Inter-Citic Minerals Inc. 2003 Annual Report

We’ve Got Covered Dachang Zalantun Gold Project Gold Project

Located in an area of significant historical In December, 2003, Inter-Citic finalized China alluvial gold mining, the Dachang Gold the Zalantun Joint Venture Agreement Project hosts a 1.3 million ounce inferred with the Institute of Geology for Mining gold resource grading 7.0 g/t. Mineral Resources (BIGM), China’s only FACTS Results of the 2003 drill program have not yet national geological institute. • Entry into World Trade been incorporated into the NI 43-101 resource The agreement gives Inter-Citic the option Organization in 2001 estimate. Drilling in 2004 will focus on upgrading to acquire up to 90% of four contiguous exploration precipitated major positive the resource estimate, and the Company believes there licenses in northeastern . These changes to China’s mining is significant potential to increase the resource through licenses cover three properties on which gold industry. anomalies have been identified (Pentouling, • Mineral title and mining exploration as less than 10% of the total property codes modelled after position has been evaluated to date. Bashenge and Huangcaogou) totalling approximately Australian and Canadian Situated approximately 350 kilometres southeast 125 square kilometres. As part of the agreement codes. of the city of Golmud, a major infrastructure centre with BIGM, Inter-Citic has a right of first refusal • Direct foreign investment in Qinghai province, the Dachang Gold Project is on any mineral exploration project for which in China totaled in excess BIGM seeks foreign investment. of US$40 billion from accessible by road via four-wheel drive vehicle. January to September, For over 200 years, the Dachang property has been The Zalantun Gold Project is in the 2003, an increase of a traditional area for Tibetan alluvial miners to Tianshan-Hinggan Domain along the northern 11.9% over the same recover gold from the gold rich river gravels on border of China, at the junction of the Altaids Belt period in 2002. the property. and the Yanshanian Volcano-Plutonic Belt. Current • As Chinese citizens are exploration in southern Mongolia and northern now allowed to own gold The property consists of four exploration and foreigners can now licenses covering some 218 square kilometres and China is demonstrating that this region is an own and develop gold hosting seven large gold geochemical anomalies. important area for copper-gold porphyry deposits. exploration and mining Historical work by the Qinghai Geological Survey Ivanhoe Mines Ltd.’s Oyu Tologoi in Mongolia projects, China has the is the most recent discovery in this region. potential to drive bullion Institute (QGSI), Inter-Citic’s joint venture partner, demand and become including exploration done in 2003, has been The Yanshanian Belt is part of the circum Pacific a major gold supplier. confined to only one-quarter of Anomaly #1, which system. In China, copper and gold deposits associated • Gold can be sold on the covers an area of 125 square kilometres and with this belt include intrusion related lode gold Gold Exchange contains 28 significant gold zones. deposits, porphyry copper-gold deposits, skarn and proceeds repatriated copper-gold and epithermal gold-copper deposits. by foreign mining To date, over 20,000 metres of trenching companies. and 6,000 metres of drilling have been completed. The 2003 exploration program included 3,500 metres of diamond drilling, the sinking of 10 prospect shafts and 2.5 kilometres of trenching to confirm continuity and grade of gold mineralization.

Dachang Gold Drill Data - 2002/03: Includes 5.3 g/t over 58.2 metres

Inter-Citic’s Dachang Gold Project is located in an area of significant 21.4 historical alluvial gold mining. Message to Fellow Shareholders

An Annual Report provides an opportunity to communicate with shareholders as well as forcing a momentary period of reflection on what transpired during the past year. Of course, the opportunity to reflect requires time. For myself, moments of solitude are often found aboard airplanes. I’m preparing this letter while traveling from the city of to Beijing. This is appropriate insofar as much of my 2003 was spent experiencing what is a very intriguing part of China. Fiscal 2003 was a year filled with significant challenges. In addition to dealing with some rather daunting commercial issues, I began the year coping with the challenge of being an executive of a Canadian company operating in China during the outbreak of Severe Acute Respiratory Syndrome (SARS). I was in China frequently during the peak SARS months of January-March. On one of my trips during this period, I was joined by my colleague Mr. David Wahl. Needless to say, it was a time of great uncertainty and SARS added an extra dimension to the challenges of doing business in China. Most of the accomplishments of 2003 are inextricably linked to the work we undertook and completed during this very difficult period. I am grateful to all people who have contributed to our success this past year but a word of thanks must be extended to David and to our families for their dedication, determination and sacrifice during what were, to say the least, very difficult and unsettling circumstances. In early 2003, we believed that the conditions to invest successfully in the Chinese gold industry were beginning to form. Our objective was to develop a strategy that would distinguish Inter-Citic from “the herd” that we knew would eventually respond to China’s invitation to participate in this newly opened industry for foreign investment. In my view, one of our greatest accomplishments in the past year has been to create and execute a strategy unique to Inter-Citic that is causing the industry and the capital markets to take initial notice. There can also be no question that “the herd” did respond to China’s invitation. China has quickly become a focus for global gold mining companies, and Inter-Citic welcomes this interest. As a result of tremendous effort during 2003, we have made significant strides towards establishing your company as a leader in the dynamic and highly competitive gold industry in China. While the Chinese gold mining industry has been around for a long time, legitimate foreign partnerships are very new and our company is now at the forefront of this emerging opportunity. Looking ahead, Inter-Citic is uniquely positioned to further expand by taking advantage of the tremendous growth forecast for China’s mining and minerals sector. “We’ve got China Covered” is an appropriate theme for this year’s Annual Report, as it reflects both our success during the past year, and a competitive advantage in China that is built on five key strengths:

Focus: Inter-Citic has been, and will remain, focused solely on the acquisition and development of mineral projects in China. The “first wave” of investment saw numerous major mining companies establish beachheads in China during the early 1990s, only to abandon their efforts due to perceived difficulties in operating within the Chinese business environment. Changes in mining regulations combined with robust metals markets have created a second wave of interest in China’s considerable potential. By maintaining our focus as the Chinese minerals sector has matured, Inter-Citic is well positioned to take advantage of the renewed interest from major mining companies in a sector of China’s economy which is actively and aggressively courting foreign investment.

Experience: Experience is a great teacher, and management has spent the better part of the past decade gaining an in-depth understanding of what it takes to do business in China. This experience allows us to identify and take advantage of significant new business opportunities with quality partners to build long-term value for shareholders. Our experience in China led us to refine our focus on the acquisition and development of gold projects in 2003. As a result of this decision, it was determined that a write-down of the Company’s investment in its Rare Earth Division, totaling $3.8 million, was appropriate.

Projects: The Dachang and Zalantun Gold properties provide Inter-Citic a solid base on which to build a pipeline of quality gold projects. Located in Qinghai province, Dachang has the potential to be a large scale regional gold discovery. Extensively explored by Inter-Citic’s joint venture partner the Qinghai Geological Survey Institute (QGSI), Inter-Citic can earn a 90% interest in this Carlin-style gold deposit that currently hosts a 1.3 million ounce inferred resource. The QGSI reported a highly successful drill program in 2003 which returned significant results, including 5.3 g/t gold over 58.2 metres. In 2004, 15,000 metres of infill and exploration drilling are planned in an effort to upgrade and expand the current resource estimate. We are committed to upholding high environmental standards, and will conduct an environmental baseline study commencing in 2004, where we will engage the support of the local and regional workers in China. Zalantun, in Inner Mongolia, holds tremendous potential. Located in a region noted for numerous significant copper-gold deposits, the Zalantun region hosts numerous geochemical and placer gold anomalies. Zalantun is a joint venture with our partner the Beijing Institute of Geology for Mineral Resources (BIGM), and Inter-Citic can earn up to a 90% interest in the project. Technical reports compliant with National Instrument 43-101 were completed on both of these projects during 2003. These reports are available for public review and can be easily accessed over the Internet at www.sedar.com.

Relationships: Strong strategic relationships are Inter-Citic’s greatest currency, both in terms of doing business in China and in securing new opportunities to grow our presence. During the past year, Inter-Citic has secured relationships which will provide an excellent platform for business development. In the process of acquiring the Zalantun and Dachang Projects, we formed solid and exclusive joint venture relationships with two of China’s most respected geological organizations - the QGSI and the BIGM. These affiliations give Inter-Citic a right of first refusal on any mineral exploration project for which our joint venture partners seek foreign investment, and will be of tremendous value as we continue to look to grow our inventory of high quality targets on favourable terms.

People: Inter-Citic added considerably to its depth of talent in 2003, with the addition of some key people in management, director and advisory roles. Early in 2003, we were pleased to welcome David Wahl as Vice-President of Mineral Project Development. David’s expertise has been valuable in evaluating mineral projects with our Chinese joint venture partners. Very recently, we have benefited from the experience of Mr. Garth Pierce. Garth is a geologist who spent much of his career working in senior management roles within Noranda’s exploration group, and will focus on executing our exploration programs in China during 2004. Additionally, the strength of our projects and accomplishments has enabled us to tap into some of the mining industry’s most respected technical experts. During 2003, a five-person Advisory Committee was created which we are confident will prove to be an asset as we embark on our next phase of growth. Finally, we undertook the challenge of reintroducing the company to the investor market. The results of our preliminary work were manifest in 2003. During the past year, the Company successfully raised over $5,000,000 in new equity financing, and the shares traded far more actively than in previous years. Looking ahead, 2004 is shaping up to be a year of new milestones. With the completion of our joint ventures, we are now anxious to advance both the Zalantun and Dachang projects, and continue to follow up on new business opportunities. Our objectives for the year include: •Ensuring uninterrupted access to drill rigs by formalizing a partnership with a recognized drilling contractor. • Completing a $2.5 million Phase One work program on the Dachang Gold Project that includes drilling and a revised resource estimate by year-end. • Commencing fieldwork during the third quarter and drilling first targets for Zalantun in the fourth quarter of 2004 and early 2005. • Continuing to evaluate world-class precious metals exploration projects or producing mines in China that have large contiguous land positions on major geological structures. In closing, I would like to acknowledge the contribution of our Vice-President, Finance and Chief Financial Officer, Mr. Lou Pasubio, during the past year. Lou’s dedication and skill were of assistance in establishing the business relationships that will continue to benefit all shareholders. As in past years, our Acting Chairman, Mr. Mark Frederick, was a consistent and reliable source of support and good counsel. Our company continues to be substantially owned by some very influential Asian based groups. Members of the Ho family, Mr. Peter Lee, and Mr. Sherman Hong at various times during the past year contributed to management’s efforts and I gratefully acknowledge their support. As 2004 begins, Inter-Citic possesses the tools to distinguish itself from its competitors and to continue its development as a leader within the gold exploration sector in China. In this regard, the Company looks forward to rewarding its owners and reporting on progress during the year ahead.

Respectfully submitted,

James J. Moore President and Chief Executive Officer April 6, 2004 Management Board of Directors

Mr. James J. Moore Mr. James J. Moore President & CEO Experienced executive with over seven years Mr. Mark R. Frederick, Acting Chairman of China-related experience Barrister and Solicitor, Miller Thomson

Mr. Lou Pasubio, C.A. Mr. Carlos Ho Fiscal Year End: Vice-President, Finance and CFO Investment Dealer, Hong Kong November 30 Three years of direct China experience Mr. Sherman Hong Symbol: Mr. David G. Wahl, P.Eng, P.Geo, Industrialist, Taipei ICI TSX.V Vice-President, Mineral Project Development Data as of Feb. 28, 2004 35 years of international mining industry experience Mr. Peter Tang, CMA BC-based CMA Shares Issued: Mr. Zhang Xiping 38.9 million Vice-President, Beijing Office Mr. Scott C. Dorey Two PhDs in Geology (China and Finland) Vice-President, Lehman Brothers Fully Diluted: 45.1 million Mr. Liu Quanqing Vice-President Special Projects Advisory Committee Retired senior Chinese government geologist Mr. Harry Burgess P. E n g Mining engineer with over 30 years of international experience Contact Information Mr. Chris Hodgson Former Ontario Minister of Natural Resources and Northern Inter-Citic Minerals Inc. Development and Mines 372 Bay Street, Suite 901 Auditor Toronto, Ontario, Canada M5H 2W9 Dr. Henry Jarecki PricewaterhouseCoopers LLP International investor, founder of Mocatta Metals Telephone (416) 363-5055 Royal Trust Tower, Suite 3000 Facsimile (416) 363-9688 Mr. Donald McKinnon Toronto Dominion Centre Email [email protected] Canada’s leading prospector. Discoverer of numerous deposits Toronto, Ontario including Hemlo gold deposit in Ontario. Member O.C. Canada M5K 1G8 www.inter-citic.com Telephone: (416) 863-1133 Ms. Rene Jackman P. E n g Facsimile: (416) 365-8215 Linear Capital Corp. Senior Gold metallurgist, Lakefield Research with over 20 years of international experience Att: Flora Wood and Sean Stokes Stock Transfer Agent Computershare Trust 111 Richmond Street, Suite 1002 Company of Canada Toronto, Ontario, Canada M5H 2G4 Annual General Meeting 4th Floor, 510 Burrard Street Telephone (416) 364-2266 Inter-Citic Minerals Inc. will hold its Annual and Vancouver, British Columbia Toll free 877-600-6001 Special Meeting on Thursday, May 13, 2004 at 4:30pm Canada V6C 3B9 Facsimile (416) 364-2496 at the Ontario Club, Commerce Court South, 5th Floor, Telephone: (604) 661-9400 30 Wellington Street West, Toronto, Ontario, Canada Facsimile: (604) 683-3694 www.linearcapital.com

INTER-CITIC MINERALS has built a solid base in China during the past seven years. Focused on the acquisition and development of high caliber gold projects, Inter-Citic has negotiated joint venture agreements under very favourable terms on some of the most highly prospective exploration and development properties in China. Through solid government relationships and strategic partnerships with several financially strong and established groups in China, the Company is well positioned to facilitate investment and other business activities in China for both Western and Chinese partners. Inter-Citic Minerals Inc. ICI TSX.V “We’ve Got China Covered”

Highlights, 2003 Goals and Objectives, 2004 • Capitalized on seven years in China by focusing growth • Establish partnership with recognized drilling contractor strategy on precious metal projects to ensure access to drill rigs in China • Acquired first two gold projects in China through • Complete minimum Cdn$2.5 million Phase One work exclusive Joint Venture Agreements program at Dachang, including drilling and a revised • Strengthened management team and Board and resource estimate, by year-end established five-person Advisory Committee • Commence fieldwork at Zalantun to identify drill • Raised Cdn$5 million during and subsequent to year end targets in order to begin drilling during fourth quarter through private placement and warrant exercise • Continue to evaluate world-class exploration and production assets in China with large contiguous land positions on major geological structures

Zalantun Property

Dachang Property

Dachang Project Zalantun Project Joint Venture Agreement: Joint Venture Agreement: • Binding Co-operative Joint Venture contract with the • Binding Co-Operative Joint Venture contract with the Qinghai Geological Survey Institute (QGSI) announced Beijing Institute of Geology for Mineral Resources (BIGM) December, 2003 announced December, 2003 • 83% interest, with option to earn up to 90% • 85% interest, with option to earn up to 90% • Invest Cdn$5.2 million over three years plus cash • Invest Cdn$2.4 million over three years payment on issuance of Mining License • Inter-Citic has right of first refusal on any mineral • Inter-Citic has right of first refusal on any mineral exploration project for which BIGM seeks foreign exploration project for which the QGSI seeks foreign investment investment 2004 Phase One Work Program: 2004 Phase One Work Program: • Comprehensive fieldwork starting Q3 • Minimum 15,000 metres infill and exploration drilling • First drill targets to be tested starting Q4 to start in Q3 • Revised resource estimate/scoping study Q4