94O)1 357 139 (1 471 OO2) Investment in long term receivables 1 445 445 (1 445 445)

(16 817 443) (2 942 898) Investment in exploration concessions (1 579 631) (2 933 O2O)(25 9O7 118) (863 953) Capitalized exploration costs (16 776 13O) O

O O Loans to subsidiaries (13 294 33O) (1O 782 258)O O Shares in subsidiaries (14 93O 414) (142 OOO)

(42 472 799) (7 967 679) Net cash used in Investing activities (45 428 866) (15 739 663)

CASH FLOW FROM FINANCING ACTIVITIESNet proceeds from increase

29 O93 7O3 2 O24 OOO in share capital and other activities 29 O93 7O3 2 O24 OOOO 823 599 Contribution by merger O 823 599

382 418 (3 316 761) Translation adjustment (227 165) O29 476 121 (469 162) Net cash provided by financing activities 28 866 538 2 847 599

(24 261 786) (24 942 351) Net increase/(decrease) in cash (24 583 578) (24 288 O7O)38 445 316 63 387 667 + Cash of January 1. 38 174 974 62 463 O4414 183 528 38 445 316 = Cash and cash equivalents as of December 31. 13 591 396 38 174 974

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Accounting Principles

The consolidated financial statements of Mindex ASA are prepared in accordance with Norwegian laws and generally accepted accounting

principles in Norway (Norwegian GAAP).

ConsolidationThe consolidated accounts consist of the holding company Mindex ASA and the subsidiaries affiliated companies Mindex Resources

Development Inc. (MRDI), Pili Point Processing, Inc. (PPPI), Wise-Tech Services Inc.(WTSI), Alagag Mining, Inc. (ALMI), Aglubang Mining, Inc.

(AGMI), Geber Holding Corporation (GEC), Shapa Holding Corporation (SHC) and Hwini-Butre Minerals Ltd. (HBML).

Ownership in the jointly controlled entity Nalunaq IS is accounted for by proportionate consolidation. The share of the income, assets and

liabilities has been consolidated line by line in the accounts for Mindex ASA and the Group.

All material inter-company transactions and balances have been eliminated.

In the consolidated accounts, the income statements of foreign subsidiaries are translated into NOK at the average exchange rate

during the year. The balance sheet is translated into NOK at the year end rates of exchange. Translation gains/losses are included under

shareholders’ equity.

Exploration and Development CostsMindex capitalizes project expenses in accordance with the recommended guidelines for mining companies by the Oslo Stock Exchange.

These guidelines are based on the Australian Accounting Standard Review Board's (ASRB) ASRB 1022 "Accounting for the extractive

industries". The principle is assumed to be in line with Norwegian accounting standards.

Costs arising from exploration and development related to an area of interest shall be written off as incurred, except that they may be

carried forward provided that rights to tenure of the area of interest are current and provided further that at least one of the following

conditions is met:

a) such costs are expected to be recouped through successful development and exploitation of the area of interest,

or alternatively, by its sale; and

b) exploration and development activities in the area of interest have not at balance date reached a stage which permits

a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant

operations in, or in relation to, the area are continuing.

According to this principle, both direct and indirect expenses arising from exploration and development activities are to be capitalized.

Administration expenses are only capitalized in the cases where the expenses are directly related to the operation in the specific area.

Beyond directly related costs, the administration costs are to be expensed as they incur.

Capitalized expenses will be expensed over a period of time according to the productive output method.

When materials, which constitutes, or by further processing is expected to constitute saleable products, which can be measured accurately

with respect to existence and mass, these will then be accounted for as inventory.

Income will be accounted for once sales have incurred (transfer of risk and control) in accordance with the transaction principle.

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Accounting Principles

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Fixed AssetsFixed assets are depreciated linearly over the expected economic lifetime. Depreciation of assets used directly or indirectly in capitalizable

projects is treated as an exploration cost and capitalized accordingly.

Foreign ExchangeCurrent assets and short-term debt in foreign currencies are translated using the exchange rate as of December 31.

Long-term account receivables in foreign currencies are included in the accounts at the lowest of the exchange rate at December 31 and

the exchange rate at the transaction date.

SharesShares in subsidiaries are valued in accordance with the cost method. If the actual value of the shares is materially lower than the book

value, and this is not due to temporary reasons, the shares will then be included in the accounts with the lower value. Shares in subsidiaries

are classified as long term assets.

Related PartiesThe Company does not have any other related parties than the included and mentioned companies in the Mindex Group. There has not

been any additional substantial transaction between the Group companies than financial transactions.

Notes to the Annual Accounts 1998

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Note 1 CASH AND CASH EQUIVALENTS

Cash and cash equivalents in the Holding Company include: 1998 1997

Cash in hand and bank deposits 13 591 396 8 438 578

Money Market Funds 0 29 736 396

Total 13 591 396 38 174 974

Bank deposits include NOK 138 690 of restricted funds, which are related to withheld employee tax.

Note 2 ACCOUNTS RECEIVABLE

Receivables are accounted for at the nominal value of the receivables. Losses on receivables are not expected.

Note 3 SHARES IN SUBSIDIARIES AND OTHER COMPANIES

Currency Company Mindex Nominal value Book value

Company Share capital ownership per share (NOK)

Mindex Resources Dev. Inc. Peso 8 811 440 100% 1 0

Pili Point Processing Inc. *) Peso 5 895 339 100% 1 1 444 793

Wise-Tech Services Inc. Peso 141 250 100% 1 142 000

Hwini-Butre Minerals Ltd. Cedi 1 000 000 100% 1 14 723 238

Geber Holding Corp. **) Peso 250 000 40% 1 19 545

Shapa Holding Corp. **) Peso 250 000 40% 1 19 270

Alagag Mining, Inc. **) Peso 250 000 40% 1

Aglubang Mining Corp. **) Peso 250 000 40% 1 168 361

Total shares in subsidiaries and other companies 16,517,207

*) The company Pili Point Processing Inc. was previously Scandinavian Exploration Inc.

**) Remaining 60% owned by Mindex ASA’s subsidiaries.

Note 4 LOANS TO SUBSIDIARIES

Mindex ASA finances the operation in the subsidiaries with loans. These loans are classified as long term loans.

}

Notes to the Annual Accounts

Note 5 MACHINERY, VEHICLES & EQUIPMENT

Mindex ASA Group

Buildings, Buildings, Vehicles Exploration TOTAL

Machinery Machinery and drilling

Inventory Inventory equipment

512 174 Cost January 1. 2 523 085 1 400 906 3 598 954 7 522 945

293 811 Additions 599 725 0 1 382 932 1 982 657

Disposals (1 240 124) (145 389) 0 (1 385 513)

Translation adjustment 72 265 53 903 150 848 277 011

805 985 Balance as of December 31. 1 954 951 1 309 421 5 132 734 8 397 100

(88 284) Acc. Depreciation January 1. (1 572 600) (800 508) (743 548) (3 116 655)

(148 133) Depreciation (505 069) (283 490) (859 971) (1 648 530)

Disposals 1 240 124 145 389 0 1 385 513

Translation adjustment 51 978 32 359 35 209 119 546

(236 417) Balance as of December 31. (889 523) (970 968) (1 638 728) (3 499 218)

569 563 Book value as of December 31. 1 634 996 338 453 3 494 006 4 897 882

10-33% Rates of depreciation (%) 10-33% 20% 20-25%

Total depreciation of the year (1 648 530)

Hereof capitalized exploration costs 1 037 860

Depreciation expenses (610 670)

Investments in/sale (sales price) of fixed assets last 3 years.

Mindex ASA Group

Buildings, Machinery Buildings, Machinery Vehicles Exploration and drilling TOTAL

Inventory Inventory equipment

Investments Sale Investments Sale Investments Sale Investments Sale Investments Sale

75 234 0 318 189 0 217 558 0 3 675 511 0 4 211 258 0

436 940 0 1 029 452 0 597 197 0 1 690 314 0 3 316 963 0

293 811 0 599 725 0 0 0 1 382 932 0 1 982 657 0

805 985 0 1 947 366 0 814 755 0 6 748 757 0 9 510 878 0

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96

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Notes to the Annual Accounts

Note 6 EXPLORATION CONCESSIONS

Nordic Minerals AS (now merged with Mindex ASA) signed in May 1997 an option agreement with the owners of Hwini-Butre Minerals

Ltd., which owns 51% of the Hwini-Butre concession in Ghana, for the purchase of 100% of the shares in the company. Nordic Minerals

AS paid the owners of Hwini-Butre Minerals Ltd. an option price of USD 400 000 upon signing of the option agreement.

The merged company, Mindex ASA, declared its option to acquire Hwini-Butre Minerals Ltd. November 24, 1997. Mindex ASA concluded

the acquisition in January 1998 when 1 318 841 shares were issued and USD 400 000 paid to the owners of Hwini-Butre Minerals Ltd.

Starting as of 1st quarter of 1998, Hwini-Butre Minerals Ltd. has been consolidated into Mindex ASA’s balance sheet.

Exploration concessions

Mindoro Hwini Butre Nalunaq Bleka Total

Capitalized exploration rights January 1. 0 3 282 974 0 0 3 282 974

Acquired during the year 864 527 11 440 265 4 705 618 109 785 17 120 195

Transfered to capitalized exploration costs (302 752) (302 752)

Capitalized exploration concessions December 31. 864 527 14 723 239 4 402 866 109 785 20 100 417

Note 7 CAPITALIZED EXPLORATION COSTS

The Mindoro nickel-cobalt concession, which is a part of the Mindoro Nickel Project in the Philippines, and its direct and indirect

exploration expenses has been capitalized since late 1997. This is also the case for other elements of the Mindoro Nickel Project such

as the Pamplona sulfur deposit and one small high-grade nickel deposit on the island of Palawan.

All exploration work incurred at the Bleka gold property during 1998 has been capitalized.

All exploration work incurred at the Nalunaq gold project during 1998 has been capitalized.

Exploration costs

Mindoro Hwini Butre Nalunaq Bleka Total

Capitalized exploration costs January 1. 1 115 048 0 0 0 1 115 048

1997 Adjustment 462 000 462 000

Capitalized during the year 11 416 689 0 13 477 147 551 282 25 445 118

Capitalized exploration costs December 31. 12 993 737 0 13 477 147 551 282 27 022 166

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Notes to the Annual Accounts

Note 8 SHAREHOLDERS’ EQUITY

Mindex ASA Group

Equity January 1. 67 334 553 48 239 000

Share issues 29 093 703 29 093 703

Net loss (8 575 917) (12 248 177)

Translation adjustments (227 165) 382 418

Equity December 31. 87 625 174 65 466 944

Note 9 PERSONNEL EXPENSES, OPTION PROGRAMS AND AUDITOR’S FEES

Salaries and personnel expenses in the Group includes:

Group 1998 Group 1997

Salaries Philippines 787 950 953 289

Salaries administration and geological staff Norway 3 081 813 2 503 069

3 869 763 3 456 358

The Managing Director received a total compensation of NOK 601 170 in 1998. As per February 28, 1998, Sargasso Invest, a 100%

owned company by the Managing Director owned 628 600 shares in Mindex ASA.

Options:

Authority to issue new shares:

The Board of Directors was in an extraordinary shareholders’ meeting December 12, 1996 given the power to increase the share capital by

a maximum of NOK 350 000 (700 000 shares with a nominal value of NOK 0.50 per. share). The power was given in order to establish an

incentive program for key employees.

By December 31, 1998 the following options were outstanding:

Anders Hvide 150 000

Brian Ballou 200 000

Arne Isberg 100 000

Ellen Opsal 50 000

Total 500 000

The Board received NOK 280 000 in compensation in 1998. The board owned the following number of shares in Mindex ASA

as of March 3, 1999:

Name No. of Shares

Brian Jepsen, Chairman 0 (2 140 915 as a 42.5 % owner of Topas AS)

Wollert Hvide jr. 59 625

Anders Ulseth 20 000

19

Notes to the Annual Accounts

2O

Option programs to employees, members of the board and other persons associated with the company.

The February 26, 1996 shareholders meeting approved an option program in favor of the Board members. The Board was given options to

buy up to 1 020 000 shares with a strike price of NOK 4.60. The options could be declared at any time within January 2, 1999.

440 000 options were declared during 1997 and the remaining was declared during 1998. There are no more options outstanding under

this options program.

The auditor, Deloitte & Touche, received NOK 90 000 in auditing fee for 1998. The auditor further received NOK 216 000 in other fees

during 1998.

In the ordinary shareholders meeting May 13th 1998, the Board was given the authority to issue a total of 10 000 000 shares in

conjunction with one or more equity issues.

Shareholders’ authority of 13.05.98 10 000 000 Until ordinary SM 2001

Granted:

Board Meeting decision October 19. 1 460 000

Board Meeting decision November 23. 1 013 000

Authorization per December 31. 7 527 000

Note 1O OTHER ADMINISTRATIVE & GENERAL EXPENSES

Group Group Mindex ASA Mindex ASA

1998 1997 1998 1997

1 275 087 1 340 103 Travel and transport expenses 796 820 1 126 041

943 439 886 689 Marketing 778 493 755 855

566 006 360 983 Office rental 335 011 246 006

2 403 214 940 814 Fees etc. 2 118 240 893 541

2 542 642 1 511 630 Other administration 1 902 932 993 516

0 1 069 784 Merger costs 0 1 069 784

7 730 388 6 110 003 5 931 496 5 084 743

Notes to the Annual Accounts

21

Note 11 TAX

Mindex ASA Mindex ASA

1998 1997

Loss before taxes (8 575 917) (7 227 826)

Other permanent differences 177 663 13 245

Changes in temporary differences (25 340) (23 452)

Taxloss carry forward (8 423 594) (7 238 033)

Temporary differences December 31.

Tax loss carry forward (25 997 356) (17 566 338)

Other temporary differences 56 316 0

(25 941 040) (17 566 338)

Deferred tax asset 7 263 491 4 918 575

Norwegian statutory regulations do not allow capitalization of a net deferred tax asset.

Tax loss expiration dates:

2006 10 338 286

2007 7 235 476

2008 8 423 594

Total 25 997 356

Note 12 EARNINGS PER SHARE AND DILUTED EARNINGS PER SHARE

The earnings per share has been calculated by dividing the net result by the time weighted average number of ordinary shares outstanding

during the period of reporting.

The Group reported a net loss for the year. Issue of shares will have a dilutive effect. Consistent with the principle of maximum

dilution we have disregarded the effect of potential shares, such that the calculation of the fully diluted result per share is the same as

primary earnings per share.

Notes to the Annual Accounts

22

Note 13 OPTION AGREEMENTS

Pamplona

Mindex Resources Development, Inc. (MRDI) entered into a six-month Option Agreement with Altai Philippines Mining Corp., (APMC)

to acquire 100% of the Pamplona Sulfur concession. The option agreement can be summarized as follows:

• MRDI paid an up-front fee of USD 20 000 upon signing of the agreement.

• MRDI is to pay an additional USD 80 000 upon exercising the option, APMC will then transfer 100% of the concession to MRDI

in exchange for 25% Net Profit Royalty on future production

• MRDI will pay APMC USD 50 000 on the first, second and third anniversary of the calling of the option and USD 125 000 on

every anniversary thereafter as advance royalty, until a production of 50 000 tons of ore per month is reached.

• MRDI has the exclusive option to, at any time to purchase the right to royalty from APMC for USD 4 000 000. However if the

right is exercised within the first four years from the exercise of the option, the price is USD 2 500 000

Alpha

Mindex Resources Development, Inc. (MRDI) entered into a royalty agreement with Alpha Resources Development Corp. (ARDI) acquiring

100% of the Alpha Nickel concession in Palawan. The royalty agreement can be summarized as follows:

• MRDI is to pay ARDI a royalty in the amount of USD 0.50/tonne shipped

• MRDI is to pay ARDI USD 5 000 as advance royalty upon the 1st, 2nd and 3rd anniversary of the agreement

• MRDI is to pay USD 7 500 as advance royalty of the fourth anniversary and every anniversary thereafter until commercial

production is started.

• MRDI has the exclusive option to purchase the right to royalty from ARDI for USD 1 000 000. However if the right is exercised

within the first four years from the exercise of the option, the price is USD 500 000.

Note 14 NANORTALIK GOLD CONCESSION, GREENLAND

Mindex ASA and Nunaoil AS entered into a Mining Venture Agreement November 21, 1997. According to the agreement, Mindex ASA

was to pay during the period June 16, 1997 to December 31, 1998 a total of DKK 11 million of the first expenditures and liabilities

accrued in connection with the operations on the Nanortalik concession. This is in order to earn a 50% participating interest in the

Venture. Expenditures over and above DKK 11 million are to be paid by the participants according to their participating interest.

Per December 31, 1997, Mindex ASA had paid NOK 1 445 445 which was presented as long-term receivable in the balance sheet.

As per third quarter of 1998, Mindex had reached the agreed invested amount of DKK 11 million. The Nanortalik concession was as of

early January 1999 transferred from Nunaoil AS to Nalunaq I/S, a company jointly owned by NunaMinerals AS (Greenlandic state-owned

company) and Mindex ASA. Nalunaq I/S is the operator of the Nanortalik concession.

Notes to the Annual Accounts

23

Mindex ASA’s 50 % ownership in the joint venture has been proportionally consolidated in the Mindex ASA accounts and the Group

accounts as specified:

ASSETS

Current assets

Cash and cash equivalents 482 816

Accounts receivable 53 246

Total current assets 536 062

Long term assets

Exploration concessions 4 402 866

Capitalized exploration costs 12 617 912

Total long-term assets 17 020 778

Total assets 17 556 840

LIABILITIES

Accounts payable (314 315)

Payroll tax and social security

Other short term debt

Total liabilities (314 315)

Translation adjustment 227 165

Net investment 17 469 690

The project’s operating expenses have been capitalized in accordance with Mindex ASA’s accounting principles.

Note 15 CONTINGENT LIABILITIES

The Sellers of the Hwini-Butre concession claim that the date applied in the calculation of number of shares was not correct such that the

share value was too high and consequently the number of shares received was too low. The claimant has, however, not stated exactly the

reasons for the claim and has not quantified the amount. Based on preliminary evaluation of the case by the Company’s legal advisors,

it is of the Company’s opinion that Mindex ASA has a very strong case, and the Company will take all action necessary in defending its

position. During the last 8 months of 1998, Mindex has not heard anything about this dispute from the Seller or Seller’s legal council.

24

To the Annual Shareholders' Meeting of Mindex ASA

AUDITOR'S REPORT FOR 1998

We have audited the financial statements of Mindex ASA for 1998 which show a net loss for the year of NOK 8 575 917 for the Parent Company and aconsolidated net loss for the year of NOK 12 248 176. Our audit also includedthe Board of Directors' report for 1998. The financial statements are comprisedof income statements, balance sheets, cash flow statements, notes to the financial statements and consolidated financial statements. All of the above elements are the responsibility of the Company's Board of Directors and itsPresident.

Our responsibility is to express an opinion on the financial statements andBoard of Directors' report based on our audits.

We have conducted our audits in accordance with relevant laws, regulationsand Norwegian generally accepted auditing standards. We have performedthose audit procedures which we have considered necessary to confirm that the financial statements and Board of Directors' report are free of material misstatements. We have examined, on a test basis, the evidence supporting the accounts and assessed the accounting principles applied and the estimatesmade by management, and evaluated the content and presentation of thefinancial statements and the Board of Directors' report. To the extent requiredby Norwegian generally accepted auditing standards we have reviewed theCompany's internal control and the management of its financial affairs.

The Board of Directors' proposal for the appropriation of the Parent Companyloss for the year is in accordance with the requirements of the Norwegian PublicCompanies Act.

In our opinion, the financial statements and Board of Directors' report on pages 10-23 have been prepared in accordance with the requirements of theNorwegian Companies Act and present fairly the financial position of MindexASA, and the group as of 31 December 1998 and the results of their operationsfor the financial year, in accordance with Norwegian generally accepted accounting principles.

Oslo, 9 April 1999DELOITTE & TOUCHE

Jacob BergerState Authorized Public Accountant (Norway)

Auditor’s Report

25

Analytical Information

26

Annual

Report

1998

Prospect PortfolioAsiaProspect Country %Mindex Size (km2) Metal/MineralMindoro Philippines 100 97.0 Ni/CoPamplona Philippines 100 39.0 SPalawan Philippines 100 10.0 Ni/CoMindoro Gold Fields Philippines 100 65.6 AuTOTAL: 211.6

EuropeProspect Country %Mindex Size (km2) Metal/MineralNanortalik* Greenland 50 365 AuRøros Norway 100 105 Zn/CuBleka Norway 100 10 AuTOTAL: 480

AfricaProspect Country %Mindex Size (km2) Metal/MineralHwini-Butre** Ghana 51 40 AuTOTAL: 40

*Nalunaq I/S is operator**St. Jude Resources Ltd. is operator

Mindoro Nickel-Cobalt Deposit,Philippines The following resources are based on in-house calculations:

Area Resource Tonnes (dry) Ni% Co%width(m)L. Kisluyan "measured" 40 032 983 0.96 0.072 6.1*U. Kisluyan "indicated" 22 663 832 0.93 0.082 3.8*Mindoro remaining "inferred" 112 250 000 0.90 0.085 3.8**depths from soil-auger drilling which cannot penetrate the full profile.

Nanortalik Gold Deposit,GreenlandThe following resources are based on in-house calculations:

Area Resource Tonnes gAu/t OuncesNalunaq level "400" "indicated" 194 000 32 200 000Nalunaq Rest "inferred" 220 000 32 225 000

Resource Statement

27

The Joint Ore Reserves Committee (JORC) was formed by the Australasian Institute of Mining and Metallurgy and theAustralian Mining Industry Council in 1971. The JORC code is an internationallyrecognised classification system designed to standardize mineral reporting.Mindex uses the JORC Code to report its exploration and development results.Listed below are the definitions for resources and reserves.

A "Mineral Resource" is defined as an identified in situ mineral occurrencefrom which valuable or useful minerals may be recovered. Mineral Resourcesare subdivided into:

• Inferred Mineral Resources• Indicated Mineral Resources• Measured Mineral Resources

The term "Inferred Mineral Resource" means a Mineral Resource inferredfrom geoscientific evidence, drill holes, underground openings or other sampling procedures where the lack of data is such that continuity cannot be predicted with confidence and where geoscientific data may not be knownwith a reasonable level of reliability.

The term "Indicated Mineral Resource" means a Mineral Resource sampled by drill holes, underground openings or other sampling procedures at locations too widely spaced to ensure continuity but close enough to give a reasonable indication of continuity and where geoscientific data are known with a reasonable level of reliability. An Indicated Mineral Resource estimate will be based on more data, and therefore will be more reliable, than an InferredMineral Resource estimate.

The term "Measured Mineral Resource" means a Mineral Resource intersectedand tested by drill holes, underground openings or other sampling proceduresat locations which are spaced closely enough to confirm continuity and wheregeoscientific data are reliably known. A Measured Mineral Resource estimatewill be based on a substantial amount of reliable data, interpretation and evaluation of which allows a clear determination to be made of shapes, sizes,densities and grades.

The JORC Code

28

Annual

Report

1998

An "Ore Reserve" is defined as that part of a Measured or Indicated MineralResource which could be mined, inclusive of dilution, and from which valuableor useful minerals could be recovered economically under conditions realisticallyassumed at the time of reporting. Ore Reserves are subdivided into:

• Probable Ore Reserves and• Proved Ore Reserves

The term "Probable Ore Reserve" means an Ore Reserve stated in terms of mineable tonnes/volume and grades where the corresponding IdentifiedMineral Resource has been defined by drilling, sampling or excavation (including extensions beyond actual openings and drill holes), and where the geological factors that control the ore body are known with sufficient confidence that the Mineral Resource is categorised as "Indicated".

The term "Proved Ore Reserve" means an Ore Reserve stated in terms ofmineable tonnes/volume and grade in which the corresponding IdentifiedMineral Resource has been defined in three dimensions by excavation or drilling (including minor extensions beyond actual openings and drill holes), and where the geological factors that limit the ore body are known with sufficient confidence that the Mineral Resource is categorised as "Measured".

Nickel-Cobalt analysis, PhilippinesLaterite and saprolite samples are collected from drilling, test-pitting (channel sampling) and manual soil-auger sampling. The sampling is carried out quantitatively at one meter intervals and the samples are sealed with sample numbers enclosed at the sampling site, and thereafter brought to the laboratory for analysis. Intertek Testing Services – ITS (Bondar Clegg),Philippines, has adopted the following preparation procedures; samples up to 1.5kg are dried and pulverized in a ring mill less than 200# in one step.Samples greater than 1.5kg are pulverized in multiple steps and thoroughlyhomogenized before being split for analysis. Nickel and cobalt analysis is carriedout by atomic absorption from 500-mg sample fraction following a total digestion (4 acids) procedure. Wet chemical analysis methods are being used for other elements and routinely checked against XRF analysis elsewhere. Splits of every tenth sample are run routinely at an independent laboratory for quality control. Every batch of samples (50) contains 2 standard samples, 2 analytical blanks, 4 sample pulp repeats, and 4 prepared sample repeats. All pulps are retained in the laboratory for reference and possible re-analysis.

Analysis Procedures

29

Gold analysis, GreenlandDrill core samples of at least 2kg are taken at 1.5 to 3.5 meter intervals according to geological boundaries. Core samples are split by a core splitter intotwo parts; one is sent to the Nanortalik sample preparation lab and one half ofthe core remains as reference in the core box and can be used for re-check analysis. Adit and surface samples of at least two-kg are chip- or channel-sampled.Core- and rock-samples from the adit are crushed in Nanortalik with a jaw crusher and the coarse pulp (90%<1mm) is then split to a sub-sample of 200to 400g that is sent to a commercial lab for analysis. Gold analysis is performedby XRAL Canada, using screened metallics assay where:– the 200 to 400g coarse pulp is milled using chromium steel (and milling

facilities are cleaned with quartz sand between each sample)– the fine pulp is then screened using a 150 mesh sieve – the entire portion of the oversize is analyzed by fire assay and two 50g

splits of the undersize are analyzed by fire assay.After calculation gold total in g/t is reported. 10% of the sample volume isreanalyzed by the same lab, and 5% of the sample volume is sent to anotherlab (CHEMEX) for cross-checks.All samples are also analyzed for pathfinder elements by geochemical analysis.Silver is analyzed by AA73 (Atomic absorption spectrometry) and As, Mo, Sb, Biand W by XRF7 (X-ray fluorescence on a pressed pellet).

Gold analysis, Ghana All core samples from diamond drilling are split, and one half is retained forfuture reference. The cores are logged and visible gold is marked on the core.One half of the core is dispatched to SGS Laboratories in Tarkwa (Ghana) forfire assay of 50g samples with AA-instrumental finish. Samples with more than10 g/t Au are duplicated by fire assay with gravimetric finish. Metallics screenassay has been used for some high-grade samples. High grade samples arereassayed at a different laboratory for control. Pulps are retained for reference.

3O

Annual

Report

1998

Nickel (Ni)Nickel (Ni) is a nearly silver-white hard metal that always occurs as a chemicalcompound in nature. It is mainly used as an alloy, for example in coins, and as a vital alloy to stainless steel. It also plays key role in the chemical, medical, andaerospace industries.

Gold (Au)Gold (Au) is a soft, heavy, yellow metal that occurs in native state in nature. It is commonly alloyed with silver or copper, and is widely found in alluvialdeposits (as nuggets or grains) or in veins associated with quartz and varioussulfides. Gold is very malleable and ductile, and is used chiefly for jewelry, and as a store of value. It is also used in dentistry and medicine; in the arts; in medallions and coins; for scientific and electronic instruments; as an electolyte in the electroplating industry.

Zinc (Zn)Zinc (Zn) is a bluish-white metal. It never occurs in native state in nature, butmainly occurs as the sulfide mineral Sphalerite (ZnS). It has many diverse uses:as protective coating on steel, as die casting, as an alloying metal with copperto make brass, and as chemical compounds in rubber and paints; used as sheetzinc and for galvanizing iron; electroplating; metal spraying; automotive parts;electrical fuses; anodes; dry cell batteries; nutrition; chemicals; roof gutters;engravers' plates; cable wrappings; organ pipes and pennies. Zinc oxide is used in medicine, paints, in vulcanizing rubber and sun block. Zinc dust is used for primers and paints.

Cobalt (Co)Cobalt (Co) is a metal. It is used in superalloys for jet engines, cell phone batteries, chemicals (paint dryers, catalysts, magnetic coatings), permanentmagnets and cemented carbides for cutting tools.

Sulfur (S)Sulfur (S) is a nonmetallic element which occurs in its native state as an orthorhombic mineral in nature. It occurs in yellow crystals or in masses or layers often associated with limestone, gypsum, and other minerals in volcanicregions. It is used in the manufacture of sulfuric acid, fertilizers, chemicals,explosives, dyestuff, petroleum refining; vulcanization of rubber; fungicides.

012345678

USD/pound

70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 9192 93 94 95 96 97 98

0100200300400500600700800

USD/ounce

70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 9192 93 94 95 96 97 98

01020304050607080

USc/pound

70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 9192 93 94 95 96 97 98

Metals andMinerals

31

ShareholderInformation

31.12.96 31.12.97 30.12.98

Top 2O Shareholders(as at March 3, 1999)Rank Name/Company Country No. of Shares %1 Topas AS NOR 5 037 448 11.582 Aksjefondet Gambak NOR 1 500 000 3.443 Rosshavet AS NOR 1 100 000 2.524 Wollert Hvide AS NOR 973 993 2.235 First Anchor AS NOR 707 000 1.626 Smith James NOR 670 690 1.547 Sargasso Invest AS NOR 628 600 1.448 Tine Pensjonskasse NOR 525 000 1.209 Riis-Johannessen Eva T. NOR 515 000 1.1810 Prominent Investment GIB 500 841 1.1511 Karl Johan Fonds NOR 495 960 1.1412 Verdipapirfondet SKA NOR 450 500 1.0313 Den Københavnske Bank NOM DNK 393 000 0.9014 Landkreditt NOR 362 000 0.8315 Nordås Invest AS NOR 335 351 0.7716 Høibye Jan Børre NOR 325 000 0.7417 RSBI Custody Bank NOM GBJ 325 000 0.7418 Verdipapirfondet GAM NOR 300 000 0.6819 Skansen Invest AS NOR 300 000 0.6820 Tunhold Invest AS NOR 285 000 0.65

Total 15 730 383 36.06%

The Mindex stock(as at December 31, 1998)

1998 1997Share transactions 8 860 5 335 No. of shares traded 88 361 247 86 611 414Domestic owners 2 869 1 792Foreign owners 88 79No. of shares domestic owners 39.7 mill (91.24%)No. of shares foreign owners 3.8 mill (8.76%)Share turnover rate 2.5 times

Mindex TOTX/OSE SMB/OSE

Activity

32

33

34

34

37

42

43

44

44

46

46

47

47

48

Page Table of Contents:Activity Report:

Mine Development

Nalunaq Gold Project

Mindoro Nickel Project

HPAL (High Pressure Acid Leaching)

Pamplona Sulfur Deposit

Mineral Exploration

Hwini-Butre Gold Project

Grass Roots Concessions

Røros Zinc Concession

Bleka Gold Concession

Mindoro Gold Fields

Maps

Report

33

34

Mine Development

During 1998, the company advanced two of its exploration projects to thedevelopment stage. In March 1999, MRDI completed a positive pre-feasibilitystudy at the Nalunaq Gold Project in Greenland. In August 1998, KvaernerMetals completed a positive pre-feasibility study at the Mindoro Nickel Project in the Philippines.

While differing in their location and metals sought, the two projects actuallyhave much in common. Independent consultants have declared that both projects will have operating costs well below their respective industry averages,and both have the potential to increase their resources through continued exploration. In addition, they will both significantly enhance the living standardof nearby residents. Mindex has started the feasibility work at Mindoro, and will do so at Nalunaq in 1999.

The Nalunaq Gold Project Greenland

1998 was an exciting year for the 50% owned Nalunaq gold deposit in southGreenland. Positive results from the summer drilling and adit programs enabledthe project to proceed to a pre-feasibility study. This study was completed byMRDI in March 1999 with a positive result, indicating that Nalunaq could become the first gold mine in Greenland.

Mindex and its partner, the Greenland Government, have claimed all of theknown areas with gold potential, totaling 365 km2 of land in the vincinity ofNalunaq. Early stage work has begun at some sites, with encouraging results,suggesting that southern Greenland is a new gold district.

ResourcesIndicated resources are 200 000 ounces of gold, with a further 225 000 ounces of gold in the inferred resources category. Altogether, based on the well defined structure of the mineralization, the target resources for the depositare 1.8 million ounces of gold. The average gold content of the indicatedresources is 32 g/t, with all high content samples cut to 300 g/t. The pre-feasibility study shows a mill feed grade of 27 g/t after dilution and losses.

Annual

Report

1998

Nalunaq Gold Project Facts:• 50% owned by Mindex.• Positive pre-feasibility study.• Indicated Resources 200 000 oz Au.• Inferred Resources 225 000 oz Au.• Target Resources 1.8 million oz Au.

NQ 27-28Elev: 483m

NQ 28NQ 27

1020.0ppm/0.3m (VG)

0.7ppm/2.09m

NQ 17-19 Elev: 443m

NQ 17

NQ 18

NQ 19

18.44ppm/0.3m

3.88ppm/1.25m

113.0ppm/1.12m

1.31ppm/1.9m

MV

HWV

MV

5240.0ppm/0.8mElev: 406.1m

NQ 2-3

NQ 2NQ 3

39.96ppm/0.3m (VG)6.89ppm/0.2m (VG)

2.36ppm/0.1m (VG)

MV

Elev: 411m

0.25ppm/4.10mHWV

218.0ppm/0.2mElev: 467.80m

35

Description of DepositThe Nalunaq deposit is an altered shear zone with sheeted veins of high gradegold mineralization. The occurrence has an outcropping gold-bearing structuredocumented for a length of over 2 000 m with relatively continuous exposure.This outcropping starts on the east face of the mountain where it is exposedalong 470 m of vertical height, corresponding to an outcrop length of 819 m.About 60% of this length is exposed and has been sampled at 20 m intervals,the rest is covered by relatively thin scree fans. On the north face of the mountain the vein is also continuously exposed and visible for about 1 200 m.This section has also been channel-sampled at approximately 50-80 m intervals.This unique feature gives support to the presence of a large system flushedwith gold-bearing solutions.

The sampling of the outcropping system suggests the presence of high-gradezones and allows the recognition of at least 6 high-grade sectors along thelength of the exposed structure.

Systematic drilling in the lowermost of these exposed high-grade sectors has verified the presence of the gold bearing structure between an elevation of 275 m and 550 m, to a depth of about 400 m along strike. Furthermore, the orientation of this plane corresponds closely to the overall orientation obtained from the outcrop data.

To date 58 diamond core holes totaling 8 930 m in length have been drilled at Nalunaq. These holes have been drilled at 25 to 50 m intervals along the strike of the deposit. The gold is very irregularly distributed, but easy to recognise when occurring. 40% of the intersections from 1998's drilling contained visible gold. Individual samples can be spectacular. For example, a 30 cm long drill intersection contained 1060 g/t of gold, and 38% of the aditsamples were greater than 20 g/t with values up to 5240 g/t.

Strategic Advantages:• Greenland is a low political risk country.• The Government of Greenland is our partner

through NunaMinerals. • Early entry into a new gold district. All known gold

signatures in the area are claimed by Mindex and NunaMinerals.

• High Grade gold deposit - average grade is 32 g/t. • Good potential to increase resources.• Mill Feed 27 g/t after mining dilution and losses.• Gold recovery of 96%.

36

The 1998 summer program drove an adit 290 m along the quartz vein at alevel of 400 m above sea level. The adit and two raises were sampled in onemeter intervals. The average grade of the adit was 32 g/t over a thickness ofone meter, including all of the data, with high values cut to 300 g/t. Two continuous higher-grade zones were encountered in the adit: 75 m grading77.3 g/t/m, and 102 m grading 35 g/t/m. 50% of the adit samples were over10 g/t gold.

MetallurgyBench scale testwork was conducted on a 400 kg sample from an outcropabove the adit by Lakefield Laboratories, Canada. Results were very encouraging. The maximum recovery of up to 98% is possible by a combination of gravity and cyanidation. Pure gravimetric processing recovers more than 80%. A 127 tonne bulk sample has been collected and will be utilized for the next stage of testwork in conjunction with the feasibility study.

Annual

Report

1998

Pre-feasibility Study:

400m strike/250 tpd ScenarioNPV (10%) 12.1%DCFROR 18.4%Capital Cost 19.2 MUSDPayback 4.9 yearsLife of Mine 14.5 yearsCash Cost 190 USD/ozProduction 74 000 oz/yearGold Price 300 USD/oz

400m strike/500 tpd ScenarioNPV (10%) 39.8%DCFROR 51.0%Capital Cost 19.8 MUSDPayback 1.8 yearsLife of Mine 7.2 yearsCash Cost 160 USD/ozProduction 148 000 oz/yearGold Price 300 USD/oz

Nanortalik License:50% Mindex / 50% NunaMinerals.365 km2 license with 4 concessions:• Nalunaq 125 km2

• Nanisiaq 93 km2

• Lake 410 93 km2

• Ippatit 54 km2

Granite early

Rapakivi granite

Granite late Gneisses

Cover / Ice

Basic metavulcanic ro

Meta-arcose

Basic intrusions

Lake-410 Licence

Nanisiaq Licence

Nalunaq Licence

Ippatit Licence

Nanortalik

Słndre Sermilik

Tasermiut

NANORTALIK CONCESSIONS, SOUTH GREENLANDSUBLICENCE AREAS

Quartz monzonite

10 km

37

The Mindoro Nickel ProjectThe Philippines

The Mindoro Nickel Project is 100% controlled by Mindex. In the past threeyears, Mindex's management team has advanced this project from grass roots exploration to an advanced development operation. The company has commenced a feasibility study. Management's goal is to complete the study within the next 24 months.

In a pre-feasibility report of August 1998, Kvaerner Metals estimated that the Mindoro Nickel Project will have a cash cost of $1.06 per pound of nickeland $0.30 per pound after cobalt credits. The estimated cash cost positions theMindoro Nickel Project as one of the lowest cost producers in the world. Since the time of the pre-feasibility study several elements of the project haveimproved: Mindex has secured a local sulfur deposit; Shell and PhilippineNational Oil Company are presently developing a gas deposit outside PalawanIsland, and the main trunk line will pass within 4 km of Mindex's proposed process site. The pipeline is scheduled to be ready by 2001; higher nickel andcobalt recovery rates have been achieved in leaching studies conducted in theUS; Kvaerner Metals, the industry leader in design and construction of HPALplants, now gives guarantees for the process. These guarantees are behind thelatest HPAL project to be financed in Australia.

Mindex’s drilling and test pitting program on the Mindoro Concession hasrevealed that the area hosts a very large nickel laterite deposit with attractiveeconomic potential. The results from a relatively small part of the area, whereMindex has carried out detailed work, suggest that the concession may have acapacity of supplying a 40 000 mt per year nickel plant for more than 30 years.

Mindoro Nickel Project Facts: • 100% controlled by Mindex.• Positive pre-feasibility study.• Products – nickel and cobalt.• By-product – ammonium sulfate,

a fertilizer for rice and sugar cane production.• Cash cost of $1.06/lb Ni, or $0.30/lb Ni – net

cobalt credits.• Measured Resources – 40 million dry tonnes

of laterite ore, with a grade of 0.96% Ni, and 0.072% Co.

• Indicated Resources – 23 million dry tonnes of laterite ore.

• Inferred Resources – 112 million dry tonnes of laterite ore.

38

Annual

Report

1998

Mindex ended its third drilling phase in December 1998, by completing center points in the initial 200 m sampling grid in the Lower Kisluyan andPagong areas, which constitute about 14 km2 out of the total 97 km2

Mindoro Concession. Around 700 drill holes and test-pits have now been completed and assayed. The results show that mineralized limonite ore with an average thickness of six to seven meters overlies two to six meters of mineralized saprolite. The average content of nickel and cobalt is 0.96% and 0.07% respectively in limonite ore, with 7.7% MgO and more than 50%Fe2O3. These results are as good as similar nickel mines currently under commissioning in Australia. High consistency of the drill hole data allows calculation of a measured resource for the Lower Kisluyan-Pagong area ofabout 40 Mt (dry). No attempt has yet been made break out a tonnage of hig-her grade areas to enhance initial project economics.

The remaining portion of the concession contains significant additional tonnage of potentially mineable ore. Mindex has carried out a comprehensivehand-auger-drilling program in this area, and by the end of 1998 more than1,500 soil analyses from 350 randomly located auger sample sites had been completed. The hand-auger method cannot penetrate the full soil profile andaccordingly measured widths for these samples will yield a minimum thickness.The soil-auger samples have revealed potentially viable nickel laterite ore inabout 70% of the remaining 75 km2 of the concession area. The average metalcontent of the qualifying holes gives 0.96% Ni and 0.091% Co for a thicknessof 3.5 meters. Accordingly, the results of the soil-sampling program show thatan additional area about 50 km2 is underlain by mineralized laterite with gradescomparable to those of the Lower Kisluyan area. It is possible, therefore, that the remaining portion of the Mindoro concession may host an additional laterite mineralization of about 135 Mt (dry).

Combining the sampled areas of mineralization, the Mindoro concessionaccordingly has the potential to host a major Ni laterite deposit with about 180 million (dry) tonnes nickel-cobalt ore.

Strategic Advantages:• Control of a giant sulfur deposit in the

Philippines. Sulfur accounts for a large part of the production cost, and will provide up to 30% of the project’s energy needs.

• Gas pipeline will pass within 4 km of proposed processing plant, gas is scheduled for delivery by 2001.

• Plant to be located at the coast with deep water access.

• Located in the largest import market for ammonium sulfate.

• Tropical (wet) laterite is amenable to leaching.• Well educated local workforce.• Second generation of laterite HPAL projects.• Potential to increase resources.• 100% controlled by Mindex.

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Metallurgical Test WorkA large sample from the Mindoro concession has been processed at the Centerfor Advanced Metallurgical and Mineral Processing (CAMP) laboratory in theU.S. for preliminary metallurgical testing. The results show that the ore exhibitsattractive leaching properties with reported recoveries of 96% for Ni, and 93%for Co, with an acid consumption of less than 350 kg acid/tonne of ore.

Mindex has hired the CAMP for the metallurgical test work because personnelnow working at the CAMP were involved in the design of a major first generation nickel-cobalt HPAL project in Australia.

Pamplona Sulfur DepositThe acquisition of the Pamplona Sulfur Deposit in the Philippines will enhancethe robust economics of the Mindoro Nickel Project. In the project's positivepre-feasibility study, Kvaerner Metals assumed that Mindex would import sulfurfrom Canada. This exclusive local source of sulfur allows the company to source the maininput to the HPAL process at a reduced cost. Due to reduced transport and purchase costs, Pamplona sulfur is estimated to cost Mindex between $20-30per tonne, while some of the new Australian nickel producers are paying $85per tonne. At an annual consumption of 400-500 000 tonnes, the Pamplonasulfur deposit will represent a savings of about 30-40 US cents per pound of nickel produced, compared to the Australian laterite projects.

MiningThe mining of laterite ores is straightforward. In fact, the mining does not requireany drilling or blasting and, consequently, the mining cost is relatively low compared to most surface mines. The mining method involves stripping andstockpiling the topsoil (average 1m thick), excavation, crushing and slurrying ofthe laterite ore (4-15m thick), return of stockpiled topsoil and rehabilitation/replanting of the mined area. All four activities will be ongoing simultaneously to limit the environmental impact to a minimum.

The excavated material will be mixed with water to provide a slurry. The slurrywill be transported 45 km by pipeline to the processing plant located on the eastcoast of Mindoro.

Pre Feasibility Study:NPV(10%) 467 MUSDIRR 39%Capital Cost 665 MUSDLife of Mine 20 yearsProduction Start 2002/2003Nickel 40 000 tpyCobalt 3 050 tpyCash Cost 1.06 USD/lb(before credits)Cash Cost 0.30 USD/lb (after cobalt credit)

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Processing of Mindoro OreThe process to be utilized is the High Pressure Acid Leach (HPAL). Unlike mostexisting nickel plants, the HPAL requires no smelter. This difference makes theprocessing less energy intensive and more environmentally friendly. Simplified,the process involves mixing the laterite slurry with sulfuric acid to dissolve thenickel and cobalt chemically. Later in the process the metals are precipitated.Limestone is added for full neutralization of the acid.

A general process flow for HPAL processing is: mining, ore preparation, acidleaching, washing, reduction, neutralization, precipitation and final product.The suggested feasible process flow for the Mindoro ore is as follows:

The process of nickel-cobalt recovery begins with ore directly from the mine,which is then screened (upgraded), crushed, ground and put into a slurry withsulfuric acid. This slurry is then put into an autoclave, a device that puts theslurry under very high temperature and pressure. This autoclaving process dissolves the nickel and cobalt contents of the laterites along with a portion of other metals.

The solution of nickel-cobalt is passed through various stages where the twometals are precipitated into a sulfide form. This intermediate product is readilysold on the international market to existing nickel refiners. However, the production of London Metal Exchange (LME) grade nickel (and high puritycobalt) is accomplished by pressure leaching the sulfides into sulfates and precipitating out metal powders which have higher value than the mixed sulfides. The other advantage of producing the final metal powders is that the process of hydrogen reduction uses ammonia with the added benefit thatammonium sulfate is produced as well.

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Tailings DisposalOffshore Deep Sea Tailings Placement (DSTP) has been proposed at the MindoroNickel Project. DSTP has been used successfully in several countries such asCanada, Turkey, Chile and PNG. In DSTP the tailings are transported through a pipeline into deep ocean waters. Research both in laboratories and on DSTPin operation has proven that no serious effect, long-term or short-term can befound on the marine environment. The reason is that the sensitive marine eco-system only exists in the top 50-100 m of the ocean which can be pene-trated by sunlight needed for photosynthesis. With DSTP, the tailings are trans-ported far below this level before release. After release from the pipe at a depth of 200 m (approximately 4 km away from the Mindoro coast), the tai-lings will continue to move by gravity, and finally settle at the deepest portions of the Tablas Strait. It should also be noted that treated tailings fromthe HPAL-process comply with accepted international standards for disposal.Deep sea deposition is the natural process for geological materials.

HPAL By-Product: Ammonium Sulfate:• Ammonium sulfate is the preferred fertilizer

in rice and sugar cane production. • Base case annual production of 40 000 tonnes

of nickel will produce 126 000 metric tonnes of ammonium sulfate.

• The Philippines is the world's largest importer of ammonium sulfate (estimated in 1997 to be about 400 000 mt).

• Additional revenue valued at US$14 million per year, or about US13 cents/pound of nickel.

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High Pressure Acid Leaching (HPAL)

High pressure acid leach processing (HPAL) is currently becoming the leadingtechnology for low-cost nickel production from laterite ore. It is believed that the HPAL technology will revolutionize the industry in the coming years in much the same way as the leaching of gold and copper did two decadesago.

The HPAL process is an established method of producing nickel, first introduced in the late 1950´s. Recent improvements in steel alloys have allowed this same leaching technology to advance. The improved alloys used in equipment are capable of withstanding much higher pressure and temperatures than they were earlier able to do. Higher pressure and temperatures allow the leaching process to dissolve the nickel and cobalt into solution much faster, allowing more throughput for the same size plant,and thus reducing the costs. The HPAL has much higher metal recovery thanammonia leaching, and it also gives excellent by-product recoveries that can be applied against cash operating costs. For example, the use of sulfur adds a valuable by-product called ammonium sulfate, a fertilizer.

Energy costs per pound of nickel produced by HPAL are significantly less than other processes, such as smelting. For example, one nickel smelter has a110 mw power plant to produce about 18 000 tonnes of nickel. The MindoroNickel Project is forecast to have a 35 mw power plant to produce 40 000 tonnes of nickel.

The HPAL technology can be economically applied to nickel deposits that arecomposed of laterite ore, and parts of the transitional zone between limoniteand saprolite, where the magnesium content is low and the iron content high.Laterite material is the largest known source of nickel in the world. Recentadvancements should move the new HPAL laterite projects into the lower quartile of the cost curve for future nickel producers.

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Pamplona Sulfur Deposit The Philippines

In September 1998 Mindex secured an option to acquire 100% of thePamplona Sulfur Deposit, located on the island of Negros, the Philippines. This major deposit is located less than 5 km from a deep-sea port, and it has 60 million tonnes of open pittable measured resources within a total resource of 84 million tonnes.

In 1971, Benguet Consolidated calculated proven and probable reserves usingstandard mining engineering norms. These calculations were carried out on thebasis of 98 diamond-core drill holes selected from a total of 178 holes drilled ina 60 m grid pattern. The deposit was then advanced by Freeport McMoran.Due to falling sulfur prices, the project was discontinued, and it has been dormant ever since.

Mindex has initiated a re-evaluation of the deposit, with the objective to mine the sulfur. The deposit consists of mixed sulfur-sulfide ore with both native sulfur and pyrite/marcasite. The weighted average composition of the ore is 13.8% elemental sulfur, and 17.0% sulfide, for a total sulfur content of30.8%. Elemental sulfur predominates in some areas whereas sulfide is predominant in others.

The deposit more than meets Mindex's long term requirements for sulfur, and the company is currently determining its total potential.

Strategic Advantages:• Inexpensive local source of sulfur for the Mindoro

Nickel Project.• Potential for Mindex to market additional sulfur

independent of its nickel project.

Pamplona Sulfur Deposit Facts:• Mindex has an option to acquire 100%.• Concession: 39 km2.

• 60 million tonnes of measured resources.• Sulfur content: 30.8%.

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Hwini-Butre Gold ProjectGhana

1998 was a year of continued exploration success at the 51% Mindex-ownedHwini-Butre concession. The property, which straddles 20 km of strike lengthalong the eastern contact of the prolific Ashanti Goldbelt, is located less than30 km from Takoradi, a major port in Ghana. The results from 1998's programwere so successful, that the company is encouraged to commence developmentstudies on this project.

In 1998, an exciting new discovery, the Father Brown zone, was delineated,and the Adoikrom zone was extended to more than 300 m of strike length.These two zones are both hosted within the Mpohor Intrusive Complex, theyare parallel and less than 300 m apart. In addition, they are both hosted in mafic diorite, exhibit similar sericite alteration, and dip 35-60 degrees west.The Dabokrom zone was also extended by new drilling, and economic mineralization was confirmed on the new Seikrom target.

Mineral Exploration

Hwini-Butre Gold Project Facts:• 51% Mindex.• Concession: 45.4 km2 .• 4 gold deposits drill indicated- all targets open

along strike and depth.• 4 promising targets trenched

(Apantunso, Guadiam, Abada, Breminsu).• 154 holes (14 430m) drilled to date. • Several km of trenching.

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AdoikromThe Adoikrom target is the most developed on the concession. It is a highlyaltered and silicified shear zone with ore grade mineralization. 41 holes (4 469m) have been drilled in this target. Results have a weighted average of4.2 g/t Au over 9.9 m true width. Drill intersections at 25-50 m intervals showconsistent thick mineralization in all holes. So far, a 325 m long and 165 mdeep gold vein has been confirmed. The deposit is open towards the north,south, and at depth.

Father BrownIn total the operator has drilled 41 holes (2 668m) in the Father Brown Zone,and all intercepts contain economic mineralization. The spacing between theintercepts varies between 10 and 25 m. The weighted average gold content for all intercepts is 8.23 g/t over 7.1 m true width. The drilling willcontinue towards the north in the Father Brown Zone in order to increase thestrike length of the deposit. So far a 200 m long and 150 m deep gold vein hasbeen confirmed. The deposit is open in both ends and towards depth. Drillingsuggests that the Father Brown Zone is a highly silicified shear zone displayingintense alteration with abundant pyrite and often visible gold.

DabokromDabokrom constitutes a very large strong geochemical surface anomaly thatmeasures 800 m by 1 200 m at +0.5 g/t Au. The operator has now completed48 drill holes (5 760.5m) in this anomoly. This confirms the presence of severalgently dipping mineralized zones extending from the surface. Extensive trenching and pitting have been carried out on the Dabokrom prospect. For example, Trench DT-23, located almost 1 km NW of the area being drilled, contains one section averaging 2.09 g/t Au over 18 m.

Strategic Advantages:• Ghana is a well established gold mining country

in West Africa, 15 gold mines have opened or reopened in the 1990's.

• The concession straddles 20 km of strike length along the eastern contact of the Ashanti Goldbelt, the main gold-bearing reef in the country.

• High Grade Gold eg: Father Brown Zone; 8.23 g/t Au over 7.1m true width.

• Partner is conducting and paying for all exploration costs through feasibility.

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As projects advance from the exploration stage to the development stageMindex will find new areas to explore. In regions where the company seespotential, grass roots exploration allows us to secure 100% of large tracts of land relatively inexpensively. The economic potential of this early stage of exploration is speculative, yet is is a good complement to an advanced portfolio.

Mindex's Norwegian projects, the Røros zinc concession and the Bleka goldconcession, are classified as grass roots projects, yet they have a surprisingamount of data available on them. Both areas have hosted historical miningoperations, and data from these periods allow our geologists to enhance theirearly field interpretations.

Røros Zinc ConcessionNorway

In 1998, Mindex staked 417 claims in central south Norway. This highly prospective area includes 24 former producing copper mines and 60 prospectswith stratiform zinc-copper mineralization, located in an area of more than 3 000 km2 with good access. The district is located from Røros in the south to Meråker in the north, 400 - 600 km north of Oslo.

The well known "Røros Kobberverk" exploited copper ore in the district for333 years until 1977 when it ceased production. Throughout its lifetime,mining focused on copper production even though the zinc potential in theRøros area was equal or better than that of copper. Zinc rich portions of theformer mines and prospects were avoided due to lack of modern flotation technology.

The current grass roots exploration targets massive zinc-copper sulfide occurences and deposits. Mindex has sampled areas with zinc grades of up to 35%. Ore consists of massive, banded pyrite-sphalerite-chalcopyrite hostedin low-grade, metamorphic sedimentary rocks.

During the 1998 field season, all accessible claims and old mines were visited,sampled and studied. This was in order to understand metal distribution and to determine the areas which would be the most promising to follow up. A detailed geophysical ground survey over a selected number of targets wasalso conducted. A structural and geochemical compilation is currently beingcompleted.

Most of the target area is heavily covered by a thick overburden of glacial till. The old mines known in the area are mostly found in the elevated areas where outcropping rocks are frequent. 37 500 m of historic drill cores are available at the Geological Survey of Norway, and geophysical ground surveysare available for certain areas.

Grass Roots Concessions

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Mindex believes that the Røros area has excellent potential for zinc, and thatthis was overlooked in previous mining. In 1999, Mindex is planning to coverthe whole area with an advanced helicopter geophysical survey.

Bleka Gold ConcessionNorway

The Bleka concession is located in Telemark, south Norway. It is a historicalgold mine site with high grade lode gold mineralization. Previous productiondata from two stopes documents average grades of 30-40 g Au/t. The Blekamain vein is exposed for more than 1 000 m, but less than 200 m have beenexploited through historical mining. The deposit has never been drilled.

Previously, Mindex conducted a systematic ground magnetic survey along 100 m lines, which expanded the main vein to about 3 000 m in length.Detailed mapping and follow up has revealed that more than 20 additionalquartz veins in the district have similar compositional signatures.

In 1998, the company followed up the Bleka concession with detailed surfacesampling of soil and hard rock. Some additional sampling work will be doneprior to a drilling program.

Mindoro Gold FieldsThe Philippines

Previous exploration has demonstrated more than 10 outcroppings of primarygold mineralization. No work was conducted in 1998, yet future systematicexploration of the area is planned.

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Annual

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1998

Maps

GreenlandNalunaq Gold Project

GhanaHwini-Butre Gold Project

NorwayRøros Zinc ConcessionBleka Gold Concession

The PhilippinesMindoro Nickel ProjectPamplona Sulfur Deposit

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Mindex has always taken care to protect and reclaim areas disturbed by itsexploration. Now that the company has moved into the development phasewith two of its projects, environmental planning has become more active.

In the Philippines, Mindex has established a nursery that has been successfullyreplanting disturbed areas on its Mindoro concession. Dames & Moore has been hired to carry out the first phase of the environmental permitting process.Following the environmental scoping study, an Environmental ImpactAssessment (EIA) and Environmental Impact Statement (EIS) will be completedin conjunction with the feasibility study.

In Greenland, through its 50% share of Nalunaq I/S, Mindex has initiated an Environmental Baseline study. The Canadian firm, Lakefield Research, has been contracted since the program began in 1997. Mindex is working closely with the Greenland Government to adopt mining regulations whichmeet international standards.

Where Mindex is the operator of a project, the company will strive to improvethe standard of living of local residents. At the Mindoro Nickel Project, on theisland of Mindoro in the Philippines, Mindex is involved in numerous initiatives to benefit the community. The company has improved local roads,built schools, drilled water wells, provided scholarships, assisted with the repairand improvement of local churches and convents, and started a free medical clinic.

Special attention has been given to the Mindoro Manyan tribes residing withinthe exploration areas. The Manyans have been given priority with employmentand direct assistance. Medical missions have also been arranged by Mindex incooperation with Manila based organizations.

Local Assistance Work

EnvironmentalReport

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The Board of DirectorsBrian Jepsen, ChairmanAppointed 1997 (2 140 915 as a 42.5% owner of Topas AS)Mr. Jepsen is the Executive Vice President of Aker Geo ASA, the President ofAker Geo Seismic AS, and the co-founder and Chairman of JSI AS, a geologicalconsultancy. In addition, he has worked at Saga Petroleum and the NorwegianSchool of Management. Mr. Jepsen has an M.Sc. in Geophysics. He has alsoearned an MBA, and a DBA (associate) from Henley Management College inLondon, England. He is a Danish citizen, and lives in Bærum, Norway.

Wollert Hvide Jr.,Appointed 1996 (59 625)Mr. Hvide is the Senior Vice President of R.S. Platou Shipbroker A/S. He has alsoworked as a consultant for McKinsey and Co. Mr. Hvide holds an M.Sc. fromNorges Tekniske Høyskole (1984), and an MBA from INSEAD in France (1988).He is a Norwegian citizen, and lives in Oslo, Norway.

Anders Ulseth,Appointed 1996 (20 000) Mr. Ulseth is the Project Manager, Minerals, in the Silicon division of ElkemASA. He has also worked for Norwegian Talc A/S, Killingdal Grubeselskap A/S,Norsk Jernverk A/S, and Boliden AB in Sweden. Mr. Ulseth holds an M.Sc. inMining Engineering from Norges Tekniske Høyskole (1962). He is a Norwegiancitizen, and lives in Oslo, Norway.

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ManagementAnders Hvide, Managing Director (628 600 as the 100% owner of Sargasso Invest AS)Mr. Hvide has been the Managing Director of Mindex since he co-founded thecompany in 1996. Prior experience includes positions at The Boston ConsultingGroup in Stockholm, Den norske Bank in New York, and Hvide Marine Inc. inFort Lauderdale. Mr. Hvide earned an MBA at Harvard Business School in 1993,and a B.Sc. in Business Administration at the University of Southern Californiain 1986. He is a Norwegian citizen, and lives in Oslo, Norway.

Jon Steen Petersen, Exploration Manager (2 140 915 as a 42.5% owner of Topas AS)Mr. Petersen joined Mindex as Exploration Manager in July 1997, after its merger with Nordic Minerals. He has an M.Sc. in Geology from the University ofAarhus, Denmark (1973), and over 25 years experience with mineral resources.Prior to joining Mindex, Mr. Petersen was an Associate Professor of Geology atthe University of Aarhus. During this period he was an active consultant to themining industry for companies such as Falconbridge, Norsk Hydro and Nunaoil.Mr. Petersen is a fellow of the Society of Economic Geologists and the Societyof Exploration Geochemists. He is a Danish citizen, and lives in Oslo, Norway.

Brian J. Ballou, Manager of Mine Development (7 500)Mr. Ballou has been the Manager of Mine Development at Mindex since March1997. He is a Registered Professional Mining Engineer with 15 years of industryexperience. Prior to joining Mindex, Mr. Ballou worked for Cominco and USGold in Guatamala, New Caledonia, and various locations in the USA. He hasalso been actively involved in the start up of one nickel, and two gold mines.Mr. Ballou has a B.Sc. in Mining Engineering from the University of Idaho(1986). He is an American citizen, and lives in Bærum, Norway.

Arne Isberg, Country Manager, Philippines (210 000) Mr. Isberg has managed projects in the Philippines for Mindex since 1996. He founded Mindex Resources Development Inc. in 1989, and remains itsPresident. He has over ten years tenure in the Philippine mining industry, and has worked with QA/QC at major industrial projects in Vietnam andScandinavia. Mr. Isberg graduated as a mechanical engineer from PolhemUniversity, Sweden in 1974. He is a Swedish citizen, and he lives in thePhilippines.

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Annual

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1998

GlossaryAdit – a horizontal passage driven from the surface toprovide access to a mineral deposit.

Aeromagnetic survey – a magnetic survey made with an airborne magnetometer. Some metal deposits can bedetected this way.

Alteration – any mineralogical and chemical changes in the wall rocks of a mineralization. Wall rock alteration often develops during the formation of mineral deposits and is an indicator of prevailing physical conditions.

Assay – a chemical test performed on a sample of ores or minerals to determine the amount of valuable metalscontained.

Auger – a screw-like boring tool or a hollow cylinderwhich is turned, often by hand, or hammered into relatively unconsolidated near surface materials such as soil or clay for the purpose of collecting materials for chemical testing. The auger can be used also for taking decomposed rock-samples below soil or alluvialcover.

Base metal – any non-precious metal (eg: copper, lead,zinc, nickel, etc)

Bedrock – solid rock which forms the most resistant portions of the land surface.

Carbon-in-pulp – the process of recovering gold and silver from a cyanide-leached pulp by adsorbing the precious metals to granules of activated carbon.

Channel sample – a sample composed of pieces of veinor mineral deposit that have been cut out of a smalltrench or channel, usually about 4 inches by 2-4 inchesdeep.

Chip sample – a method of sampling a rock exposure,whereby a regular series of small chips of rock is brokenoff along a line across the face of a mineralized zone.

Concession – area for which mineral rights have beengranted. A concession may consist of several claims, whichis a smaller unit of land reservation for mineral explorationor mining.

Core – the long cylindrical piece of rock, about 3/4 inch or more in diameter, recovered by diamond drilling.

Diamond drill – a rotary type of rock drill in which thecutting is done by abrasion rather than percussion. Thecutting bit is set with diamonds and is attached to the end of long hollow rods through which water is pumpedto the cutting face. The drill cuts a core of rock that isrecovered in long cylindrical sections, 3/4 inch or more indiameter.

Dip – the angle at which a vein, structure, or rock bed isinclined from the horizontal as measured at right angles to the strike.

Disseminated ore – ore carrying small particles of valuable minerals, spread more or less uniformly throughthe body of matter.

Downdip – a direction that is downwards and parallel to the dip of a structure or surface.

Epithermal – mineral deposits associated with volcanicsystems, characterized by areas of concentrated high-grade and areas of larger, lower grade mineralizationwidely disseminated throughout the ore body.

Fault – a break in the earth's crust, often a pathway formineralizing fluids.

Feasibility Study – a detailed economic assessment todetermine whether a given ore deposit has the potentialto develop into a profitable mining venture.

Flotation – a milling process by which some mineral particles are induced to become attached to bubbles andfloat, and others to sink. In this way the valuable mineralsare concentrated and separated from the worthless minerals in an ore deposit.

Garnierite – a group name for poorly defined, green,hydrous nickel-silicates which are the main source of nickelin laterite ores.

Geophysical exploration – the use of geophysicalinstruments and methods to obtain information aboutmineral deposits by measuring, for example, subsurfaceelectrical resistivity, specific gravity, magnetic and electromagnetic properties or radioactivity.

Grab sample – a sample taken at random, it is assayed to determine if valuable elements are contained in therock. A grab sample is not intended to be representativeof the deposit, and usually the best-looking material isselected.

Gravity concentration – the process of mechanicallyseparating valuable minerals from non-valuable material by exploiting the difference in density between the two.

Greenstone – a term used to describe fine-grained greenish volcanic rock.

Hanging Wall – the overlying side of a dipping ore body.In a mine working, the hanging wall is located in the roofzone of the adit, hence the name: hanging wall. Oppositeto footwall.

Heap leaching – a process whereby valuable metals areextracted from a heap, or pad, of crushed ore by applyingleaching solutions which percolate down through the heapand are collected from a sloping, impermeable liner belowthe pad. The run-off from the heaps is processed torecover the metal.

In-fill drilling – drilling between widely-spaced holes toestablish and upgrade the resource classification.

Intersection – the portion of a drill hole, adit or trenchwhich contains economic mineralization. This may be coincident with a quartz vein or include mineralized sidewall.

Interval – the distance between sample points or thelength of a continuous sample. For a continuous sample(e.g. a drill core) the sample interval can be similar to theintersection or be different from this. Intervals are determined by the geologist. They can be physical boundaries or set distances.

Laterite – a highly weathered, often red colored, clay-richsoil, rich in secondary oxides of iron and/or alumina and

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nearly void of bases (Na, K, Ca) and primary silicate minerals. Laterite develops in tropical or forested hot and humid climates, and is a residual or end product of weathering. Residual accumulation of insoluble or immobile elements such as gold or nickel and cobalt canlead to the formation of economic ore deposits in certainlaterite soils.

Limonite – a general term covering a variety of hydrousferric oxides, mainly aggregates goethite and lepidocrosite,which give tropical soils a typically reddish-brown color.

Lode – a mineral deposit in solid rock which is confined to a zone of veins, often including a rim of alteration.

Magnetic Survey – mapping of the Earths magnetic fieldand/or anomalies due to variations in rock magnetization.Magnetic surveys can delineate ore deposits composed ofprimarily magnetic oxides and sulfides, such as magnetiteor pyrrhotite.

Marcasite – a rhombic, bronze-yellow mineral of similarcomposition and use as pyrite (FeS2). Often occurs in radiating masses or tabular aggregates.

Mapping – the process of preparing a diagrammatic presentation, often to a predefined scale, showing the distribution and/or relation between topographic, geologic, vegetative or infrastructural features. A geologicmap shows distribution of different rock types or theirstructures and a topographic map shows the relationshipbetween surface features such as topography, drainageand infrastructure incl. houses, roads, powerlines etc.

Mesh – size of openings in a screen: 100 mesh is equivalent to a grain size of 150 micron (0.15 mm); 200 mesh is 75 microns.

Metallics Screen Assay – a type of assay for sampleswith coarse gold. Because gold is soft and malleable, larger grains may not be reduced during milling, but rather transformed into larger flakes. Therefore, the entire sample is crushed, milled and sieved through -150microns. The oversize fraction is then weighed and assayed separately together with one or two splits of the undersize fraction. The two assay results are combinedby weight to give the total gold content of the sample.Traditional fire assay procedures have the risk of not including the coarser flakes in the fraction analysed and therefore potentially underestimate the gold contentseverely.

Metallurgy – the science and art of separating metalsfrom their ores by mechanical and chemical processes; the preparation of metallic raw materials from ore.

Mineralization – the process or processes by which amineral or minerals are introduced into a rock, resulting in an economically valuable or potentially valuable deposit.

Ounce (Troy) – traditional weight unit for gold, equivalentto 31.1 grams.

Outcrop – that part of a geologic formation or structurethat appears at the surface of the Earth.Overburden – loose and unconsolidated materials overlying the solid bedrock, either transported or formedin place. The overburden prevents direct observation ofprimary rocks or structures.

Oxidized zone – the upper portion of a mineral depositwhich has been modified by surface waters, where e.g.sulfides have been altered to oxides and carbonates.

Precious metal – a general term for gold, silver, or any ofthe minerals of the platinum group.

Pre-feasibility Study – a preliminary study of the techni-cal and financial boundary conditions for the economic exploitation of a mineral deposit. The pre-feasibility studygive recommendations for the technical advancement of amining project.

Pyrite – a common, brass-yellow mineral which oftencrystallizes in cubes. Pyrite, which is hard, has a brilliantmetallic luster and lack of cleavage, is often associatedwith gold (which is softer and heavier). Pyrite (FeS2) is animportant source of sulfur, primarily used for the production of sulfuric acid.

Reverse circulation (drilling) – a drilling method inwhich chip samples are recovered by an airstream blownup a central barrel.

Saprolite – a zone of clay rich thoroughly decomposedrock occurring towards depth in a laterite profile whererelics of primary textures can be distinguised.

Sampling – selecting a fractional, but representative partof a mineral deposit for analysis.

Shear zone – a tabular zone of rock that has been crushed and brecciated by many parallel fractures due toshear strain. Such an area is often mineralized by ore-forming solutions.

Stratiform deposit – a mineral deposit which has theform of a layer or a flatlying sheet.

Strike – the direction or trend of a vein or rock formation measured on a horizontal surface. The strike is perpendicular to the dip.

Sulfide zone – an area of enrichment of sulfide depositsthat have not yet been oxidized by near-surface waters.

Tailings – material rejected from a mill after most of therecoverable valuable minerals have been extracted.

Test Pit – a hole or pit, often 1 x 1 meter in section, dug into unconsolidated or weathered rock to enable investigation or vertical sampling of mineral-bearingground.

Trenching – a narrow excavation in unconsolidated or weathered rock across a suspected mineralized structure with the purpose to allow subsurface sampling and observations of the mineralization along the trench.

Wall rocks – rock units on either side of an orebody. The hanging wall (upper side) and footwall (underside)rocks of an orebody.

Zone – An area of distinct mineralization.

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HeadquartersMindex ASAO.H. Bangsvei 54-58N-1363 Høvik, Norway.Telephone +47 67592424Fax +47 67592425http://www.mindex.no

SubsidiariesMindex Resources Development, Inc. and Pili Point Processing, Inc.Suite 24-A 3rd Floor, Legaspi Tower 3002600 Roxas Boulevard, Manila, Philippines.Telephone +632 5257757Fax +632 5362540

Addresses

Mindex ASA

O.H. Bangsvei 54-58, N-1363 Høvik, Norway.

Telephone + 47 67592424 • Telefax + 47 67592425

http://www.mindex.no

Mindex ASAAnnual Report 1998

Mindex

• Table of Contents

• Overview

• Summary 1998

• Key figures

• Report of the Board of Directors

• Income Statement

• Balance Sheet

• Cash Flow Analysis

• Notes

• Shareholders Policy

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