LETTER TO SHAREHOLDERS

CC&V
Your Company’s 33% owned joint venture with AngloGold Ashanti in Cripple Creek Colorado, remains our primary asset and focus (the “Joint Venture”). Here is a brief refresher: the Joint Venture completed construction of the required infrastructure for the Cresson Mine and began mining operations in 1995, with the first Cresson Mine gold pour occurring on February 14, 1995. In 1996 the Joint Venture completed its first full year of Cresson Mine operations. The development of the East and North Cresson mines began during the second quarter of 1999. The Joint Venture began construction of expanded facilities during early 2002, completing the new truck shop, crushing facility, expanded process facility, and the first phase of the valley leach facility in September 2002, with the second phase of the expanded valley leach facility completed by September 2003. The last step in the mine expansion, a $15.5 million third phase expansion of the valley leach facility, was completed during the fall of 2004. For additional details, including a description of the business terms of the Joint Venture, please read our report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 2004.

Production
The 2004 Joint Venture gold production improved to 329,029 troy ounces (approximately 94% of budget) compared to 283,886 troy ounces of gold (83% of budget) produced during 2003. However, this improvement fell materially short of the Cresson Mine Expansion Plan projections.

CC&V has corrected most of the leach pad chemistry problems previously reported and is experiencing improved recoveries. CC&V is monitoring and working to improve leach pad chemistry on a daily basis. CC&V appears to have overcome its truck capacity problems, chiefly through improved maintenance. CC&V mined 58.3 million tons of material during the year (the expansion plan budgeted rate is 58 million tons per year), including 20.3 million tons of ore and 38 million tons of waste. CC&V also moved 1.3 million tons of stockpiled ore to the crusher for a total of 59.6 million tons moved.

The new primary crusher operated at design capacity during the year, crushing 20.1 million tons versus a budget of 20 million tons. Ore placed on the valley leach facility averaged 0.0245 troy ounces of gold per ton, containing an estimated 492,943 troy ounces of gold (an estimated 355,950 recoverable ounces of gold).

Revenue and Costs
The Joint Venture recorded net income of $7.7 million for the year ended December 31, 2004, compared to net losses of $0.5 million and $14.3 million for the years ended December 31, 2003 and December 31, 2002, respectively. In 2004, 331,299 troy ounces of gold were sold at an average price of $409.52 per ounce producing total metal sale revenues of approximately $135.7 million.

Cash production costs for 2004 were approximately $256 per troy ounce compared to $199 per troy ounce during 2003 and a budget of $225 per troy ounce. The main reason for the higher cost per ounce in 2004, compared to the budgeted cost per ounce, was the reduced number of ounces produced (94% of budget) and increased variable costs such as diesel fuel. The Joint Venture had total operating costs of $104.4 million, including depreciation, depletion and amortization (DD&A) of $30.7 million, and expensed exploration of approximately $1.4 million for the year, compared to $85.1 million, $25.8 million and $2.8 million comparatively for the year ended 2003. Interest expense on the Joint Venture’s loan payable to AngloGold Ashanti was approximately $23.8 million ($22.4 million in the year 2003). The Company did receive the minimum annual distribution of $250,000 from the Joint Venture, which amount will be recovered by the Manager of the Joint Venture from future shares of net proceeds to the Company.

Ore Reserves and Non-reserve Mineralization
The Joint Venture is conducting continuing exploration and engineering feasibility work concerning future operations. These continuing activities will serve to direct future exploration drilling programs as well as future development and project planning as part of its determination of the Joint Venture reserves. The main objective of CC&V’s continuing exploration program for 2004 was to delineate the boundaries of two areas of mineralization in the Wild Horse Extension area. This effort was directed at increasing statistical information that would define additional resources / reserves within areas previously indicating existing mineralization.

Each year CC&V models its gold ore reserves to incorporate the results of its exploration program, new geologic information, revised metallurgical recoveries, revised gold price, new geotechnical data, new pit designs, new operating costs and/or allowances for 2004 depletion. The ore reserves shown for 2004 were modeled using a $375 gold price. The cutoff grade for reserves and resources was changed from the 2003 cutoff grade of 0.008 ounce per ton (opt) to 0.007 opt recoverable. A total of 252,654 feet of additional drilling was added (308 drill holes). Mineral resources remain restricted to a $425 Lerchs-Grossmann shell envelope around the reserve pits.

The geo-statistical modeling procedures used by CC&V in computing the ore reserves have been reviewed by independent consultants (Independent Mining Consultants, Inc., Mine Reserve Associates, Inc., Mineral Resource Development Associates, Inc., and Mine Development Associates, Inc.) over previous years, and conform to industry standards.

The decrease in ore reserves at year end 2004 is attributed to depletion. As of December 31, 2004, CC&V estimated the ore reserve at 134,299,000 ore tons containing 3,877,815 troy ounces of gold at an average of 0.029 troy ounces of gold per ton. CC&V estimates that approximately 2,374,467 troy ounces of gold will be recovered from the ore using present mining and processing techniques. The 2004 ore reserve represents an increase from 2003 of 3.5 million in ore tons. However the lower average grade of the 3.5 million ore tons results in an estimated net decrease in both contained ounces (102,823) and recoverable ounces (159,976). During 2004, CC&V’s exploration program replaced all of the ore mined and the majority of the gold depleted through mining (390,120 of 492,943 troy ounces, or 79.1%). The ore reserve figures set forth above are estimates and no assurances can be given that any particular level of recovery of gold from ore reserves will in fact be realized.

The focus of the Joint Venture’s 2005 exploration program is to develop additional information in mineral resource areas to enable it to change the classification of a portion of its non-reserve mineral resources to mineral reserve ounces of gold. It expects to achieve this goal through additional infill drilling, geo-tech and metallurgical drilling and studies, as well as alternative processing economic studies. CC&V estimates its non-reserve mineralized resources total at an additional 139,873,000 tons, containing approximately 3.8 million troy ounces of gold, of which approximately 2.15 million troy ounces of gold may be recoverable. Further, the Joint Venture is exploring a new area on a widely spaced drill hole basis with the objective of defining a mineral resource in the area.

Gold
We continue to believe in our product: gold. Over the past year market volatility has challenged the belief and support of most of us. However, we continue to believe strongly in the future of gold in the marketplace and as real money one can trust. In our view, financial markets will continue to exert upward pressure in the gold bullion market, particularly in US dollar terms, due to historically high US budget and trade deficits. Former Federal Reserve Chairman, Paul Volcker, has continued to warn the markets and the public at large that there is increasing risk to the financial system by allowing the continuation of the US’s historically high and growing international and domestic deficits. In our opinion, Foreign Central Banks are only left with a couple of alternatives in dealing with the unrestricted growth of the US money supply (dollars) that are flooding the world currency markets. One of their choices appears to be to diversify their national currency reserve holdings and conduct financial dealings in currencies other than the US dollar which would reduce their exposure to further depreciation of dollar holdings. A second choice would be to run their printing presses equally as fast and dilute their national currencies at the same pace our country is debasing its own currency. Either way, we believe gold stands to benefit in the marketplace, certainly in US dollar terms, more likely in terms of all of the world currencies.

So, how does the upward pressure in the gold market price affect your Company? The most obvious impact is through improved per ounce revenues, resulting in improved profitability for your Joint Venture. Above our break-even price, increases in the price of gold will increase revenue proportionately, resulting in increases in annual profitability directly correlated to the increase in the price of gold. However, the very same environment that provides higher gold prices also may cause price increases in several of the commodities critical to the Joint Venture, diesel fuel, lime and cyanide to name a few, and increase expenses. Further, the interest rate the Joint Venture pays on its Initial Loan to AngloGold Ashanti has been increasing this year, and consequently the Joint Venture’s interest payment increased to $23.8 million during 2004 compared to $22.4 million in 2003. We have asked AngloGold Ashanti to fix interest rates at the current level, and are exploring other ways to reduce the Joint Venture’s exposure to the interest rate risk, however, there can be no assurance that we will be successful or what the financing, if available, will cost. Finally, we expect the increase in demand for mined products around the world will increase immediately available employment opportunities in mining and may result in wage inflation within the industry.

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