
Unknown;
SEC 1815
   Potential persons who are to respond to the collection of
         OMB APPROVAL
(11-2002)
   information contained in this form are not required to
   OMB Number: 3235-0116
Previous versions
   respond unless the form displays a currently valid OMB
   Expires: August 31, 2005
Obsolete
   control number.
   Estimated average burden
   hours per response 6.0




FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer 
Pursuant to Rule 13a-16 or 15d-16 
of the Securities Exchange Act of 1934


For the month of November,  2002


Commission File Number: 0-31166


Corner Bay Silver, Inc
_____________________________________________________________________
(Translation of registrant's name into English)


55 University Avenue, Ste 910, Ontario Canada M5J 2H7
_____________________________________________________________________
(Address of principal executive offices)


1.  Notice of Meeting
2.  Information Circular
3.  Audited financial statements
4.  Management's Discussion and Analysis
5.  Proxy


Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.


Form 20-F..XXX.... Form 40-F.........


Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____ 


Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders. 


Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____ 


Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR. 


Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.


Yes ..... No XXX


If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________.



Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




Corner Bay Silver, Inc.
________________________
(Registrant)


         November 26, 2002
Date_______________ 


    /s/Steve Brunelle
By:___________________________
Steve Brunelle, Vice President 









CORNER BAY SILVER INC.
55 University Avenue, Suite 910
Toronto, Ontario
M5J 2H7




NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS


NOTICE IS HEREBY GIVEN that an Annual and Special Meeting of Shareholders of Corner Bay Silver Inc. (the “Company”) will be held on Friday, December 20, 2002 at 10:00 a.m. (Toronto time) at The Ontario Club, Canadian Room, 30 Wellington Street West, 5th Floor, Toronto, Ontario, for the following purposes:


1.
To receive the Annual Report, the Consolidated Financial Statements of the Company for the years ended June 30, 2002 and 2001 and the Report of the Auditors thereon;


2.
To elect directors for the ensuing year;


3.
To appoint PricewaterhouseCoopers LLP, Chartered Accountants as auditors and authorize the directors to fix their remuneration;


4.
To approve, ratify and confirm a resolution authorizing the directors to enter into agreements whereby the Company may perform private placements for the purposes of raising additional funds to carry out exploration work and to increase its working capital; 


5.
To transact such further and other business as may properly come before the meeting or any adjournment thereof.


This Notice of Meeting is accompanied by the Form of Proxy, Proxy Information Circular, Annual Report and Audited Financial Statements of the Company.


Shareholders who are unable to attend the Meeting in person are asked to complete, date, sign and return the enclosed form of Proxy before the Meeting in the enclosed envelope. 


DATED at Toronto, Ontario 4th day of November, 2002.




BY ORDER OF THE BOARD OF DIRECTORS






Peter Mordaunt
Chairman and President




















Page 2

CORNER BAY SILVER INC.
55 University Avenue, Suite 910
Toronto, Ontario M5J 2H7


MANAGEMENT PROXY CIRCULAR FOR THE 
ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS


Solicitation of Proxies


This Proxy Circular is furnished in connection with the solicitation by the management of Corner Bay Silver Inc. (the “Company”) of proxies to be used at the Annual and Special Meeting of Shareholders of the Company (the “Meeting”) to be held at the time and place and for the purposes set forth in the Notice of Meeting.  It is expected that the solicitation will be primarily by mail.  Proxies may be solicited personally by management of the Company at nominal cost.  The cost of solicitation by management will be borne by the Company.


Voting by Proxy


Proxies for use at the Meeting must be mailed to Equity Transfer Services Inc., Suite 420, Adelaide Street West, Toronto, Ontario  M5H 4C3 and must be received not later than the close of business on Wednesday December 18, 2002 or be delivered to the scrutineer at the Meeting or any adjournment thereof, prior to the time for voting, in order to be voted.


The shares represented by the Proxy given in favour of the person or persons named in the enclosed form of Proxy will be voted in accordance with the direction of the shareholder as indicated on the form of Proxy.  In the absence of such direction, such shares will be voted "for" the matters set out in the Notice of Meeting and described in this Proxy Circular.  The enclosed form of Proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the Notice of Meeting, and with respect to other matters which may properly come before the Meeting.  At the date hereof, the management of the Company knows of no such amendments, variations or other matters to come before the Meeting.  However, if other matters not known to management should properly come before the meeting, the accompanying Proxy will be voted on such matters in accordance with the judgment of the person voting the Proxy. 


Appointment and Revocation of Proxies


The persons named in the enclosed form of Proxy are directors and/or officers of the Company.  A shareholder desiring to appoint some other person to represent him at the Meeting may do so by inserting such person’s name in the blank space provided in the Proxy form and striking out the names of the other nominees. 


A shareholder giving a Proxy has the power to revoke it at any time before it is exercised.  A Proxy may be revoked by instrument in writing executed by the shareholder or by his attorney authorized in writing or, if the shareholder is a corporation, under its corporate seal, or by an officer or attorney thereof duly authorized, and received by the Company at the address below by the close of business on Wednesday, December 18, 2002 or by the scrutineer of the Meeting on the day of the Meeting, or adjournment thereof, or in any other manner permitted by law.


Record Date


The Company has fixed November 14, 2002 as the record date for the purpose of determining shareholders entitled to receive notice of the Meeting and as the record date for the purpose of determining shareholders entitled to vote at the Meeting.  The Company will prepare a list of shareholders as at the close of business on the record date and each shareholder named in the list will be entitled to vote the shares shown opposite his name on the said list at the Meeting except to the extent that the shareholder has transferred any of his shares after the record date and (i) the transferee of those shares produces properly endorsed share certificates or otherwise establishes that he owns the shares and (ii) demands by not later than December 10, 2001 that his name be included in the list before the Meeting, in which case the transferee will be entitled to vote his shares at the Meeting.
Page 3

Voting Shares and Principal Holders Thereof


On November 4, 2002 the Company has 19,636,109 common shares issued and outstanding, each carrying the right to one vote at the Meeting.  So far as the directors and senior officers of the Company are aware, there are no persons or companies beneficially owning or exercising control or direction over shares carrying more than 10% of the votes attached to the common shares of the Company.


Executive Compensation


The following table presented in accordance with the regulation (the “Regulation”) made under the Securities Act (Ontario) sets forth all annual and long term compensation for services in all capacities to the Company for the fiscal years ended June 30, 2002, 2001 and 2000 (to the extent required by the Regulation):


Summary Compensation Table








Name and
Position






Year Ending 




















Stock Options Granted




Stock Options Exercised






Stock Options held at 
  







All Other 

(1)
June 30
$Salary
$Bonus
( 2)
$Gain (3)
year end
$ Value (4)
Compensation

                 
Peter Mordaunt
2002
US78,000
US40,000
100,000
Nil
580,000
1,320,500
Nil

Chairman &
2001
US78,000
US40,000
Nil
210,000
480,000
Nil
Nil

President 
2000
US78,000
Nil
480,000
500,000
630,000
502,000
Nil

                 
Steven Brunelle
2002
111,000
25,000
100,000
98,490
350,000
807,500
Nil

Vice President
               
                 
William Faust
2002
US121,668
Nil
100,000
263,500
60,000
111,000
Nil

Vice President
               
Operations
               
                 
Edward J. Badida
2002
102,300
Nil
100,000
Nil
100,000
310,000
Nil

Vice President
               
Finance
               
                 



(1)
For the relevant periods, no other executive officer earned compensation in excess of $100,000.


(2)
Peter Mordaunt - 2002 – 100,000 Options to purchase Common Shares at $1.75 expiring 10/02/04 and 2000 - 350,000 Options to purchase Common Shares at $2.65 expiring 12/20/02.
Steven Brunelle – 2002 - 100,000 Options to purchase Common Shares at $1.75 expiring 10/02/04 William Faust – 2002- 100,000 Options to purchase Common Shares at $3.00 expiring 02/28/05
Edward J. Badida – 2002 – 100,000 Options to purchase Common Shares $1.75 expiring 10/02/04


(3)
Represents the difference between the exercise price and the closing price on The Toronto Stock Exchange on the day prior to exercise.


(4)
Represents the difference between exercise price and the closing price on The Toronto Stock Exchange at June 30.




Page 4




































Page 5



Compensation of Directors


No amounts were paid to directors acting as such in the fiscal year ended June 30, 2002.


Indebtedness of Directors and Officers


No directors or officers of the Company are indebted to the Company.


Interests of Management and Others in Material Transactions


Certain geological, consulting and corporate services and facilities were provided to the Company and its subsidiaries by directors and/or officers and/or companies controlled by directors and/or officers.  The cost of such services for the fiscal year ended June 30, 2002 was $680,213 (2001-$354,989).  The Company, as prime tenant of shared corporate offices, charged rent of $6,000 (2001-$51,400) and overhead recoveries of $7,500 (2001-$97,575) to companies related due to common direction and management.  


Management Contracts


The Company has agreements with three executive officers.  Two provide that, if the officer’s contract is terminated without cause, the Company is required to pay the said officer two times his annual remuneration.  In the event that there is a fundamental change with respect to the Company, the officer or the Company, at any time within six months following such change, may terminate the contract and thereupon the Company shall pay the said officer three times his annual remuneration.  The third provides that if the officer’s contract is terminated without cause, the Company is required to pay the said officer one times his annual remuneration.  In the event of a fundamental change with respect to the Company, the Company may terminate the contract and thereupon the Company shall pay the officer two times his annual remuneration.


Stock Option Plan


On November 1, 1995 the shareholders of the Company adopted a resolution approving the creation of a Stock Option Plan (the “Plan”) in favour of directors, employees and consultants to the Company (collectively, the “Eligible Persons”).  Pursuant to the plan and subsequent resolutions passed by shareholders, the Company may grant options to Eligible Persons for a maximum of 4,400,000 common shares of its share capital, at a price to be determined by its Board of Directors.  Such price shall not be lower than the market price in accordance with the rules set forth by the regulatory authorities having jurisdiction over the securities of the Company.  The purpose of the Plan is to attract and motivate Eligible Persons by offering them the opportunity to acquire an equity interest in the company through the purchase of common shares under the Plan.


The following table sets out the details concerning all outstanding options granted under the Plan as at the date hereof;


Date of Grant
Number of Options
Exercise Price
Expire Date

       
December 20, 1999
500,000
$2.65
December 20, 2002

June 30, 2000
660,000
$3.00
June 30, 2003

October 2, 2001
380,000
$1.75
October 2, 2004

December 12, 2001
  40,000
$1.80
December 12, 2004

February 28, 2002
  60,000
$3.00
February 28, 2005












Page 6

The following table sets forth the number of shares acquired, if any, by officers and directors pursuant to options exercised during the financial year ended June 30, 2002 and the total value realized at the time of exercise.




Category
Number of optionees who have exercised options
Number of shares
Purchased
Value realized
($)

Officers
2
207,000
310,100

Directors
5
210,000
432,000

Employees and
Consultants
4
195,000
466,750




Annual Report and Consolidated Financial Statements


The Consolidated Financial Statements of the Company for the years ended June 30, 2001 and 2000 and the Report of the Auditors thereon are included herewith.


Statement of Corporate Governance Practices


The Toronto Stock Exchange, on which Corner Bay Silver Inc. (“Corner Bay”) is listed, has adopted guidelines regarding the disclosure by listed corporations of their approach to corporate governance (the “Guidelines”).  This section is a consequence of the Guidelines.


The Guidelines provide that some of the recommendations that are made may be overly expensive and thus inappropriate for smaller corporations.  As a matter of fact, the Board of Directors of Corner Bay (the “Board”) considered the Guidelines, received comments from Corner Bay’s solicitors and decided not to implement some recommendations, which were deemed to be overly expensive and inappropriate for a company of Corner Bay’s size.  It was felt that adding such overhead costs would needlessly reduce the Company’s working capital position


The Role of the Board


The role of the Board is to oversee the conduct of the Company’s business and to supervise management, which is responsible to the board for the day-to-day conduct of business.  However, given Corner Bay’s size, individual transactions loom large in relative importance and are addressed at the Board level.


The Board discharges five (5) specific responsibilities as part of its overall “stewardship responsibility”.  These are:


*  Strategic planning process:  given Corner Bay’s size, its strategic plan is elaborated directly by the Board, with the assistance of management;


*  Managing risk :  the Board directly oversees most aspects of the business of Corner Bay and thus, does not require the elaboration of “systems” or the creation of committees to effectively monitor and manage the principal risks of all aspects of the business of Corner Bay;


*  Appointing, training and monitoring senior management:  no elaborate system of selection, training and assessment of management has been established, as these would prove too costly; however the Board closely monitors management’s performance, which is measured against the overall strategic plan, through reports by and regular meetings with management;










Page 7



*  Communication policy:  it is and has always been the Board’s unwritten policy to communicate effectively with its shareholders, other stakeholders and the public generally through statutory filings and mailings, as well as news releases; the shareholders are also given an opportunity to make comments or suggestions at shareholder meetings; these comments and suggestions are then factored into the Board’s decisions; 


*  Ensuring the integrity of the Company’s internal control and management information systems:  given the involvement of the Board in operations, the reports from and the meetings with management, the Board can effectively track and monitor the implementation of approved strategies.


The Composition of the Board and the Establishment of Board Committees 


Corner Bay’s Board is presently comprised of six (6) Directors, of whom four (4) can be defined as “unrelated Directors” or “Directors who are independent of management and are free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Directors’ ability to act with a view to the best interests of the Company, other than interests and relationships arising from shareholding” and do not have interests in or relationships with Corner Bay.  


In keeping with the Guideline, the Board examined the possibility of setting up various committees such as a Nominating Committee, a Governance Committee or a Human Resources and Compensations Committee.  However, in light of Corner Bay’s size and resources, it was deemed that setting up such committees would be overly expensive.


Corner Bay does not provide a formal orientation and education programme for new Directors.  However, new Directors are given an opportunity to familiarize themselves with Corner Bay by touring the facilities and meeting other members of the Board as well as members of management.


The Board’s Performance and Director’s Compensation and Indemnification


Without convening a special meeting for this purpose, the Board periodically undertakes an assessment exercise addressing its effectiveness, with input from management.


Board remuneration is divulged in the Information Circular which is sent to shareholders prior to meetings.


The Board’s Relations with Management 


The Chairman of the Board is a member of management, as is the norm with companies of Corner Bay’s size.  However, the Board feels that this is not an impediment to the proper discharge of the Board’s responsibilities.  Furthermore, the interaction between senior management and the Board members both inside and outside of Board meetings ensures that the Board is properly informed and that the Board members’ experience is brought to bear when needed by management.


Corner Bay’s Board remains sensitive to corporate governance issues and seeks to set up the necessary structures to ensure an effective discharge of its responsibilities without creating additional overhead costs and reducing the return on shareholder’s equity.  The Board remains committed to ensuring the long term viability and profitability of Corner Bay, along with the well-being of its employees and of the communities in which it operates.
















Page 8

PARTICULARS OF MATTERS TO BE ACTED UPON


1.    Election of Directors


The Board of Directors of the Company presently consists of six (6) directors.  Management proposes the election of six (6) directors to the Board.  The following are management’s nominees for election to the Board:




Name, Residence and 
Present Position
Number of 


with the Corporation
Principal Occupation
Shares (1) 
Director Since


Peter Mordaunt
Chairman and President of 
Tucson, Arizona
Corner Bay Silver Inc.
729,490
July 1993
Chairman of the Board,


President and Director




Steven Brunelle
Geologist,Vice President 
318,509
February 1996
Acton, Ontario
& Secretary
Vice President and 
Corner Bay Silver Inc.
Director


J. Terrence Flanagan  
Geologist and Professional  
312,037
May 1991
Toronto, Ontario
Engineer; Chairman of Chesbar
Director
Resources Inc.


Frank J. Nolan 
President of 
25,000
May 1990
Halifax, Nova Scotia
Petro Drilling Company Ltd.
Director


Donald J. Worth
Retired Professional Engineer
20,000
October 2001
Willowdale, Ontario


Director




Michel Blouin
Lawyer, Partner at
NIL
December 2001
Dorval, Quebec
Lavery De Billy, Montreal
Director




NOTE:  (1)  The information with respect to shares owned beneficially, controlled, or directed by directors not being within the knowledge of the Company has been furnished by the respective directors individually.


All of the above nominees, were candidates for the position of director at the last meeting of shareholders.  The term of office of each director will be from the date of the Meeting at which he is elected until the next Annual Meeting of the Company or until his successor is elected or appointed.


At present, the Audit Committee is composed of Messrs. P. Mordaunt, J. T. Flanagan and D. J. Worth.  The responsibility of the Audit Committee is to review the annual and quarterly consolidated financial statements of the Company and to make recommendations to the Board of Directors with respect to the same.  The Company does not have an Executive Committee.






Page 9



If for any reason any nominee is not available for election, Proxies exercisable by management will be voted in favour of the remaining nominees, unless the shareholder directs withholding of vote, and may be voted for a substitute nominee in the place of those who are not candidates.  Management has no reason to believe that any of these nominees will fail to be candidates at the Meeting and does not at this time have any substitute for any nominees.


2.    Appointment of Auditors


It is proposed to appoint PricewaterhouseCoopers LLP, Chartered Accountants, Toronto, Ontario, as auditors of the Company and to authorize the Directors to fix their remuneration.  PricewaterhouseCoopers were first appointed as auditors of the Company in June, 1989. 


3.
Advance Shareholder Approval for the Issuance of a Number of Shares by Private Placement That Exceeds 25% of the Company’s Issued and Outstanding Share Capital


The Company from time to time investigates opportunities to raise financing on advantageous terms. It expects to undertake one or more financings over the next year and expects some of them to be structured as private placements.


Under the rules of The Toronto Stock Exchange the aggregate number of shares of a listed company which are issued or made subject to issuance (i.e. issuable under a share purchase warrant or option or other convertible security) by way of one or more private placement transactions during any particular six-month period must not exceed 25% of the number of shares outstanding (on a non-diluted basis) prior to giving effect to such transactions (the “TSX 25% Rule”), unless there has been shareholder approval of such transactions.


The application of the TSX 25% Rule may restrict the availability to the Company of funds which it may wish to raise in the future by private placement of its securities.


In particular, management of the Company considers it to be in the best interests of the Company to solicit private placement funds for working capital and Company operations. The Toronto Stock Exchange has a working practice that it will accept advance approval by shareholders in anticipation of private placements that may exceed the TSX 25% Rule, provided such private placements are completed within 12 months of the date such advance shareholder approval is given.


THE COMPANY’S ISSUED AND OUTSTANDING SHARE CAPITAL IS CURRENTLY 19,636,109 COMMON SHARES AND THE COMPANY PROPOSES THAT THE MAXIMUM NUMBER OF SHARES WHICH EITHER WOULD BE ISSUED OR MADE SUBJECT TO ISSUANCE UNDER ONE OR MORE PRIVATE PLACEMENTS IN THE TWELVE MONTH PERIOD COMMENCING ON DECEMBER 20, 2002 WOULD NOT EXCEED 19,636,109 SHARES IN THE AGGREGATE, OR 100% OF THE COMPANY’S ISSUED AND OUTSTANDING AS AT NOVEMBER 4^TH, 2002.


Any private placement proceeded with by the Company under the advance approval being sought at the Meeting will be subject to the following additional restrictions:


(a)
it must be substantially with parties at arm’s length to the Company;


(b)
it cannot materially affect control of the Company;


(c)
it must be completed within a twelve month period following the date the shareholder approval is given; and






Page10



(d)
it must comply with the private placement pricing rules of The Toronto Stock Exchange which currently require that the issue price per Common share must not be lower than the closing market price of the Common shares on The Toronto Stock Exchange on the trading day prior to the date notice of the private placement is given to The Toronto Stock Exchange (the “Market Price”), less the applicable discount, as follows:


Market Price
Maximum Discount


$0.50 or less
25%
$0.51 to $2.00
20%
Above $2.00
15%


(for these purposes, a private placement of unlisted convertible securities is deemed to be a private placement of the underlying listed securities at an issue price equal to the lowest possible price at which the securities are convertible by the holders thereof.)


In any event, The Toronto Stock Exchange retains the discretion to decide whether or not a particular placement is “substantially” at arm’s length or will materially affect control in which case specific approval may be required.


In anticipation that the Company may wish to enter into one or more private placements in the next 12 months that will result in it issuing and/or making issuable such number of its Common shares, taking into account any shares that may be issued upon exercise of any warrants, options or other rights granted in connection with the private placements, that will exceed the TSX 25% Rule, the Company requests that its shareholders pass an ordinary resolution in the following terms:


RESOLVED, as an ordinary resolution, that the issuance by the Company in one or more private placements during the twelve month period commencing December 20, 2002 of such number of securities that would result in the Company issuing or making issuable 19,636,109 common shares as is more particularly described in the Company’s Proxy Circular dated November 4, 2002, is hereby approved.


The persons designated in the enclosed form of Proxy intend to vote for the adoption of this  resolution. This resolution must be adopted by a majority of the votes cast by the shareholders present or represented by proxy at the meeting.


Other Matters Which May Come Before the Meeting


Management knows of no matters to come before the Meeting other than as set forth in the Notice of Meeting.  However, if other matters which are not known to management should properly come before the Meeting, the persons named in the enclosed form of proxy are authorized to vote the shares represented thereby in accordance with their best judgment.


The undersigned hereby certifies that the contents and sending of this Management Proxy Circular have been approved by the Board of Directors of the Company.










Toronto, Ontario
Peter Mordaunt
November 4, 2002
Chairman and President








Page 11















































Corner Bay Silver Inc.
An exploration stage entity


Consolidated Financial Statements
June 30, 2002 and 2001
(expressed in Canadian dollars)


























































Page 12





     September 6, 2002






                              Independent Auditors' Report


     To the Shareholders of
     Corner Bay Silver Inc.




     We have audited the consolidated balance sheets of Corner Bay Silver Inc. as at
     June 30, 2002 and 2001 and the consolidated statements of operations and deficit
     and cash flows for each of the years in the three-year period ended June 30,
     2002. These financial statements are the responsibility of the Company's
     management. Our responsibility is to express an opinion on these financial
     statements based on our audits.


     We conducted our audits in accordance with Canadian and United States generally
     accepted auditing standards. Those standards require that we plan and perform an
     audit to obtain reasonable assurance whether the financial statements are free of
     material misstatement. An audit includes examining, on a test basis, evidence
     supporting the amounts and disclosures in the financial statements. An audit also
     includes assessing the accounting principles used and significant estimates made
     by management, as well as evaluating the overall financial statement
     presentation.


     In our opinion, these consolidated financial statements present fairly, in all
     material respects, the financial position of the Company as at June 30, 2002 and
     2001 and the results of its operations and its cash flows for each of the years
     in the three-year period ended June 30, 2002 in accordance with Canadian
     generally accepted accounting principles.




     (Signed) "PricewaterhouseCoopers LLP"


     Chartered Accountants


     Toronto, Ontario




     Comments by Auditors for U.S. readers on Canada-U.S. Reporting Difference




     In the United States, reporting standards for auditors require the addition of an
     explanatory paragraph (following the opinion paragraph) when the financial
     statements are affected by conditions and events that cast substantial doubt on
     the Company's ability to continue as a going concern, such as those described in
     note 1 to the consolidated financial statements. Our report to the shareholders
     dated September 6, 2002 is expressed in accordance with Canadian reporting
     standards, which do not permit a reference to such events and conditions in the
     auditors' report when they are adequately disclosed in the financial statements.


     (Signed) "PricewaterhouseCoopers LLP"


     Chartered Accountants


     Toronto, Ontario




Page 13

     Corner Bay Silver Inc.
     An exploration stage entity
     Consolidated Balance Sheets 
     As at June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated)




                                                              2002         2001
                                                                $            $
                                                          -----------  -----------
      Assets
      Current assets
      Cash                                                 5,323,564    4,022,422
      Receivables                                            197,673      176,912
      Prepaid expenses and deposits                           16,887       27,389
                                                          -----------  -----------
                                                           5,538,124    4,226,723


      Deposits - reclamation bonds                            30,000       30,000
      Investment - quoted market value of $nil(2001 -              -       43,353
         $61,933) (note 8)
      Deferred exploration expenditure (note 3)            7,705,865    4,551,072
      Property, plant and equipment (note 4)               3,896,461       96,870
                                                          -----------  -----------


                                                          17,170,450    8,948,018
                                                          ===========  ===========


      Liabilities
      Current liabilities
      Accounts payable and accrued liabilities               316,914      387,963
                                                          -----------  -----------
      Shareholders' Equity
      Capital stock (note 5)                              24,314,504   14,813,154
      Contributed surplus                                    537,005      537,005
      Deficit                                             (7,997,973)  (6,790,104)
                                                          -----------  -----------
                                                          16,853,536    8,560,055
                                                          -----------  -----------
                                                          17,170,450    8,948,018
                                                          ===========  ===========


      Nature of operations and going concern (note 1)


      Commitments (note 10)




Approved by the Board of Directors


(signed) J. Terrance Flanagan       Director(signed) Steve Brunelle       Director






       The accompanying notes form an integral part of these consolidated financial
                                        statements.










Page 14

     Corner Bay Silver Inc.
     An exploration stage entity
     Consolidated Statements of Operations and Deficit
     For the three-year period ended June 30, 2002


     (expressed in Canadian dollars, unless otherwise stated)




                                                 2002         2001         2000
                                                  $            $            $
                                              -----------  -----------  -----------
      Other income
      Interest                                    94,013     127,474        48,611
      Other                                      201,831      97,500        64,900
                                              -----------  -----------  -----------
                                                 295,844     224,974       113,511


      Other expenses
      General and administrative               1,467,007     798,073       521,338
      Amortization                                     -      25,312        19,251
                                              -----------  -----------  -----------
                                               1,467,007     823,385       540,589


      Gain on disposal of assets                       -           -      (14,465)
      Gain on disposal of investment             (5,805)           -             -
      Writedown of investment                          -           -        22,606
      Write-off of property, plant and            42,511      95,833             -
         equipment
      Write-off of deferred exploration                -     373,627     1,088,239
         expenditure
                                               1,503,713   1,292,845     1,636,969
                                              -----------  -----------  -----------


      Loss for the year                      (1,207,869)  (1,067,871)   (1,523,458)
      Deficit - Beginning of year            (6,790,104)  (5,722,233)   (4,198,775)
                                              -----------  -----------  -----------


      Deficit - End of year                  (7,997,973)  (6,790,104)   (5,722,233)
                                              ==========  ===========  ============
      Basic loss per share                        (0.07)       (0.08)       (0.14) 
                                              ==========  ===========  ============


      Weighted average number of shares
         outstanding                          16,697,807  13,912,182    10,760,945
                                              ==========  ===========  ============


























       The accompanying notes form an integral part of these consolidated financial
                                        statements.


Page 15

     Corner Bay Silver Inc.
     An exploration stage entity
     Consolidated Statements of Cash Flows
     For the three-year period ended June 30, 2002


     (expressed in Canadian dollars, unless otherwise stated)




                                                 2002         2001         2000
                                                  $            $            $
                                              -----------  -----------  -----------
      Cash provided by (used in)
      Operating activities
      Loss for the year                       (1,207,869)  (1,067,871)  (1,523,458)
      Write-off of deferred exploration                -      373,627    1,088,239
         expenditure
      Writedown of investment                          -            -       22,606
      Amortization                                     -       25,312       19,251
      Write-off of property, plant and            42,511       95,833            -
         equipment
      Gain on disposal of investment              (5,805)           -            -
      Gain on disposal of assets                       -            -      (14,465)
                                              -----------  -----------  -----------
                                              (1,171,163)    (573,099)    (407,827)


      Net (increase) decrease in non-cash        (81,308)      82,054      237,610
         working capital balances related
         to operations (note 11)
                                              (1,252,471)    (491,045)    (170,217)
      Investing activities
      Deferred exploration expenditure and
         property, plant and equipment
            Expenditures                      (3,147,522)  (1,460,057)  (2,185,566)
            Option receipts                            -        5,975       25,000
            Proceeds on disposal of assets             -            -       28,057
            Proceeds on disposal of               49,158            -       73,486
                investment
      Purchase of assets under construction     (400,000)           -            -
      Purchase of equipment                       (6,873)           -            -
                                              -----------  -----------  -----------
                                              (3,505,237)  (1,454,082)  (2,059,023)


      Financing activities
      Issue of common shares                   6,058,850    5,038,397    2,499,391
                                              -----------  -----------  -----------


      Increase in cash during the year         1,301,142    3,093,270       270,151
      Cash - Beginning of year                 4,022,422      929,152       659,001
                                              -----------  -----------  -----------
      Cash - End of year                       5,323,564    4,022,422       929,152
                                              ===========  ===========  ===========




     Supplemental cash flow information (note 11)










       The accompanying notes form an integral part of these consolidated financial
                                        statements.
Page 16

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated)




1. Nature of operations and going concern


        The Company is in the process of exploring its mineral properties and is
        establishing the amount of ore reserves that are economically recoverable from
        the Mexico property. The recoverability of amounts shown for these properties
        and related deferred exploration expenditures are dependent upon the discovery
        of economically recoverable reserves, the preservation of the Company's
        interest in the underlying mineral claims, the ability of the Company to
        obtain the financing necessary to complete the development of the properties,
        and future profitable production or, alternatively, upon the Company's ability
        to dispose of its interest on an advantageous basis. Changes in future
        conditions could require material writedowns of the carrying amounts of
        deferred exploration expenditure.
        
        
2. Summary of significant accounting policies


        These consolidated financial statements have been prepared in accordance with
        Canadian generally accepted accounting principles (GAAP).
        
        Basis of consolidation
        
        These consolidated financial statements include the accounts of the Company
        and its wholly owned subsidiaries, Corner Bay Resources Inc. and Pan MacKenzie
        Resources Inc. (including its wholly owned subsidiary Minera Corner Bay S.A.
        de C.V.).
        
        Deferred exploration expenditure
        
        The deferred exploration expenditure is recorded at cost, net of incidental
        revenues generated from the particular properties. These net costs are
        deferred until the properties to which they relate are placed into production,
        sold or abandoned. The costs will be amortized over the estimated useful lives
        of the properties following the commencement of production or written off if
        the properties are sold or abandoned.
        
        In March 2000, the Accounting Standards Board of the Canadian Institute of
        Chartered Accountants (CICA) issued Accounting Guideline No. 11 entitled,
        "Enterprises in the Development Stage" (AcG 11), and subsequently, on March
        12, 2002, issued Emerging Issues Committee (EIC) 126 "Accounting by Mining
        Enterprises for Exploration Costs." These guidelines address three distinct
        issues: (i) capitalization of costs/expenditures, (ii) impairment and (iii)
        disclosure. Prior to their issuance, development stage entities were exempt
        from following certain aspects of Canadian generally accepted accounting
        principles (GAAP). EIC 126 and AcG 11 require that all companies account for
        transactions based on the underlying characteristics of the transactions
        rather than the maturity of the enterprise. In addition, EIC 126 and AcG 11
        require specific disclosure of information by development stage companies.
        These guidelines were effective for fiscal periods beginning on or after April
        1, 2000, which affects the Company's fiscal years ended on or after June 30,
        2001.
        


Page 17

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated)


        EIC 126 and AcG 11 affect mining companies with respect to the deferral of
        exploration costs. The appropriate accounting guidance is contained in Section
        3061, "Property, Plant and Equipment" of the CICA handbook which permits, but
        does not require, exploration costs to be capitalized as part of a mining
        property, if the Company considers that such costs have the characteristics of
        property, plant and equipment. Under this view, deferred exploration
        expenditure would not automatically be subject to regular assessment of
        recoverability, unless conditions such as those discussed in EIC 126 and AcG
        11 exist.
        
        There would need to be an assessment of deferred exploration expenditure.
        Assessment of the probability of recoverability of deferred exploration
        expenditure from future operations will require the preparation of a
        projection based on objective evidence of economic reserves such as a
        feasibility study.
        
        The status of the Company's operations is such that, like most mining
        companies in the exploration stage, it would not be practicable to obtain a
        feasibility study or provide other information that could be used to support
        capitalization of deferred exploration expenditure under the alternative view.
        
        EIC 126 and AcG 11 did not have a significant impact on the Company's
        consolidated financial statements.
        
        Property, plant and equipment
        
        Land and exploration equipment are recorded at cost. Exploration equipment is
        amortized on a reducing balance basis at various rates from 14% to 33%.
        Amortization relating to equipment used on the mineral properties is
        capitalized as part of the deferred exploration expenditure balance.
        
        Assets under construction 
        
        Assets under construction consist of equipment to be commissioned at the
        Mexico property site. The assets will be included as part of the equipment
        balance once refurbished and transferred to the site. These assets are not
        being amortized, as they are not currently ready for use.
        
        Financial instruments
        
        The carrying amounts of cash, receivables, prepaid expenses and deposits,
        accounts payable and accrued liabilities approximate the fair values of those
        financial instruments due to the short-term maturities of such instruments.
        Financial instruments that potentially subject the Company to concentrations
        of credit risk consist primarily of cash. The Company places its cash with
        high credit quality financial institutions.
        
        Income taxes
        
        The provision for future income taxes is based on the liability method. Future
        income taxes arise from the recognition of the tax consequences of temporary
        differences by applying statutory income tax rates applicable to future years
        to differences between the financial statements' carrying amounts and the
        income tax bases of certain assets and liabilities. The Company records a
        valuation allowance against any portion of those future income tax assets that
        it believes is not, more likely than not, to be realized. 
Page 18



     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated)
        
        Stock-based compensation plan
        
        The Company has one stock option plan, which is described in note 5. No
        compensation expense is recognized for this plan when stock or stock options
        are issued to employees. Any consideration paid on exercise of stock options
        or purchase of stock is credited to capital stock.
        Loss per share
        
        Basic loss per share is computed by dividing the loss for the year by the
        weighted average number of common shares outstanding during the year,
        including contingently issuable shares that are included when the conditions
        necessary for issuance have been met. Diluted earnings per share are
        calculated in a manner similar to basic earnings per share, except the
        weighted average number of shares outstanding are increased to include
        potential common shares from the assumed exercise of options and warrants, if
        dilutive. The number of additional shares included in the calculation is based
        on the treasury stock method for options and warrants and on the as if
        converted method for convertible securities.
        
        During the year ended June 30, 2001, the Company changed its method of
        accounting for earnings per share to comply with the revised standard issued
        by the CICA handbook, Section 3500, "Earnings per share." There was no
        difference between the loss per share calculated under the new standard and
        the amount that would have been calculated using the previous standard.
        
        Use of estimates
        
        The preparation of financial statements in conformity with Canadian generally
        accepted accounting principles (GAAP) requires management to make estimates
        and assumptions that affect the reported amounts of assets, liabilities,
        revenue and expenses during the reporting period. Actual results could differ
        from these estimates.
        
        Translation of foreign currencies
        
        As the Company considers all of its foreign operations to be fully integrated,
        all items denominated in foreign currencies have been translated using the
        temporal method. Under this method, monetary assets and liabilities and non-
        monetary items carried at market values are translated at the year-end
        exchange rate. Other non-monetary items and revenue and expenses are
        translated at approximate rates in effect at the dates of the transactions,
        except depletion and amortization, which are translated at the same rates as
        the related assets.




















Page 19

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated)




3. Deferred exploration expenditure


                                      Mexico  Maritimes  Chibou-gamau        Total
                                           $          $             $            $
     --------------------------------------------------------------------------------
      Balance - June 30, 1999       1,018,492      401,611    1,097,825    2,517,928
      Expenditures                  2,114,901        1,411            -    2,116,312
      Option receipts                       -      (25,000)      (9,586)     (34,586)
      Writedown                             -            -   (1,088,239)  (1,088,239)
     --------------------------------------------------------------------------------


      Balance - June 30, 2000       3,133,393      378,022            -    3,511,415
      Expenditures                  1,388,451        1,580            -    1,390,031
      Option receipts                       -       (5,975)           -       (5,975)
      Amortization of                  29,228            -            -       29,228
         equipment capitalized
      Writedown                             -     (373,627)           -     (373,627)
     --------------------------------------------------------------------------------


      Balance - June 30, 2001       4,551,072            -            -    4,551,072
      Expenditures                  3,147,522            -            -    3,147,522
      Amortization of                   7,271            -            -        7,271
         equipment capitalized
     --------------------------------------------------------------------------------


      Balance - June 30, 2002       7,705,865            -            -    7,705,865
     ================================================================================


        The Alamo Dorado silver/gold property is located in the northwestern state of
        Sonora, Mexico. Paved roads connect the state capital of Hermosillo to the
        town of Alamos, which is 67 kilometres northwest of the Alamo Dorado Project.


        The 5,369 hectare property consists of the 504 hectare Alamo Ocho concession
        held under option by the Company, and the 4,865 hectare Alamo Dorado
        concession, which is owned 100% by the Company and surrounds the Alamo Ocho
        concession. The Company can earn a 100% interest in Alamo Ocho by paying
        US$800,000 over six years. Payments are made semi-annually, of which
        US$450,000 was paid to June 30, 2002 (2001 - $325,000; 2000 - $nil). 
        
        During the year, the Company incurred $131,147 (2001 and 2000 - $nil) in
        rental payments, and is committed to annual rental payments of $114,150.
























Page 20

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated)




4. Property, plant and equipment


                                                 2002                                    2001
     -------------------------------------------------------------------------------------------------
                             Cost    Accumulated       Net        Cost      Accumulated        Net
                                     amortization                           amortization        
                                $          $            $           $             $             $
     -------------------------------------------------------------------------------------------------
     Equipment            68,683         14,722       53,961      129,415         32,545       96,870
     Assets under
       construction     3,842,500              -    3,842,500            -              -            -
     -------------------------------------------------------------------------------------------------


                       3,911,183         14,722    3,896,461      129,415         32,545       96,870
     =================================================================================================


                                                                                              2000
                                                               ---------------------------------------
                                                                   Cost     Accumulated        Net
                                                                            amortization       
                                                                    $             $             $
                                                               ---------------------------------------
     Equipment                                                    239,640         62,423      177,217
     Assets under construction                                          -              -            -
                                                               ---------------------------------------
                                                                  239,640         62,423      177,217
                                                               =======================================




        During the year ended June 30, 2002, the Company wrote off $42,511 (2001 -
        $95,833; 2000 - $nil) of property, plant and equipment.
        
5. Capital Stock


        Authorized
        
        Unlimited number of common shares, without nominal or par value






































Page 21

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated)




      Issued and outstanding - common shares
        
                                                            Number of        Net
                                                              shares      proceeds
                                                           outstanding        $
      -----------------------------------------------------------------------------
      Balance - June 30, 1999                               9,899,115    7,275,366
      Shares issued for cash in private placement
          September 21, 1999                                  596,540      773,976
          December 20, 1999                                   400,000    1,198,435
      Warrants exercised for cash during the year             545,454      409,080
      Options exercised for cash during the year              393,000      117,900
     ------------------------------------------------------------------------------
      Balance - June 30, 2000                              11,834,109    9,774,757
      Shares issued in prospectus offering -                3,666,667    4,978,397
          December 14, 2000
      Options exercised for cash during the year              200,000       60,000
     ------------------------------------------------------------------------------
      Balance - June 30, 2001                              15,700,776   14,813,154
      Shares issued for cash in private placement -         1,830,000    4,575,000
          February 19, 2002
      Warrants exercised for cash during the year             183,333      275,000
      Options exercised for cash during the year              612,000    1,208,850
      Shares issued for assets under construction             850,000    3,442,500
          purchased June 18, 2002 (note 11)
     ------------------------------------------------------------------------------
      Balance - June 30, 2002                              19,176,109   24,314,504
     ==============================================================================


        On September 21, 1999, the Company completed a private placement of 596,540
        shares at a price of $1.30 per share.
        
        On December 20, 1999, the Company completed a private placement of 400,000
        units. Each unit consists of one common share at $3.00 and one-half common
        share purchase warrant. Each whole purchase warrant entitles the holder to
        purchase one additional common share at a price of $4.00 per common share at
        anytime until December 20, 2001. Effective December 20, 2001, all options that
        had not been exercised prior to this date expired.
        
        On December 14, 2000, the Company publicly offered 3,666,667 units. Each unit
        consisted of one common share at $1.50 and one-half common share purchase
        warrant. Each whole purchase warrant entitles the holder to purchase one
        additional common share at $2.25 per share at anytime until December 14, 2001.
        In connection with the December 14, 2000 offering, the underwriters received
        183,333 warrants of the Company. Each warrant entitles the underwriter to
        purchase one common share for $1.50 at any time until December 14, 2001.
        Effective December 14, 2001, all warrants that had not been exercised prior to
        this date expired. Refer to the following warrants table.
        
        On February 19, 2002, the Company completed a private placement of 1,830,000
        shares at a price of $2.50 per share.




Page 22

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated)




      Warrants
                                  Number of warrants     Weighted
                                                          average
                                                            price
                                                                $
      Balance - June 30, 1999              -                   -
      Issued - December 20, 1999     200,000                 4.00
     -------------------------------------------------------------
      Balance - June 30, 2000        200,000                 4.00
      Issued - December 14, 2000   2,016,666                 2.18
     -------------------------------------------------------------
      Balance - June 30, 2001      2,216,666                 2.34
      Expired                     (2,033,333)                2.42
      Exercised                     (183,333)                1.50
     -------------------------------------------------------------
      Balance - June 30, 2002              -
     =======================================
        Options


     On December 15, 1995, the shareholders of the Company approved the amended stock
        option plan (dated November 1, 1995) (the Plan) which provides for the
        issuance of 1.0 million stock options under the terms of the Plan. On December
        20, 1999 and December 15, 2000, the shareholders approved an amendment to
        provide for the further issuance of an additional 1.4 and 2.0 million common
        share options, respectively, under the terms of the Plan. 


        Under the Plan, the Company provides options to buy common shares of the
        Company to directors, officers and service providers. The board of directors
        grants such options for periods of up to ten years at prices not lower than
        the market price at the date of granting.
        
        No compensation expense is recognized when stock options are issued to
        employees and directors. All consideration paid by employees from the exercise
        of stock options or purchase of stock is credited to capital stock.
        
        Compensation expense is recorded when stock options are issued to non-
        employees and is recognized over the vesting period of the options.
        Compensation expense is determined as the fair value of the options at the
        date of grant using an option-pricing model. During the year ended June 30,
        2002, no stock options were issued to non-employees.
        
























Page 23

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated)


        As at June 30, 2002, the Company had outstanding and exercisable stock options
        as follows:
        
      Number of options   Exercise price   Expiry date
                                 $
      -----------------   --------------   -----------
          500,000                2.65       12/20/02
          660,000                3.00       06/30/03
          380,000                1.75       10/02/04
           40,000                1.80       12/12/04
           60,000                3.00       02/28/05
     


                                         2002                 2001                 2000
     ------------------------------------------------------------------------------------
                       Number of   Weighted   Number of   Weighted   Number of   Weighted
                        options     average    options     average    options     average
                                     price                  price                  price
                                       $                      $                      $
     ------------------------------------------------------------------------------------
     Outstanding - 
       Beginning of
       year             1,607,000     2.60   1,707,000       2.38     700,000      0.30


     Granted              645,000     1.95     100,000       1.70   1,400,000      2,84
     Exercised           (612,000)    1.98    (200,000)      0.30    (393,000)     0.30
     -----------------------------------------------------------------------------------
     Outstanding -
       End of year      1,640,000     2.57   1,607,000       2.60   1,707,000      2.38
     ===================================================================================


     6. Income taxes
        
        The Company has non-capital loss carry-forwards of approximately $2.5 million
        available to reduce future taxable income. These losses will expire between
        2003 and 2009. In addition, the Company has approximately $7.3 million in
        unclaimed exploration and development expenses in Canada. No recognition is
        given in these consolidated financial statements to any potential benefit from
        the utilization of these non-capital losses or unclaimed exploration and
        development expenses.
        
     7. Related party transactions


        Certain geological, consulting and corporate services were provided to the
        Company and its subsidiaries by seven directors and/or officers, and/or
        companies controlled by directors and/or officers. The cost of such services
        (including salaries) for the year ended June 30, 2002 was $680,213 (2001 -
        $354,989; 2000 - $230,279). The services provided were at rates similar to
        those charged to non-related parties.
        
        The Company, as prime tenant of shared corporate offices with the above-
        mentioned related party companies, charged rent of $6,000 for the year ended
        June 30, 2002 (2001 - $51,400; 2000 - $46,800) and had overhead recoveries of
        $7,500 for the year ended June 30, 2002 (2001 - $97,575; 2000 - $71,913).


Page 24

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated 


     8. Investment


        As at June 30, 2002, the Company held nil (2001 - 309,665; 2000 - 309,665)
        shares of MSV Resources Inc. The investment was disposed of during the year.
        
        
     9. Segmented information


        Working capital balances are retained in Canada and principal property
        balances are located as described in note 3.
        
        
     10. Commitments


        The Company leases office space under leases expiring November 30, 2004.
        Future minimum lease payments are as follows:
        


         Year ended June 30         $
        ----------------------------------
             2003                69,660
             2004                69,660
             2005                29,025
        ----------------------------------
                                168,345
        ==================================




     11. Supplemental cash flow information


        During the fiscal years ended June 30, 2002, 2001 and 2000, the Company paid
        no income taxes or interest.


        Net (increase) decrease in non-cash working capital balances related to
        operations:
        
                                                       2002      2001      2000
                                                        $         $         $
         ------------------------------------------------------------------------
          Receivables                               (20,761)   (17,438)   32,625
          Prepaid expenses and deposits              10,502     (1,452)  (21,502)
          Accounts payable and accrued liabilities  (71,049)   100,944   226,487
         ------------------------------------------------------------------------
                                                    (81,308)    82,054   237,610
         ========================================================================


        On June 18, 2002, assets under construction were acquired for $3,442,500,
        through issuance of common shares (note 5). The purchase price was based on
        the value of the common shares.
        
        






Page 25

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated 




     12. Acquisition of Company by Pan American Silver Corp.


        On May 21, 2002 the Company and Pan American Silver Corp. (Pan American)
        announced a proposed plan of arrangement whereby Pan American would acquire
        all of the issued and outstanding shares of the Company. On June 28, 2002,
        both companies announced amended terms to the proposed plan of arrangement.
        The amended proposal for a plan of arrangement is subject to approval of the
        shareholders of the Company and Pan American and approval by the Ontario
        Superior Court of Justice and various regulatory authorities. The shareholders
        of the Company and Pan American approved the plan of arrangement on September
        4 and 5, 2002, respectively. If remaining approvals are obtained and all
        material covenants are satisfied in a timely fashion, the plan of arrangement
        would become effective in September 2002.
        
        Under the terms of the amended plan of arrangement, each Corner Bay Silver
        Inc. common share would be exchanged for 0.3846 of a Pan American common share
        and 0.1923 of a Pan American common share purchase warrant.  Each whole Pan
        American common share purchase warrant (the Pan American Warrant) provides the
        holder with the rights to purchased a Pan American common share for CAN$12 for
        a five-year period after the effective date of the plan of arrangement. The
        Pan American Warrants will, subject to regulatory approval, be listed for
        trading on the Toronto Stock Exchange.
        
        
     13. Subsequent events


        In July 2002, the principal mineral concession, which hosts the Alamo Dorado
        concession, was purchased outright from the concession owners by paying the
        remaining option payments in a final lump sum payment of US$345,000
        (US$300,000 plus Impuesto Al Valor Agregado (IVA) taxes).
        
        
     14. Comparatives


        Certain prior year's comparative numbers have been restated to reflect the
        current year's presentation.
        
        


     15. Difference between Canadian and United States Generally Accepted Accounting
        Principles (GAAP)


        Canadian GAAP varies in certain significant respects from the principles and
        practices generally accepted in the United States (U.S. GAAP). The effect of
        these principal measurement differences on the Company's consolidated
        financial statements are quantified below and described in the accompanying
        notes.
        










Page 26

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated 




     Consolidated statement of operations
                                                  2002         2001         2000
                                                   $            $            $
     ------------------------------------------------------------------------------
      Loss for the year reported under
         Canadian GAAP                        (1,207,869)  (1,067,871)  (1,523,458)
      Exploration expenses adjustment (a)     (3,154,793)  (1,039,657)    (993,487)
     ------------------------------------------------------------------------------
      Loss for the year reported under
         U.S. GAAP                            (4,362,662)  (2,107,528)  (2,516,945)
     ==============================================================================


U..
In accordance with U.S. GAAP, the Company would be required to charge all
        costs of deferred exploration expenditure to earnings as operating expenses as
        incurred until proven economic reserves are established.  As a result of
        accounting for these expenditures in this manner, loss for the year would be
        increased by $3,154,793 in the year ended June 39, 2002, by $1,039,657 in the
        year ended June 30, 2001 and $993,487 in the year ended June 30, 2000.


        b) The Company accounts for its share options using the intrinsic value
        method, which in the Company's circumstances does not result in amounts
        different from the amounts that would be determined under the provisions of
        the Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock
        Issued to Employees," (APB 25) and related interpretations. Accordingly, no
        compensation expense for its share option plan has been recognized or recorded
        in the consolidated statements of operations and deficit for any of the years
        presented. A company that does not adopt the fair value method must disclose
        the cost of stock compensation awards at their fair value at the date the
        award is granted. The fair value of the Company's options that were granted in
        2002 was $447,952 (2001 - $37,605; 2000 - $878,747). The fair value for 2002
        was estimated using the Black-Scholes model with assumptions of a three-year
        expected term volatility ranging from 50% to 56% and interest rates from 3.75%
        to 4.04%. The fair value for 2001 and 2000 was estimated using the Black-
        Scholes model with assumptions of a two-year expected term, 60% volatility and
        interest rates ranging from 6.0% to 6.5%.


      Basic loss per share
                                                  2002         2001         2000
                                                   $            $            $
     ------------------------------------------------------------------------------
      Loss for the year reported under       (4,362,662)  (2,107,528)  (2,516,945)
         U.S. GAAP
      Weighted average number of common      16,697,807   13,912,182   10,760,945
         shares outstanding
     ------------------------------------------------------------------------------
      Loss per share under U.S. GAAP              (0.26)       (0.15)       (0.23)
     ==============================================================================












Page 27

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated 




     Consolidated statements of comprehensive loss


                                                  2002         2001         2000
                                                   $            $            $
     ------------------------------------------------------------------------------
      Loss for the year reported under       (4,362,662)  (2,107,528)  (2,516,945)
         U.S. GAAP
      Other comprehensive earnings - net
         of income taxes
           Unrealized gain on                         -       18,580        9,290
              marketable securities
           Realized (gain) loss on              (18,580)           -       33,948
              sale of marketable securities
           Writedown to fair value                    -            -       22,606
     ------------------------------------------------------------------------------
      Comprehensive loss for the year        (4,381,242)  (2,088,948)   (2,451,101)
     ==============================================================================


        The consolidated statements of comprehensive loss provide a measure of all
        changes in equity of the Company that resulted from transactions, other than
        those with shareholders, and other economic events that occurred during the
        year.
        
        Under U.S. GAAP, the Company's holdings of marketable securities with quoted
        market values would be marked to market with the resulting unrealized gain or
        loss being taken to the consolidated statement of comprehensive loss in the
        relevant year.
        
     Consolidated statements of cash flows
        
        The following summarizes the cash flow amounts in accordance with U.S. GAAP:
        
                                                  2002         2001         2000
                                                   $            $            $
     ------------------------------------------------------------------------------
      Operating activities               (4,399,993)  (1,900,413)  (2,258,579)
      Investing activities                (357,715)     (44,714)       29,339
      Financing activities                6,058,850    5,038,397    2,499,391
      Opening cash and cash equivalents   4,022,422      929,152      659,001
      Closing cash and cash equivalents   5,323,564    4,022,422      929,152
        
























Page 28

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated 






     Consolidated balance sheets
        
        The following summarizes the consolidated balance sheet amounts in accordance
        with U.S. GAAP where they are different from the amounts reported under
        Canadian GAAP.
        
                                         2002                       2001
     ------------------------------------------------------------------------------
                                 Canadian     U.S. GAAP     Canadian      U.S. GAAP
                                   GAAP                       GAAP       
                                     $            $             $              $
     ------------------------------------------------------------------------------
      Investments                      -             -        43,353         61,933
      Deferred                 7,705,865             -     4,551,072              -
         exploration
         expenditure
      Deficit                 (7,997,973)  (15,703,838)   (6,790,104)   (11,341,176)
      Cumulative
         comprehensive
         other income                  -             -             -         18,580
         


        New standards for U.S. GAAP
        
        In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
        of Financial Accounting Standard (SFAS) No. 142, "Goodwill and Other
        Intangible Assets." This new standard features new accounting rules for
        goodwill and intangible assets. The Company does not foresee any impact on a
        cumulative effect of an accounting change or on the carrying values of assets
        and liabilities recorded in the consolidated balance sheets upon adoption.
        SFAS No. 142 will be adopted on July 1, 2002.
        
        Also issued in June 2001 was SFAS No. 143, "Accounting for Asset Retirement
        Obligations." This statement addresses financial accounting and reporting for
        obligations associated with the retirement of tangible long-lived assets and
        the associated asset retirement costs. It requires that the fair value of a
        liability for an asset retirement obligation be recognized in the period in
        which it is incurred if a reasonable estimate of a fair value can be made. The
        associated asset retirement costs are capitalized as part of the carrying
        amount of the long-lived asset. The Company is analyzing the impact of SFAS
        No. 143 and will adopt this standard on July 1, 2002.
        
        In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
        or Disposal of Long-Lived Assets." This statement supersedes SFAS No. 121 and
        the accounting and reporting provisions of APB 30, and also amends APB 51.
        This statement will require one accounting model be used for long-lived assets
        to be disposed of by sale, whether previously held and used or newly acquired,
        and will broaden the presentation of discontinued operations to include more
        disposal transactions. The Company is analyzing the impact of SFAS No. 144 and
        will adopt this standard on July 1, 2002.
        


Page 29

     Corner Bay Silver Inc.
     An exploration stage entity
     Notes to Consolidated Financial Statements
     June 30, 2002 and 2001


     (expressed in Canadian dollars, unless otherwise stated 




        Effective July 1, 2002, the Company will adopt, for United States reporting
        purposes, SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
        Amendment of SFAS No. 13, and Technical Corrections as of April 2002." This
        statement rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment
        of Debt," and an amendment of that statement, SFAS No. 64, "Extinguishments of
        Debt Made to Satisfy Sinking-Fund Requirements." This statement also rescinds
        SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers." This
        statement amends SFAS No. 13, "Accounting for Leases," to eliminate an
        inconsistency between the required accounting for sale-leaseback transactions
        and the required accounting for certain lease modifications that have economic
        effects that are similar to sale-leaseback transactions. This statement also
        amends other existing authoritative pronouncements to make various technical
        corrections, clarify meanings or describe their applicability under changed
        conditions. The adoption of the new standard is not currently expected to have
        a significant impact on the Company's results of operations or financial
        position.
        
        Financial Accounting Standards Board (FASB)
        
        On July 30, 2002, the FASB issued SFAS No. 146, "Accounting for Costs
        Associated with Exit or Disposal Activities." The standard requires companies
        to recognize costs associated with exit or disposal activities when they are
        incurred rather than at the date of a commitment to an exit or disposal plan.
        Examples of costs covered by the standard include lease termination costs and
        certain employee severance costs that are associated with a restructuring,
        discontinued operation, plant closing or other exit or disposal activity. SFAS
        No. 146 is to be applied prospectively to exit or disposal activities
        initiated after December 31, 2002. The adoption of the new standard is not
        currently expected to have a significant impact on the Company's result of
        operations or financial position.
        
        New standards for Canadian GAAP
        
        The CICA approved a new handbook Section 3062, "Goodwill and Other Intangible
        Assets," which will require intangible assets with an indefinite life and
        goodwill to be tested for impairment on an annual basis. Goodwill and
        indefinite life intangible assets will no longer be amortized. Intangible
        assets with definite lives will continue to be amortized over their useful
        lives. The new section is consistent with those recently approved by the FASB
        (SFAS No. 142). The adoption of this new standard is not expected to have any
        material effect on the Company's financial position, results of operations or
        cash flows. Section 3026 will be adopted on July 1, 2002.
        
        
        
















Page 30



Management’s Discussion and Analysis
Corner Bay Silver Inc.


General


The following management’s discussion and analysis of financial condition and results of operations of Corner Bay Silver Inc. should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in this Annual Report.  During the year ended June 30, 2002, the Company’s activities focused on the completion of a Feasibility Study on the Alamo Dorado Property, in Sonora Mexico, and the acquisition of a crushing plant for the project.


Operations


Fiscal 2002


The loss for the year ended June 30 2002 was $1,207,869 ($0.07 per share) compared to a loss of $1,067,871 ($0.08 per share) for the previous year. The loss in the current year includes the write off of property plant and equipment of $42,511, compared to $469,460 for property, plant, equipment and deferred exploration expenditures in fiscal 2001. The Company’s general and administrative expenses increased to $1,467,007 as compared with $798,073 in the previous year. The increase is attributable to the addition of personnel, engaging financial consultants to assist in mine financing, costs incurred to keep the shareholders informed and the Company in good standing with various regulatory authorities and costs related to the increased administration activity required as exploration and the Feasibility Study continued on the Alamo Dorado Property.  Income increased during the year to $295,844 from the previous year’s $224,974. Interest income was $94,013 compared to $127,474 in the prior year. This was due to a decrease in average cash on deposit during the year.  Other income, including royalty income on mineral properties increased to $201,831 in fiscal 2002 from $97,500 in the previous year.


Fiscal 2001


The loss for the year ended June 2001 was $1,067,871 ($0.08 per share) compared to a loss of $1,523,458 or ($0.14 per share) for the previous year. The loss in the year includes the write off of property plant and equipment and deferred exploration expenditure of $469,460, compared to $1,088,239 in fiscal 2000. The Company’s general and administrative expenses increased to $798,073 as compared with $521,338 in the previous year.  The increase is attributable to the addition of personnel, costs associated with the Company’s head office move and costs related to an equity financing during the year.  Income increased during the year to $224,974 from the
previous year’s $113,511. Interest income was $127,474 compared to $48,611 in the prior year. This was due to an increase in cash on deposit from the proceeds received from the equity financing. Other income, including rental income from shared head office premises, increased to $97,500 in Fiscal 2001 from $64,900 in the previous year.


Capital Expenditures


Fiscal 2002


During the current year, expenditures of $3,154,395 were made on the Alamo Dorado Property compared to $1,417,679 in the previous year. The increase in deferred exploration expenditures during the year ended June 30, 2002 is a result of increased exploration activity and the costs of conducting a Feasibility Study. Furthermore the Company acquired a crushing plant (assets under construction) for $3,842,500. The purchase price was comprised of cash $400,000 and the issuance of 850,000 common shares of the Company with an estimated fair value of $3,442,500.


Fiscal 2001


During fiscal 2001 expenditures of $1,417,679 were made on the Alamo Dorado Property compared to $2,114,901 in the previous year. The reduction in expenditures during the year ended June 30, 2001 is a result of reduced exploration activity during the time the Company focused on completing its equity financing.








Page 31



Liquidity, Capital and Financial Condition


Fiscal 2002


The Company raised net proceeds of $6,058,850 during fiscal 2002 by the issuance of 2,625,333 common shares as compared with net proceeds of $5,038,397 by the issuance of 3,866,667 common shares in the preceding year. The Company also issued 850,000 shares during fiscal 2002 with an estimated value of $3,442,500 for the purchase of assets under construction.  The working capital of the Company at June 30, 2002 was $5,221,210. This compares with $3,838,760 at June 30, 2001. The Company has no long term debt and has funded the ongoing exploration of the Alamo Dorado property by the sale of its common shares.  Cash used in operating activities for the year ended June 30, 2002 totaled $1,252,471 including the net loss of $1,207,869. Significant adjustments included the write-off of property plant and equipment in the amount of $42,511 and a gain on disposal of investment of $5,805.  Cash used in the year ended June 30, 2002 on investing activities totaled $3,505,237, consisting of expenditures on mineral properties totaling $3,154,395 and purchase of assets under construction of $400,000. Cash was provided by proceeds on disposal of investments of $49,158.  Cash provided in the year ended June 30, 2002 by financing activities totaled $6,058,850 consisting entirely of the issuance of common stock.


Fiscal 2001


The Company raised net proceeds of $5,038,397 during Fiscal 2001 by the issuance of 3,866,667 common shares as compared with net proceeds of $2,499,391 by the issuance of 1,934,994 common shares in the preceding year. The working capital of the Company at June 30, 2001 was $3,838,760. This compares with $827,544 at June 30, 2000.  The Company had no long term debt and had funded the ongoing exploration of the Alamo Dorado property by the sale of its common shares. Cash used in the year ended June 30, 2001 operating activities totaled $491,045 including the net loss of $1,067,871. Significant adjustments included property plant and equipment and deferred exploration expenditure written off in the amount of $469,460 and amortization in the amount of $25,312.  Cash used in the year ended June 30, 2001 on investing  activities totaled $1,454,082, consisting of expenditures on mineral properties totaling $1,460,057. Cash was provided by option receipts in the amount of $5,975.  Cash provided in the year ended June 30, 2001 financing activities totaled $5,038,397 consisting entirely of the issuance of common stock.


Outlook


At June 30, 2002 the Company held cash and cash equivalents of $5,323,564. These funds have been allocated to fund the Company’s ongoing general and administrative expenses. The Company will need to fund the further activity at the Alamo Dorado Property as recommended by AMEC E&C Services Inc. (AMEC) in the Feasibility Study by a combination of debt and equity financing. The AMEC Feasibility Study estimates capital costs to be US$45.1 million to complete the Alamo Dorado mine construction. There are no assurances that either the banking industry or the equity markets will allow for the conclusion of the project financing. Market conditions for raising capital will be strongly influenced by the prices of both silver and gold.


Acquisition of Company by Pan American Silver Corp.


On May 21, 2002 the Company and Pan American Silver Corp. (Pan American) announced a proposed plan of arrangement whereby Pan American would acquire all of the issued and outstanding shares of the Company. 


On June 28, 2002, both companies announced amended terms to the proposed plan of arrangement. The amended proposal for a plan of arrangement was subject to approval of the shareholders of the Company and Pan American and approval by the Ontario Superior Court of Justice and various regulatory authorities.  The shareholders of the Company and Pan American approved the plan of arrangement on September 4 and 5, 2002, respectively. If remaining approvals are obtained and all material covenants are satisfied in a timely fashion, the plan of arrangement would become effective in November 2002.


Under the terms of the amended plan of arrangement, each Corner Bay Silver Inc. common share would be exchanged for 0.3846 of a Pan American common share and 0.1923 of a Pan American common share purchase warrant. Each whole Pan American common share purchase warrant (the Pan American Warrant) provides the holder with the rights to purchased a Pan American common share for CAN$12 for a five–year period after the effective date of the plan of arrangement. The Pan American Warrants will, subject to approval, be listed for trading on the Toronto Stock Exchange (TSX).


Page 32

CORNER BAY SILVER INC.
PROXY FOR THE ANNUAL AND SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON DECEMBER 20, 2002


SOLICITED BY MANAGEMENT


The undersigned shareholder of CORNER BAY SILVER INC.  hereby appoints PETER MORDAUNT, Chairman and President, or failing him, STEVEN S. BRUNELLE, Vice President or instead of either of them___________________ as Proxy to attend, vote and act for the undersigned at the Annual and Special Meeting of the Shareholders to be held on December 20, 2002 and at any adjournments thereof, in the same manner, to the same extent and with the same power as if the undersigned were present at the Meeting or any such adjournments and, without limiting the generality of the foregoing, to vote on my behalf:


1.
FOR [    ] or WITHHOLD FROM VOTING [    ] for the election of the six Directors as proposed by management


OR
if you wish to vote for some but not all of the six nominees for director, mark your votes individually, as follows:


FOR [   ] or WITHHOLD FROM VOTING [   ]   Peter Mordaunt
FOR [   ] or WITHHOLD FROM VOTING [   ]   Steven S. Brunelle
FOR [   ] or WITHHOLD FROM VOTING [   ]   J. Terrence Flanagan
FOR [   ] or WITHHOLD FROM VOTING [   ]   Frank J. Nolan
FOR [   ] or WITHHOLD FROM VOTING [   ]   Donald J. Worth
FOR [   ] or WITHHOLD FROM VOTING [   ]   Michel Blouin


2.
FOR [  ] or WITHHOLD FROM VOTING [  ]  with respect to the appointment of PricewaterhouseCoopers LLP, Chartered Accountants, as Auditors and authorizing the Directors to fix their remuneration; 


3.
FOR [   ] or AGAINST [    ] the approval, ratification and confirmation of a resolution authorizing the directors to enter into agreements whereby the Company may perform private placements for the purposes of raising additional funds to carry out exploration work and to increase its working capital;


4.
At the Proxy’s discretion upon any amendments or variations to matters specified in the Notice of Annual and Special Meeting or upon any other matters that may properly come before the Annual and Special Meeting or any adjournments thereof.


The shares represented by this Proxy will be voted as specified.  If no choice is specified the Proxy will be voted “for” the matters described above.  This Proxy confers discretionary authority for the nominee to vote with respect to amendments or variations to the matters identified in the Notice of Meeting accompanying this Proxy or any other matter which may properly come before the meeting and in such manner  as such nominee in his judgment may determine.


Each shareholder has the right to appoint a person (who need not be a shareholder of the Company) to attend and act for him at the meeting other than the persons designated above.  Such right may be exercised by striking out the names of management’s nominees and by inserting in the blank space provided the name of the person to be appointed.
       
       The undersigned hereby revokes any proxies previously given.
       DATED the _________ day of ________________________, 2002


       


Signature of Shareholder              Please Print Name  


If the shareholder is a corporation, this Proxy must be executed under its corporate seal or by an officer or attorney thereof duly authorized.


An undated Proxy is deemed to bear the date it was mailed by Management.
Category	Number of optionees who have exercised options	Number of shares Purchased	Value realized ($)
Officers	2	207,000	310,100
Directors	5	210,000	432,000
Employees and Consultants	4	195,000	466,750
Name and Position	Year Ending			Stock Options Granted	Stock Options Exercised	Stock Options held at		All Other
(1)	June 30	$Salary	$Bonus	( 2)	$Gain (3)	year end	$ Value (4)	Compensation

Peter Mordaunt	2002	US78,000	US40,000	100,000	Nil	580,000	1,320,500	Nil
Chairman &	2001	US78,000	US40,000	Nil	210,000	480,000	Nil	Nil
President	2000	US78,000	Nil	480,000	500,000	630,000	502,000	Nil

Steven Brunelle	2002	111,000	25,000	100,000	98,490	350,000	807,500	Nil
Vice President

William Faust	2002	US121,668	Nil	100,000	263,500	60,000	111,000	Nil
Vice President
Operations

Edward J. Badida	2002	102,300	Nil	100,000	Nil	100,000	310,000	Nil
Vice President
Finance
Date of Grant	Number of Options	Exercise Price	Expire Date

December 20, 1999	500,000	$2.65	December 20, 2002
June 30, 2000	660,000	$3.00	June 30, 2003
October 2, 2001	380,000	$1.75	October 2, 2004
December 12, 2001	40,000	$1.80	December 12, 2004
February 28, 2002	60,000	$3.00	February 28, 2005
CORNER BAY SILVER INC 6-K
