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    • MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2005 The following discussion and analysis for Equinox Minerals Limited (“Equinox” or the “Company”) should be read in conjunction with the June 2005 unaudited and December 2004 audited consolidated financial statements and related notes thereto. This information is presented as of July 27, 2005. The financial information contained in this document is derived from the Company’s consolidated financial statements prepared in accordance with Canadian generally accepted accounting principles. All amounts in this discussion are expressed in U.S. dollars, unless identified otherwise. Equinox (TSX and ASX symbol: “EQN”) was incorporated under the Canada Business Corporations Act on January 19, 2004 and became a reporting issuer on June 29, 2004. The Company was established for the purpose of becoming the Canadian holding company and to carry on the business of Equinox Resources Limited (“Equinox Resources”), a company incorporated under the Australian Corporations Act 2001 (Cth), pursuant to a court-approved restructuring under Australian law. As a result of this transaction, Equinox Resources became a wholly-owned subsidiary of Equinox. This business combination was accounted for using the continuity of interests method pursuant to Canadian generally accepted accounting principles. As a result, the comparative financial statements and the activities described in the following management discussion and analysis relate to the operations of Equinox Resources and its subsidiaries. Following the restructuring, and prior to Equinox becoming a reporting issuer, Equinox Resources changed its year-end from June 30 to December 31 as permitted by Australian law in order to conform to the December 31 year-end of its parent Equinox. Comparative figures for the prior quarter are those of Equinox Resources Limited. Additional information about the Company and its business activities is available on SEDAR at www.sedar.com 1. Overview Equinox is an international mineral exploration and development company listed on both the TSX and ASX, with a focus on base and precious metals. Its wholly-owned subsidiary, Equinox Resources, has been an active explorer since listing on the ASX in 1994. The principal assets of Equinox are: 1.1 Development and exploration interests in Zambia Copper–Cobalt Projects & Exploration The 100% owned Lumwana Copper Project (“Lumwana”) is located in the North Western Province of Zambia, approximately 65 km west of the Provincial capital of Solwezi, 220 km west of the Copperbelt. The Lumwana Large Scale Mining License ("LML-49") covers an area of 1,355 km2 and includes the two major copper deposits, Malundwe and Chimiwungo, together with numerous exploration prospects. During late 2003, the Company completed the Lumwana Bankable Feasibility Study (“BFS”) which now provides the basis for the potential development of Lumwana. Equinox is proceeding towards development of Lumwana expanding its operation team and has engaged GRD Minproc to conduct the front end engineering design (“FEED”) for project implementation. The bank working group for project financing has been formed and discussions are underway with a number of smelters regarding metal off-take. The Company’s objective is to complete project financing during late 2005, commence construction with a target of commissioning production in mid-2007. The extensive Lumwana LML-49 mining license covers 27 high priority exploration targets. Exploration on two of these in late-2004 resulted in the discovery of the Chimiwungo North deposit. 1
    • Elsewhere in Zambia, Equinox has recently regained 100% control of the strategic Zambezi Joint Venture tenement package now called the Zambezi Project. These holdings total approximately 19,300 km2 of highly prospective Central African Copperbelt geology on both the Zambian Copperbelt and in Northwest Province adjoining the Company’s Lumwana project. Following the recent blind discovery of Chimiwungo North and the re-acquisition of the Zambezi Project prospects, the potential for further discoveries in the region has been increased significantly. 1.2 Exploration interests in Australia, Sweden and Peru Iron Oxide Copper-Gold Projects (“IOCG”) Equinox is exploring for iron oxide copper gold mineralization in the Cloncurry region of North Queensland, the Gawler and Curnamona Cratons of South Australia and the Norrbotten Region of Northern Sweden. Exploration joint ventures exist with Minotaur Exploration Ltd. (“Minotaur” and ASX: “MEP”) in the Gawler, with Southern Cross Resources Inc. (“Southern Cross” and TSX: “SXR”) with respect to the Curnamona and with Phelps Dodge Corporation (“Phelps” and NYSE: “PD”) for Norrbotten in Sweden. Nickel Sulphide Projects Equinox is exploring for Nickel in the Yilgarn Province of Western Australia through the Cowan Nickel Joint Venture (“Cowan”) with Bullion Minerals Ltd. (“Bullion”) to explore extensive nickel interests in the Widgiemooltha-Higginsville region. Epithermal Gold and Base Metal Exploration Equinox is exploring for gold and base metal mineralization in Peru through Alturas Minerals SRL (“Alturas”), a Peruvian company controlled by Equinox in which Equinox holds a 70% direct equity interest. SIGNIFICANT EVENTS SUMMARY Zambia Lumwana (100%) Equinox has completed a Bankable Feasibility Study (“BFS”) at Lumwana and is at an advanced stage of financing project development. Equinox has made substantial progress towards the financing and development of the Lumwana Copper Project. Key achievements during Q2 are as follows: Front End Engineering Design GRD Minproc and the Equinox Engineering team are advancing the Lumwana Front End Engineering Design (”FEED”) which is upgrading the BFS to project implementation. This involves revision and updating of the capital and operating costs, and project optimization studies. Uranium Resources Announced On May 02, 2005, the Company announced a Joint Ore Reserves Committee (“JORC”) code and National Instrument 43-101 compliant Lumwana Uranium Resource for Lumwana. The BFS included an evaluation of uranium at Lumwana. Work included resource definition, metallurgical testwork and the design of a uranium extraction plant separate to the Lumwana copper plant. BFS pilot plant metallurgical test work achieved uranium recoveries of 97% in the production of uranium yellowcake from Malundwe uranium ore. In light of the significant improvement in international Uranium markets, this BFS work is currently being reviewed. 2
    • Uranium within the Malundwe and Chimiwungo copper deposits occurs as discrete uranium-enriched zones that will be separately mined during the copper mining operation and as such, processing of the copper ore does not produce any uranium “contamination” of resultant copper concentrate. Of the total Uranium Resource (JORC and 43-101 compliant) of 12.1 million tonnes of 0.082% U3O8, (>0.01% uranium cut-off grade) containing 21,800,000 lbs U3O8, a total of 7.7 million tonnes at 0.081% U3O8 13,560,000 lbs U3O8,are included within the currently optimized (Malundwe and Chimiwungo) pit designs. In addition to the uranium resources defined at Malundwe and Chimiwungo, there also exists considerable additional exploration potential for uranium within the 1,355 km² Lumwana Mining Licence. AGIP/COGEMA conducted an extensive regional uranium exploration program at Lumwana between 1981-1991 which defined a number of non-JORC compliant prospects and uranium resources outside of the proposed Lumwana copper reserve base. These provide outstanding potential for the discovery of additional uranium resources. Letter of Intent signed with Ongopolo The Company’s 100% owned Zambian subsidiary, Equinox Copper Ventures Limited (“EQCV”), announced on June 29, 2005 that it has signed a Letter of Intent (“LOI”) with Ongopolo Mining & Processing Limited (“Ongopolo”) of the Republic of Namibia for the future supply and sale of copper concentrate from Lumwana. The objective and purpose of this LOI is to conclude terms and conditions for a Long Term Contract (“Sales Agreement”) between the parties for the supply and sale of a proportion of the copper concentrate produced at Lumwana from the commencement of commercial production (scheduled to occur mid-2007). The Sales Agreement is expected to be finalized between Equinox and Ongopolo later this year. The LOI establishes a framework for the negotiation of the Sales Agreement between the parties. This is the second LOI that the Company has signed with a major regional smelter following the LOI signed with Palabora in Q1. The Company continues to conduct similar off-take discussions with further smelters, within and outside Zambia, for the future supply and sale of copper concentrates expected to be produced from Lumwana. Zambezi JV restructured with Anglo American (100%) On June 14, 2005, Equinox announced that it had successfully restructured the Zambezi JV with Anglo American. This new agreement provides Equinox with 100% control of an extensive, 19,300 km2 highly prospective land package in Zambia (the “Zambezi Project”) including properties on the Zambian Copperbelt and properties in North Western Zambia contiguous to Lumwana. Some key exploration properties include: Kitwe – Mwekere: These properties cover an area of 3,170 km2 on the Zambian Copperbelt. The Kitwe tenement adjoins the main Copperbelt mining leases including Mufulira (Mopani), Chambishi (NFC Africa and J&W) and Nchanga /Konkola (KCM). The most highly prospective of the Equinox targets is the sequence lying along strike between the First Quantum’s Bwana Mkubwa and Mopani’s Mufulira mining leases and extending for approximately 90 kms along the border between Zambia and the DRC. Equinox controls the Zambian side of this zone including 30 kms of strike of the sequence which hosts the Mopani’s Mufulira mine and First Quantum’s Frontier (previously Lufua) and Nina Prospects (located within 2 kms on the DRC side of the border). In addition, at the Ndola West Prospect, Mufulira style copper mineralization has been intersected over 1.8 kms strike length. Mwombezhi Dome: The 2,400 km2 Mwombezhi Dome property in the Northwest Copperbelt covers the south-western lobe of the Mwombezhi Dome. The north-eastern lobe hosts the Lumwana deposits which are already covered by Company’s Lumwana Large Scale Mining License. Any discovery at Mwombezhi Dome could positively impact Lumwana development. 3
    • Kabompo: The Kabompo property covers 5,900 km2 of the Kabompo Dome, the next dome west of the Mwombezhi Dome at Lumwana in the North Western province of Zambia. Widespread copper mineralisation has been identified at Kabompo, including wide zones of low grade copper mineralization intersected at the Kalaba Prospect. The restructuring of the Zambezi JV will enable Equinox to substantially expand its exploration activities in the region. Australia Cowan: Western Australia (Equinox earning up to 50%) Work during the quarter at the Cowan project in the Kambalda region of Western Australia comprised electromagnetic (“EM”) surveys, field mapping of the ultramafic sequence, and soil sampling a sequence known to be prospective for nickel sulphide deposits. Targets include potential extensions to the sequences that host the Mariners, Miitel, and Redross nickel mines on the adjoining ground held by Mincor Resources NL. Results from extensive geophysical and soil sampling programs have highlighted additional targets at Footes, Republican, South Higginsville and Repeater targets. Particularly significant geophysical anomalies were identified at Footes and South Higginsville. Further interpretation of geophysical, geochemical, and geological databases is also ongoing to better define areas of komatiite stratigraphy considered to be prospective within the Cowan tenement package. Curnamona Craton: Ethiudna, South Australia (100%) Southern Cross Resources (“SXR”) has identified a broad Tertiary palaeochannel system draining northwards across the Equinox property. The target sought is of the Beverley uranium deposit style, which is located to the NW within the same cratonic block. Two reconnaissance traverses of rotary drill holes have been undertaken across the interpreted Tertiary palaeochannels. The drilling was successful in that substantial thicknesses of palaeodrainage have been identified within the lease area. Whilst uranium was not intersected on these two test lines, it is likely that airborne EM and gravity coverage will be extended across the palaeodrainage system to identify targets for the next round of drilling. Independent of the agreement with SXR, Equinox maintains the rights to any basement-hosted mineralisation. Gawler Craton: Nuckulla Hill, South Australia (100% diluting to 20%) This Equinox project is a joint venture with Minotaur Exploration (“MEP”), who are targeting Iron Oxide Copper-Gold (“IOCG”) deposits. Last quarter, Minotaur confirmed several gravity anomalies with their detailed infill gravity surveys, one of which lay adjacent to the Myall gold prospect of Equinox. During the June quarter, MEP drilled three percussion holes to test two gravity anomalies on the margin of the Yarlbrinda Shear Zone adjacent to the Myall Prospect. Significant mineralization was not intersected. Gravity surveys long the Yarlbrinda Shear Zone to the north revealed a number of other, larger gravity anomalies occupying the same shear marginal position that warrant further investigation. Fort Constantine South-Eliza Creek: Northwest Queensland (100%) The project area adjoins the Ernest Henry Mine and is also prospective for IOCG mineralization. An agreement with the Traditional Owners has recently been concluded, paving the way for the renewal of title for the Fort Constantine South lease 10601. A review of available regional gravity and magnetic surveys has been carried out in order to budget a new phase of exploration. 4
    • Peru (70%) Equinox’s majority owned (70%) subsidiary Alturas Minerals Corporation (“Alturas”) has lodged a Preliminary Long Form Prospectus with the Ontario Securities Commission (the “OSC”) with an objective of listing Alturas on the TSX-V. Following a process of OSC review and approval, Equinox plans to separately list Alturas on the TSX-V by way of an Initial Public Offering in late-2005. The Alturas exploration portfolio in Peru comprises four gold and base metal prospects. Principal projects include Huilacollo, Baňos del Indio, Utupara and Huajoto. Significant gold mineralized intercepts have been reported from Huilacollo and gold anomalism has been reported from only very limited sampling of the extensive alteration system at Baňos del Indio. Exploration will commence at Alturas following the TSX-V financing. Subsequent Events Equinox appoints Sir Sam Jonah In July 2005 the company announced that Sir Sam Jonah had been appointed to its Board of Directors and had also accepted the appointment of Non-Executive Chairman replacing Mr Geoff Reynolds who has retired from the Board. Sir Sam Jonah is currently President (moving to Non-Executive President from 31 July 2005) of AngloGold Ashanti Limited, a US$9.5 billion NYSE listed company (Symbol: “AU”). Sir Sam Jonah was conferred with an Honorary Knighthood by Her Majesty Queen Elizabeth II of Great Britain and has been decorated with many awards and honours. Amongst these is an honorary Doctor of Science awarded in 2003 jointly by the Camborne School of Mines and the University of Exeter (UK). He is a member of numerous advisory committees including President Thabo Mbeki’s International Investment Advisory Council of South Africa and President Kufuor’s Ghana Investors’ Advisory Council. Mr Geoff Reynolds completed 5 years of service with Equinox as Director and Chairman and provided an outstanding contribution to Equinox during the critical stage of Lumwana Project feasibility and financing. Cash Position At the end of the quarter the Company had cash and cash equivalents of $3,329,514. 5
    • 2. Selected Financial Information The table below sets forth selected financial data relating to the Company’s quarter and six months ended June 30, 2005 and June 30, 2004. This financial data is derived from the Company’s unaudited consolidated financial statements, which are prepared in accordance with Canadian GAAP. All numbers in US dollars unless otherwise stated Quarter Ended Six Months Ended Jun 05 Jun 04 Jun 05 Jun 04 Other Income / (Expenses) 26,341 45,063 139,027 108,128 Exploration Expense 477,687 599,240 1,002,799 885,411 Incentive Stock Option Expense 394,683 0 824,516 0 Loss (1,039,161) (766,944) (1,993,773) (1,149,769) Loss per share (dollars) (1) (0.009) (0.011) (0.019) (0.017) Weighted avg # of shares(1) 110,429,919 71,816,414 103,506,497 68,213,702 (1) - The loss per share and weighted average number of shares figures have been adjusted to reflect the 1:3 share exchange which took place in June 2004 in connection with the restructuring. 3. Results of Operations Quarter ended June 30, 2005 v Quarter ended June 30, 2004 • The consolidated loss for the quarter ended June 30, 2005 and quarter ended June 30, 2004 was $1,039,161 or $0.009 per share and $766,944 or $0.011 per share respectively. • Unfavorable foreign exchange movements in the quarter resulted in a loss of $23,967 (2004: loss of $1,697), derived from monetary assets and liabilities in currencies other than US dollars. • General and administrative costs increased in the quarter $307,003 (2004: expense of $203,192) due to the Toronto corporate office expenditure. The Toronto office was established July 2004. • The incentive stock option expense in the quarter ended June 30, 2005 of $394,683 (2004: Nil) resulted from the vesting of options granted to employees and directors as an incentive for maintaining performance. • Since the completion of the Lumwana BFS in October 2003 exploration activity has focused on existing and new exploration prospects in Australia ($234,077; 2004 $75,250) and Peru ($243,610; 2004 $523,990). Six months ended June 30, 2005 v Six months ended June 30, 2004 • The consolidated loss for the six months ended June 30, 2005 and June 30, 2004 were $1,993,773 or $0.019 per share and $1,149,769 or $0.017 per share respectively. • Favorable foreign exchange movements for the six months resulted in a gain of $60,519 (2004: loss $155) derived from monetary assets and liabilities in currencies other than US dollars. This gain was offset slightly by reduced interest received $80,023 (2004: $105,798) from lower average cash balances held during the first quarter. 6
    • • General and administrative costs were higher for the six months $538,607 (2004: $354,537) due to the inclusion of Toronto corporate office costs. The Toronto office had not been established until the second half of 2004. • The incentive stock option expense in the six months ended June 30, 2005 of $824,516 (2004: Nil) resulted from the vesting of options granted to employees and directors as an incentive for maintaining performance. • Higher second quarter activity on Australian exploration projects ($551,064; 2004 $361,421) has contributed to the overall increase in exploration to $1,002,799 (2004: $885,411). 4. Discussion of Cash Flows Quarter Ended Six Months Ended Cash flows from: Jun 05 Jun 04 Jun 05 Jun 04 Operating activities (558,717) (1,005,418) (1,556,105) (1,740,156) Financing activities 102,104 (890,692) 6,715,817 (354,182) Investing activities (3,890,651) (308,147) (5,471,177) (983,288) Quarter ended June 30, 2005 v Quarter ended June 30, 2004 • Cash outflow from operating activities was $558,717 (2004: $1,005,418). The decreased expenditure was attributable to the large increase in accounts receivable and prepayments. • Cash inflow from financing activities in the quarter mainly relates to receipts from the non controlling interest in Alturas, who contributed $128,000 (2004: $Nil) towards their proportion of Peruvian exploration costs to date. The 2004 cash outflow was entirely due to share issue costs relating the exercise of financier options in February 2004. • Cash outflows from investing activities relate to the increased expenditure on Lumwana $3,874,677 (2004: $278,630) associated with commencement of the FEED phase of the project and payments for property plant and equipment $15,974 (2004: $30,065). Six months ended June 30, 2005 v Six months ended June 30, 2004 • Cash outflow from operating activities was $1,556,105 (2004: $1,740,156). The increase in accounts receivable and prepayments was able to reduce the impact of the additional costs associated with the Toronto corporate office and Australian exploration projects. • Cash inflow from financing activities principally relates to the private placement closed on March 29, 2005 of 14,403,900 common shares at a price of C$0.60 per share and realized gross proceeds of C$8,642,340 (US$7,114,455). Net proceeds after deducting fees were US$6,453,317. The net proceeds from the placement are being used to fund the FEED contract, the cost of project financing and general working capital. Additional cash inflow was received from the non controlling interest in Alturas, which contributed $262,500 (2004: $Nil) towards their proportion of Peruvian exploration costs to date. • Cash outflows from investing activities relate to the increased expenditure on Lumwana since the beginning of the year $5,431,828 (2004: $935,117) associated with pre-development and commencement of the FEED phase of the project. 7
    • 5. Discussion of Financial Position and Liquidity June 30 December 31 2005 2004 $ $ Assets Cash and cash equivalents 3,329,514 3,640,946 Other current assets 845,390 248,806 Capital assets 32,356,199 27,951,372 Total assets 36,531,103 31,841,124 Liabilities Current liabilities 2,499,372 2,008,343 Long-term debt 8,446,200 9,550,800 Employee future benefits 198,968 179,477 Total liabilities 11,144,540 11,738,620 Shareholders’ equity 25,386,563 20,102,504 Outstanding number of shares (1) 110,429,919 96,026,019 (1) - The number of shares have been adjusted to reflect the 1:3 share exchange which took place in June 2004 in connection with the restructure. 5.1 Cash and Cash Equivalents Cash and cash equivalents decreased to $3,329,514 at June 30, 2005 (December 31, 2004: $3,640,946), primarily due to the proceeds from the private placement less exploration and deferred exploration costs. 5.2 Other Current Assets The total current assets increased to $845,390 at June 30, 2005 (December 31, 2004: $248,806) due to the prepayment of legal costs associated with the Alturas Preliminary Long Form Prospectus lodged with the OSC. 5.3 Capital Assets The increase in capital assets at June 30, 2005 of $32,356,199 (December 31, 2004: $27,951,372) is principally from capitalization of deferred exploration and evaluation costs for the Lumwana Project of $4,456,925 in 2005. 5.4 Current Liabilities Current liabilities at June 30, 2005 were $2,499,372 (December 31, 2004: $2,008,343) arising from increased accruals associated with the Lumwana project and the Alturas prospectus. 8
    • 5.5 Total Liabilities Total liabilities decreased to $11,144,540 at June 30, 2005 (December 31, 2004: $11,738,620). This decrease is the net effect of foreign exchange gains on the translation of the €7.0 million concessional loan from the European Investment Bank and the movement in accruals discussed above offset by the increase in accruals. 5.6 Contractual Obligations Equinox’s contractual obligations are as follows: Payments Due by Period - As at June 30, 2005 Less than 1–3 4–5 After Contractual Obligations - U.S. $ Total 1 year years years 5 years Long Term Debt 8,446,200 1,055,775 2,111,550 5,278,875 Operating Leases 293,480 148,858 144,622 Employee Entitlements 198,968 198,968 Total Contractual Obligations 8,938,648 148,858 1,200,397 2,111,550 5,477,843 5.7 Shareholders’ Equity Shareholders’ equity has increased to $25,386,563 as at June 30, 2005 (December 31, 2004: $20,102,504) arising from the private placement and offset by the share issue expenses and the losses for the period. On March 29, 2005 Equinox closed a private placement of 14,403,900 common shares at a price of C$0.60 per share and realized gross proceeds of C$8,642,340 (US$7,114,455). Net proceeds after capital raising costs were US$6,453,317. At July 27, 2005 the company had 110,429,919 ordinary shares outstanding. In addition there were 9,720,000 incentive stock options outstanding with exercise prices ranging from C$0.55 to C$0.72 per share. Subject to shareholder approval, a new stock option plan has been initiated on July 5, 2005 for the issue of 3 million options in conjunction with the appointment of Sir Sam Jonah as Chairman. 6. Outlook Equinox is progressing the Lumwana project towards development. The company and GRD Minproc are currently conducting the FEED phase that is revising and updating the Lumwana capital and operating costs, and optimizing the development plan. Project financing is advancing with an objective of completing the FEED and project financing in late 2005, facilitating the commencement of project construction. Critical Accounting Estimates The accounting policies that involve significant management judgement and estimates are discussed in this section. For a complete list of the significant accounting policies, reference should be made to note 2 of the 2004 audited consolidated financial statements. 9
    • Exploration Costs Exploration and evaluation expenditure costs incurred by the entity are accumulated separately for each area of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead or administrative expenditure, but does not include general overhead or administrative expenditure. Exploration and evaluation expenditure for each area of interest is written off as incurred, unless such costs are expected to be recovered through successful development and exploitation of the area of interest or, alternatively, by its sale. Expenditure is not deferred in respect of any area of interest or mineral resource unless the Company’s rights of tenure to that area of interest are current. Although the Company has taken steps to verify title to its areas of interest, these procedures do not guarantee the Company’s title. Such areas of interest may be subject to prior undetected agreements or transfers and title may be affected by such defects. Deferred exploration and evaluation costs will be amortised over the estimated useful life of the ore body, on a units of production basis, from the commencement of commercial extraction, or written off if the property is sold or abandoned. Borrowing costs included in exploration and evaluation expenditure are those costs that would have been avoided if the expenditure had not been incurred. Each year management considers the recoverable value of mineral properties and where they believe those values to be lower than the carrying values, such expenditure will be written down accordingly. Management’s estimate of carrying values is subject to risks and uncertainties affecting the recoverability of the Company’s investment in these areas. Although management have made their best estimate of these factors based on current conditions, it is possible that changes could occur in the near term which could adversely affect this estimate of the recoverability of deferred exploration and evaluation costs. Foreign Currency Translations With development of the Lumwana Project the Company has adopted the US Dollar as its reporting currency from 1 July 2004 as the majority of the revenues and expenses of the Project, and therefore the Company, will be denominated in that currency. Prior to this date, the Company’s reporting currency was the Australian Dollar. Comparative figures previously reported in Australian Dollars have been translated to US Dollars using the current rate method. The Company employs the current rate method of translation for its self-sustaining operations. Under this method, all assets and liabilities are translated at the year-end rates and all revenue and expense items are translated at the average monthly exchange rates for recognition in income. Differences arising from these foreign currency restatements are recorded in shareholders’ equity as a cumulative translation adjustment until they are realized by a reduction in the investment. The Company employs the temporal method of translation for its integrated operations. Under this method, monetary assets and liabilities are translated at the year-end rates and all other assets and liabilities are translated at applicable historical exchange rates. Revenue and expense items are translated at the rate of exchange in effect at the date the transactions are recognized in income. Realized exchange gains and losses and currency translation adjustments are included in income. Stock Option Pricing Model Stock options granted to employees or external parties are recognized at fair value as an expense in equal instalments over the vesting period (except where the expense constitutes a borrowing cost and is deferred in accordance with note 3(d) of the 2004 audit consolidated financial statements) and credited to the contributed surplus account. The expense is determined using an option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the non-tradable nature of the option, the current price and expected volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. 10
    • Contingent Liabilities The Native Title Act has created significant uncertainties in respect of ownership of mining tenements in Australia. Management have been advised of existing native title claims over a number of the Company’s tenements in Western Australia, South Australia and Queensland. Due to continuing uncertainties in the application of the Native Title Act, the effect, if any, of these claims and procedures on Equinox is not clear. Estimates, Risks and Uncertainties Canadian generally accepted accounting principles require management to make estimates and assumptions that affect the amounts reported in the financial statements and related notes. Actual results could differ from those estimates. Deed of Cross Guarantee On December 24, 2004 Equinox Minerals Limited and certain Australian incorporated companies entered in to a Deed of Cross Guarantee (the “Deed”) under which each company guarantees the liabilities of all other companies that are a party to the Deed. The companies which form this “Closed Group” (as defined by Australian Securities and Investments Commission Class Order 98/1418) are: - Equinox Minerals Limited, Equinox Resources Limited and Equinox Peru Ventures Limited. 7. Summary of Quarterly Results (unaudited) The table below sets forth selected financial data for each of the eight quarters ending June 30, 2005. The financial data is derived from the Company’s interim unaudited financial statements, which are prepared in accordance with Canadian GAAP. Financial Data - Last Eight Quarters Three Months Ended Jun 05 Mar 05 Dec 04 Sep 04 Jun 04 Mar 04 Dec 03 Sep 03 Other Income $('000) 26 113 (122) 58 45 63 9 7 Income/(Loss) $('000) (1,039) (955) (848) (1,098) (767) (383) (355) (203) (1) Income/(Loss) per share (dollars) (0.009) (0.010) (0.009) (0.012) (0.011) (0.006) (0.007) (0.004) (1) Weighted avg # of shares - Millions 110.43 96.51 96.03 95.31 71.85 64.93 49.40 46.43 (Except as otherwise indicated, financial information prior to the quarter ended June 2004 is that of Equinox Resources.) (1) - The loss per share and weighted average number of shares figures have been adjusted to reflect the 1:3 share exchange which took place in June 2004 in connection with the restructure. 8. Cautionary Note Regarding Forward-Looking Statements This document may contain “forward-looking statements”, which are subject to various risks and uncertainties that could cause actual results and future events to differ materially from those expressed or implied by such statements. Investors are cautioned that such statements are not guarantees of future performance and results. Risks and uncertainties about the Company's business are more fully discussed in the Company’s disclosure documents filed from time to time with the Toronto and Australian securities authorities. The independent feasibility study, prepared by Aker Kvaerner, Golder Associates and Investor Resources Ltd has been disclosed in the Technical Report dated April 2004 (updated in May 2005), and is compliant with the JORC Code and National Instrument 43-101. Unless otherwise indicated, technical information contained in this release is based on information compiled by a “Qualified Person” who is a corporate member of the Australasian Institute of Mining and Metallurgy and/or the CIM. 11
    • 9. Risk Factors The Company’s operations and results are subject to a number of different risks at any given time. These risk factors, include but are not limited to: exploration and mining involves a high degree of risk and uncertainty; mineral resources and reserves are estimates only; there is no certainty that further exploration will result in the upgrade of inferred mineral resources to proven and probable mineral reserves; Equinox may be adversely affected by fluctuations in metal prices; Equinox has no history of mining operations; Equinox currently depends heavily on the Lumwana Project; Equinox will require further capital from external sources to fund its operating costs and develop Lumwana; Equinox does not insure against all risks; Equinox’s operations and activities are subject to environmental risks; government regulation may adversely affect Equinox; Equinox is subject to international operations risks; Equinox will require other mineral reserves in the future; Equinox does not at present hedge metal or currency futures; Equinox’s title to its properties may be subject to challenge and the existence of possible undetected defects in respect of which title insurance is generally not available; carrying values of Equinox’s assets may be adversely affected by fluctuations in the copper, cobalt and sulphuric acid markets and changes in operation and production factors; Equinox is dependent on key personnel. There are risks specific to Lumwana, including: road access to the Lumwana Project is limited and completion of necessary upgrades is not guaranteed; inflation in Zambia may have negative effects on the results of operations; the handling and disposal of waste rock containing uranium at Lumwana may present environmental and health risks; and HIV/AIDS and other infectious diseases may have a negative effect on the work force and increase medical costs. Risks specific to Australian operations include the risk that Equinox’s ownership of mining tenements are subject to uncertainty under the Native Title Act (Australia); and exploration and mining tenements may be subject to forfeiture. The Company’s risk factors are discussed in detail in the Company’s prospectus dated June 29, 2004, and AIF which are available on SEDAR at www.sedar.com and should be reviewed in conjunction with this document. 10. Outstanding Share Data The only class of securities of the Company outstanding as at July 27, 2005 is common shares. As at July 27, 2005, the Company had 110,429,919 common shares outstanding. The Company has an Employee Incentive Stock Option Plan (“Option Plan”) for certain of its directors, officers, consultants and employees. Subject to shareholders approval, a new stock option plan has been initiated for the issue of 3 million options in conjunction with the appointment of Sir Sam Jonah as Chairman. 12