20-F

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

_  Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934  

or

x  Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2003

or

_  Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____ to _____

Commission File Number

0-29878

GENTRY RESOURCES LTD.

(Exact Name of Registrant as Specified in its Charter)

GENTRY RESOURCES LTD.

(Translation of Registrant's Name into English)

Federally Incorporated in Canada

(Jurisdiction of Incorporation or Organization)

101 6th Avenue S.W., Suite 2500, Calgary, Alberta, Canada T2P 3P4

(Address of Principal Executive Offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange  on Which Registered
______________N/A________________	______________N/A_______________

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Common Shares Without Par Value

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

N/A

(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital stock as of December 31, 2003

27,352,508

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

YES   X  

NO      

Indicate by check mark which financial statement item the registrant has elected to follow.

ITEM 17   X  

ITEM 18      

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  

NOT APPLICABLE

	TABLE OF CONTENTS
PART I		PAGE
ITEM 1	Identity of Directors, Senior Management and Advisors	1
ITEM 2	Offer Statistics and Expected Timetable	1
ITEM 3	Key Information	1
ITEM 4	Information on the Company	6
ITEM 5	Operating and Financial Review and Prospects	31
ITEM 6	Directors, Senior Management and Employees	47
ITEM 7	Major Shareholders and Related Party Transactions	57
ITEM 8	Financial Information	60
ITEM 9	The Offer and Listing	61
ITEM 10	Additional Information	62
ITEM 11	Quantitative and Qualitative Disclosure about Market Risk	79
ITEM 12	Description of Securities Other than Equity Securities	79
PART II		PAGE
ITEM 13	Defaults, Dividend Arrearages and Delinquencies	79
ITEM 14	Material Modifications to the Rights of Security Holders and
	Use of Proceeds	79
ITEM 15	Controls and Procedures	79
ITEM 16	[Reserved]	80
ITEM 16A	Audit Committee Financial Expert	80
ITEM 16B	Code of Ethics	89
ITEM 16C	Principal Accountant Fees and Services	80
ITEM 16D	Exemptions from the Listing Standards for Audit Committees	81
ITEM 16E	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	81
PART III		PAGE
ITEM 17	Financial Statements	82
ITEM 18	Financial Statements	82
ITEM 19	Exhibits	83

Glossary

Terms used in this Annual Report on Form 20-F and not otherwise defined have the meanings set forth below:

"ABCA" means the Business Corporations Act (Alberta), R.S.A. 2000, c. B-9, as amended, and the regulations thereunder, and any successor laws or regulations thereto.

"API" means American Petroleum Institute.

"ARTC" means Alberta Royalty Tax Credit.

"CBCA" means the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended, and the regulations thereunder, and any successor laws or regulations thereto.

"Common Shares" means common shares in the share capital of the Company.

"Company" or "Gentry" means Gentry Resources Ltd., a corporation amalgamated under the CBCA.

"Martin" means Martin & Brusset Associates, an independent firm of petroleum consultants, Calgary, Alberta.

"Martin Report" means the independent consultants' evaluation of Gentry's oil and natural gas properties prepared by Martin dated March 18, 2004 and effective as of December 31, 2003.

"NGLs" means natural gas liquids, including condensate, propane, butane and pentane.

"overriding royalty interest" means an interest in the gross production of oil and gas under a lease, free of any expense for exploration, drilling, development, operating and other costs incident to the production and sale of oil and gas produced from the lease.

"property" or "properties" means an oil and/or natural gas property or properties and related tangible equipment, including facilities for producing, gathering, storing, measuring, transporting or processing of oil and/or natural gas production from such property, as well as seismic data, if any.

"TSX" means the Toronto Stock Exchange.

Please see also "Abbreviations and Conversion" and "Presentation of Gentry's Oil and Gas Natural Gas Reserves and Production Information" in the following sections.

i

Abbreviations and Conversion

In this Annual Report on Form 20-F, the following abbreviations have the meanings set forth below.

AECO	Alberta Energy Company interconnect with the Nova System, the Canadian benchmark for natural gas pricing purposes	GJ	gigajoules
		Mbbls	one thousand barrels
		MBOE	one thousand barrels of oil equivalent
bbls	barrels, with each barrel representing 34.972 imperial gallons or 42 U.S. gallons	Mcf	one thousand cubic feet
		Mcf/d	one thousand cubic feet per day
bbls/d Bcf	barrels per day billion cubic feet	Mmbbls	one million barrels
		MMBOE	one million barrels of oil equivalent
Bcf/d BOE BOE/d	billion cubic feet per day barrels of oil equivalent converting 6 Mcf of natural gas to one barrel of oil equivalent and one barrel of natural gas liquids to one barrel of oil equivalent. The factor used to convert natural gas and natural gas liquids to oil equivalent is not based on either energy content or prices but is a commonly used industry benchmark. barrels of oil equivalent per day	MMBTU Mmcf MMcf/d MW NGLs WTI	one million British Thermal Units one million cubic feet one million cubic feet per day megawatts of electricity natural gas liquids West Texas Intermediate at Cushing, Oklahoma, the benchmark for North American crude oil pricing purposes

In this Annual Report on Form 20F, unless otherwise indicated, all dollar amounts are in Canadian dollars and all references to "$" are to Canadian dollars.

The following table sets forth certain standard conversions between Standard Imperial Units and the International System of Units (or metric units).

To Convert From	To	Multiply By
Mcf	cubic metres	28.317
cubic metres	cubic feet	35.314
bbls	cubic metres	0.159
cubic metres	bbls	6.290
feet	metres	0.305
metres	feet	3.281
miles	kilometres	1.609
kilometres	miles	0.621
acres	hectares	0.4047
hectares	acres	2.471

ii

Presentation of Gentry's Oil and Natural Gas Reserves and Production Information

Disclosure of Information

In this Annual Report on Form 20-F, all estimates of oil and natural gas reserves and production are presented on a "company interest" (as defined below) basis, unless indicated that they have been presented on a "gross" or "net" basis.  The Company's actual oil and natural gas reserves and production will be greater than or less than the estimates provided in this Annual Report.  The estimated future net revenue from the production of the Company's oil and natural gas reserves do not represent the fair market value of the Company's reserves.

The Company has adopted the standard of 6 Mcf:1 BOE when converting natural gas to BOE.  BOEs may be misleading, particularly if used in isolation.  A BOE conversion ratio of 6 Mcf:1 BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Note to Reader Regarding Oil and Natural Gas Information and National Instrument 51-101

The oil and natural gas operational and reserves information contained in this Annual Report contains the information required to be included in the Statement of Reserves Data and Other Oil and Gas Information pursuant to National Instrument 51-101 adopted by the Canadian securities regulatory authorities and is presented in accordance with Form 51-101F1.  Readers should also refer to the Report on Reserves Data by Martin and the Report of Management and Directors on Oil and Gas Disclosure as filed with the Company's Annual Information Form, dated May 19, 2004, on the SEDAR database (www.sedar.com).  The effective date for the Statement of Reserves Data and Other Oil and Gas Information contained in this Annual Report is December 31, 2003 and the information contained in the Annual Report has been prepared as of May 19, 2004.

Certain of the following definitions and guidelines have been prepared by the Standing Committee on Reserves Definitions of the CIM (Petroleum Society).  Further information is contained in Section 5.4 of Volume 1 of the COGE Handbook (First Edition, June 30, 2002).  Readers should consult the COGE Handbook for additional explanation and guidance.  Certain other terms used in this Annual Report have the meanings assigned to them in National Instrument 51-101 and accompanying Companion Policy 51-101CP, adopted by the Canadian securities regulatory authorities.

Interests in Reserves, Production, Wells and Properties

"company interest" means in relation to the Company's interest in production or reserves, its working interest (operating or non-operating) share before deduction of royalties and including any royalty interests of the Company.

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"gross" means:

(i)

in relation to the Company's interest in production or reserves, its working interest (operating or non-operating) share in its reserves, before deduction of royalties and without including any royalty interests of the Company;

(ii)

in relation to wells, the total number of wells in which the Company has an interest; and

(iii)

in relation to properties, the total area of properties in which the Company has an interest.

"net" means:

(i)

in relation to the Company's interest in production or reserves, its working interest (operating or non-operating) share after deduction of royalty obligations, plus the Company's royalty interests in those production or reserves;

(ii)

in relation to the Company's interest in wells, the number of wells obtained by aggregating the Company's working interest in each of its gross wells; and

(iii)

in relation to the Company's interest in a property, the total area in which the Company has an interest multiplied by the working interest owned by the Company.

"working interest" means the percentage of undivided interest held by the Company in the oil and/or natural gas or mineral lease granted by the mineral owner, Crown or freehold, which interest gives the Company the right to "work" the property (lease) to explore for, develop, produce and market the leased substances.

Reserves Categories

"Proved Reserves" are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated Proved Reserves.

"Probable Reserves" are those additional reserves that are less certain to be recovered than Proved Reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated Proved plus Probable Reserves.

"Possible Reserves" are those additional reserves that are less certain to be recovered than Probable Reserves.  It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated Proved plus Probable plus Possible Reserves.

Development and Production Status

Each of the reserves categories (Proved, Probable and Possible) may be divided into developed and undeveloped categories:

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"Developed Reserves" are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (for example, when compared to the cost of drilling a well) to put the reserves on production.  The developed category may be subdivided into Producing and Non-Producing.

• "Developed Producing Reserves" are those reserves that are expected to be recovered from completion intervals open at the time of the estimate.  These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

• "Developed Non-Producing Reserves" are those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of resumption of production is unknown.

"Undeveloped Reserves" are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production.  They must fully meet the requirements of the reserves classification (Proved, Probable, Possible) to which they are assigned.

Levels of Certainty for Reported Reserves

The qualitative certainty levels referred to in the definitions above are applicable to individual reserves entities (which refers to the lowest level at which reserves calculations are performed) and to reported reserves (which refers to the highest-level sum of individual entity estimates for which reserves estimates are presented).  Reported reserves should target the following levels of certainty under a specific set of economic conditions:

• at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimated Proved Reserves;

• at least a 50 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated Proved plus Probable Reserves; and

• at least a 10 percent probability that the quantities actually recovered will equal the sum of the estimated Proved plus Probable plus Possible Reserves.

Description of Price and Cost Assumptions

"Constant prices and costs" means prices and costs used in an estimate that are:

(i)

the Company's prices and costs as at December 31, 2003, held constant throughout the estimated lives of the properties to which the estimate applies; and

v

(ii)

if, and only to the extent that, there are fixed or presently determinable future prices or costs to which the Company is legally bound by a contractual or other obligation to supply a physical product, including those for an extension period of a contract that is likely to be extended, those prices or costs rather than the prices or costs referred to in paragraph (i).

"Forecast prices and costs" means future prices and costs that are:

(i)

generally accepted as being a reasonable outlook of the future; and

(ii)

if, and only to the extent that, there are fixed or presently determinable future prices or costs to which the Company is legally bound by a contractual or other obligation to supply a physical product, including those for an extension period of a contract that is likely to be extended, those prices or costs rather than the prices or costs referred to in paragraph (i).

Calculation of Reserve Life Index

"Reserve Life Index" means the amount obtained by dividing the quantity of a particular category of reserves by the prior month's production for the corresponding reserve category.  

vi

Forward-Looking Statements

Certain statements contained in this Annual Report on Form 20-F constitute forward-looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this Annual Report should not be unduly relied upon. These statements speak only as of the date of this Annual Report.

In particular, this Annual Report contains forward-looking statements pertaining to the following:

• the quantity of oil and natural gas reserves;

• crude oil, natural gas and natural gas liquids production levels;

• capital expenditure programs;

• projections of market prices and costs;

• supply and demand for crude oil, natural gas and natural gas liquids;

• expectations regarding the ability of the Company and its subsidiaries to raise capital and to continually add to reserves through acquisitions and development; and

• treatment under governmental regulatory regimes and tax laws.

The actual results of the Company and its subsidiaries could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this Annual Report:

• volatility in market prices for crude oil, natural gas and natural gas liquids;

• liabilities inherent in oil and natural gas operations;

• uncertainties associated with estimating oil and natural gas reserves;

• competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;

• incorrect assessments of the value of acquisitions;

• geological, technical, drilling and processing problems; and

• the other factors discussed under "Risk Factors" in this Annual Report.

These factors should not be construed as exhaustive. Neither the Company nor its affiliates undertakes any obligation to publicly update or revise any forward-looking statements.

vii

PART I

ITEM 1

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this Item.

ITEM 2

OFFER STATISTICS AND EXPECTED TIMETABLE

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this Item.

ITEM 3

KEY INFORMATION

A.

Selected Financial Data

The following selected financial data should be read in conjunction with "Item 5.  Operating and Financial Review and Prospects" and in conjunction with the consolidated financial statements attached as a part hereof.  The Company's consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles.  Except as described in Note 13 to the audited consolidated financial statements for the years ended December 31, 2003 and 2002, and Note 12 to the audited consolidated financial statements for the years ended December 31, 2002 and 2001 there are no material differences, for the purposes of these financial statements, between generally accepted accounting principles in Canada and the United States.

 (Canadian Dollars in Thousands Except Per Share Amounts)

	For the Years Ended December 31,
	2003	2002	2001	2000	1999
Financial results:
Production revenue (net of royalties)	$19,613	$15,130	$13,469	$10,079	$5,004
Interest, management fees and other revenue	285	169	148	80	39
Production expenses	5,733	(4,464)	(4,415)	(3,194)	(1,715)
General & admin. expenses	2,529	(2,060)	(1,979)	(1,486)	(1,157)
Interest on long-term debt	484	(407)	(370)	(319)	(231)
Depletion and depreciation	(7,080)	(4,273)	(3,007)	(2,118)	(1,594)
Net income	3,041	2,436	1,746	1,987	45
Net income per share	$0.12	$0.11	$0.08	$0.10	$0.00

1

	For the Years Ended December 31,
	2003	2002	2001	2000	1999
Financial Position:
Working capital (deficiency)	$(13,443)	$(7,225)	$  (7,817)	$   (735)	$    108
Total assets	53,473	36,423	28,168	19,056	15,587
Long-term debt	-	-	-	4,015	4,995
Shareholders' equity	24,459	16,613	12,843	8,845	7,400

The Company has not declared or paid any dividends during the periods indicated.

(Amounts Restated in Accordance with U.S. GAAP;

Canadian Dollars in Thousands Except Per Share Amounts)

	For the Years Ended December 31,
	2003	2002	2001
Financial Results:
Depletion and depreciation, including ceiling test writedown	$(6,744)	$(4,029)	$(2,685)
Net income	2,825	2,107	1,848
Net income per share	$0.11	$0.10	$0.09
	2003	2002	2001
Financial Position:
Working capital (deficiency)	(13,443)	(7,459)	(8,161)
Total assets	53,784	33,432	25,461
Long-term debt	-	-	-
Shareholders' equity	25,096	14,897	10,924

Currency and Exchange Rates

All dollar amounts set forth in this report are in Canadian dollars, except where otherwise indicated.

1.

On June 18, 2004, the noon buying rate in New York City for cable transfer in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York was $0.7329 U.S. = $1.00 Canadian.  

All exchange rate calculations in #2 and #3 below are based on the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York.

2.

The following table sets forth the high and low exchange rates for each month during the previous six months.  

Month	May 2004	Apr. 2004	Mar. 2004	Feb. 2004	Jan. 2004	Dec. 2003
High Rate	.7363	.7637	.7645	.7629	.7880	.7738
Low Rate	.7158	.7293	.7418	.7439	.7496	.7460

2

3.

The following table sets forth the average exchange rates for each of the past 5 fiscal years, calculated by using the average of the exchange rates in effect on the last day of each month during the period indicated.

	Year Ended December 31,
	2003	2002	2001	2000	1999
Average Rate During Period	.7205	.6370	.6444	.6725	.6744

B.

Capitalization and Indebtedness

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

C.

Reasons for the Offer and Use of Proceeds

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

D.

Risk Factors

Investors should consider the following risk factors prior to making an investment in the Common Shares or other securities of the Company.

Investment in the Common Shares should be considered to be speculative and involve a degree of risk, including, but not necessarily limited to, the risk factors listed below.  Owners and prospective purchasers of the Common Shares should carefully consider, in addition to the other information in this Annual Report, the following risk factors inherent in and affecting the Company's business before making an investment decision.

Industry Risks

There are many risks inherent in the oil and gas industry which even a combination of experience, knowledge and careful evaluation may not be able to overcome.  

The Company's success will depend on its ability to select and acquire suitable producing properties or undeveloped exploration prospects.  The marketability of any oil and natural gas acquired or discovered by the Company will be affected by numerous factors beyond the control of the Company.  These factors include market fluctuations, the world price of crude oil, the continental price of natural gas, the supply and demand for oil and natural gas, the proximity and capacity of oil and natural gas pipelines and processing equipment and government regulations, including regulations relating to prices, taxes, royalties, land tenure, allowable production, the import and export of oil and natural gas and environmental protection.  The effect of these factors cannot be accurately predicted.

3

Hazards such as unusual or unexpected geological formations, pressures, blow-outs, fires or other conditions may be encountered in drilling and operating wells.  The Company will have the benefit of insurance maintained by it; however, the Company may become liable for damages arising from pollution, blowouts or other hazards against which it cannot insure or against which it may elect not to insure because of high premium costs or other reasons.  Oil and natural gas production operations are also subject to all of the risks typically associated with such operations, including premature decline of reservoirs and invasion of water into formations, which may hinder economic production.

Both oil and natural gas prices are unstable and are subject to fluctuation.  Any material drop in prices could result in a reduction of any future net production revenue of the Company.  The economics of producing from wells acquired or drilled by the Company may change as a result of lower commodity prices, which could result in a reduction in the volumes of economic reserves of the Company.  The Company might also elect not to produce from certain wells at lower prices.  Crude oil and natural gas prices are currently at very high levels and may be extremely volatile in the short term.  These factors could result in a material decrease in any future net production revenue of the Company, causing a reduction in the Company's oil and natural gas acquisition and development activities.

Regulation of Industry

The Company's activities are subject to complex and stringent energy, environmental and other governmental laws and regulations.  While management believes that the Company's business will be operated in accordance with applicable laws, the Company will remain subject to a varied and complex body of laws and regulations that both public officials and private individuals may seek to enforce.  Existing laws and regulations may be revised or new laws and regulations may become applicable to the Company that may have a negative effect on the Company's business and the results of operations. Environmental regulation is becoming increasingly stringent and costs and expenses of regulatory compliance are increasing.  The Company expects that it will be able to fully comply with all regulatory requirements in this regard.

Possible Income Tax Changes

There can be no assurance that the income tax laws applicable to the Company or to the oil and natural gas industry generally will not be changed in a manner that adversely affects the Company or the holders of Common Shares.

Need for Future Financings

Additional financing for new development and operations may not be available on acceptable terms in the future.  Where additional financing is raised by the issuance of Common Shares or securities convertible into Common Shares from the Company's treasury, control of the

4

Company may change and shareholders may suffer further dilution to their investment.  The issuance of debt may result among other things, in the encumbrance of certain of the Company's assets, impede the Company's ability to obtain additional bank financing, decrease the Company's liquidity and adversely affect the Company's ability to declare and pay dividends to its shareholders.

Property Title

Although title reviews will be done according to industry standards prior to the purchase of most oil and natural gas producing properties or the commencement of drilling wells, such reviews do not guarantee or certify that an unforeseen defect in the chain of title will not arise to defeat the claim of the Company, which could result in a reduction of the revenues received by the Company.

Recovery and Reserve Estimates

The recovery and reserve estimates of the Company's oil and natural gas reserves provided for herein are estimates only and there is no guarantee that the estimated reserves will be recovered. In general, estimates of economically recoverable oil and natural gas reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, all of which may vary considerably from actual results.  The Company's actual production, revenues, taxes and development and operating expenses and results will vary from estimates contained in the evaluations, and such variations could be material. Actual reserves may be greater or less than the estimates. The Company has used both constant and escalated price and costs assumptions in calculating reserve quantities as required by securities disclosure legislation and policies in Canada.  Actual future net cash flows will be affected by oth er factors such as actual production levels, supply and demand for oil and natural gas, curtailments or increases in consumption of oil and natural gas, changes in government regulation or taxation and the impact of inflation on costs, among others.

Competition

Competition could adversely affect the Company's performance.  The oil and natural gas industry is characterized by intense competition and the Company competes directly with other companies that have greater resources. The industry also competes with other industries who supply non-petroleum energy products.

Conflicts of Interest

Certain of the directors of the Company may be engaged and will continue to be engaged in certain business interests on their own behalf and on behalf of other companies, and situations may arise where the directors and officers may be in direct competition with the Company.  Conflicts of interest, if any, which arise will be subject to and governed by the procedures prescribed by the CBCA.

5

Reliance on Management

Holders of securities of the Company must rely upon the experience and expertise of management.   The Company's continued success is dependent upon its ability to attract and retain experienced management.

Absence of Dividends

The Company does not anticipate that cash dividends will be paid on its Common Shares in the foreseeable future since the Company currently intends to retain any future earnings to finance the expansion and development of its business.  The declaration and payment in the future of any cash dividends will be at the discretion of the Company's board of directors and will depend upon the earnings, capital requirements and financial position of the Company, future loan covenants, general economic conditions and other pertinent factors.  No assurance can be given that the Company will pay any dividends in the future or with respect to the amount of any such dividends.

ITEM 4             INFORMATION ON THE COMPANY

A.           History and Development of the Company

Organization; Registered Office; Etc.

Gentry Resources Ltd. ("Gentry" or the "Company") was amalgamated¹ under the Canada Business Corporations Act on June 29, 1981 as Sasko Oil & Gas Limited. On October 29, 1990, the Company changed its name to Gentry Resources Ltd. and consolidated its Common Shares on the basis of one post-consolidation share for every five pre-consolidation shares.  The head office and registered office of the Company is located at Suite 2500, 101 - 6th Avenue S.W., Calgary, Alberta, T2P 3P4, Canada.  The Company is federally incorporated under the Canada Business Corporations Act and is extra-territorially incorporated in British Columbia, Alberta, Saskatchewan, and Manitoba.

On June 4, 1999, at the Company's Annual General and Special Meeting, the Company's shareholders approved a special resolution to amend the Company's Articles of Amalgamation respecting its share capital structure.  In summary, the Class "A" shares, of which none were issued, were deleted; the Class "B" shares were reclassified to Common Shares having one vote per share (the "Common Shares"); and the Preferred Shares, Series 1, of which none were issued, were deleted.  The Toronto Stock Exchange (the "TSX"), where the Company's stock is listed for trading, approved the substitutional listing of the Common Shares, and to effect the change from Class "B" to Common Shares, the Company's trading symbol was changed from "GNY.B" to "GNY".

¹   Under Canadian law, two or more corporations, including holding and subsidiary corporations, may amalgamate (merge or combine) and continue as one corporation.  Each corporation proposing to amalgamate must enter into an agreement setting out the terms and means of effecting the amalgamation.

6

General Development of the Business

Gentry is an independent Alberta oil and gas company which carries on the business of exploring, developing, acquiring, and producing petroleum and natural gas reserves in Alberta, Saskatchewan and Manitoba.  Gentry's focus is to find high quality long life reserves which management believes have significant potential for increased production through infill drilling and enhanced recovery programs.  Its strategy is to engage in low to medium risk exploration and development activities complimented by selective acquisitions in the western Canadian sedimentary basin.  Gentry also participates, through its investment in Stratic, in medium to higher risk international exploration projects.

Gentry's Development over the Last Three Years

Developments in 2001

On March 1, 2001, Gentry was amalgamated with Sloane Petroleums Inc. ("Sloane") and the amalgamated company continued to operate as Gentry Resources Ltd.  The amalgamation was approved by the shareholders of both Gentry and Sloane on February 28, 2001.  The addition of Sloane's assets resulted in an extra 619 MBOE of proven reserves and two MMcf/d of gas production accruing to Gentry as of March 1, 2001.  In order to complete the amalgamation, Gentry issued 498,118 common shares at a deemed price of $0.80 per share and paid $3,586,456 in cash for the total consideration of $3,984,950 paid to the shareholders of Sloane.  Holders of Gentry shares pre-amalgamation received one share of the amalgamated company in exchange for each pre-amalgamation share held.

In December, Gentry completed a private placement of 1,808,549 flow-through shares at $1.55 per share for gross proceeds of $2,803,250.  These funds were utilized to help fund the Company's 2002 capital exploration program.

Stratic-Related Developments

On September 17, 2001, Gentry participated in a special warrant financing by Stratic, acquiring 2,272,727 special warrants for a total subscription price of $1,250,000.  Once all the special warrants were converted into common shares in June of 2002, Gentry's ownership of Stratic increased from 37% to 40%.  Proceeds were used for Stratic's international exploration programs, including the drilling of a well in Gabon.

Summary of Stratic Energy (West Africa) Inc.("Stratic (West Africa)") Property Activity During 2001

• Côte d'Ivoire, West Africa

Stratic (West Africa), a wholly owned subsidiary of Stratic, holds an 11% working interest in the shallow water Block CI-102, and a 10% interest in the deeper-water Block CI-103, in the Abidjan Margin Basin.  Collection and interpretation of over 2,000 line kilometres of 2-

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dimensional and 600 km² of 3-dimensional seismic data on these blocks continued throughout 2001.

• Gabon, West Africa

Stratic (West Africa) holds a 35% working interest in the Ofoubou block and drilled its first test well in September 2001.  It was deemed to be non-commercial and as a result the well was plugged and abandoned.

Developments in 2002

During 2002, Gentry concentrated its exploration efforts on four core areas - - Princess, Tide Lake, Sedalia and Whitecourt.  The first three areas are located in southeast Alberta, while Whitecourt is in the west central portion of Alberta.

In December 2002, Gentry completed a private placement of 1,000,000 flow-through shares at a price of $1.65 per share and 1,000,000 units at $1.40 per unit for gross proceeds of $3,050,000.  Each unit consisted of one common share and one-half of a share purchase warrant, with each whole warrant entitling the holder to acquire an additional common share at a price of $1.75 per share until June 17, 2004.  These funds were utilized to help fund the Company's 2003 capital exploration program.

Stratic-Related Developments

In November 2002, Stratic issued 7,272,727 common shares to acquire certain rights in Algeria and Syria.  Stratic acquired rights under bids submitted for production sharing contracts in three blocks in Syria. If the bids are successful and Stratic signs an agreement to acquire a block, Stratic will issue a further 7,090,909 common shares for one of the blocks and 6,181,818 common shares for each of the other two blocks.  Stratic also acquired rights under a bid submitted for a production sharing contract relating to an exploration block in Algeria.  The rights entitle Stratic to a 20% participating interest in the block.  If the bid is successful and Stratic acquires the block, Stratic will issue a further 8,545,455 common shares.

In December 2002, Stratic completed a special warrant financing for gross proceeds of $4,657,070 by way of issuance of 21,168,500 special warrants at a price of $0.22 per special warrant.  Each special warrant entitles the holder to acquire, for no additional consideration, one common share and one half of a share purchase warrant.  Each whole share purchase warrant entitled the holder to acquire an additional common share at a price of $0.40 per share until June 4, 2004.  Gentry participated in Stratic's financing for 909,090 special warrants for subscription proceeds of $200,000.  Once all the special warrants were converted into common shares in May 2003, Gentry's ownership of Stratic decreased to 19%.  Proceeds from the financing were used for Stratic's international exploration and acquisition programs and for general working capital purposes.

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Summary of Stratic (West Africa) Property Activity During 2002

• Côte d'Ivoire, West Africa

In 2002, the operator of CI-102 and CI-103 withdrew from blocks and assigned its interest to Stratic (West Africa).  As a result of this assignment and another partner converting to a carried interest, Stratic (West Africa) holds an 85.5% working interest in the shallow water CI-102, and an 87.5% interest in the deeper-water Block CI-103, in the Abidjan Margin Basin.  The current exploration periods of the blocks have been extended to August 12, 2004 and August 21, 2004 respectively to allow Stratic (West Africa) time to find a third party to assign a portion of its interests and assume the role of operator of the blocks.

• Gabon, West Africa

Stratic (West Africa) held a 35% working interest in the Ofoubou block.  In September, the operator withdrew from the block and Stratic (West Africa) followed suit in 2003.

Developments in 2003

During 2003, Gentry continued to concentrated its exploration efforts on four core areas - - Princess, Tide Lake, Sedalia and Whitecourt.  The first three areas are located in southeast Alberta, while Whitecourt is in the west central portion of Alberta.  In 2003, the Company participated in 55 gross wells (27.7 net) with a success rate of 71% (73% net).

On October 30, 2003, Gentry completed an equity offering of 3,000,000 common shares at a price of $1.75 per common share for total gross proceeds of $5,250,000.  The proceeds from this financing were utilized to fund the continued exploration and development of Gentry's oil and natural gas properties, including acquisitions, and proceeds were used to temporarily reduce indebtedness until required for those purposes.

During 2003, due to additions in management of Stratic and the reduction of the Company's ownership in Stratic to 19% ownership interest by the end of the year, the Company changed it's accounting for its investment in Stratic from equity accounting to cost basis of accounting for investments.  

Significant Acquisitions

In the third quarter, the Company purchased the remaining 50% interest in a Nisku well and surrounding lands in the Princess area for $2.5 million from its industry partner.  This gave the Company 100% interest in the wells in the area, prior to the conversion of a royalty interest into a 50% working interest by royalty holder.

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Recent Developments

On April 28, 2004, Gentry announced an equity offering of 5,000,000 common shares at a price of $2.00 per common share and 1,000,000 flow through shares at a price of $2.50 for total gross proceeds of $12,500,000.  The proceeds from this financing will be utilized to fund the continued exploration and development of Gentry's oil and natural gas properties, including acquisitions, and proceeds are being used to temporarily reduce indebtedness until required for those purposes.  The financing was completed on May 18, 2004.

Principal Capital Expenditures/Divestitures Over Last Three Fiscal Years

The following table summarizes capital expenditures (net of incentives and net of certain proceeds, including capitalized general and administrative expenses) made by the Company during the periods indicated. (Canadian dollars in thousands).

($ thousands)	2003	2002	2001
Exploration and Development	9,723.8	5,113.1	4,101.4
Facilities and equipping	4,208.4	1,298.4	1,429.7
Acquisitions, net of dispositions	2,503.6	-	2,131.9
Land and seismic	4,160.4	1,355.6	1,553.5
Capitalized expenses	848.0	796.3	756.0
Other	209.3	57.5	119.7
Total	21,653.5	8,620.9	10,092.2

All expenditures were incurred in Canada.

Expenditures were financed through a combination of bank debt, cash flow and equity financings.  See "Item 5.  Operating and Financial Review and Prospects -- B.  Liquidity and Capital Resources."  

Current and Planned Capital Expenditures/Divestitures

As of May 31, 2004, the Company had incurred approximately $4,000,000 in capital expenditures, primarily in the Princess and Sedalia areas of southern Alberta, Canada.  These expenditures, as in previous years, are being financed through a combination of bank debt, cash flow and equity financings.

Public Takeover Offers

During the current and previous fiscal year, the Company has not received any public takeover offers from third parties nor has the Company made any such takeover offers.

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B.

Business Overview

Summary

The Company's principal properties are located in western Canada in the southern portions of Alberta, Saskatchewan, and Manitoba.  Gentry's strategy is two-fold: first, to find high quality, long life reserves which management believes have significant potential for increased production through infill drilling and enhanced recovery programs; and second, to engage in low to medium risk exploration and development activities complimented by selective acquisitions in the Western Canadian Sedimentary Basin.

Gentry maintains undeveloped acreage in the Gulf of St. Lawrence.  The acreage is non-operated and exploration is not anticipated in the near future.

Gentry holds a 16% interest in Stratic, which participates in oil and gas exploration and development activities in North and West Africa and the U.K. North Sea.

Applicable Government Regulation in Canada

The oil and natural gas industry is subject to extensive controls and regulation imposed by various levels of government. Regulatory approvals must be obtained before drilling wells or constructing facilities. Failure to obtain such approvals on a timely basis could result in delays or abandonment of projects and increased costs.  Although it is not expected that any of these controls or regulations will affect the Company's operations in a manner materially different than they would affect other Canadian oil and gas issuers of similar size, the controls and regulations should be considered carefully by investors in the oil and gas industry. All current legislation is a matter of public record and the Company is unable to predict what additional legislation or amendments may be enacted. Outlined below are some of the principal aspects of legislation, regulations and agreements governing the oil and gas industry in western Canada.

Pricing and Marketing - Oil

In Canada, producers of oil negotiate sales contracts directly with oil purchasers, with the result that the market determines the price of oil. The price depends, in part, on oil type and quality, prices of competing fuels, distance to market, the value of refined products and the supply/demand balance and other contractual terms. Oil exports may be made pursuant to export contracts with terms not exceeding one year in the case of light crude, and not exceeding two years in the case of heavy crude, provided that an order approving any such export has been obtained from the National Energy Board (the "NEB").  Any oil export to be made pursuant to a contract of longer duration (to a maximum of 25 years) requires an exporter to obtain an export licence from the NEB and the issue of such a licence requires the approval of the Governor in Council.

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Pricing and Marketing - Natural Gas

In Canada, the price of natural gas sold in intraprovincial, interprovincial and international trade is determined by negotiation between buyers and sellers. Such price depends, in part, on natural gas quality, prices of competing natural gas and other fuels, distance to market, access to downstream transportation, length of contract term, weather conditions, the value of refined products and the supply/demand balance and other contractual terms.  Natural gas exported from Canada is subject to regulation by the NEB and the Government of Canada. Exporters are free to negotiate prices and other terms with purchasers, provided that the export contracts must continue to meet certain criteria prescribed by the NEB and the Government of Canada.  Natural gas exports for a term of less than two years or for a term of two to 20 years (in quantities of not more than 30,000 cubic metres per day), must be made pursuant to an NEB order. Any natural gas export to be made pursuant to a contract of longer duration (to a maximum of 25 years) or a larger quantity requires an exporter to obtain an export licence from the NEB and the issue of such a licence requires the approval of the Governor in Council.  

The governments of Alberta, British Columbia and Saskatchewan also regulate the volume of natural gas which may be removed from those provinces for consumption elsewhere, based on such factors as reserve availability, transportation arrangements and market considerations.

The North American Free Trade Agreement ("NAFTA")

On January 1, 1994, NAFTA became effective among the governments of Canada, the United States of America and Mexico. In the context of energy resources, Canada continues to remain free to determine whether exports to the United States or Mexico will be allowed, provided that any export restrictions do not: (i) reduce the proportion of energy resource exported relative to domestic use (based upon the proportion prevailing in the most recent 36 month period); (ii) impose an export price higher than the domestic price; and (iii) disrupt normal channels of supply. All three countries are generally prohibited from imposing minimum export or import price requirements.

NAFTA contemplates the reduction of Mexican restrictive trade practices in the energy sector and prohibits discriminatory border restrictions and export taxes. NAFTA also contemplates clearer disciplines on regulators to ensure fair implementation of any regulatory changes and to minimize disruption of contractual arrangements, which is important for Canadian natural gas exports.

Provincial Royalties and Incentives

General

In addition to federal regulations, each province in Canada has legislation and regulations which govern land tenure, royalties, production rates, environmental protection and other matters. The royalty regime is a significant factor in the profitability of oil and natural gas

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production. Royalties payable on production from lands other than Crown-owned lands are determined by negotiations between the freehold mineral owner and the lessee. Crown royalties are determined by government regulation and are generally calculated as a percentage of the value of the gross production. The rate of royalties payable generally depends in part on prescribed reference prices, well productivity, geographical location, field discovery date and the type or quality of the petroleum product produced. Other royalties and royalty-like interests are from time to time carved out of the working interest owner's interest through non-public transactions.  These are often referred to as overriding royalties, gross overriding royalties or net profits or net carried interests.

From time to time, the federal and provincial governments in Canada have established incentive programs which have included royalty rate reductions (including far specific wells), royalty holidays and tax credits for the purpose of encouraging oil and natural gas exploration or enhanced planning projects, although the trend is toward eliminating these types of programs in favour of long term programs which enhance predictability for producers.  If applicable, oil and natural gas royalty holidays and reductions would reduce the amount of Crown royalties paid by oil and gas producers to the provincial governments and would increase the net income and funds from operations of such producers.

Alberta

Regulations made pursuant to the Mines and Minerals Act (Alberta) provide various incentives for exploring and developing oil reserves in Alberta. Oil produced from horizontal extensions commenced at least five years after the well was originally spudded may also qualify for a royalty reduction. A 24 month, 8,000 cubic metre exemption is available for production from a well that has not produced for a 12 month period, if resuming production after February 1, 1993. Additionally, oil production from eligible new field and new pool wildcat wells and deeper pool test wells spudded or deepened after September 30, 1992 is entitled to a 12 month royalty exemption (to a maximum of $1 million). Oil produced from low productivity wells, enhanced recovery schemes (such as injection wells) and experimental projects is also subject to royalty reductions.

In Alberta, the amount payable to the Alberta government as a royalty in respect of oil depends on the type of oil, the vintage of the oil, the quantity of oil produced in a month and the value of the oil. The vintage of oil is determined based on various criteria set out in the regulations, but is generally broken down into three categories being old oil, new oil and third tier oil (which is oil produced form pools discovered after September 30, 1992).  The royalty rate on old oil is between 10% and 35%, for new oil it is between 10% and 30%, and for third tier oil it is between 10% and 25%.

The royalty payable to the Alberta government in respect of natural gas is determined by a sliding scale based on a reference price (which is the greater of the amount obtained by the producer and a prescribed minimum price), the type of natural gas, the quantity produced in a given month and the vintage of the natural gas. The vintage of natural gas is based on various criteria set out in the regulations, but is generally determined based on when the natural gas pools

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were discovered and natural gas from such pools was recovered.  As an incentive for the production and marketing of natural gas which may have been flared, the royalty rate on natural gas produced in association with oil is less than non-associated natural gas. The royalty payable on natural gas varies between 15% and 30%, in the case of new natural gas, and between 15% and 35%, in the case of old natural gas. Natural gas produced from qualifying exploratory natural gas wells spudded or deepened after July 31, 1985 and before June 1, 1988 is eligible for a royalty exemption for a period of 12 months, up to a prescribed maximum amount.  Natural gas produced from qualifying intervals in eligible natural gas wells spudded or deepened to a depth below 2,500 meters is also subject to a royalty exemption, the amount of which depends on the depth of the well.

In Alberta, a producer of oil or natural gas is entitled to a credit against the royalties payable to the Crown by virtue of the ARTC program. The ARTC rate is based on a price-sensitive formula and varies between 75% for prices at or below the royalty tax credit reference price of $100 per cubic metre decreasing to 25% for prices above the royalty tax credit reference price of $210 per cubic metre. The ARTC rate will be applied to a maximum annual amount of $2,000,000 of Alberta Crown royalties payable for each producer or associated group of producers. Crown royalties on production from producing properties acquired from corporations claiming maximum entitlements to ARTC will generally not be eligible for ARTC. The rate is established quarterly based on the average "par price", as determined by the Alberta Department of Energy for the previous quarterly period. On December 22, 1997, the Alberta Government announced that it would conduct a review of the ARTC program with the objective of setting out better-targeted objectives for a smaller program and to deal with administrative difficulties. On August 30, 1999, the Alberta Government announced that it would not be reducing the size of the program, but that it would introduce new rules to reduce the number of persons who qualify for the program. The new rules will preclude companies that pay less than $10,000 in royalties per year and non-corporate entities from qualifying from the program.

Saskatchewan

In Saskatchewan, the amount payable as a royalty in respect of oil depends on the vintage of the oil, the type of oil, the quantity of oil produced in a month and the value of the oil. The royalty rate payable for old oil is between 20% and 45%, and for new oil and third tier oil is between 10% and 35%. The royalty payable on natural gas in Saskatchewan is determined by a sliding scale based on a reference price (which is the greater of the amount obtained by the producer and a prescribed minimum price), the quantity produced in a given month, the type of natural gas and the vintage of the natural gas. As an incentive for the production and marketing of natural gas which may have been flared, the royalty rate on natural gas produced in association with oil is less than non-associated natural gas. The royalty rate payable for old gas is between 20% and 45%, and for new gas and third tier gas is between 15% and 35%.

Effective October 1, 2002, the Saskatchewan government revised its fiscal regime for the oil and gas industry. Some royalties on wells existing as of that date will remain unchanged and will therefore be subject to various periods of royalty/tax deduction. The changes include new lower royalty and tax structures applicable to both oil, natural gas and associated natural gas (natural gas produced from oil wells), a new system of volume incentives and a reduced corporation capital tax resource surcharge rate.

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The new fiscal regime for the Saskatchewan oil and gas industry provides an incentive to encourage exploration and development through a revised royalty/tax structure for oil and natural gas wells with a finished drilling date on or after October 1, 2002 or incremental oil production due to a new or expanded waterflood project with a commencement date on or after October 1, 2002. This "fourth tier" Crown royalty rate, applicable to both oil and natural gas, is price sensitive and ranges from a minimum 5% at a base price to a maximum of 30% at a price above the base price. A fourth tier freehold tax structure, calculated by subtracting a production tax factor of 12.5 percentage points from the corresponding Crown royalty rates, has also been created which is applicable to conventional oil, incremental oil from new or expanded waterfloods and natural gas. The fourth tier royalty/tax structure is also applicable in respect of associated natural gas that is gathered for use or sale which is produced either from oil wells with a finished drilling date on or after October 1, 2002 and oil wells with a finished drilling date prior to October 1, 2002, where the individual oil well has a gas-oil production ratio in any month of more than 3,500 cubic metres of natural gas per cubic metre of oil. In addition, volume-based royalty/tax reduction incentives have been changed such that a maximum royalty of 2.5% now applies to various volumes of both oil and natural gas, depending on the depth and nature of the well (up to 16,000 cubic metres of oil in the case of deep exploratory wells and 25,000 cubic metres of natural gas produced from exploratory wells). The royalty/tax category with respect to re-entry and short sectional horizontal oil wells has been eliminated such that all horizontal oil wells with a finished drilling date on or after October 1, 2002 will receive fourth tier royalty/tax rates and incentive volumes. Further changes include the reduction of the corporation capital tax resource surcharge rate from 3.6% to 2.0% and, subject to certain restrictions, the expansion of the deep oil well definition to include oil wells producing from a zone deeper than 1,700 meters.

Land Tenure

Crude oil and natural gas located in the western Canadian provinces is owned predominantly by the respective provincial governments. Provincial governments grant rights to explore for and produce oil and natural gas pursuant to leases, licences and permits for varying periods and on conditions set forth in provincial legislation including requirements to perform specific work or make payments. Oil and natural gas located in such provinces can also be privately owned and rights to explore for and produce such oil and natural gas are granted by lease on such terms and conditions as may be negotiated.

Environmental Regulation

The oil and natural gas industry is currently subject to environmental regulation pursuant to provincial and federal legislation. Environmental legislation provides for restrictions and prohibitions on releases or emissions of various substances produced or utilized in association with certain oil and gas industry operations. In addition, legislation requires that well, pipeline and facility sites be abandoned and reclaimed to the satisfaction of provincial authorities. Compliance with such legislation can require significant expenditures.  A breach of such legislation may result in the imposition of material fines and penalties, the revocation of necessary licenses and authorizations and civil liability for pollution damage.

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In Alberta, environmental compliance is governed by the Environmental Protection and Enhancement Act (Alberta) and the Oil and Gas Conservation Act (Alberta), both of which impose certain environmental responsibilities on oil and natural gas operators and working interest holders in Alberta and impose penalties for violations. In Saskatchewan, environmental compliance is governed by the Environmental Management and Protection Act (Saskatchewan) and the Oil and Gas Conservation Act (Saskatchewan).

In 1994, the United Nations' Framework Convention on Climate Change came into force and three years later led to the Kyoto Protocol which will require participating countries, upon ratification, to reduce their emissions of carbon dioxide and other greenhouse gases.  Canada ratified the Kyoto Protocol in late 2002.  Although the Canadian federal government has not released details of any implementation plan, it has stated that it intends to limit the emission reduction targets for the industry and the cost of emission credits, which could result in increased capital expenditures and operating costs.

The Company believes that it is, and intends to continue to be, in material compliance with applicable environmental laws and regulations and is committed to meeting its responsibilities to protect the environment wherever it operates or holds working interests.  The Company anticipates that this compliance may result in increased expenditures of both a capital and expense nature as a result of increasingly stringent laws relating to the protection of the environment.  The Company believes that it is reasonably likely that the trend in environmental legislation and regulation will continue toward stricter standards.

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C.

Organizational Structure

Gentry currently has one wholly-owned active subsidiary, Gentry Resources (Saskatchewan) Ltd., and two wholly-owned inactive subsidiaries, Gentry Resources (West Africa) Inc. and Gentry Income Funds Inc., all of which were incorporated under the ABCA.  Gentry also owns a 16% interest in the outstanding common equity of Stratic Energy Corporation, a TSX Venture listed company which was continued under the Business Corporations Act (Yukon).  The following chart outlines the corporate structure of Gentry.

At present, 100% of the Company's sales occur in the Canadian market.  As is standard in the oil and gas industry, the Company uses commercial oil and gas brokers, who market the petroleum and natural gas that the Company produces to various oil and gas suppliers.  The price of oil and gas is deregulated and is negotiated between the producers and suppliers based upon domestic and international economic and market factors (including supply and demand, oil quality, prices for competing oils, distance to market, and value of refined products).

D.

Property, Plant and Equipment

PRINCIPAL PRODUCING PROPERTIES

The following is a description of Gentry's principal producing oil and gas properties as of December 31, 2003.

Readers are directed to the definitions of "company interest," "gross," "net" and other defined terms and disclosure regarding the Company's operations and resources under "Presentation of Gentry's Oil and Natural Gas Reserves and Production Information" in this Annual Report.  In particular, unless otherwise indicated as "gross" or "net," all estimates of oil and natural gas reserves and production are presented on a "company interest" basis.

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Alberta

Bantry

The Bantry area is located approximately 9 kilometres north of Brooks in south eastern Alberta in Township 19, Range 14, West of the 4th Meridian.  Gentry owns a 50% interest in one well and a 38.67% interest in a second well.  Natural gas production for 2003 was approximately 108 Mcf/d.

Joffre

The Joffre area is located approximately 10 kilometres southeast of Red Deer in south central Alberta in Township 37, Range 26, West of the 4th Meridian.  Gentry owns interests varying between 10% to 40% in the area. Production from the area averaged 10 bbls/d and 185 Mcf/d in 2003.

Princess

The Princess lands are located approximately 30 kilometres east of Brooks, in southeast Alberta in Townships 18-20, Ranges 10 and 14, west of the Fourth Meridian.  Gentry owns interests ranging between 28% and 50% in the area. 2003 production averaged 202 bbls/d and 536 Mcf/d.

Red Rock

The Red Rock area is located approximately 50 kilometres south of Grande Prairie, in west central Alberta, in Township 63, Ranges 7 and 8 West of the Sixth Meridian.  Gentry owns a 3.35564% working interest in the Red Rock Chinook Unit No. 1 plus various working interests ranging from a 0.78125% working interest to a 25.0% working interest in non-unit lands in the Red Rock area.  The Red Rock Chinook Unit No. 1 and non-unit lands produced 8 bbls/d of crude oil and 90 Mcf/d of natural gas in 2003.

Red Willow

The Red Willow lands are located approximately 270 kilometres northeast of Stettler, in east central Alberta in Township 39, Range 16, west of the Fourth Meridian.  Gentry owns interests ranging between 23.56% and 100% the area.  2003 production averaged 1.56 MMcf/d.

Sedalia

The Sedalia lands are located approximately 25 kilometres west of Oyen, in southeast Alberta in Townships 28-30, Ranges 5 and 6, west of the Fourth Meridian.  Gentry owns interests ranging between 50% and 100% in the area.  Production in 2003 averaged 1.27 MMcf/d.

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Thornbury

The Thornbury area is located approximately 100 kilometres southwest of Fort McMurray in northeastern Alberta, in townships 80 and 81, Ranges 14 to 16, West of the fourth Meridian.  Gentry owns an 18.333% working interest in the area. Natural gas production for 2003 was approximately 237 Mcf/d.

West Provost Viking Gas Unit

The West Provost Viking Gas Unit is located approximately 20 kilometres southeast of Coronation in east central Alberta in Townships 35-37, Ranges 7-9, West of the 4th Meridian.  Gentry owns a 27.34% interest in the Unit. For 2003, production averaged 601 Mcf/d.

West Provost Non-Unit Lands

The West Provost Non-Unit Lands are located approximately 20 kilometres southeast of Coronation in east central Alberta, located at Townships 35-37, Ranges 7-9, West of the 4th Meridian.  Gentry owns interest varying between 18.275% to 39.990% in the area3. Production from the area was approximately 50 bbls/d in 2003.

Whitecourt

The Whitecourt lands are located west-central Alberta in Townships 59 to 61, Ranges 11, 12 and 14, west of the Fifth Meridian.  Gentry owns interests ranging between 20% and 50%.  Production in 2003 averaged 363 Mcf/d.

Saskatchewan

Baldwinton

The Baldwinton property is located approximately 70 kilometres southeast of Lloydminster, in Section 8, Township 44, Range 23, West of the 3rd Meridian.  Gentry holds a 30.5% working interest in the area. Production from this area was approximately 253 bbls/d of crude oil in 2003.  

Benson

The Benson area is located approximately 160 kilometres southeast of Regina, in Township 6, Ranges 8 and 9, West of the Second Meridian.  Gentry has a 10.9153% working interest and a gross overriding royalty interest of 0.07% in the Benson Unit.  Gentry also has royalty interests of 1.875% and 25% of 1/150 (5-15%) respectively in two wells just outside the Unit.  The wells in this Unit produce primarily from the Midale formation.  Production from this area in 2003 was approximately 82 bbls/d of crude oil.

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Dollard

The Dollard area is located approximately 300 kilometres west-southwest of Regina, in Township 7, Ranges 19 and 20, West of the Third Meridian.  Gentry has a 3.853% working interest in the Dollard Unit and a gross overriding royalty of approximately 1.5% in the East Dollard Voluntary Unit.  Production from these units averaged 87 bbls/d of crude oil in 2003.

Steelman

The Steelman area is located approximately 180 kilometres southeast of Regina in Townships 3, 4 and 5, Ranges 4, 5 and 6, West of the Second Meridian.  Gentry owns interests in three units in the Steelman area, being units 1A, 4 and 5.

In the Steelman Unit 1A, Gentry holds a 2.707% working interest in the Unit. Production from this unit in 2003 was approximately 15 bbls/d of crude oil and 10 Mcf/d of natural gas.

In the Steelman Unit 4, Gentry holds a 13.938% working interest in approximately the Unit.  Production from this unit was approximately 75 bbls/d of crude oil and 44 Mcf/d of natural gas in 2003.

In the Steelman Unit 5, Gentry holds a 19.927% working interest in the Unit. Production from this unit was 24 bbls/d of crude oil and 16 Mcf/d of natural gas in 2003.

Manitoba

Virden Roselea

The Virden Roselea area is located in southwestern Manitoba in Townships 9 and 10, Ranges 24, 25 and 26, West of the Prime Meridian.  Gentry owns a 10.629% working interest in the Virden Roselea Unit No. 1.  Production for the unit in 2003 was approximately 46 bbls/d of crude oil.

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SUMMARY OF PRODUCTION FROM PRINCIPAL PRODUCING PROPERTIES

During the year ended December 31, 2003, on a BOE basis, 65.0% of the Company's production was derived from Alberta, 32.4% from Saskatchewan and 2.6% from Manitoba.  The following table describes the Company's major properties and the average daily production from these properties during the year ended December 31, 2003.

OIL AND NATURAL GAS RESERVES

In the Martin Report, Martin has evaluated all of the crude oil, NGLs and natural gas reserves associated with Gentry's properties effective as of December 31, 2003 in accordance with National Instrument 51-101 adopted by the Canadian securities regulatory authorities.

In preparing its report, Martin obtained basic information from Gentry, which included land data, well information, geological information, reservoir studies, estimates of on-stream dates, contract information, current hydrocarbon product prices, operating cost data, capital budget forecasts, financial data and future operating plans.  Other engineering, geological or economic data required to conduct the evaluation and upon which the Martin Report is based, was obtained from public records, other operators and from Martin's non-confidential files.  Information concerning the extent and character of ownership of Gentry's interests and the accuracy of all factual data supplied to Martin by third parties was accepted by Martin as represented.

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The following is a summary, as at December 31, 2003, of the crude oil, NGLs and natural gas reserves of Gentry and the net present value of the estimated future net revenue ascribed to such reserves as evaluated in the Martin Report, based on both forecast and constant price and cost assumptions. All future net revenues are stated prior to provision for interest, future site restoration and reclamation costs, income taxes, general and administrative expenses and indirect costs and after deduction of royalties and estimated future capital expenditures. It should not be assumed that the present worth of estimated future cash flows shown below is representative of the fair market value of the reserves. There is no assurance that such price and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of Gentry's  crude oil, NGLs and natural gas reserves provided herein ar e estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein. Readers should review the definitions and information contained in "Presentation of Gentry's Oil and Natural Gas Reserves and Production Information" in conjunction with the following tables and notes. Columns may not add due to rounding.

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Notes:

 (1)

The Martin Report makes certain assumptions regarding future increases in the prices of oil and gas and takes into account inflation with respect to future operating and capital costs in the escalated price case.  Operating and capital costs were escalated by 2% per annum.  All oil prices have been adjusted from the reference price for quality and transportation and all gas prices have been adjusted for heating value.

(2)

Effective January 1, 1995, the ARTC program refunds a portion of eligible Crown royalties and varies from a maximum rate of refund of 75% of $2 million when the oil reference price is below $100 per cubic metre, to a minimum of 25% of $2 million when the oil price is above $210 per cubic metre.  The ARTC program was assumed to continue indefinitely.

(3)

The forecast price and cost case assumes the continuance of current laws and regulations, and any increase in selling prices also takes inflation into account.  The estimated future net revenue to be received from the production of the reserves was based on an inflation rate of 2.0% per year, an exchange rate of Cdn$1.00 = US$0.753 in 2004, Cdn$1.00 = US$0.751 in 2005 and Cdn$1.00 = US$0.748 thereafter and the following production price forecasts supplied by Martin:

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 (4)

The constant price and cost case assumes the continuance of produce prices at December 31, 2003 and operating costs projected for 2004, and the continuance of current laws and regulations.  Product prices have not been escalated beyond this date nor have operating and capital costs been increased on an inflationary basis.  The future net revenue to be received from the production of the reserves was based on an exchange rate of Cdn$1.00 = US$0.753 and the following prices:

 (5)

The undiscounted total future net revenue by reserves categories as of December 31, 2003, using both constant and forecast prices and costs, is set forth below:

 (6)

The net present value of future net revenue by reserves category and production group as of December 31, 2003, using both constant and forecast prices and costs and discounted at 10% per year, is set forth below:

(a)

Includes solution gas and other by-products.

(b)

Includes by-products but excludes solution gas from oil wells.

(7)

The volume of gross Proved plus Probable production estimated by Martin for 2004 in preparing the estimated net present values of future net revenue is as follows.

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 (8)

The amount of development costs deducted in the estimated net present value of future net revenue is as follows:

	Constant Prices and Costs		Forecast Prices and Costs
	Proved Reserves		Proved Reserves		Proved Plus Probable Reserves
Year	Undiscounted	Discounted at 10% /year	Undiscounted	Discounted a 10%/year	Undiscounted	Discounted at 10%/year
			(in $ thousands)
2004	223		223		335
2005	771		771		2373
2006	409		417		565
2007	0		0		421
2008	0		0		0
Remaining	0		0		9
Total	1,403	1,147	1,411	1,153	3,703	2,981

(9)

As of December 31, 2003, the Company had no Proved plus Probable Reserves which were capable of production but which were not on production.

(10)

The extent and character of the Company's interests evaluated in the Martin Report and all factual data supplied by the Company to Martin were accepted by Martin as represented.  The crude oil and natural gas reserve calculations and any projections on which the Martin Report is based were determined with generally accepted petroleum engineering evaluation practices.

OIL AND NATURAL GAS WELLS AND UNPROVED PROPERTIES

The following table summarizes, as at December 31, 2003, Gentry's interests in producing wells and in non-producing wells which were not producing, but may be capable of production, along with Gentry's interests in Unproved properties.  Although many wells produce both oil and natural gas, a well is categorized as an oil well or a natural gas well based upon the proportion of oil or natural gas production.

	Producing Wells				Non-Producing Wells				Unproved Properties
	Oil		Natural Gas		Oil		Natural Gas		(thousand of acres)
	Gross	Net	Gross	Net	Gross	Net	Gross	Net	Gross	Net
Alberta	58	9.5	111	29.5	10	6.2	37	11.9	89	48
Saskatchewan	1208	54.8	0	0	109	8.1	0	0	8	3
Manitoba	60	6.4	0	0	8	0.9	0	0	0	0
Total	1326	70.7	111	29.5	127	15.2	37	11.9	97	51

Gentry expects its rights to explore and develop on approximately Nil net acres to expire prior to December 31, 2004.  Gentry has no material work commitments on such properties and, where Gentry determines appropriate, it can continue the leases by either making the necessary applications or performing the necessary work.

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EXPLORATION AND DEVELOPMENT ACTIVITIES

During 2003, Gentry participated in the drilling of 55 gross wells (27.7 net wells) with a 73% net well success rate.  The majority of Gentry's 2003 wells were drilled in Princess and Sedalia. The following table summarizes the number and type of wells that Gentry drilled or participated in the drilling of for the year ended December 31, 2003.

	Number of Exploration Wells		Number of Development Wells		Total Wells
Category of Well	Gross	Net	Gross	Net	Gross	Net
Crude oil wells	3	0.9	7	2.5	10	3.4
Natural gas wells	11	8.0	10	5.2	21	13.2
Cased Wells	4	2.5	4	1.0	8	3.5
Dry and abandoned wells	8	3.7	8	3.9	16	7.6
Total	26	15.1	29	12.6	55	27.7

Gentry currently intends to focus its development activities in the Western Canadian Sedimentary Basin.  Gentry's exploration and development activities are typically funded through debt, internally generated cash flow and issuances of Common Shares.

QUARTERLY PRODUCTION HISTORY

The following table sets forth Gentry's average daily production volumes, on a company interest basis, for each fiscal quarter in 2003 and for the entire year.

QUARTERLY NETBACK HISTORY

The following tables set forth Gentry's average netbacks received for each fiscal quarter in 2003 and for the entire year (excluding any hedging gains or losses).  Netbacks are calculated on the basis of prices received before hedging on sales volumes, less related royalties and related production costs. For multiple product well types, production costs are entirely attributed to that well's principal product type.

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Note:

(1)

Production costs are costs incurred to operate and maintain wells and related equipment and facilities, including operating costs of support equipment used in oil and gas activities and other costs of operating and maintaining those wells and related equipment and facilities.  Examples of productions costs include items such as field staff labour costs, costs of materials, supplies and fuel consumed and supplies utilized in operating the wells and related equipment (such as power, chemicals and lease rentals), repairs and maintenance costs, property taxes, insurance costs, costs of work-overs, processing and treating fees, overhead fees, taxes (other than income and capital taxes) and other costs.

RECONCILIATION OF RESERVES

The following tables reconcile the Company's oil and natural gas reserves (on both a gross and net basis) from December 31, 2002 to December 31, 2003, using forecast prices and costs.

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RECONCILIATION OF CHANGES IN NET PRESENT VALUE OF FUTURE NET REVENUE

The following table sets forth a reconciliation of changes in the net present value of estimated future revenues associated with the Company's net Proved Reserves from December 31, 2002 to December 31, 2003 using constant prices and costs and discounted at 10% per year.

Note:

(1)  The difference between forecast income taxes at beginning of period and forecast income taxes at end of period.

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HISTORICAL UNDEVELOPED RESERVES

The following table discloses the volumes of Undeveloped Reserves of the Company that were first attributed in 2003.

Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable) to which they are assigned.  The Company anticipates that such expenditures will be incurred prior to 2005 for the above noted reserves.

ABANDONMENT AND RECLAMATION COSTS

The Company is liable for ongoing environmental obligations and for the ultimate abandonment and reclamation costs for its natural gas and petroleum properties (including surface leases, wells, facilities and pipelines) upon abandonment. The Company identifies obligations related to petroleum and natural gas properties by estimating the present value of expected future costs to reclaim and abandon these properties and the timing of the costs to be incurred in future periods.  These estimates are currently based on 99.2 net wells and no net facilities in respect of which the Company expects to incur such costs.  The Company anticipates the total amount of such costs to be approximately $2.4 million on an undiscounted basis and $1.3 million discounted at 10%.  Of this amount, the Company anticipates that approximately $233,000 will be incurred in the next three financial years.

Ongoing environmental obligations will generally be funded out of cash flow.  

The estimates of total Proved Reserves associated with the Principal Producing Properties and the present worth of future net cash flows from such reserves contained in the Martin Report (based on forecast prices and costs on an undiscounted basis) include expenditures of approximately $1.6 million associated with the abandonment of current producing and future wells but do not include any provision for non-producing wells or facility abandonment and site restoration costs.  

TAX HORIZON

The Company's wholly owned subsidiary Gentry Resources (Saskatchewan) Ltd. was required to pay income taxes in 2003.  It is anticipated that Gentry Resources (Saskatchewan) Ltd. will be liable for income taxes in 2004.  Based on a model of reinvesting cash flow at industry average efficiency rates, the Company anticipates it will be required to pay income taxes in 2004.

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ENVIRONMENTAL AND SAFETY MATTERS

The Company and its subsidiaries conduct their operations with a commitment to the health of their employees and the public, as well as the long-term enhancement and protection of the environment.  The Company intends to perform all work safely and to comply with all corporate and regulatory requirements. The Company intends to continue to operate in a manner consistent with and, where applicable, build on its existing comprehensive safety, health and environment program, which outlines responsibilities and corporate and regulatory standards, as well as provides tools to assist employees and contractors to work safely and to meet or exceed regulatory requirements.

INSURANCE

The Company carries suitable insurance policies to provide protection for its working interest in its natural gas and petroleum properties. Insurance policies cover property damage and general liability. The ongoing level, type and maintenance of insurance will be determined by the Company based upon the availability and cost of such insurance and the Company's perception of the risk of loss.  See "Item 3.  Key Information -- D.  Risk Factors -- Environmental Concerns".

FUTURE COMMITMENTS

The Company does not currently use any type of financial instruments or fixed price physical sales contracts to manage the risk related to fluctuating commodity prices.  Absent such hedging activities, all of the Company's crude oil and NGLs and  natural gas production is sold into the open market at prevailing spot prices, which exposes the Company to the risks associated with commodity price fluctuations and foreign exchange rates.  See "Item 3.  Key Information  -- D.  Risk Factors -- Industry Risks".

The Company currently does not have any firm commitments for gathering, processing and transmission services that require the Company to deliver certain minimum quantities of crude oil and NGLs and natural gas to third parties or pay the corresponding tariffs. The Company utilizes interruptible processing and transportation arrangements either directly or through the oil and gas purchaser.

As part of the Company's flow-through share issue completed on May 18, 2004 (see " -- A.  History and Development of the Company -- Recent Developments"), the Company must expend $2.5 million on exploration expenditures prior to December 31, 2005.

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ITEM 5

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

This discussion and analysis should be read in conjunction with the consolidated audited financial statements of the Company for the fiscal years ended December 31, 2003, 2002 and 2001, and related notes thereto included herewith and with the selected data set forth in Item 3 above.  The consolidated financial statements for the Company have been prepared in accordance with Canadian generally accepted accounting principles.  Except as described in Note 13 to the audited consolidated financial statements for the years ended December 31, 2003 and 2002, and Note 12 to the audited consolidated financial statements for the years ended December 31, 2002 and 2001, there are no material differences, for the purposes of these financial statements, between generally accepted accounting principles in Canada and the United States.

Where amounts are expressed on a barrel of oil equivalent (boe) basis, natural gas has been converted at a ratio of six thousand cubic feet of natural gas to one boe. This ratio is based upon an energy equivalent conversion method primarily applicable at the burner tip and does not represent economic equivalence at the wellhead or point of sale. Boe figures may be misleading, particularly if used in isolation.

Included in the discussion and analysis are references to financial measures commonly used in the oil and gas industry such as cash flow and cash flow per share. These measures have no standardized meaning, are not defined by Canadian generally accepted accounting principles, and accordingly are referred to as non-GAAP measures.  Cash flow and cash flow per share are used by the Company to assess operating results between years and between peer companies.  Gentry's reported amounts may not be comparable to similarly titled measures reported by other companies.  Cash flow should not be considered an alternative to, or more meaningful than, cash provided by operating, investing, and financing activities or net income as determined by Canadian GAAP as an indicator of the Company's performance or liquidity.

Effective January 1, 2003, the Company has adopted retroactively, with restatement of prior periods, the Canadian Institute of Chartered Accountants' new standard on Asset Retirement Obligations.  As a result, certain comparative figures have been restated in compliance with the new policy.  A summary of the effects of this new policy is contained in the "New Accounting Standards for 2003 and 2004" section of Item 5B.

Certain disclosure in this Item 5 contains forward-looking statements that involve risks and uncertainties.  Such information, although considered reasonable by Gentry at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated in the statements made.  For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Such risks and uncertainties include, but are not limited to, risks associated with operations, loss of market, regulatory matters, commodity price risk, environmental risks, industry competition, and ability to access sufficient capital from internal and external sources.  See "Forward-Looking Statements" at the beginning of this Annual Report.

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A.

Operating Results

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Production and Pricing

With Gentry's shift to full-cycle exploration, the majority of its activities and a growing amount of its oil and gas production are from Alberta.  Previously, most of the Company's oil production had been derived from Saskatchewan and the majority of its gas production was generated in Alberta. Whereas the Saskatchewan crude varies from medium to light gravity in the southeast of the province to a heavier blend in the central area, the new Alberta crude is a medium to heavy gravity oil. Gentry's growth in gas production is coming largely from the southern portions of Alberta.

Oil and liquids	Revenue	Volume	Price
	($thousands)	(bbls/d)	($/bbl)
2003	11,860.4	897	36.22
2002	12,139.8	991	35.55
2001	9,984.1	937	29.19

	Revenue	Volume	Price
Natural gas	($thousands)	(mcf/d)	($/mcf)
2003	12,819.4	5,330.0	6.59
2002	7,215.8	4,741	4.17
2001	6,236.3	3,275	5.22

	Revenue	Volume	Price
Boe	($thousands)	(boe/d)	($/boe)
2003	24,679.8	1,785	37.87
2002	19,355.6	1,781	29.77
2001	16,220.4	1,483	29.97

Gross production revenue increased 28%, or $5.32 million, to $24.68 million from $19.36 million in 2002.  This substantial increase was due to higher commodity prices, primarily for natural gas, and a 12% increase in natural gas production, offset by a 9% decrease in the production of oil and liquids.

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Gentry's average natural gas price increased to $6.59/ mcf, up 58% from the 2002 average of $4.17/mcf.  This price rise added $4.71 million to 2003 revenues. Prices for oil and liquids showed a more moderate increase, up 8% to $36.22/bbl from $33.55/bbl in 2002, which had the effect of increasing revenues by $874 thousand.

Volume wise, the increased gas sales from 4,741 mcf/d to 5,330 mcf/d contributed $896 thousand to gross revenue.  This could not offset the $1.16 million lost due to reduced oil and liquids sales which fell from 991 bbls/d to $897 bbls/d.

In the above table, 2001 revenue includes a hedging gain.  The Company hedged 300 bbls/d of oil at a price of $43.69/bbl resulting in a gain of $391 thousand.

Gentry did not enter into any forward contracts in 2002 or 2003 and none are in place for 2004.

Royalties

Gentry's royalties, net of Alberta Royalty Tax Credit (ARTC), increased 20% to $5.07 million from $4.23 million in 2002.  Expressed as a percentage of production, oil royalties were 22.6% in 2003 versus 22.2% in 2002.  Gas royalties were 18.6% in 2003 compared with 21.2% in 2002.  On a boe basis, the percentages were 20.5% in 2003 and 21.8% in 2002.  The shift in production weighting from Saskatchewan to Alberta, which generally has a more favorable royalty regime for the Company' s assets, is the primary reason for the overall decrease in royalties as a percentage of revenues.

($thousands)	2003	2002	2001
Crown royalties	3054.7	2,225.3	1,575.3
Freehold royalties	1821.7	1,634.3	828.3
Overriding royalties	502.2	528.9	464.3
Total royalties	5,378.6	4,388.5	2,867.9
ARTC	(311.5)	(163.3)	(116.2)
Net royalties	5,067.1	4,225.2	2,751.7
As a percentage of production       revenue (prior to hedging)	20.5	21.8	17.4

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Production Expenses

Gross production expenses increased 28% to $5.73 million from $4.46 million in 2002. The majority of the increase was attributable to a full, active year of production at Princess.  On a barrel of oil equivalent basis, costs increased 28% to $8.80/boe from $6.86/boe in 2002.  Production problems at Baldwinton, as well as interruptions associated with bringing on new pool production at Princess, were the two leading factors to this increase.  As the proportion of Baldwinton's contribution falls and as the Company's history, experience and production at Princess grows, production expenses should fall closer to the levels realized in 2002.

General and Administrative Expenses

Gentry's general and administrative expenses increased 23% to $2.53 million in 2003 from $2.06 million in 2002.  Just over half of this increase was due to additional staff and compensation requirements as the Company continued to expand its activities.  On a barrel of oil equivalent basis, general and administrative expenses increased 22% to $3.88/boe from $3.17/boe in 2002.  Going forward, moderate increases to gross administrative costs are expected, however, as production increases, it is anticipated that per unit costs will decline.

Included in general and administrative expenses was $113 thousand in stock-based compensation that was expensed as the Company prospectively adopted new standards with respect to accounting for stock option grants.  This figure represents the value, using the Black-Scholes option-pricing method, of stock options granted in 2003.

Interest Expense

Gentry's interest expense increased to $484 thousand in 2003 from $407 thousand in 2002.  This increase was due to greater use of the Company's credit facilities to fund its capital exploration programs.  During the first half of the year, Gentry paid interest on its outstanding loan balance at a rate of prime plus 3/4%.  For the latter half, the rate was reduced to prime in conjunction with the increase in line of credit from $12 million to $14 million.

Depletion and Depreciation

Depletion and depreciation charges for 2003 were $7.08 million compared with $4.27 million in the previous year. This trend is expected to continue as the Company increases its asset base through its capital programs. On a barrel of oil equivalent basis, costs increased to $10.86/boe versus $6.57/boe in 2002.

The Company's depletion rate grew to 14.54% in 2003 from 13.16% in 2002.  The depletion calculation was based on year end proved reserves estimates at constant prices and costs.  These reserves were 8% lower than the 2002 estimates, primarily as a result of changes to reserves definitions under National Instrument 51-101 and this accounted for the increased depletion rate.

34

Income Taxes

Gentry was liable for $941 thousand in current taxes in 2003 which was a negligible decrease from $951 thousand in 2002. On a unit of production basis, current taxes were also similar, at $1.44/boe versus $1.46/boe in 2002. Future taxes declined substantially to $87 thousand in 2003 from $648 thousand in 2002.

This decrease was largely due to reductions in future federal and provincial income tax rates payable by the Company. On a unit of production basis, future taxes for 2003 equated to $0.13/boe versus $1.00/boe in 2002.

As a result of a flow-through financing in 2002, Gentry agreed to renounce $1.65 million of Canadian Exploration Expenditures. $106 thousand was incurred prior to year-end 2002 and the remaining $1.54 million was incurred in 2003.

At the end of 2003, Gentry had approximately $25.58 million of accumulated tax pools that are available for deduction against income in future years.

		Maximum
	Available	Annual
($ thousands)	Balance	Deduction
Canadian oil & gas property expense	9,476.8	10%
Canadian development expense	3,259.5	30%
Canadian exploration expense	4,670.6	100%
Foreign exploration & development expense	436.4	10%
Undepreciated capital cost	7,149.2	20-100%
Cumulative eligible capital	68.8	7%
Financing costs	521.8	20%
Total	25,583.1

Cash Flow and Net Income

In 2003, cash flow from operations reached a record high of $10.39 million, an increase of 40% from $7.42 million in 2002.  This amounts to $0.42 per share ($0.40 diluted) versus $0.34 per share ($0.32 diluted) in 2002.  This increase was largely achieved from higher net production revenues as a result of increases in commodity prices.

Net income increased 25% to $3.04 million from $2.44 million in 2002.  On a per share basis, net income was $0.12 ($0.12 diluted) in 2003 compared to $0.11 ($0.10 diluted) in 2002.  In assessing the change in net income, the positive impact of the extra $2.97 million in cash flow, coupled with a comparative savings of $561 thousand in future taxes, were greatly reduced by the additional $2.81 million in depletion and depreciation charges.

35

Netbacks

($/boe)	2003	2002	2001
Selling price	37.87	29.77	29.97
Royalties (net of ARTC)	(7.78)	(6.50)	(5.08)
Production expenses	(8.80)	(6.86)	(8.16)
Operating netbacks	21.29	16.41	16.73
Administration	(3.88)	3.17	(3.66)
Interest	(0.74)	(0.63)	(0.68)
Current taxes	(1.44)	(1.46)	(1.08)
Other income	0.44	0.26	0.27
Non-cash compensation	0.27	—	—
Cash flow	15.94	11.41	11.58
Depletion &    depreciation	(10.86)	(6.57)	(5.55)
Future taxes	(0.13)	(1.00)	(1.12)
Other items	(0.01)	(0.09)	(1.69)
Non-cash compensation	(0.27)	—	—
Net income	4.67	3.75	3.22

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Revenues

Gross production revenue increased $3.14 million, or 19% to $19.36 million in 2002 from $16.22 million in 2001.  The 6% rise in oil and liquids production from 937 bbls/d to 991 bbls/d contributed $0.58 million to this increase while gas production, which increased 45% from 3,275 mcf/d to 4,741 mcf/d, contributed $2.80 million to the revenue growth.

Changes in commodity pricing had a mixed effect on revenues.  Crude oil and liquids averaged $33.44/bbl versus $29.19/bbl in 2001, which had the effect of increasing revenues by $1.58 million.  Natural gas, on the other hand, sold for an average price of $4.17/mcf in 2002 compared with $5.22/mcf a year ago.  This lowered revenues by $1.82 million.

Included in the 2001 figures is Gentry's hedging gain.  The Company hedged 300 bbls/d of oil at a price of $43.69/bbl, resulting in a gain of $391 thousand.  Gentry did not enter into any forward contracts in 2002 and has not done so for 2003.

36

Interest and Other Income

Interest and other income was $168,906 in 2002 compared to $147,980 in 2001.  The primary reason for the increase was the increased processing fees received from the facilities at Red Willow.

General and Administrative Expenses

Gentry's general and administrative expenses increased 4% to $2.06 million in 2002 from $1.98 million in 2001.  This increase was a result of additional staffing requirements.  On a barrel of oil equivalent basis, general and administrative expenses decreased 13% to $3.17/boe from $3.66/boe in 2001.  While the Company expects moderate increases to gross administrative costs, per unit costs will decrease as production increases.

Production Expenses

In spite of the Company's increased production volumes, gross production expenses remained flat - $4.46 million in 2002 versus $4.41 million in 2001.  On a unit basis, costs decreased to $6.86/boe from $8.16/boe a year earlier.  The primary reason for this decrease was a fall in the operating costs at Baldwinton and Red Willow, both of which saw a more reasonable level of expenses after experiencing high costs in 2001.

Royalties

Gentry's royalties, net of Alberta Royalty Tax Credit (ARTC), increased 54% to $4.23 million from $2.75 million in 2001.  Expressed as a percentage of production, oil royalties were 22.2% in 2002 versus 18.6% (before hedging) a year ago. Gas royalties were 21.2% in 2002 versus 15.5% in 2001. On a boe basis, the percentages were 21.8% in 2002 and 17.4% in 2001. Reasons for the increase are higher freehold royalties and the expiration of some crown royalty holiday volumes.

($000s)	2002	2001	2000
Crown Royalties	2,225.3	1,575.3	1,684.5
Freehold royalties	1,634.3	828.3	918.0
Overriding royalties	528.9	464.3	576.9
Total royalties	4,388.5	2,867.9	3,179.4
ARTC	(163.3)	(116.2)	(106.9)
Net royalties	4,225.2	2,751.7	3,072.5
As a  percentage of production revenue (prior to hedging)	21.8	17.4	20.8

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Income Taxes

Gentry was liable for $951 thousand in current taxes in 2002 versus $584 thousand in 2001, while future taxes were relatively unchanged at $618 thousand compared with $605 thousand in the previous period.  The biggest reason for the increase in current taxes was due to the excess of tax deductions over accounting charges on capital assets being lower in 2002 than 2001.  On a unit of production basis, current taxes were $1.46/boe in 2002 and $1.08/boe in 2001.  Future taxes were $0.95/boe in the current year versus $1.12/boe in 2001.  As a result of a flow-through financing in the last month of 2002, Gentry agreed to renounce $1.65 million of Canadian Exploration Expenditures.  $106 thousand was incurred prior to the year-end and the remaining $1.54 million will be incurred in 2003.

Interest Expense

Gentry's interest expense increased to $407 thousand in 2002 from $370 thousand in 2001.  This increase is attributable to the greater utilization of the Company's credit facilities to fund its capital exploration programs.  In 2002, the Company paid an effective interest rate of 4.46% on an average outstanding loan balance of $9.12 million.  This compares with 5.67% on an average balance of $6.54 million in 2001.

Depletion, Depreciation and Site Restoration

Depletion and depreciation charges for 2002 totaled $4.27 million compared with $3.01 million the previous year.  This trend is expected to continue as the Company increases its asset base through its capital programs.  On a barrel of oil equivalent basis, costs increased to $6.57/boe compared with $5.55/boe the previous year as the depletion rate grew to 13.16% from 10.63% in 2001.  Gentry's site restoration and reclamation provision for 2002 amounted to $272 thousand compared with $228 thousand the previous year.

Net Income

Net income increased 39% to $2.44 million in 2002 from $1.75 million in 2001.  The per share numbers were $0.11 ($0.10 diluted) in 2002 versus $0.08 ($0.08 diluted) in 2001.  The primary factors in this increase relate to higher net production revenues and Gentry's equity investments.

Impact of Equity Investments on Results of Operations

During 2002, Gentry had a significant investment in Stratic. Gentry began the year owning 37% of Stratic's issued and outstanding shares, but ended the year at 19%, as Stratic issued additional shares pursuant to a financing in December.

As Gentry's equity income (loss) from its investments is recorded in Gentry's consolidated income statement on a one-line basis, the figures only affect Gentry's consolidated net income result and do not affect normal operating revenues, expenses, or cash flow from operations.

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Marketing and Risk Management Arrangements

In 2003, all of Gentry's sales occurred in the Canadian market.  The price of oil and gas is deregulated and is negotiated between the producers and suppliers based upon domestic and international economic and market factors (including supply and demand, oil quality, prices for competing oils, distance to market, and value of refined products).  Gentry utilizes the services and expertise of various oil and gas marketers to sell its production.  No production is contracted out on terms greater than one year.  Gentry may hedge a portion of its crude oil and/or natural gas production to manage its exposure to fluctuations in the price of the product, although it did not do so in 2003.  The Company does not currently have a hedging program in place for 2004.

Gentry's operations in Canada render it subject to foreign currency fluctuations, which may materially affect its financial position and results.  Oil is generally sold at prices stated in U.S. dollars, while costs incurred are paid in the currency of the country in which the activities are undertaken.  At the present time, the Canadian dollar trades at a discount to the U.S. dollar, but any change in the exchange ratio could affect profitability.  Gentry does not expect to engage in currency hedging to offset any risk of currency fluctuations.

B.

Liquidity and Capital Resources

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Funds Flow

In 2003, cash flow from operations rose 40% to $10.39 million from $7.42 million the previous year.  This amounts to $0.42 per share ($0.40 diluted) in 2003 versus $0.34 per share ($0.32 diluted) during 2002.  Greater net production revenues enabled the Company to achieve this increase.

Funds flow from financing activities was $10.16 million versus $1.40 million in 2002.  The largest component of this change was the increase in bank debt of approximately $4.97 million (versus a decrease of $579 thousand in 2002).

Funds outflow from investing activities was $19.85 million in 2003 compared to $7.63 million in the previous year.  Petroleum and natural gas expenditures in 2003 amounted to $21.65 million compared to $8.62 million in 2002.

Liquidity and Capital Resources

On October 30, 2003, Gentry closed a bought deal financing with a syndicate of underwriters. Three million shares were issued at a price of $1.75 per share for gross proceeds of $5.25 million. The proceeds were initially applied to Gentry's bank indebtedness and then drawn on to fund capital commitments as required.

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Gentry began the year with 23,783,263 common shares issued and outstanding. During 2003, 3,000,000 shares were issued pursuant to the aforementioned financing; 350,000 and 585, 000 shares were issued on the exercised of previously issued share purchase warrants and incentive stock options ($1.75 and $0.52 per share respectively); 76,045 shares were issued pursuant to the Company's employee share purchase plan ($1.64 per share); and 441,800 shares were repurchased and cancelled pursuant to the Company's Normal Course Issuer Bid ($1.54 per share). As a result of these changes, Gentry ended the year with 27,352,508 common shares issued and outstanding.

Gentry's year end net debt (current liabilities in excess of current assets) was $13.44 million compared with $7.22 million at the end of 2002.  Gentry's credit limit stands at $14 million and is currently being reviewed based upon the Company's January 1, 2004 Reserves Report.

On May 18, 2004 Gentry issued 5,000,000 common shares at a price of $2.00 per share and 1,000,000 flow-through shares at a price of $2.50 per share for gross proceeds of $12,500,000.

Current Indebtedness

The Company currently has a $14,000,000 revolving operating facility with the Toronto Dominion Bank.  The facility was increased to that level as of June 24, 2003, from its previous level of $12,000,000 where it had been since November 2001.  The outstanding balance is due on demand and is secured by a general assignment of book debts, a $20,000,000 fixed and floating demand debenture against all assets and undertakings including fixed charges on certain property and equipment, a general security agreement covering all present and after acquired property, and a hypothecation and assignment of certain specific properties.  Interest on loan advances under the facility is payable monthly at the lender's prime rate.  The facility is subject to annual review and is subject to the following terms:

• The Company is required to maintain a current ratio of not less than one to one.  For the Bank's purposes, the undrawn portion of the facility may be added to cash.  In other words, the Bank allows Gentry to calculate its current ratio by adding the difference between the maximum revolving facility (in this case $14,000,000) and the amount actually outstanding and owing under the facility, to its cash position thereby effectively increasing its current ratio for the bank's reporting purposes.

• The Company may not incur any Term Debt in excess of $200,000 outstanding at any time.

• The Company may not dispose of its oil and gas assets with a value in excess of $1,000,000 per annum without the prior written consent of the Bank.

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Capital Expenditures

Net capital expenditures increased 151% in 2003 to $21.65 million from $8.62 million in 2002. The increase was due to a record level of activity for the Company as it continued to increase drilling in all of its core exploration areas; pursue an aggressive land acquisition program to facilitate further exploration activities; and to acquire and build additional infrastructure to bring new volumes on stream.

($thousands)	2003	2002	2001
Exploration and development	9,723.8	5,113.1	4,101.4
Facilities and equipment	4,208.4	1,298.4	1,429.7
Acquisitions, net of dispositions	2,503.6	n/a	2,131.9
Land and seismic	4,160.4	1,355.6	1,553.5
Capitalized expenses	848.0	796.3	756.0
Other	209.3	57.5	119.7
Total	21,653.5	8,620.9	10,092.2

The Company participated in 55 gross wells (27.7 net) in 2003 for a success rate of 71% (73% net). This compares to 35 gross wells (12.6 net) and success rate of 89% (76% net) in 2002.

Contractual Obligations

In the normal course of business, Gentry has entered into the following contractual obligation and commitment:

	Payments due in period
($ thousands)	2004	2005 to 2008	Total
Office lease	174	680	854

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Funds Flow

In 2002, cash flow from operations rose 18% to $7.42 million from $6.27 million the previous year.  This amounts to $0.34 per share ($0.32 diluted) in 2002 versus $0.30 per share ($0.29 diluted) during 2001.  Greater net production revenues enabled the Company to achieve this increase.

Funds flow from financing activities was $1,395,771 versus $5,493,080 in 2001.  The largest component of this change was the decrease in bank debt of approximately $579 thousand (versus an increase of $3.55 million in 2001).

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Funds flow from investing activities was $(7,716,287) in 2002 compared to $(10,424,220) in the previous year.  Petroleum and natural gas expenditures in 2002 amounted to $8,620,870 compared to $7,960,299 in 2001. In 2001, the Company also spent $1.73 million on the acquisition of Sloane and a further $1.25 million as an investment in Stratic.

Liquidity and Capital Resources

After the financing in December, which saw 1,000,000 common shares issued at $1.40 per share (with warrants to acquire 500,000 shares at $1.75 per share) and 1,000,000 flow-through shares issued at $1.65 per share, Gentry ended the year with 23,783,263 shares outstanding.  Other changes to share capital during the year included the issuance of 207,500 shares pursuant to the exercise of stock options ($0.51 per share) and the repurchase of 741,580 shares ($1.23 per share) pursuant to the Company's normal course issuer bid.

Gentry's net debt (bank debt less working capital) decreased to $7.22 million at the end of the year from $7.82 million at the start of the year.  Although capital expenditures were greater than cash flow, the year-end financing was responsible for lowering the debt.  Gentry's credit limit currently stands at $12 million and is reviewed annually.

Capital Expenditures

Net capital expenditures decreased 15% to $8.62 million from the $10.09 million incurred in the prior year.  The 2001 expenditures included $2.49 million associated with the acquisition of Sloane whereas the 2002 expenditures were focused more on exploration and development at Princess and Sedalia.

($thousands)	2002	2001	2000
Exploration and development	6,411.5	5,531.1	2,279.2
Acquisitions, net of dispositions	--	2,131.9	(59.6)
Land and seismic	1,355.6	1,553.5	402.3
Capitalized expenses	796.3	756.0	601.5
Other	57.5	119.7	95.9
Total	8,620.9	10,092.2	3,319.3

Critical Accounting Estimates

Gentry is required to make certain assumptions and estimates in the application of generally accepted accounting principles that may have a significant impact on the financial results of the Company. The following is a discussion of the estimates that are critical to Gentry's consolidated financial statements.

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Oil and Natural Gas Reserves and Full Cost Accounting

Gentry follows the full cost method of accounting for its oil and gas properties and equipment as prescribed by the Canadian Institute of Chartered Accountants (CICA).  Accordingly, all costs associated with the acquisition, development and exploration of oil and natural gas reserves are capitalized and then depleted using the unit-of-production method based on estimated proved reserves. A ceiling test keeps capitalized costs, less accumulated depletion and depreciation, future income taxes, and asset retirement obligations, from exceeding an amount equal to the estimated undiscounted value of future net revenues from proved reserves, less estimated future general and administrative expenses, asset retirement obligations, financing costs and income taxes.

Reserve estimates can have a significant impact on net income and the carrying value of property and equipment as they are the key component in the calculation of both depletion and depreciation and the ceiling test. Revisions to reserve estimates could result in a higher or lower depletion and depreciation expense being charged to net income while downward revisions to reserve estimates could result in a write down of property and equipment based on the ceiling test.

100% of Gentry's reserves are evaluated by the independent engineering firm of Martin & Brussett Associates. This evaluation requires significant estimates to be made on various engineering data as well as future production rates, capital expenditures, and commodity prices, all of which are subject to a number of uncertainties and various interpretations. The Company expects that over time its estimates of reserves will be revised, either upwards or downwards, based on future drilling, testing, production rates and commodity forecasts.

Asset Retirement Obligations

Gentry estimates the fair value of each asset retirement obligation. The obligation is based on current regulations, costs, technologies, and industry standards and is calculated using estimates for the timing of abandonment, inflation, and a credit-adjusted risk-free interest rate. The discounted obligation is initially capitalized as part of the carrying amount of the property and equipment and a corresponding liability is recognized. The increase in property and equipment is depleted and depreciated on the same basis as the remainder of the property and equipment. The liability is accreted against income, until it is settled or the property is sold, and is included as a component of depletion and depreciation expense.

Retirement obligations can have a material impact on both the consolidated balance sheets and consolidated statements of income of the Company. Revisions to any or all of the aforementioned factors and estimates used in calculating the obligation may result in a change to the carrying value of property and equipment and the related liability, as well as the depletion and depreciation expense charged to net income. The Company expects that over time its estimate of its asset retirement obligations will be revised, either upwards or downwards, based on future regulations, costs technologies, industry standards, timing of abandonments, and interest and inflation rates.

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Stock-based Compensation

Gentry follows the fair value method of accounting for its stock-based compensation arrangements relating to stock options grants. The Company recognizes a compensation expense based on the fair value of the options on the date of grant using the Black-Scholes option-pricing method and amortizes the expense over the vesting period of the options. The Black-Scholes method requires estimates for the volatility of the Company's stock, a risk-free interest rate, an expected dividend rate, and the expected life of the options. Changes in these estimates will change the fair value of the option and affect the compensation expense recorded in the consolidated financial statements.

Other Accounting Estimates

Gentry follows the accrual method of accounting which requires the Company to incorporate certain estimates in its financial and operating results. This includes estimates of revenues, royalties, production expenses and capital items for specific reporting periods for which actual results have not yet been received.

Gentry ensures that the personnel with the most knowledge of the relevant activities are responsible for the estimates which are then reviewed for reasonableness. Past estimates are also compared to actual results in order to make more informed decisions when accruing future amounts.

New Accounting Standards for 2003 and 2004

During the past year, a number of changes to financial reporting requirements have been introduced. The following outlines the most notable changes and those which have the greatest impact on Gentry.

Full Cost Accounting

Effective for fiscal years beginning on or after January 1, 2004, the CICA issued Accounting Guideline 16 -"Oil and Gas Accounting -- Full Cost" which changes the calculation of the ceiling test. The new standard requires that impairment be recognized if the carrying value of a long-life asset can not be recovered from its undiscounted future cash flows. An impairment, if required, is then determined as the difference between the carrying value and the fair value of the asset, such fair value to be based on the present value of the expected future discounted cash flows. Gentry performed this ceiling test calculation as at December 31, 2003 and there was no impact on the Company under the new guideline.

Asset Retirement Obligations

The CICA has introduced handbook section 3110—"Asset Retirement Obligations" which is effective January 1, 2004, although early adoption is encouraged. Under this section, the

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Company is required to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is first recorded, it is added at fair value to property and equipment. It is then amortized against income as a component of depletion and depreciation expense using the unit-of production method. The Company elected to adopt this policy effective January 1, 2003, with restatement of prior periods, and a summary of the effects of this new policy is contained in Note 3 of the Consolidated Financial Statements.

Stock-based Compensation

On October 1, 2003, and with effect from January 1, 2003, the Company prospectively adopted the CICA's new standard with respect to accounting for stock-based compensation arrangements relating to stock options granted to employees, officers and directors. Under the transitional provisions of the standard, stock options granted to employees, officers and directors after the effective date of January 1, 2003 are accounted for using the fair value method. As a result of this change, general and administrative expenses have increased by $113 thousand, property and equipment increased by $20 thousand and contributed surplus increased by $132 thousand.

A summary of the assumptions used in calculating the stock-based compensation expense are contained in Note 9(d) of the Consolidated Financial Statements.

Hedging Relationships

The CICA issued Accounting Guideline 13—"Hedging Relationships", which is effective for the Company's fiscal year beginning January 1, 2004. The new standard requires the identification, designation, documentation and measurement of hedging relationships in order to apply hedge accounting. As Gentry had no hedges in place in 2003 and none for 2004, this policy currently has no effect on the Company.

Business Risks and Uncertainties

Gentry, like all companies in the oil and gas industry, operates in an environment subject to inherent risks. Many such uncertainties are beyond the ability of a company to control --particularly those associated with exploring for, and developing, economic quantities of hydrocarbons; volatile commodity prices; issues related to global supply and demand; governmental regulations; and environmental matters. The Company's business is affected by these risks to the same degree as any other participant in the upstream Canadian oil and gas industry.

Gentry has implemented risk protection through such means as maintaining a broad base of interests in core areas of the Western Canadian Sedimentary Basin that have long-term production and reserves. In addition, through its investment in Stratic, the Company participates in selected international exploration ventures of high potential that nonetheless add certain political and technical business risks. Such risks are mitigated by operating in politically and

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economically stable countries, and by aligning with joint venture companies that have significant international experience.

C.

Research and Development, Patents and Licenses

As the Company is an oil and gas exploration and production company, the information required by this section is inapplicable.

D.

Trend Information

During the first quarter of 2004, both crude oil and natural gas were in an upward trend in the commodity price cycle.  For crude oil, this upward pricing trend began in late 2002 with production disruptions in Venezuela, followed by the addition of a "war premium" from concerns over Iraqi production curtailments.  Tensions in the Middle East are continuing to put pressure on the market fundamentals of supply, demand and inventories.  While there appears to still be an abundant supply of oil in the world, it remains highly concentrated and therefore susceptible to the influence of organizations such as OPEC.  Rejuvenation and development of Iraqi reserves will take enormous capital, not to mention the capital required to increase non-OPEC production.  This in turn has implicit assumptions for potential returns on capital and hence, oil prices.  While crude prices will continue to cycle through pricing highs and lows in response to world events, and OPEC's response to those events, Company management believes that the basic market fundamentals remain strong.

 North American gas markets are not tied to the geopolitical framework of OPEC and its production quotas and pricing policies.  Rather, market fundamentals in North America drive prices.  Over the past winter, prices remained strong due to continuing supply concerns in North America.  With a large amount of storage to be refilled this summer and continuing demand from the United States, Company management expects to see prices remain strong.  These positive market fundamentals and increased social and environmental awareness have led Gentry to focus its capital programs weighted toward a gas-driven strategy.

E.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements required to be disclosed in this Annual Report on Form 20-F.

F.

Tabular Disclosure of Contractual Obligations

The required information is contained above under "-- B.  Liquidity and Capital Resources -- Contractual Obligations."  

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ITEM 6

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.         Directors and Senior Management

The following table sets forth the names and addresses of Directors and Officers of the Company, their positions and offices with the Company and the date of commencement of their terms.  

Name and Address	Positions and Offices with the Company	Term in Office
Hugh G. Ross Calgary, Alberta	President, Chief Executive Officer and Director	President (Dec. ‘90 -- present); CEO (May ‘94 -- present); Director (June ‘88 -- present).
Ketan Panchmatia Calgary, Alberta	Chief Financial Officer and Secretary/Treasurer	Chief Financial Officer (Apr. ‘96 -- present); Secretary/Treasurer (Dec. ‘90 -- present)
R. Gordon McKay Calgary, Alberta	Vice-President, Exploration and Operations and Chief Operating Officer	Vice President (June ‘96 -- present); Chief Operating Officer (May ‘01 -- present)
Michael Halvorson Edmonton, Alberta	Director	Aug. ‘94 -- present
A. Bruce Macdonald Calgary, Alberta	Director	Nov. ‘95 -- present
George T. Hawes Plandome, New York	Director	Dec. ‘99 -- present
Walter O'Donoghue Calgary, Alberta	Director	May ‘98 -- present

There are no arrangements or understandings between any directors or officers and any other person pursuant to which the director or officer was selected as a director or officer.

Management

Hugh G. Ross

Mr. Ross has served as President of the Company since December 1990, Chief Executive Officer of the Company since May 1994, and a Director of the Company since June 1988.  Mr. Ross earned a Bachelor of Arts degree in Political Science in 1980 from the University of Calgary, and shortly after graduating, joined Gentry's predecessor company.  Mr. Ross has held various positions within the Company, from Corporate Secretary and Junior Landman to Land Manager and Vice President.  Additionally, he has served as Chief Executive Officer of Sloane Petroleums Inc. (formerly known as Northwind Ventures Ltd.) since 1994, President since 1990, and a Director since 1987 all through to its amalgamation with Gentry in March 2001.  He has served as President of Winslow Resources Inc. since 1990 and a Director of that corporation since 1986, and a s President, Chief Executive Officer, and a Director of Stratic Energy Corporation since April 1999.

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Ketan Panchmatia

Mr. Panchmatia has served as Chief Financial Officer of the Company since April 1996.  After obtaining his Bachelor of Management degree from the University of Lethbridge in 1988, Mr. Panchmatia joined the national accounting firm of Deloitte & Touche, Chartered Accountants.  Mr. Panchmatia started with Gentry in March 1990 as Controller, and in December 1990 assumed the role of Secretary and Treasurer of the Company.  He earned his CMA (Certified Management Accountant) designation in October 1992.  Mr. Panchmatia has served as Secretary/Treasurer and Controller of both Sloane Petroleums Inc. (formerly known as Northwind Ventures Ltd. which, as Sloane, amalgamated with Gentry in March 2001) and Winslow Resources Inc. since 1990, and as Chief Financial Officer, Secretary and Treasurer of Stratic Energy Corporation since April 1999.

R. Gordon McKay

Mr. McKay has served as the Company's Vice President of Exploration and Operations since June 1996 and Chief Operating Officer since May 2001.  Mr. McKay holds a Bachelor of Environmental Studies degree from the University of Waterloo.  He is a member of the Society of Exploration Geophysicists and the Canadian Society of Petroleum Geologists.  Prior to joining the Company in June 1993 as a Senior Geophysicist, Mr. McKay was employed as a geophysicist with a seismic processing firm, then as a senior geophysicist with Petro-Canada Inc.

Directors

Michael Halvorson

Mr. Halvorson has served as a Director of the Company since August 1994.  Since 1980, he has been the President of Halcorp Capital Ltd., a private corporation specializing in the raising of investment capital in the resources industry.  Mr. Halvorson has also been involved in various aspects of the securities business since 1967.  He serves as a Director for Viceroy Resources Corporation and Trillion Resources Ltd., both of which focus on gold mining and exploration in North America and Africa, and was a Director of Sloane Petroleums Inc. (formerly known as Northwind Ventures Ltd.) until its amalgamation with Gentry in March 2001.  

A. Bruce Macdonald

Mr. Macdonald has served as a Director of the Company since November 1995.  He has been the President of Stoneyfell Investments Inc., a private oil and gas management consulting firm, since July 1996.  Mr. Macdonald holds a Bachelor of Science degree in Petroleum Engineering from the Colorado School of Mines.  He has 40 years of experience in the oil and gas industry in Canada, the U.S. and Australia.  Previously, he served as Executive Vice President of Andex Oil Co. Ltd., and its successor.  Mr. Macdonald was also a Director of Sloane Petroleums Inc. (formerly known as Northwind Ventures Ltd.) until its amalgamation with Gentry and remains a Director of Stratic Energy Corporation.

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George T. Hawes

Mr. Hawes was appointed to the Board of Directors in December 1999.  Mr. Hawes obtained a B.B.A. in Accounting from the University of Notre Dame and has over thirty years business and financial experience.  He is currently the President of G.T. Hawes & Co., Inc., a private real estate brokerage firm based out of Plandome, New York.

Walter B. O'Donoghue

Mr. O'Donoghue was appointed to the Board of Directors in May 1998.  He has been an independent businessman since 2003.  Prior thereto, he was a partner of the law firm of Bennett Jones.  He sits on a number of Boards including Gibson Petroleum Company Limited, a mid-sized oil and gas company, and Athabasca Oil Sands Investments Inc., a mid-sized oil and gas limited partnership management company.

B.

Compensation

The following table sets forth the annual, long term and other compensation paid by the Company for each of the last three (3) financial years ended December 31, 2003, 2002 and 2001 to Hugh G. Ross, President and Chief Executive Officer, R. Gordon McKay, Vice President, Exploration and Operations and Chief Operating Officer, and Ketan Panchmatia, Vice President, Finance and Chief Financial Officer (the "Named Executive Officers"):

Summary Compensation Table

		Annual Compensation			Long Term Compensation(1)
					Awards		Payouts
Name and Principal Position	Year	Salary ($)	Bonus ($)	Other Annual Compensation ($)	Securities Under Options Granted (#)	Restricted Common Shares or Restricted Share Units ($)	LTIP Payouts ($)	All Other Compensation ($)(3)
Hugh G. Ross, President & CEO(2)	2003	$198,750	$33,800	$10,609	50,000	Nil	Nil	$9,938
	2002	$190,250	$38,000	$8,174	Nil	Nil	Nil	Nil
	2001	$175,650	$35,000	$10,139	50,000	Nil	Nil	Nil
R. Gordon McKay, Vice President, Exploration & Operations & COO	2003	$155,250	$21,700	$242	50,000	Nil	Nil	$7,763
	2002	$148,500	$26,000	$837	Nil	Nil	Nil	Nil
	2001	$135,500	$25,000	$362	50,000	Nil	Nil	Nil
Ketan Panchmatia, Vice President, Finance & CFO	2003	$136,500	$23,200	$384	50,000	Nil	Nil	$6,825
	2002	$129,000	$23,000	$636	Nil	Nil	Nil	Nil
	2001	$114,000	$20,000	$172	50,000	Nil	Nil	Nil

Notes:

(1)

The Company has not issued any stock appreciation rights, restricted Common Shares or restricted share units; does not have any long-term incentive plans ("LTIP") nor made any similar payments; and does not have any pension or retirement plans.

(2)

Mr. Ross, in his capacity as a director of the Company, also received certain director's fees during the financial years ended December 31, 2003, 2002 and 2001.  See "Compensation of Directors".

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(3)

Represents the value of the Company's contributions to the Employee Share Ownership Plan on behalf of the Named Executive Officer. See "- Employee Share Ownership Plan" below.

Options Granted During the Most Recently Completed Financial Year

The following Options were granted to Named Executive Officers by the Company during the fiscal year ended December 31, 2003:

Name	Common Shares Under Options Granted	% of Total Options Granted to Employees in Financial Year	Exercise Price ($/Common Share)	Market Value of Common Shares Underlying Options on the Date of Grant ($/Common Share)	Expiration Date(1)
Hugh G. Ross	50,000	6.9%	$1.34	$1.34	April 24, 2008
R. Gordon McKay	50,000	6.9%	$1.34	$1.34	April 24, 2008
Ketan Panchmatia	50,000	6.9%	$1.34	$1.34	April 24, 2008

Note:

(1)

These Options were granted on April 24, 2003. 33% (16,667) of these Options vested on October 24, 2003, 33% (16,667) of these Options are scheduled to vest on October 24, 2004 and 33% (16,666) of these Options are scheduled to vest on October 24, 2005.

Aggregate Options Exercised During the Most Recently Completed Financial Year and Financial Year End Option Values

The following table sets forth information concerning options exercised during the financial year ended December 31, 2003 and the value of unexercised options as at December 31, 2003:

Name	Securities Acquired on Exercise (#)	Aggregate Value Realized ($)	Unexercised Options at December 31, 2003 (#) Exercisable/ Unexercisable	Value of Unexercised in-the-money Options at December 31, 2003 ($) Exercisable/ Unexercisable
Hugh G. Ross	200,000	201,500	374,167/33,333	522,392/21,333
R. Gordon McKay	100,000	84,000	116,667/33,333	145,917/21,333
Ketan Panchmatia	50,000	42,000	216,667/33,333	291,917/21,333

The value of the unexercised options at December 31, 2003 was based on the closing price of the Common Shares on the Toronto Stock Exchange as at December 31, 2003, being $1.98.

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Employee Share Ownership Plan

The Company has instituted an Employee Share Ownership Plan ("ESOP") effective January 1, 2003 in which all employees of the Company resident in Canada, including the Named Executive Officers, are eligible to participate.  The Company matches the employee's contribution in an amount not exceeding 5% of the employee's annual salary from and after January 1, 2003, excluding any bonuses or other payments, perquisites or benefits.  Both the employee's and the Company's contributions are invested exclusively in treasury Common Shares of the Company thereby aligning the interests of employees with those of the shareholders. The value of the Company's contributions to the ESOP on behalf of the Named Executive Officers is disclosed in the "All Other Compensation" column in the Summary Compensation Table above.

Termination of Employment, Change-in-Control and Employment Contracts

The Company has no employment contracts with any employees, including any Named Executive Officers, respecting the resignation, retirement or other termination of employment of any employees, including any Named Executive Officers, or a change-in-control of the Company.

The Company has implemented an Employment Termination Compensation Plan effective January 1, 2002 (the "Plan") which provides that in the event of a change-in-control of the Company each employee of the Company, including Named Executive Officers, shall be entitled to specified compensation (which is a function of the annual regular salary and the number of years of service of an employee) for the termination of his employment by the Company without "just cause" (as defined in the Plan) or by the employee for "good reason" (as defined in the Plan) within a period of six (6) months after the date of a change-in-control.

As used in the Plan, "change-in-control" of the Company means any change in the registered holdings and/or beneficial ownership of the common shares of the Company as a result of which a person or a group of persons or persons acting jointly or in concert or persons associated or affiliated with any such person(s) or group(s) within the meaning of the Canada Business Corporations Act are in a position to exercise effective control of the Company, provided that any such person(s) or group(s) directly or indirectly holding and/or owning and/or controlling common shares of the Company in excess of the number that would entitle such person(s) to cast more than 50% of the votes attaching to all common shares of the Company that may be cast to elect directors of the Company shall be deemed to be in a position to exercise effective control of the Company.

Under the Plan, termination of employment includes the occurrence of the following after a change-in-control:

(a)

any material change in the employee's office or employment;

(b)

any material change in the nature or scope of duties;

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(a)

any requirement without the employee's agreement to change his place of employment;

(b)

any reduction in the employee's remuneration;

(e)

any withdrawal of benefits or privileges of employment; or

(f)

any exclusion from any incentive compensation plans in which employee was a participant.

The Plan is not in substitution for or replacement of any additional or other compensation to which an employee, including any Named Executive Officer, may be entitled under statute or common law and no legal rights of any employee, including any Named Executive Officer, are adversely affected by the Plan.

Pension Plans

The Company does not provide retirement benefits for directors or executive officers.  

Compensation of Directors

The directors of the Company were paid an annual fee of $10,000 by the Company for services in their capacity as directors of the Company during the fiscal year ended December 31, 2003.  Directors also received $1,000 per board meeting, $500 per committee meeting for in-town directors and $1,000 per committee meeting for out-of-town directors.  Committee chairs received a further $250 per committee meeting.

Management Services Contracts

Hawkeye Resources Ltd. provides certain management services to the Company.  Pursuant to an Engineering Consulting Agreement with the Company effective January 1, 1999, as amended through April 1, 2003, Hawkeye Resources received consulting fees in the aggregate amounts of $72,133 and $75,500 during the fiscal years ended December 31, 2003 and 2002, respectively.  

A. Bruce Macdonald, a director of the Company, is a shareholder, director and officer of Hawkeye Resources Ltd.  It provides management advisory and consulting services to the Company and its officers and management including consulting on engineering matters relating to drilling prospects and property acquisitions in western Canada.  These management services are in addition to Mr. Macdonald's duties and responsibilities to the Company in his capacity  as a director of the Company.

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Stock Options Granted to and Exercised by Directors

The following stock options were granted to the directors of the Company during the fiscal year ended December 31, 2003:

Name of Optionee	Securities under Options Granted	Percent of Total Options Granted to Employees in Financial Year	Exercise or Base Price ($/Security)	Market Value of Securities Underlying Options on the Date of Grant ($/Security)	Expiration Date
Hugh G. Ross	50,000	6.9%	$1.34	$1.34	April 24, 2008
A. Bruce Macdonald	50,000	6.9%	$1.34	$1.34	April 24, 2008
Michael Halvorson	50,000	6.9%	$1.34	$1.34	April 24, 2008
Walter O'Donoghue	50,000	6.9%	$1.34	$1.34	April 24, 2008
George Hawes	50,000	6.9%	$1.34	$1.34	April 24, 2008

The following stock options were exercised by directors of the Company during the fiscal year ended December 31, 2003:

Name	Securities Acquired on Exercise (#)	Aggregate Value Realized ($)	Unexercised Options at Financial Year End (#) Exercisable/Unexercisable	Value of Unexercised in-the-money Options at Financial Year End ($) Exercisable/Unexercisable
Hugh G. Ross	200,000	201,500	374,167 / 33,333	522,392 / 21,333
A. Bruce Macdonald	75,000	63,000	124,167 / 33,333	151,142 / 21,333
Michael Halvorson	75,000	63,000	149,167 / 33,333	193,892 / 21,333
Walter O'Donoghue	50,000	74,000	99,167 / 33,333	120,892 / 21,333
George Hawes	Nil	Nil	141,667 / 33,333	185,917 / 21,333

C.

Board Practices

Tenure of Board of Directors

Directors are elected at each Annual General Meeting of Shareholders to hold office until the next Annual Meeting or until his successor is duly elected or appointed, unless his office is earlier vacated by death, removal or other cause in accordance with the Articles of the Company.

No director of the Company is currently party to a service contract with the Company or any of its subsidiaries that provides for benefits upon termination of employment.  

Audit and Risk Management Committee

The Audit and Risk Management Committee is comprised of three directors, namely George T. Hawes, A. Bruce Macdonald and Michael Halvorson.  It monitors audit functions and

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the preparation of financial statements and discusses with management and the independent auditors all significant accounting matters.

The objectives of the Audit and Risk Management Committee are to help directors discharge their duties and responsibilities, especially accountability; to provide better communication between directors and the external auditor; to enhance the external auditor's independence; to ensure the credibility and objectivity of financial reports; and to strengthen the role of the external directors by facilitating in depth discussions between the Committee, senior management and the external auditor.  The Committee's duties include review and reporting to the Board, as appropriate, concerning matters including:  annual audited financial statements; Company disclosure documents; senior management reports about litigation or claims; Company insurance coverage; and Company safety, health and environmental compliance policies.

Compensation and Human Resources Committee

The Compensation and Human Resources Committee is comprised of two directors, namely, Michael Halvorson and A. Bruce Macdonald. The Committee annually reviews, considers and makes recommendations respecting the compensation philosophy and remuneration policy of the Company for consideration by the Board of Directors of the Company.  Among its specific responsibilities, the Committee reviews, considers and recommends for approval:

(a)

the compensation philosophies and remuneration policies of the Company;

(b)

the recommendations of senior management of the Company respecting the compensation, including salaries, stock option grants, benefits and perquisites, of the Named Executive Officers and other key employees of the Company;

(c)

the annual performance objectives for and the performance appraisal of the President and Chief Executive Officer of the Company;

(d)

any amendments to the provisions of the employee share ownership plan, the Option Plan and the benefit programs of the Company; and

(e)

the compensation of the Board of Directors and its committees, including the granting of stock options to directors of the Company.

D.

Employees

The breakdown of employees at the end of 2003, 2002, and 2001 was as follows:

Department	2003	2002	2001
Land	2	2	2
Accounting	5	4	4
Exploration	8	5	5
Administration	3	3	3
Total	18	14	14

All employees work in Calgary, Alberta.  No employees are members of labor unions.  The Company has only one temporary employee at the present time.

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E.

Share Ownership

The following table sets forth the share ownership of those persons listed (or whose compensation is otherwise disclosed) in subsection 6.B above and includes details of all options or warrants to purchase shares of the Company held by such persons:

Name	Number of Shares Beneficially Owned Directly or Indirectly and Percentage Ownership of Shares (1)	Number of Common Shares Subject to Option	Purchase Price (if any)	Exercise Price ($)	Expiry Date
Hugh G. Ross, President & C.E.O.	1,850,248 Direct       326,134 Indirect 324,167 (Options exercisable within 60 days) 7.4%	275,000 32,500 50,000 50,000 407,500	N/A	$0.52 0.45 0.77 1.34	July 8, 2004 Feb. 16, 2010 Mar. 13, 2011 Apr. 24, 2008
A. Bruce Macdonald, Director	190,500 Direct        57,500 Indirect 124,167 (Options exercisable within 60 days) 1.1%	50,000 32,500 75,000 157,500	N/A	$1.34 0.45 0.77	Apr. 24, 2008 Feb. 16, 2010 Mar. 13, 2011
George T. Hawes, Director	1,427,400 Direct 141,667 (Options exercisable within 60 days) 4.7%	50,000 75,000 50,000 175,000	N/A	$1.34 0.45 0.77	Apr. 24, 2008 Feb. 16, 2010 Mar. 13, 2011

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Michael Halvorson, Director	416,300 Direct       169,133 Indirect 149,167 (Options exercisable within 60 days) 2.2%	50,000 50,000 32,500 50,000 182,500	N/A	$0.52 1.34 0.45 0.77	Sep. 22, 2004 Apr. 24, 2008 Feb. 16, 2010 Mar. 13, 2011
Walter O'Donoghue, Director	178,126 Direct   99,167 (Options exercisable within 60 days) 0.8%	50,000 32,500 50,000 132,500	N/A	$1.34 0.45 0.77	Apr. 24, 2008 Feb. 16, 2010 Mar. 13, 2011
Ketan Panchmatia, Vice-President, Finance and C.F.O.	123,840 Direct 10,660 Indirect 216,667 (Options exercisable within 60 days) 1.0%	100,000 25,000 50,000 25,000 50,000 250,000	N/A	$0.52 0.52 1.34 0.45 0.77	July 8, 2004 Sep. 22, 2004 Apr. 24, 2008 Feb. 16, 2010 Mar. 13, 2011
R. Gordon McKay, Vice-President, Exploration and Operations	204,453 Direct 116,667 (Options exercisable within 60 days) 1.0%	25,000 50,000 25,000 50,000 150,000	N/A	$0.52 1.34 0.45 0.77	Sep. 22, 2004 Apr. 24, 2008 Feb. 16, 2010 Mar. 13, 2011

(1)  Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission.  In computing the number of shares owned by a person and the percentage ownership of that person, Common Shares subject to options and warrants held by that person that are currently exercisable or exercisable within 60 days of May 19, 2004, are deemed outstanding.  Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.  This table has been prepared based on 33,376,716 Common Shares outstanding as of May 19, 2004.  

Stock Option Plan

The Company has adopted a Stock Option Plan (the "Option Plan") for eligible employees, officers and directors of the Company.  The Option Plan, as most recently amended by the Company's Board of Directors and ratified by the Company's shareholders on May 28, 2004, permits the granting of options to purchase up to a maximum of 4,000,000 Common Shares.  The total number of Common Shares which may be granted to any optionee under the Option Plan may not exceed 5% of the outstanding Common Shares.  The maximum number of Common Shares which may be reserved for issuance to insiders of the Company under the Option Plan may not exceed 10% of the outstanding Common Shares, less the aggregate number of Common Shares reserved for issuance to insiders under any other share compensation arrangement.  The total number of Options which may be granted to the i nsiders of the Company, within a one year period, may not exceed 10% of the issued and outstanding Common Shares.  

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The total number of Options which may be granted to any one insider and that insider's associates within a one year period shall not exceed 5% of the issued and outstanding Common Shares.  The Option Plan is administered by the Compensation and Human Resources Committee of the Board of Directors. This committee has the discretion to determine to whom Options will be granted, the number and exercise price of such Options and the terms and time frames in which the Options will be exercisable.  However, Options may be exercisable for a maximum of ten calendar years from the date of grant and the exercise price of such Options may not be lower than the market price of the Common Shares on the business day prior to the date of grant.

Subject to a resolution passed by the directors stating otherwise, an Option shall terminate immediately upon the optionholder ceasing to be a director, officer or employee of the Company.  Notwithstanding the foregoing, if the optionholder's employment by the Company is terminated without cause, the Options may be exercised by the optionholder within 90 days of the date of termination of employment or directorship, as long as the Options do not expire by such time and have vested in accordance with their terms.  If the optionholder's employment is terminated by the optionholder for "Good Reason" (as defined in the Option Plan), or an optionholder retires, the Options may be exercised by such optionholder within 180 days of such termination or retirement, as long as the Options do not expire by such time and have vested in accordance with their terms. Upon the death of an optionholder, the options may be exercised by the optionholder's legal representative within one year after the date of death.  The Option Plan contains standard adjustment and anti-dilution provisions in the event of a merger, amalgamation, arrangement or sale of all or substantially all of the assets of the Company, or if there is a subdivision, consolidation or reclassification of the Common Shares.  Additionally, the Option Plan provides for the acceleration of the vesting period for any Options granted if a take-over bid is made for the Common Shares.

ITEM 7

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.

Major Shareholders

The following table sets forth the name of the only shareholder who, to the knowledge of management of the Company, as of May 19, 2004 beneficially owns more than five percent (5%) of any class of the Company's voting securities:

Name and Address	Number of Common Shares Beneficially Owned (1)	Percentage  of Class (1)
Hugh G. Ross, President & CEO, Calgary, A.B., Canada	2,500,549 (2)	7.4%

(1)  Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission.  In computing the number of shares owned by a person and the percentage ownership of that person, Common Shares subject to options and warrants held by that person that are currently exercisable or exercisable within 60 days of May 19, 2004, are deemed outstanding.  Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.  This table has been prepared based on 33,376,716 Common Shares outstanding as of May 19, 2004.  

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(2)  Includes 324,167 shares which may be acquired upon the exercise of stock options that are exercisable within 60 days of May 19, 2004.

There has been no major change in ownership of Common Shares during the past three years.

No shareholder has special rights with respect to its Common Shares beyond those rights accorded all shareholders of the Company's Common Shares.

On May 31, 2004, 1,771,664 Common Shares were held by 22 registered holders in the United States.  The Company is not listed for trading on any securities exchange in the United States.

To the best of its knowledge, the Company is not directly or indirectly controlled by another corporation, a foreign government and no stockholder owns more than five percent (5%) of its voting stock except as set forth above.  

The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change of control of the Company.

B.

Related Party Transactions

Listed below are the only material transactions that were effected within the past three years (or are proposed) between the Company or any of its subsidiaries and:

(a)

enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the Company;

(b)

associates;

(c)

individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the Company, and close members of any such individual's family;

(d)

key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the Company, including directors and senior management of companies and close members of such individuals' families; and

(e)

enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence including enterprises owned by directors or major shareholders of the Company and enterprises that have a member of key management in common with the Company.

1.

Sloane Petroleums Inc. Transaction

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On March 1, 2001, the Company amalgamated with Sloane following the approval of the shareholders of both companies on February 28, 2001.  At the time of the amalgamation Gentry owned approximately 37% of Sloane while insiders of Gentry owned another 18%.  All insiders and Gentry refrained from voting on the amalgamation.  

Each Sloane shareholder received $0.72 cash and 0.1 common shares of Gentry at a deemed price of $0.80 per share, for each share of Sloane held.  See "Item 4.  Information on the Company -- A.  History and Development of the Company -- Gentry's Development over the Last Three Years -- Developments in 2001."

2.

Hawkeye Resources Ltd. Engineering Consulting Agreement

The Company is a party to an Engineering Consulting Agreement with Hawkeye Resources Ltd., pursuant to which Hawkeye Resources provides certain management advisory and consulting services to the Company.  A. Bruce Macdonald, a director of the Company, is a controlling shareholder, director and officer of Hawkeye Resources.  For more information concerning this Agreement, see "Item 6.  Directors, Senior Management and Employees of the Company -- B.  Compensation -- Management Services Contracts."

Conflicts of Interest

There are potential conflicts of interest to which the Directors and officers of the Company will be subject to in connection with the operations of the Company.  Some of the Directors may be or may become engaged in other oil and gas industry interests on their own behalf and on behalf of other corporations, and situations may arise where the Directors and officers will be in direct competition with the Company.  Conflicts, if any, will be subject to the procedures and remedies under the Canada Business Corporations Act  ("CBCA").

Certain Directors of the Company are associated with other oil and gas companies, which may give rise to conflicts of interest.  See "Item 3.  Key Information -- D.  Risk Factors -- Conflicts of Interest".  In accordance with the CBCA, Directors who have a material interest in any person who is a party to a material contract or a proposed material contract with the Company are required, subject to certain exceptions, to disclose that interest and abstain from voting on any resolution to approve the contract.  In addition, the Directors are required to act honestly and in good faith with a view to the best interests of the Company.

Indebtedness of Directors and Senior Officers

None of the directors or officers of the Company are, or at any time since the beginning of the last completed financial year of the Company has been, indebted to the Company or any of its subsidiaries.

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C.

Interests of Experts and Counsel

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

ITEM 8

FINANCIAL INFORMATION

A.       Consolidated Statements and Other Financial Information

This Annual Report contains the following audited consolidated financial statements of the Company:  (i) as to the years ended December 31, 2003 and 2002 (the "2003 Financial Statements"), Auditors' Report dated March 25, 2004, Consolidated Balance Sheets as at December 31, 2003 and 2002, Consolidated Statements of Income for the Years Ended December 31, 2003 and 2002, Consolidated Statements of Retained Earnings for the Years Ended December 31, 2003 and 2002, and Consolidated Statements of Cash Flow for the Years Ended December 31, 2003 and 2002, as well as Notes to the Consolidated Financial Statements for the Years Ended December 31, 2003 and 2002; and (ii) as to the years ended December 31, 2002 and 2001 (the "2002 Financial Statements"), Auditors' Report dated March 14, 2003, Consolidated Balance Sheets as at December 31, 2002 and 2001, Consolidated Statements of Income and Retained Earnings (Deficit) for the Years Ended December 31, 2002 and 2001, and Consolidated Statements of Cash Flow for the Years Ended December 31, 2002 and 2001, as well as Notes to the Consolidated Financial Statements for the Years Ended December 31, 2002 and 2001.  The Company's consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles.  Except as described in Note 13 to the 2003 Financial Statements and Note 12 to the 2002 Financial Statements, there are no material differences, for the purposes of these financial statements, between accounting principles generally accept ed in Canada and the United States.

Legal Proceedings

No material legal proceedings are pending to which the Company is a party or of which any of its properties is the subject.

Dividend Policy

The Company has not paid any dividends on its Common Shares and has no dividend policy with respect to the payment of dividends.

B.

Significant Changes

No significant change has occurred since the date of the annual financial statements included in this Annual Report on Form 20-F.

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ITEM 9          THE OFFER AND THE LISTING

A.

Offer and Listing Details

From November 13, 1995 to present, the Common Shares have been listed for trading on The Toronto Stock Exchange (the "TSX".  The following table sets out the high and low closing prices and the total trading volumes for the indicated periods, as reported by the TSX.

The following table sets out the annual high and low market prices of the Common Shares on the TSX during the last five fiscal years:

	HIGH (Cdn. $)	LOW (Cdn. $)
2003	2.14	1.34
2002	1.48	1.03
2001	1.50	0.65
2000	0.95	0.26
1999	0.64	0.22

The following table sets out the market price range of the Common Shares for the last two years by fiscal quarter on the TSX.

	HIGH (Cdn. $)	LOW (Cdn. $)
2003
First Quarter	1.75	1.36
Second Quarter	1.65	1.34
Third Quarter	2.00	1.55
Fourth Quarter	2.14	1.66
2002
First Quarter	1.40	1.05
Second Quarter	1.37	1.03
Third Quarter	1.48	1.24
Fourth Quarter	1.48	1.25

The following table sets out the high and low market prices of the Common Shares on the TSX for the last six months:  

	HIGH (Cdn.$)	LOW (Cdn.$)
May 2004	2.14	2.00

April 2004	2.19	1.95
March 2004	2.13	1.85
February 2004	2.15	1.91
January 2004	2.29	2.02
December 2003	2.14	1.71

On June 23, 2004 the closing price of the Common Shares on the TSX was $2.10.

 

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B.

Plan of Distribution

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

C.

Markets

The Company's Common Shares are listed for trading on the Toronto Stock Exchange (the "TSX").

D.

Selling Shareholders

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

E.

Dilution

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

F.

Expenses of the Issue

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

ITEM 10        ADDITIONAL INFORMATION

A.        Share Capital

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

B.

Memorandum and Articles of Association  

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The Company's constituent documents corresponding to a memorandum and articles of association are its Articles of Amalgamation and By-Laws, respectively.

1.  The Company's objects and purposes as set forth in its Memorandum and Articles:

The Company's By-Laws and Articles are silent as to the Company's objects and purposes.

2.  Matters relating to Directors of the Company:

(a)  Director's power to vote on a proposal, arrangement or contract in which the director is materially interested:

Section 4.19 of the Company's By-Laws state that, "A director of officer who is party to, or who is a director of officer of or has a material interest in any person who is a party to, a material contract or proposed material contract with the Corporation shall disclose the nature and extent of his interest at the time and in the manner provided by the Canada Business Corporations Act.  A director interested in a contract so referred to the board shall not vote on any resolution to approve the same except as provided by the Act."

(b)  Directors' power, in the absence of an independent quorum, to vote compensation to themselves or any members of their body:

Section 4.20 of the Company's By-Laws states that, "The directors shall be paid such remuneration for their services as the board may from time to time determine.  The directors shall also be entitled to be reimbursed for traveling and other expenses properly incurred by them in attending meetings of the board or any committee thereof."

(c)  Borrowing powers exercisable by the directors and how such borrowing powers can be varied:

Section 3.01 of the Company's By-Laws states that, "…the board may from time to time on behalf of the Corporation, without authorization of the shareholders:

a) borrow money upon credit of the Corporation;

b) issue, reissue, sell or pledge bonds, debentures, notes or other evidences of indebtedness or guarantees of the Corporation, whether secured or unsecured;

c) to the extent permitted by the Act, give a guarantee on behalf of the Corporation to secure performance of any present or future indebtedness, liability or obligation of any person; and

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d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any currently owned or subsequently acquired real or personal, movable or immovable property of the Corporation, including book debts, rights, powers, franchises and undertakings, to secure any such bonds, debentures, notes or other evidences of indebtedness or guarantee or any other present or future indebtedness, liability or obligation of the Corporation."  

Section 3.02 further provides that, "The board may from time to time delegate to such one or more of the directors and officers of the Corporation as may be designated by the board all or any of the powers conferred on the board by section 3.01 or by the Act to such extent and in such manner as the board shall determine at the time of each such delegation."

(d)  The Company's By-Laws and Articles are silent with regard to the retirement or non-retirement of directors under an age limit requirement.

(e)  The Company's By-Laws and Articles are silent with regard to the number of shares, if any, required for qualification.

3.  Rights, preferences and restrictions attaching to each class of shares:

(a)  Dividend rights, including time limit after which dividend entitlement lapses

According to Section Nine of the By-Laws of the Company, the board may declare dividends payable to shareholders according to their respective rights and interest in the Company.  Any dividend unclaimed after a period of 6 years from the date on which the same has been declared to be payable shall be forfeited and shall revert to the Company.

(b)  Voting rights; staggered re-election intervals; cumulative voting

According to the Articles and By-Laws of the Company, each Common Share of the Company entitles the holder to one vote at any Annual, General or Special Meeting of Shareholders of the Company.  The Company's By-Laws provide for election of directors each year at the Annual Meeting of Shareholders.  Shareholders of the Company do not have cumulative voting.

(c)  Rights to share in surplus in event of liquidation

In the event of liquidation, dissolution or winding-up of the Company or other distribution of its assets, the holders of Common Shares will be entitled to receive, on a pro rata basis, all of the assets remaining after the Company has paid out its liabilities.

(d)  Other

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There are no provisions discriminating against any existing or prospective holder of Common Shares of the Company as a result of such shareholder owning a substantial number of Common Shares.

4.  Actions necessary to change the rights of holders of the Company's stock:

The Articles and By-Laws of the Company are silent in this regard.  

5.  Conditions governing manner in which annual general meetings and extraordinary general meetings of shareholders are convoked, including conditions of admission:

Annual Meeting

Section 10.01 of the By-Laws of the Company state, "The annual meeting of shareholders shall be held at such time in each year and, subject to section 10.03, at such place as the board, the chairman of the board, the managing director or the president may from time to time determine, for the purpose of considering the financial statements and reports required by the Act to be placed before the annual meeting, electing directors, appointing an auditor and for the transaction of such other business as may properly be brought before the meeting."

Special Meeting

Section 10.02 of the By-Laws of the Company state, "The board, the chairman of the board, the managing director or the president shall have power to call a special meeting of shareholders at any time."

6.  Limitations on rights to own securities of the Company:

The Investment Canada Act (the "ICA"), enacted on June 20, 1985, requires prior notification to the Government of Canada on the "acquisition of control" of Canadian businesses by non-Canadians, as defined in the ICA.  Certain acquisitions of control, discussed below, are reviewed by the Government of Canada.  The term "acquisition of control" is defined as any one or more non-Canadian persons acquiring all or substantially all of the assets used in the Canadian business, or the acquisition of the voting shares of a Canadian corporation carrying on the Canadian business or the acquisition of the voting interests of an entity controlling or carrying on the Canadian business.  The acquisition of the majority of the outstanding shares is deemed to be an "acquisition of control" of a corporation.  The acquisition of less than a majority, but one-third or more, of the voting shares of a corporation is presumed to be  an "acquisition of control" of a corporation unless it can be established that the purchaser will not control the corporation.

Investments requiring notification and review are all direct acquisitions of Canadian businesses with assets of Cdn. $5,000,000 or more (subject to the comments below on WTO investors), and all indirect acquisitions of Canadian businesses (subject to the comments below

65

on WTO investors) with assets of more than Cdn. $50,000,000 or with assets of between Cdn. $5,000,000 and Cdn. $50,000,000 which represent more than 50% of the value of the total international transaction.  In addition, specific acquisitions or new business in designated types of business activities related to Canada's cultural heritage or national identity could be reviewed if the Government of Canada considers that it is in the public interest to do so.

The ICA was amended with the implementation of the Agreement establishing the World Trade Organization ("WTO") to provide for special review thresholds for "WTO investors", as defined in the ICA.  "WTO investor" generally means:

(a)

an individual, other than a Canadian, who is a national of a WTO member (such as, for example, the United States), or who has the right of permanent residence in relation to that WTO member;

(b)

governments of WTO members; and

(c)

entities that are not Canadian controlled, but which are WTO investor controlled, as determined by rules specified in the ICA.

The special review thresholds for WTO investors do not apply, and the general rules described above do apply, to the acquisition of control of certain types of businesses specified in the ICA, including a business that is a "cultural business".  If the WTO investor rules apply, an investment in the shares of the Company by or from a WTO investor will be reviewable only if it is an investment to acquire control of the Company and the value of the assets of the Company is equal to or greater than a specified amount (the "WTO Review Threshold").  The WTO Review Threshold is adjusted annually by a formula relating to increases in the nominal gross domestic product of Canada.  The 2004 WTO Review Threshold was $237,000,000.

If any non-Canadian, whether or not a WTO investor, acquires control of the Company by the acquisition of shares, but the transaction is not reviewable as described above, the non-Canadian is required to notify the Canadian government and to provide certain basic information relating to the investment.  A non-Canadian, whether or not a WTO investor, is also required to provide a notice to the government on the establishment of a new Canadian business.  If the business of the Company is then a prescribed type of business activity related to Canada's cultural heritage or national identity, and if the Canadian government considers it to be in the public interest to do so, then the Canadian government may give a notice in writing within 21 days requiring the investment to be reviewed.

For non-Canadians (other than WTO investors), an indirect acquisition of control, by the acquisition of voting interests of an entity that directly or indirectly controls the Company, is reviewable if the value of the assets of the Company is then Cdn. $50,000,000 or more.  If the WTO investor rules apply, then this requirement does not apply to a WTO  investor, or to a person acquiring the entity from a WTO investor.  Special rules specified in the ICA apply if the value of the assets of the Company is more than 50% of the value of the entity so acquired.  By these special rules, if the non-Canadian (whether or not a WTO investor) is acquiring control of

66

an entity that directly or indirectly controls the Company, and the value of the assets of the Company and all other entities carrying on business in Canada, calculated in the manner provided in the ICA and the regulations under the ICA, is more than 50% of the value, calculated in the manner provided in the ICA and the regulations under the ICA, of the assets of all entities, the control of which is acquired, directly or indirectly, in the transaction of which the acquisition of control of the Company forms a part, then the thresholds for a direct acquisition of control as discussed above will apply, that is, a WTO Review Threshold of Cdn. $237,000,000 (in 2004) for a WTO investor or threshold of Cdn. $5,000,000 for a non-Canadian other than a WTO investor.  If the value exceeds that level, then the transaction must be reviewed in the same manner as a direct acquisition of control by the purchase of shares of the Compa ny.

If an investor is reviewable, an application for review in the form prescribed by the regulations is normally required to be filed with the Director appointed under the ICA (the "Director") prior to the investment taking place and the investment may not be consummated until the review has been completed.  There are, however, certain exceptions.  Applications concerning indirect acquisitions may be filed up to 30 days after the investment is consummated and applications concerning reviewable investments in culture-sensitive sectors are required upon receipt of a notice for review.  In addition, the Minister (a person designated as such under the ICA) may permit an investment to be consummated prior to completion of the review, if he is satisfied that delay would cause undue hardship to the acquiror or jeopardize the operations of the Canadian business that is being acquired.  The Director will submit the application to the Minister, together with any other information or written undertakings given by the acquiror and any representation submitted to the Director by a p rovince that is likely to be significantly affected by the investment.

The Minister will then determine whether the investment is likely to be of net benefit to Canada, taking into account the information provided and having regard to certain factors of assessment where they are relevant.  Some of the factors to be considered are:

(a)

the effect of the investment on the level and nature of economic activity in Canada, including the effect on employment, on resource processing, and on the utilization of parts, components and services produced in Canada;

(b)

the effect of the investment on exports from Canada;

(c)

the degree and significance of participation by Canadians in the Canadian business and in any industry in Canada of which it forms a part;

(d)

the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada;

(e)

the effect of the investment on competition within any industry or industries in Canada;

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(f)

the compatibility of the investment with national industrial, economical and cultural policies;

(g)

 the compatibility of the investment with national industrial, economic and cultural policies taking into consideration industrial, economic and cultural objectives enunciated by the government or legislature of any province likely to be significantly affected by the investment; and

(h)

the contribution of the investment to Canada's ability to compete in world markets.

To ensure prompt review, the ICA sets certain time limits for the Director and the Minister.  Within 45 days after a completed application has been received, the Minister must notify the acquiror that he is satisfied that the investment is likely to be of net benefit to Canada, or that he is unable to complete his review, in which case he shall have 30 additional days to complete his review (unless the acquiror agrees to a longer period), or he is not satisfied that the investment is likely to be of net benefit to Canada.

Where the Minister has advised the acquiror that he is not satisfied that the investment is likely to be of net benefit to Canada, the acquiror has the right to make representations and submit undertakings within 30 days of the date of the notice (or any other further period that is agreed upon between the acquiror and the Minister).  On the expiration of the 30-day period (or the agreed extension), the Minister must quickly notify the acquiror that he is now satisfied that the investment is likely to be of net benefit to Canada or that he is not satisfied that the investment is likely to be of net benefit to Canada.  In the latter case, the acquiror may not proceed with the investment or, if the investment has already been consummated, must divest itself of control of the Canadian business.

The ICA provides civil remedies for non-compliance with any provision.  There are also criminal penalties for breach of confidentiality or providing false information.

Except as provided in the ICA, there are no limitations under the laws of Canada, the Province of British Columbia or in any constituent documents of the Company on the right of non-Canadians to hold or vote the common shares of the Company.

7.  Provisions of Company's articles, charter or by-laws that have the effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition, or corporate restructuring involving the Company:

There are no limitations in the By-Laws or Articles of the Company, but see discussion of the Company's shareholder rights plan, below.

Rights Plan

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Effective April 24, 1998, the Company adopted a shareholder rights plan (the "Original Plan") that was ratified by the shareholders of the Company at the annual general and special meeting held on May 29, 1998 and was renewed for an additional three-year term upon confirmation by the shareholders at the annual general and special meeting held on May 25, 2001.  At the annual general and special meeting held on May 28, 2004, the shareholders approved and reconfirmed the Original Plan, as amended and restated (as so amended, the "Amended Plan" or the "Rights Plan").  The Amended Plan is identical to the Original Plan in all material respects.  

The primary objectives of the Amended Plan, as with the Original Plan, are to ensure that, in the context of a bid for control of the Company through an acquisition of the Company's Common Shares, the Board of Directors has sufficient time to explore and develop alternatives for maximizing shareholder value, to provide adequate time for competing bids to emerge, to ensure that shareholders have an equal opportunity to participate in such a bid and to give shareholders adequate time to properly assess the bid and lessen the pressure to tender typically encountered by a securityholder of an issuer that is subject to a bid.  Current legislation permits a hostile bid to be made in as little as 35 days, giving little time for competing bids to be made.  The Company is not aware of any pending or threatened take-over bid for the Company.

Under the Rights Plan, the Company issued, for no consideration, one Right in respect of each outstanding Common Share of the Company to all holders of record of Common Shares on April 24, 1998, the date of implementation of the Original Plan.  From that date, all Common Shares issued by the Company during the term of the Rights Plan will have one Right attached.  The Rights will trade together with the Common Shares of the Company and will be represented by the certificates representing the Common Shares of the Company.  The term of the Rights Plan is three years unless the Rights are earlier redeemed or exchanged.

If a party acquires 20% or more of the Company's Common Shares without complying with the Rights Plan, or without Board approval or waiver, each Right, other than Rights held by the acquiring party, will entitle shareholders other than the bidder to purchase Common Shares of the Company at a 50% discount to the market price at that time.  Under the Rights Plan as amended, the Company is not required to issue or deliver Rights, or securities upon the exercise of Rights, outside Canada or the United States where such issuance or delivery would be unlawful without registration of the relevant Persons or securities.

The Rights Plan is not triggered by a bid made to all shareholders, for all of the shares of the Company, that is open for at least 60 days.  If at least 50% of the outstanding shares have been tendered at the end of 60 days, the bidder may take up and pay for the shares, but must extend the bid for a further 10 days to allow other shareholders to tender to it.

8.  Provisions governing the ownership threshold above which shareholder ownership must be disclosed:

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The British Columbia, Alberta and Ontario Securities Acts provide that a person that has direct or indirect beneficial ownership of, control or direction over, or a combination of direct or indirect beneficial ownership of, and control or direction over, securities of the issuer carrying more than 10% of the voting rights attached to all the issuer's outstanding voting securities must, within 10 days of becoming an "insider", file an insider report in the required form effective the date on which the person became an insider, disclosing any direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer.  The British Columbia, Alberta and Ontario Securities Acts also provide for the filing of a report by an "insider" of a reporting issuer who acquires or transfers securities of the issuer.  This insider report must be filed within 10 days after the end of the month in which the change takes place.

The U.S. rules governing the ownership threshold above which shareholder ownership must be disclosed are more stringent than those discussed above.  Section 13 of the Exchange Act imposes reporting requirements on persons who acquire beneficial ownership (as such term is defined in the Rule 13d-3 under the Exchange Act) of more than 5 per cent of a class of an equity security registered under Section 12 of the Exchange Act.  In general, such persons must file, within 10 days after such acquisition, a report of beneficial ownership with the Securities and Exchange Commission containing the information prescribed by the regulations under Section 13 of the Exchange Act.  This information is also required to be sent to the issuer of the securities and to each exchange where the securities are traded.

9.  Significant differences between law applicable to the Company and law of the United States.  

See 8, above.

C.

Material Contracts

The Company has not entered into any material contract, other than contracts entered into the ordinary course of business, to which the Company is a party, during the previous two fiscal years, except for the Engineering Consulting Agreement with Hawkeye Resources Ltd., pursuant to which Hawkeye Resources provides certain management advisory and consulting services to the Company.  A. Bruce Macdonald, a director of the Company, is a controlling shareholder, director and officer of Hawkeye Resources.  For more information concerning this Agreement, see "Item 6.  Directors, Senior Management and Employees of the Company -- B.  Compensation -- Management Services Contracts."

D.

Exchange Controls

Canada has no system of exchange controls.  There are no exchange restrictions on borrowing from foreign countries nor on the remittance of dividends, interest, royalties and similar payments, management fees, loan repayments, settlement of trade debts or the repatriation of capital.

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E.

Taxation

CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The following summarizes the principal Canadian federal income tax considerations applicable to the holding and disposition of Common Shares of the Company by a holder of one or more Common Shares (the "Holder") who is a resident in the United States and holds common shares solely as capital property.  This summary is based on the current provisions of the Income Tax Act (Canada), the regulations thereunder and all amendments to the Tax Act publicly proposed by the government of Canada to the date hereof (the "Tax Act"), and on the current provisions of the Canada - U.S. Income Tax Convention, 1980 (the "Treaty").  It has been assumed that all currently proposed amendments to the Tax Act will be enacted as proposed and that there is no other relevant change in any governing law.

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Every Holder is liable to pay a Canadian withholding tax on every dividend that is or is deemed to be paid or credited to the Holder on the Holder's Common Shares.  Under the Treaty, the rate of withholding tax is, if the Holder is a company that owns at least 10% of the voting stock of the Company and beneficially owns the dividend, 6% in 1996 and 5% thereafter, and in any other case 15%, of the gross amount of the dividend.

Pursuant to the Tax Act, a Holder will not be subject to Canadian capital gains tax on any capital gain realized on an actual or deemed disposition of a Common Share, including a deemed disposition on death, provided either that the Holder did not hold the Common Share as capital property used in carrying on a business in Canada, or that neither the Holder nor persons with whom the Holder did not deal at arm's length alone or together owned 25% or more of the issued shares of any class of the Company at any time in the five years immediately preceding the disposition.

Subject to certain limited exceptions, a Holder who otherwise would be liable for Canadian capital gains tax in consequence of an actual or deemed disposition of a Common Share will generally be exempted for Canadian tax under the Treaty.  Any holder who is a former resident of Canada may have different Canadian tax considerations and should obtain specific tax advice.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following summary is a general discussion of the material United States Federal income tax considerations to U.S. holders of shares of the Company under current law. It does not discuss all the tax consequences that may be relevant to particular holders in light of their circumstances or to holders subject to special rules, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals or foreign corporations whose ownership of shares of the Company is not effectively connected with the conduct of a trade or business in the United States, shareholders who acquired their stock through the exercise of employee stock options or otherwise as compensation, shareholders who hold their stock as ordinary assets and not capital assets and any other non-U.S. hol ders.

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time.  This discussion does not consider the potential effects, both adverse and beneficial, of any recently proposed legislation that, if enacted, could be applied, possibly on a retroactive basis, at any time. The following discussion is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of shares of the Company and no opinion or representation with respect to the United States Federal income tax consequences to any such holder or prospective holder is made.  Accordingly , holders and prospective holders of shares of the Company should consult their own tax advisors about the Federal, state, local, estate and foreign tax consequences of purchasing, owning and disposing of shares of the Company.

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U.S. Holders

As used herein, a "U.S. Holder" includes a holder of shares of the Company who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, any entity that is taxable as a corporation for U.S. tax purposes and any other person or entity whose ownership of shares of the Company is effectively connected with the conduct of a trade or busi­ness in the United States.  A U.S. Holder does not include persons subject to special provisions of Federal income tax law, such as tax exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, nonresident alien individuals or foreign corporations whose ownership of shares of the Company is not effectively connected with conduct or trade or business in the United States, s hareholders who acquired their stock through the exercise of employee stock options or otherwise as compensation and shareholders who hold their stock as ordinary assets and not as capital assets.

Distributions on Shares of the Company

U.S. Holders receiving dividend distributions (including constructive dividends) with respect to shares of the Company are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions to the extent that the Company has current or accumulated earnings and profits as defined under U.S. Federal tax law, without reduction for any Canadian income tax withheld from such distributions.  Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder's United States Federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder's United States Federal taxable income by those who itemize deductions. (See more detailed discussion at "Foreign Tax Credit" below).  To the extent that distributions exceed current or accumulated earnings and profits of the Company, they will be treated first as a return of capital up to the U.S. Holder's adjusted basis in the shares and thereafter as gain from the sale or exchange of the shares.  Preferential tax rates for net capital gains are applicable to a U.S. Holder that is an individual, estate or trust.  There are currently no preferential tax rates for long term capital gains for a U.S. Holder that is a corporation.

Dividends paid on the shares of the Company will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations.  A U.S. Holder that is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from the Company (unless the Company qualifies as a "foreign personal holding company" or a "passive foreign investment company", as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of the Company.  The availability of this deduction is subject to several complex limitations that are beyond the scope of this discussion.

In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt.  Generally, any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the

73

exchange for U.S. dollars, will be ordinary income or loss.  However, for tax years after 1997, an individual whose realized foreign exchange gain does not exceed U.S. $200 will not recognize that gain, to the extent that there are not expenses associated with the transaction that meet the requirement for deductibility as a trade or business expense (other than travel expenses in connection with a business trip or as an expense for the production of income).

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of shares of the Company may be entitled, at-the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld.  Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income subject to tax.   This election is made on a year-by-year basis and applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year.  There are significant and complex limitations that apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder's United States Federal income tax liability that the U.S. Holder's foreign source income bears to his or its worldwide taxable income.  In the determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources.  Complex rules govern this classification process.  There are further limitations on the foreign tax credit for certain types of income such as "passive income", "high withholding tax interest", "financial services income", "shipping income", and certain other classifications of income.  The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and holders and prospective holders of shares of the Company should consult their own tax advisors regarding their individual circumstances.

Disposition of Shares of the Company

A U.S. Holder will recognize a gain or loss upon the sale of shares of the Company equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholder's tax basis in the shares of the Company.  This gain or loss will be a capital gain or loss if the shares are a capital asset in the hands of the U.S. Holder, and will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder.  Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year.  Deductions for net capital losses are subject to significant limitations.  Corporate capital losses (other than losses of corporations electing under Subchapter S or the Code) are deductible to the extent o f capital gains.  Non-corporate taxpayers may deduct net capital losses, whether short-term or long-term, up to U.S. $3,000 a year (U.S. $1,500 in the case of a married individual filing separately).  For U.S. Holders which are individuals, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted.  For U.S. Holders which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

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Other Considerations

In the following circumstances, the above sections of this discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of shares of the Company:

Foreign Personal Holding Company

If at any time during a taxable year more than 50% of the total combined voting power or the total value of the Company's outstanding shares is owned, directly or indirectly, by five or fewer individuals who are citizens or residents of the United States and 60% (50% in subsequent years) or more of the Company's gross income for such year was derived from certain passive sources, the Company would be treated as a "foreign personal holding company".  In that event, U.S. Holders that hold shares of the Company (on the earlier of the last day of the Company's tax year or the last date on which the Company was a foreign personal holding company) would be required to include in gross income for such year their allowable portions of such passive income to the extent the Company does not actually distribute such income.

Foreign Investment Company

If 50% or more of the combined voting power or total value of the Company's outstanding shares are held, directly or indirectly, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701 (a)(31)), and the Company is found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that the Company might be treated as a "foreign investment company" as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging shares of the Company to be treated as ordinary income rather than capital gain.

Passive Foreign Investment Company

As a foreign corporation with U.S. Holders, the Company could potentially be treated as a passive foreign investment company ("PFIC"), as defined in Section 1296 of the Code, if 75% or more of its gross income in a taxable year is passive income, or the average percentage of the Company's assets (by value) during the taxable year which produce passive income or which are held for production of same is at least 50%.  Passive income is generally defined to include gross income in the nature of dividends, interest, royalties, rents and annuities; excess of gains over losses from certain transactions in any commodities not arising inter alia from a PFIC whose business is actively involved in such commodities; certain foreign currency gains; and o ther similar types of income. U.S. Holders owning shares of a PFIC are subject to an additional tax and to an interest charge based on the value of deferral of tax for the period during which the shares of the PFIC are owned, in addition to treatment of any gain realized on the disposition of shares of the PFIC as ordinary income rather than as a capital gain.  However, if the U.S. Holder

75

makes a timely election to treat a PFIC as a qualified electing fund ("QEF") with respect to such shareholder's interest therein, the above-described rules generally will not apply.  Instead, the electing U.S. Holder would include annually in his gross income his pro rata share of the PFIC's ordinary earnings and any net capital gain regardless of whether such income or gain was actually distributed.  A U.S. Holder of a QEF can, however, elect to defer the payment of United States Federal income tax on such income inclusions.  Special rules apply to U.S. Holders who own their interests in a PFIC through intermediate entities or persons.

Effective for tax years of U.S. Holders beginning after December 31, 1997, U.S. Holders who hold, actually or constructively, marketable stock of a foreign corporation that qualifies as a PFIC may elect to mark such stock to the market (a "mark-to-market election").  If such an election is made, such U.S. Holder will not be subject to the special taxation rules of PFIC described above for the taxable years for which the mark-to-market election is made.  A U.S. Holder who makes such an election will include in income for the taxable year an amount equal to the excess, if any, of the fair market value of the shares of the Company as of the close of such tax year over such U.S. Holder's adjusted basis in such shares.  In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the excess, if any, of such U.S. Holder's adjusted tax basis in the shares over the fair market value of such shares as of the close of the tax year, or (ii) the excess, if any of (A) the mark-to-market gains for the shares in the Company included by suc h U.S. Holder for prior tax years, including any amount which would have been included for any prior year but for Section 1291 interest on tax deferral rules discussed above with respect to a U.S. Holder, who has not made a timely QEF election during the year in which he holds (or is deemed to have held) shares in the Company and the Company is a PFIC ("Non-Electing U.S. Holder"), over (B) the mark-to-market losses for shares that were allowed as deductions for prior tax years.  A U.S. Holder's adjusted tax basis in the shares of the Company will be increased or decreased to reflect the amount included or deducted as a result of mark-to-market election.  A mark-to-market election will apply to the tax year for which the election is made and to all later tax years, unless the PFIC stock ceases to be marketable or the IRS consents to the revocatio n of the election.

The IRS has issued proposed regulations that, subject to certain exceptions, would treat as taxable certain transfers of PFIC stock by a Non-Electing U.S. Holder that are generally not otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death.  Generally, in such cases, the basis of the Company's shares in the hands of the transferee and the basis of any property received in the exchange for those shares would be increased by the amount of gain recognized.  A U.S. Holder who has made a timely QEF election (as discussed below) will not be taxed on certain transfers of PFIC stock, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death.  The transferee's basis in this case will depend on the manner of the transfer. & nbsp;The specific tax effect to the U.S. Holder and the transferee may vary based on the manner in which the shares of the Company are transferred.  Each U.S. Holder should consult a tax advisor with respect to how the PFIC rules affect their tax situation.

Shareholder Election

These adverse tax consequences may be avoided, if the U.S. Holder has elected to treat the PFIC as a qualified electing fund (a "QEF") with respect to that U.S. Holder effective for

76

each of the PFIC's taxable years beginning on or after January 1, 1987, which include any portion of the U.S. Holder's holding period.

The procedure a U.S. Holder must comply with in making an effective QEF election will depend on whether the year of election is the first year in the U.S. Holder's holding period in which the Company is a PFIC.  If the U.S. Holder makes a QEF election in such first year (i.e. a timely QEF election), then the U.S. Holder may make the QEF election by simply filing the appropriate documents at the time the U.S. Holder files his tax return for such first year.  If, however, the Company qualified as a PFIC in a prior year, then in addition to filing documents, the U.S. Holder must generally recognize gain as if it had sold the QEF stock on the first day of the taxable year in which the QEF election is made, if (i) the U.S. Holder holds stock in the PFIC on that day, and (ii) the U.S. Holder can establish the fair market value of the PFIC stock on that day.  The U.S. Holder will treat that deemed sale transaction as a disposition of PFIC stock and will, thereafter, be subject to the rules described below applicable to U.S. shareholders of a QEF.

In general, U.S. shareholders of a QEF are taxable currently on their pro rata share of the QEF's ordinary income and net capital gain regardless of whether such income or gain was actually distributed.  A U.S. Holder of a QEF can, however, elect to defer the payment of United States Federal income tax on such income inclusions.

Mark to Market Election

Effective for tax years of U.S. Holders beginning after December 31, 1997, U.S. Holders who hold, actually or constructively, marketable stock of a foreign corporation that qualifies as a PFIC may elect to mark such stock to the market (a "mark-to-market election").  If such an election is made, such U.S. Holder will not be subject to the special taxation rules of PFIC described above for the taxable years for which the mark-to-market election is made.  A U.S. Holder who makes such an election will include in income for the taxable year an amount equal to the excess, if any, of the fair market value of the shares of the Company as of the close of such tax year over such U.S. Holder's adjusted basis in such shares.  In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the excess, if any, of such U.S. Holder's adjusted tax basis in the shares over the fair market value of such shares as of the close of the tax year, or (ii) the excess, if any of (A) the mark-to-market gains for the shares in the Company include d by such U.S. Holder for prior tax years, including any amount which would have been included for any prior year but for Section 1291 interest on tax deferral rules discussed above with respect to a U.S. Holder, who has not made a timely QEF election during the year in which he holds (or is deemed to have held) shares in the Company and the Company is a PFIC ("Non-Electing U.S. Holder"), over (B) the mark-to-market losses for shares that were allowed as deductions for prior tax years.  A U.S. Holder's adjusted tax basis in the shares of the Company will be increased or decreased to reflect the amount included or deducted as a result of mark-to-market election.  A mark-to-market election will apply to the tax year for which the election is made and to all later tax years, unless the PFIC stock ceases to be marketable or the IRS consents to the r evocation of the election.

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The PFIC and QEF election rules are complex.  U.S. Holders should consult a tax advisor regarding the availability and procedure for making the QEF election as well as the applicable method for recognizing gains or earnings and profits under the foregoing rules.

Controlled Foreign Corporation

If more than 50% of the voting power of all classes of stock or the total value of the stock of the Company is owned, directly or indirectly, by citizens or residents of the United States, United States domestic partnerships and corporations or estates or trusts other than foreign estates or trusts, each of whom own 10% or more of the total combined voting power of all classes of stock of the Company ("United States shareholder"), the Company could be treated as a "controlled foreign corporation" under Subpart F of the Code.  This classification would effect many complex results including the required inclusion by such United States shareholders in income of their pro rata share of "Subpart F income" (as specially defined by the Code) of the Company. If the Company is both a PFIC and controlled foreign corporation. the company will generally not be treated as a PFIC with respect to United States shareholders of the controlled foreign corporation.  This rule generally will be effective for taxable years of the Company ending with or within such taxable years of United States shareholders.  In addition, under Section 1248 of the Code, a gain from the sale or exchange of shares by a U.S. Holder who is or was a United States shareholder at any time during the five year period ending with the sale or exchange is treated as ordinary dividend income to the extent of earnings and profits of the Company attributable to the stock sold or exchanged.  Because of the complexity of Subpart F, and because it is not clear that Subpart F would apply to the U.S. Holders of shares of the Company, a mo re detailed review of these rules is outside of the scope of this discussion.

F.

Dividends and Paying Agents

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

G.

Statement by Experts

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

H.

Documents on Display

Copies of the Company's exhibits and documents are available for inspection at the Company's registered office located at 101 6th Avenue S.W., Suite 2500, Calgary, Alberta, Canada T2P 3P4.

I.

Subsidiary Information

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The information referred to in this section is not required for reports filed in the United States.

ITEM 11

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

The Company is a "Small Business Issuer" as such term is defined in Rule 12b-2 under the Exchange Act and, as such, there is no requirement to provide any information under this Item.

ITEM 12

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES     

This Form 20-F is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this Item.

PART II

ITEM 13

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

There has not been a material default in the payment of principal, interest, a sinking or purchase fund installment, or any other material default not cured within thirty days, relating to indebtedness of the Company or any of its subsidiaries.  There are no payments of dividends by the Company in arrears, nor has there been any other material delinquency relating to any class of preference shares of the Company.

ITEM 14

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY

HOLDERS AND USE OF PROCEEDS

Neither the Company nor any other person has (i) modified materially any instrument defining the rights of holders of any class of registered securities, (ii) modified materially or qualified the rights evidenced by any class of registered securities by issuing or modifying any other class of securities, or (iii) withdrawn or substituted a material amount of the assets securing any class of registered securities.  There has been no change in the trustees or paying agents for any of the Company's securities during the previous fiscal year.  

ITEM 15

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.  As of December 31, 2003, an evaluation was carried out by the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934, as amended).  Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were adequate to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rul es and forms.

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Changes in Internal Control over Financial Reporting.  During the fiscal year ended December 31, 2003, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

ITEM 16

[RESERVED]

ITEM 16A

AUDIT COMMITTEE FINANCIAL EXPERT

The Company has an Audit and Risk Management Committee (the "Audit Committee") established by the Board of Directors.  The members of the Audit Committee are George T. Hawes, A. Bruce Macdonald and Michael Halvorson.  The Board has designated Mr. Hawes as the "Audit Committee Financial Expert" as that term is defined under Section 407 of the Sarbanes-Oxley Act of 2002.  Mr. Hawes is "independent" as that term is defined under the rules of the American Stock Exchange.

ITEM 16B

CODE OF ETHICS

The Company has adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees, including its Chief Executive Officer and Chief Financial Officer.  The Company's Code of Business Conduct and Ethics will be provided, without charge, to any individual who requests it.  A copy may be obtained from the Corporate Secretary by telephoning the Company at (403) 264-6161 or by writing the Company at 2500, 101-6^th Ave SW, Calgary, Alberta, Canada T2P 3P4

ITEM 16C

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate amounts billed by Collins Barrow Calgary LLP, Chartered Accountants ("CBC") to the Company for each of the fiscal years ended December 31, 2003 and 2002 for audit fees, audit-related fees, tax fees and all other fees are set forth below:

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	Year Ended December 31, 2003	Year Ended December 31, 2002
Audit Fees (1)	$55,000	$51,400
Audit-Related Fees (2)	12,000	10,415
Tax Fees (3)	5,000	6,500
All Other Fees (4)	--	3,200
Totals	$72,000	$71,515

NOTES:

(1)  "Audit Fees" represent fees for the audit of the Company's annual financial statements, review of the Company's interim financial statements and review in connection with the Company's statutory and regulatory filings.

(2)  "Audit-Related Fees" represent fees for assurance and related services that are related to the performance of the audit, principally for US standards compliance.

(3)  "Tax Fees" represent fees for tax compliance, tax advice and tax planning.

(4)  "Other Fees" represent fees for accounting research on new accounting policies.

The Audit Committee has adopted procedures requiring Audit Committee review and approval in advance of all particular engagements for services provided by the Company's independent auditors.  Consistent with applicable laws, the procedures permit limited amounts of services, other than audit, review or attest services, to be approved by one or more members of the Audit Committee pursuant to authority delegated by the Audit Committee, provided the Audit Committee is informed of each particular service.  All of the engagements and fees for the year ended December 31, 2003 were approved by the Audit Committee.  The Audit Committee reviews with CBC whether the non-audit services to be provided are compatible with maintaining the auditors' independence.

ITEM 16D

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT

COMMITTEES

The information referred to in this section is not required as to the fiscal year ended December 31, 2003, which is the period covered by this Annual Report on Form 20-F.

ITEM 16E

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND

AFFILIATED PURCHASERS

The information referred to in this section is not required as to the fiscal year ended December 31, 2003, which is the period covered by this Annual Report on Form 20-F.

81

ITEM 17

FINANCIAL STATEMENTS

The following financial statements are attached and incorporated herein:  

Description of Document

Auditors' Report dated March 25, 2004

Consolidated Balance Sheets as at December 31, 2003 and 2002

Consolidated Statements of Income for the Years Ended December 31, 2003 and 2002

Consolidated Statements of Retained Earnings for the Years Ended December 31, 2003 and 2002

Consolidated Statements of Cash Flows for the Years Ended December 31, 2003 and 2002

Notes to Consolidated Financial Statements for the Years Ended December 31, 2003 and 2002

Auditors' Report dated March 14, 2003

Consolidated Balance Sheets as at December 31, 2002 and 2001

Consolidated Statements of Income and Retained Earnings (Deficit) for the Years Ended December 31, 2002 and 2001

Consolidated Statements of Cash Flows for the Years Ended December 31, 2002 and 2001

Notes to Consolidated Financial Statements for the Years Ended December 31, 2002 and 2001

ITEM 18

FINANCIAL STATEMENTS

See Item 17.

82

     GENTRY RESOURCES LTD. CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2003 and 2002

__________________________________________

	ASSETS
			2003			2002
				(Restated - Note 3)
CURRENT
Cash and cash equivalents		$	194,119		$	175,915
Accounts receivable			7,461,796			5,356,504
Prepaid expenses			210,387			236,760
			7,866,302			5,769,179
INVESTMENTS (Note 4)			1,544,058			1,561,111
PROPERTY AND EQUIPMENT (Note 5)			44,062,285			29,092,384
		$	53,472,645		$	36,422,674
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities		$	8,866,288		$	5,599,989
Income taxes payable			479,240			403,822
Bank debt (Note 6)			11,964,010			6,990,027
			21,309,538			12,993,838
ASSET RETIREMENT OBLIGATIONS (Note 7)			1,563,555			1,299,681
FUTURE INCOME TAXES (Note 8)			6,140,992			5,516,577
			29,014,085			19,810,096
SHARE CAPITAL (Note 9)			18,373,169			13,262,522
CONTRIBUTED SURPLUS (Notes 9[b] and [d])			22,067			-
RETAINED EARNINGS			6,063,324			3,350,056
			24,458,560			16,612,578
		$	53,472,645		$	36,422,674
Please refer to the accompanying notes.
(signed) "A. Bruce Macdonald"		(signed) "George T. Hawes"
A. Bruce Macdonald Director		George T. Hawes Director

GENTRY RESOURCES LTD.

     CONSOLIDATED STATEMENTS OF CASH FLOWS 

FOR THE YEARS ENDED DECEMBER 31, 2003 and 2002
__________________________________________

		2003			2002
			(Restated - Note3)
OPERATING ACTIVITIES
Net income	$	3,040,509		$	2,435,546
Add (deduct) items not requiring cash
Depletion and depreciation		7,079,953			4,273,079
Non-cash compensation		174,947			-
Share of loss of affiliate		3,985			349,520
Dilution gain on investments in affiliates		-			(295,072)
Loss on sale of investments		-			6,726
Future income taxes		86,795			647,615
		10,386,189			7,417,414
Changes in non-cash working capital items		(564,546)			(1,165,210)
Asset retirement costs		(112,643)			(90,362)
		9,709,000			6,161,842
INVESTING ACTIVITIES
Capital expenditures		(21,653,477)			(8,620,870)
Acquisition of investments, net		-			(200,000)
Proceeds from sale of investments		-			45,830
Changes in non-cash working capital items		1,799,810			1,149,115
		(19,853,667)			(7,625,925)
FINANCING ACTIVITIES
Proceeds on issuance of share capital, net of share issuance costs		5,828,070			2,930,802
Proceeds from bank debt, net		4,973,983			(579,096)
Redemption of share capital		(679,785)			(910,871)
Changes in non-cash working capital items		40,603			(45,064)
		10,162,871			1,395,771
INCREASE (DECREASE) IN CASH		18,204			(68,312)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		175,915			244,227
CASH AND CASH EQUIVALENTS, END OF YEAR	$	194,119		$	175,915
Supplemental cash flows disclosure:
Interest paid	$	484,069		$	407,245
Income taxes paid	$	855,285		$	313,756
Please refer to the accompanying notes.

GENTRY RESOURCES LTD.

     CONSOLIDATED STATEMENTS OF INCOME 

FOR THE YEARS ENDED DECEMBER 31, 2003 and 2002
__________________________________________

		2003			2002
			(Restated - Note 3)
REVENUE
Production	$	24,679,805		$	19,355,614
Less: royalties, net of Alberta Royalty Tax Credit		(5,067,096)			(4,225,170)
Interest and other		285,457			168,906
		19,898,166			15,299,350
EXPENSES
Depletion & depreciation		7,079,953			4,273,079
Production		5,732,584			4,463,744
General & administrative		2,529,486			2,060,198
Interest on bank debt		484,069			407,245
		15,826,092			11,204,266
INCOME FROM OPERATIONS		4,072,074			4,095,084
OTHER INCOME (LOSS)
Share of loss of affiliate		(3,985)			(349,520)
Dilution gain on investments in affiliates		-			295,072
Loss on sale of investments		-			(6,726)
		(3,985)			(61,174)
INCOME BEFORE INCOME TAXES		4,068,089			4,033,910
INCOME TAXES (Note 8)
Current		940,785			950,749
Future		86,795			647,615
		1,027,580			1,598,364
NET INCOME	$	3,040,509		$	2,435,546
NET INCOME PER SHARE
Basic (Note 10)	$	0.12		$	0.11
Diluted (Note 10)	$	0.12		$	0.10
Please refer to the accompanying notes.

GENTRY RESOURCES LTD.

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS 

FOR THE YEARS ENDED DECEMBER 31, 2003 and 2002
__________________________________________

		2003			2002
			(Restated-Note3
Retained earnings, beginning of year as previously stated	$	2,867,417		$	1,048,182
Restatement on change in accounting policy (Note 3)		482,639			400,863
Retained earnings, beginning of year restated		3,350,056			1,449,045
Net income		3,040,509			2,435,546
Less: Excess of cost of shares acquired over stated value (Note 9[b])		(327,241)			(534,535)
Retained earnings, end of year	$	6,063,324		$	3,350,056
Please refer to the accompanying notes.

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

1.

Company activities

The Company's activities are the exploration for and development of petroleum and natural gas properties in Canada.

2.

Summary of significant accounting policies

These financial statements have been prepared using accounting principles generally accepted in Canada which include:

(a)

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Gentry Resources (Saskatchewan) Ltd., Gentry Income Funds Inc. and Gentry Resources (West Africa) Inc.  Both Gentry Income Funds Inc. and Gentry Resources (West Africa) Inc. are inactive and have no production operations.

(b)

Cash and cash equivalents

Cash and cash equivalents consist of amounts on deposit with banks and broker accounts.

(c)

Investments

During 2003, the Company ceased to exert significant influence on its investment in Stratic Energy Corporation ("Stratic").

Prior to October 1, 2003, the Company recorded its investment in Stratic using the equity method of accounting, whereby the investment was initially recorded at cost and the carrying value was adjusted thereafter to include the Company's pro-rata share of earnings and losses.  Profit distributions received or receivable were recorded as a reduction to the amount of the investment.

The Company records its investment in Stratic subsequent to October 1, 2003, and its other investment, using the cost method of accounting whereby the investment is initially recorded at cost.  Earnings are recognized only to the extent received or receivable.  The carrying value of the investment under the equity method of accounting on the date that the Company ceased to exert significant influence becomes its carrying value under the cost method of accounting.

Where there has been a permanent decline in value, the investments are stated at estimated net realizable value.

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

(d)

Petroleum and natural gas exploration and development expenditures

The Company follows the Canadian full cost method of accounting whereby all costs related to the exploration for and the development of petroleum and natural gas reserves are initially capitalized and accumulated in cost centres by country.  Costs capitalized include land acquisition costs, geological and geophysical expenditures, costs of drilling productive and non-productive wells, together with overhead and interest directly related to exploration and development activities and lease and well equipment.  Gains or losses are not recognized upon disposition of petroleum and natural gas properties unless such a disposition would significantly alter the related cost centre's rate of depletion and depreciation.  A significant disposition is defined as causing a change of 20% or more in the annual depletion rate.

Costs capitalized are depleted and depreciated using the unit-of-production method by cost centre based upon gross proven petroleum and natural gas reserves as determined by independent engineers.  For purposes of the calculation, petroleum and natural gas reserves are converted to a common unit of measure on the basis of their relative energy content, whereby one barrel of oil is equivalent to six thousand cubic feet of natural gas.

The cost of significant unproved properties are excluded from the depletion and depreciation base until it is determined whether proved reserves are attributable to the properties, or impairment has occurred.

In applying the full cost method, the Company performs a ceiling test which restricts the capitalized costs less accumulated depletion and depreciation, future income taxes and asset retirement obligations for each cost centre from exceeding an amount equal to the estimated undiscounted value of future net revenues from proved petroleum and natural gas reserves, based on current prices and costs, and after deducting estimated future general and administrative expenses, estimated asset retirement obligations, financing costs and income taxes.

(e)

Depreciation

Other assets are depreciated using the declining balance method at annual rates of 20% to 100%.

(f)

Income taxes

Income taxes are accounted for using the liability method of income tax allocation.  Under the liability method, income tax assets and liabilities are recorded to recognize future income tax inflows and outflows arising from the settlement or recovery of assets and liabilities at the carrying values.  Income tax assets are also recognized for the benefits from tax losses and deductions that cannot be identified with particular assets or liabilities, provided those benefits are more likely than not to be realized.  Future income tax assets and liabilities are determined based on the tax laws and rates that are anticipated to apply in the year of realization.

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

(g)

Asset retirement obligations

Effective January 1, 2003, the Company has adopted retroactively, with restatement of prior periods, the Canadian Institute of Chartered Accountants' new standard on Asset Retirement Obligations.  This new section requires liability recognition for retirement obligations associated with long-lived assets, which would include abandonment of oil and natural gas wells, related facilities, compressors and gas plants, removal of equipment from leased acreage and returning such land to its original condition.

Under the new standard, the estimated fair value of each asset retirement obligation is recorded in the period a well or related asset is drilled, constructed or acquired.  Fair value is estimated using the present value of the estimated future cash outflows to abandon the asset at the Company's credit-adjusted risk-free interest rate.  The obligation is reviewed regularly by Company management based upon current regulations, costs, technologies and industry standards.  The discounted obligation is initially capitalized as part of the carrying amount of the related oil and natural gas properties and a corresponding liability is recognized.  The increase in oil and natural gas properties is depleted and depreciated on the same basis as the remainder of the oil and natural gas properties.  The liability is accreted against income until it is settled or the property is sold and is included as a component of depletion and depreciation expense.  Actual restoration expenditures are charged to the accumulated obligation as incurred.

Prior to 2003, the Company estimated costs of dismantlement, removal and site restoration and recorded them over the remaining life of the proved reserves on the unit-of-production basis. The annual provision was included in depletion and depreciation expense and was accrued as a site restoration liability on the balance sheet.  Actual restoration expenditures were charged to the accumulated obligation as incurred.  

(h)

Flow-through shares

The Company, from time to time, issues flow-through shares to finance a portion of its capital expenditure program.  Pursuant to the terms of the flow-through share agreements, the tax deductions associated with the expenditures are renounced to the subscribers.  Accordingly, share capital is reduced and a future tax liability is recorded equal to the estimated amount of future income taxes payable by the Company as a result of the renunciations, when the expenditures are made.

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

(i)

Stock-based compensation

The Company has a stock option plan as described in Note 9(c).  

On October 1, 2003, the Company prospectively adopted the Canadian Institute of Chartered Accountants' new standard with respect to accounting for stock-based compensation arrangements relating to stock options granted to employees, officers and directors.  Under the transitional provisions of the standard, stock options granted to employees, officers and directors after the effective date of January 1, 2003 are accounted for using the fair value method.  As a result of this change, general and administrative expense increased by $112,543, property and equipment increased by $19,861 and contributed surplus increased by $132,404, all of which have been recorded in 2003, subsequent to September 30, 2003.  The Company will continue to disclose the pro-forma results for stock options issued to employees, officers and directors which were issued in 2002 in Note 9(e).

Effective January 1, 2002, the Company prospectively adopted the Canadian Institute of Chartered Accountants' accounting standard with respect to accounting for stock-based compensation arrangements.  Stock options granted to non-employees are accounted for using the fair value method under which compensation expense is recorded based on the estimated fair value of the options at the date of grant.  The Company has elected to use the intrinsic value-based method of accounting for its stock option plans, whereby no compensation expense is recorded for stock options issued to directors, officers and employees that have an exercise price equal to or greater than the fair value of the stock at the date options are granted.  However, the pro-forma results of using the fair value method, under which compensation expense is recorded based upon the estimated fair value of the options, will be presented only for the effects of options granted subsequent to January 1, 2002.

Any consideration received by the Company on the exercise of stock options will be credited to share capital.

(j)

Net income per share

Diluted net income per share is calculated using the treasury stock method, whereby it is assumed that proceeds from the exercise of stock options and warrants are used by the Company to repurchase Company shares at the weighted average market price during the year.

(k)

Revenue recognition

Revenue from the sale of petroleum and natural gas is recognized based on volumes delivered to customers at contractual delivery points and rates. The costs associated with the delivery, including operating and maintenance costs, transportation, and production based royalty expenses are recognized in the same period in which the related revenue is earned and recorded.

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

(l)

Foreign currency translation

The Company follows the temporal method when translating foreign currency transactions and the financial statements of its integrated subsidiaries.

Under this method, foreign currency denominated assets and liabilities are translated at the exchange rate prevailing at the balance sheet date for monetary items and at the transaction date for non-monetary items.  Revenues and expenses, except depletion and depreciation, are translated at average exchange rates for the year.  Depletion and depreciation are translated at the same rate as the related assets.  Exchange gains or losses on translation of current and non-current monetary items are included in the determination of net income.

Effective January 1, 2002, the Company adopted the Canadian Institute of Chartered Accountants' amended accounting standard with respect to accounting for exchange gains or losses on long-term monetary items, whereby such gains or losses are no longer deferred and amortized over the remaining terms of the related items.  All gains or losses on long-term monetary items are now recognized in income in the period in which they occur.  There was no effect to the consolidated financial statements for the year ended December 31, 2002 as a result of this change.

(m)

Joint venture accounting

Substantially all of the Company's exploration and production activities are conducted jointly with others, and accordingly, these financial statements reflect only the Company's proportionate interest in such activities.

(n)

Measurement uncertainty

The amounts recorded for depletion and depreciation, asset retirement costs and obligations and the ceiling test are based on estimated proved reserves, production rates, future oil and natural gas prices and future costs.  By their nature, these estimates are subject to measurement uncertainty and the effect of changes in such estimates in future periods could be significant.

The amounts used to estimate fair values of stock options issued, and the resultant pro-forma income effects (Notes 9[d] and [e]) are based on estimates of future volatility of the Company's share price, expected lives of the options, expected dividends to be paid by the Company and other relevant assumptions.  By their nature, these estimates are subject to measurement uncertainty and the effect of changes in such estimates on the financial statements of future periods could be significant.

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

3.

Change in accounting policy

The effects of the change in policy for asset retirement obligations for the years ended December 31, 2003 and 2002 are as follows:

There is no change in the basic or diluted net income per share for either year as a result of these changes.

4.

Investments

At December 31, 2003, the Company owned 18.99% (2002 - 19.36%) of the common shares and Special Warrants of Stratic.  The Company is related to Stratic by virtue of common directors and officers.

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

5.

Property and equipment

During the year, the Company capitalized $848,043 (2002 - $796,265) of a total of $3,377,529 (2002 - $2,856,463) in general and administrative expenses.  No interest has been capitalized.

Costs of unproven petroleum and natural gas properties amounting to $3,206,210 (2002 - $1,569,091) have been excluded from the depletion calculation.

6.

Bank debt

The Company has an uncommitted demand revolving credit facility to a maximum of $14,000,000.  The facility is available to the Company by way of prime rate based loans, bankers acceptances and letters of credit.  Interest is payable monthly at the bank's prime lending rate. The facility is secured by a general assignment of book debts, a $20,000,000 fixed and floating demand debenture against all assets and undertakings including fixed charges on certain property and equipment, a general security agreement covering all present and after acquired property, and a hypothecation and assignment of certain specific properties.  The facility is subject to an annual review.

Effective for the fiscal period commencing January 1, 2002, the Canadian Institute of Chartered Accountants amended Canadian Generally Accepted Accounting Principles to require all borrowings, where the lender has the right to demand repayment within 12 months (other than in the event of default or breach of covenants) or where the lender has the right to refuse to roll-over the borrowing for a further lending period longer than 12 months, to be classified as current liabilities.  While the nature of the Company's debt has not changed, the accounting guidelines require that this loan must be classified as current.  The Company is not in breach of any covenants under the credit facility.

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

The credit facility is subject to review on a periodic basis.  The next review will be undertaken before May 31, 2004.

7.

Asset retirement obligations

The following table summarizes changes in the asset retirement obligations for the years ended December 31, 2003 and 2002:

The undiscounted amount of the estimated future cash flows required to settle the obligations is $2,411,686 (2002 - $1,987,111).  These obligations are expected to be paid over the next several years with a weighted average life of approximately 11 years.  The estimated future cash flows have been discounted at the credit-adjusted risk free rate of 5.25% (2002 - 5.87%).

8.

Income taxes

(a)

Significant components of the future income tax liability are as follows:

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

(b)

Income taxes expense differs from that which would be expected from applying the combined Canadian federal and provincial income tax rate of 42.52% (2002 - 45.01%) to income before income taxes.  The difference results from the following:

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

9.

Share capital

Authorized

Unlimited number of voting common shares

Unlimited number of non-voting preferred shares

Issued

(a)

During the year ended December 31, 2003, the Company issued 3,000,000 common shares at a price of $1.75 per share for gross proceeds of $5,250,000.

During the year ended December 31, 2002, the Company issued 1,000,000 Units at a price of $1.40 per Unit for total proceeds of $1,400,000.  Each Unit is exchangeable, for no additional consideration, into one voting common share and one half share purchase warrant.  Each whole purchase warrant will entitle the holder to acquire one voting common share at a price of $1.75 per share until June 18, 2004.  All Units were deemed to have been exercised on December 18, 2002 into 1,000,000 voting common shares and 500,000 share purchase warrants.  As at December 31, 2003, 350,000 share purchase warrants have been exercised.

In addition, during the year ended December 31, 2002, the Company issued 1,000,000 flow-through common shares at a price of $1.65 per share.  Income tax exploration deductions in the amount of $1,650,000 were renounced to subscribers effective December 31, 2002. Qualifying expenditures in the amount of $106,058 were incurred to December 31, 2002 and $1,543,942 in 2003.

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

(b)

Pursuant to Normal Course Issuer Bids, the Company acquired 441,800 (2002 - 741,580) common shares at an average price of $1.54 (2002 - $1.23) per share.  The excess of cost of reacquisition over stated value of $110,337 (2002 - Nil) has been charged against contributed surplus with the remaining $327,241 (2002 - $534,535) charged to retained earnings.  At December 31, 2003, a maximum of 1,638,680 common shares may be acquired by the Company until August 26, 2004 under the present Normal Course Issuer Bid.

(c)

Stock option plan

Under the Company's stock option plan, the Company may grant options to its directors, officers, employees, and consultants.  The maximum number of shares which may be reserved for issuance under the plan is 4,300,000 common shares.  The maximum number of shares which may be reserved for issuance to any one person under the plan is 5% of the issued common shares.  The plan also provides that the price at which options may be granted can not be less than the market price of the common shares at the time the option is granted.  Options granted under the plan will have a term not exceeding ten years.  The vesting period is set by the Board of Directors at the time the options are granted.  

A summary of the status of the Company's stock option plan, as of December 31, 2003 and 2002 and changes during the years then ending are as follows:

The following table summarizes the stock options outstanding at December 31, 2003:

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

(d)

   Stock-based compensation expense

The fair value of stock options granted during 2003 was estimated on the dates of grant using the Black-Scholes option-pricing method with the following assumptions:

Risk free interest rate of 3.85%

Expected life of options of 3.5 to 4.5 years

Expected volatility of 59.19%

Expected dividend rate of 0%

Fair value per option granted of $0.66

Compensation costs of $112,543 have been expensed and $19,860 has been capitalized, resulting in the recognition of $132,404 of contributed surplus during 2003.

(e)

   Pro-forma stock-based compensation expense

Had compensation costs for the Company's stock option plan been determined using the fair value method for options granted from January 1, 2002 to December 31, 2002, the Company's pro-forma net income and retained earnings for 2003 would be reduced by $20,423 (2002 - $14,238).  There would be no change in net income per share or diluted net income per share.

The assumptions used to determine the fair value of each option granted on the date of grant using the Black-Scholes option-pricing model are as follows:

Risk free interest rate of 4.1%

Expected life of options of 3.5 years

Expected volatility of 65.50%

Expected dividend rate of 0%

Fair value per option granted of $0.60

(f)

Employee share purchase plan

On January 1, 2003, the Company initiated an employee share purchase plan (the "Plan"), whereby the Company is authorized to match employees' purchases under the Plan from a minimum of two percent to a maximum of five percent of the employees' regular gross earnings, through the issuance of common shares of the Company, for all full-time employees.  Compensation expense is recognized when shares are issued under the Plan and an equal amount is recorded as share capital.  Shares are issued from Treasury to employees at the weighted average market price for the month immediately preceding the date of purchase of the Company's shares.  

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

10.

Income per share

Net income per share has been calculated based on the weighted average number of common shares outstanding during the year of 24,564,151 (2002 - 22,075,233).

A reconciliation of the denominators for the per share calculations is outlined below:

There is no change in the numerator in the calculation of diluted net income per share for either year.

In 2002, 500,000 warrants with a weighted average exercise price of $1.75 per share were excluded from the calculation of diluted weighted average shares as their exercise would be anti-dilutive.  No warrants were excluded in the 2003 calculation.

11.

Financial instruments

(a)

Fair values

The fair values of the Company's accounts receivable and accounts payable and accrued liabilities approximate their carrying values due to the short-term nature of these financial instruments.  The fair value of investments is $3,833,014 at December 31, 2003.

The fair value of bank debt approximates its carrying value as it bears interest at market rates.

(b)

Credit risk

Virtually all of the Company's accounts receivables are with customers in the petroleum and natural gas industry and are subject to normal industry credit risks.

(c)

Interest rate risk

The Company is exposed to interest rate cash flow risk to the extent that its bank debt is at a floating rate of interest.

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

12.

Commitments

The Company has obligations under operating leases for office space which expire on November 30, 2008 with annual minimum lease rentals, exclusive of operating costs, of $173,525 per year.

13.

United States accounting principles and reporting

The Company's consolidated financial statements have been prepared in Canadian dollars and in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"), which in most respects conform to accounting principles generally accepted in the United States ("U.S. GAAP").  Significant differences between Canadian and U.S. GAAP are described in this note:

(a)

Full cost accounting

In accordance with U.S. GAAP, a ceiling test is applied to ensure the unamortized capitalized costs in each cost center do not exceed the sum of the present value, discounted at 10 percent, of the estimated unescalated future net operating revenue from proved reserves plus unimpaired unproved property costs less future development costs, related production costs, asset retirement obligations and applicable taxes.  Under Canadian GAAP, a similar ceiling test calculation is performed with the exception that future revenues are undiscounted and administrative and interest expenses are deducted from revenues.

In computing consolidated net income for U.S. GAAP purposes, the Company recorded additional depletion in prior years as a result of the application of the ceiling test.  These charges were not required under the Canadian GAAP ceiling test.  As a result, the depletion base of unamortized capitalized costs is less for U.S. GAAP purposes.  No ceiling test write-down is required under Canadian GAAP or U.S. GAAP as at December 31, 2003 and 2002.

(b)

Income taxes

Canadian GAAP previously required the Company to record potential future taxes using the deferral method.  However, the Canadian Institute of Chartered Accountants' accounting standard is now similar to U.S. GAAP.   

Upon implementation of the new Canadian standard, retained earnings was decreased for temporary differences that had not previously been recognized.  Under U.S. GAAP, these temporary differences would have already been reflected in property and equipment, therefore further differences in depletion and depreciation expense results in subsequent years.

Under U.S. GAAP, enacted tax rates are used to calculate future taxes, whereas under Canadian GAAP, substantively enacted tax rates are used.

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

(c)

Flow-through shares

U.S. GAAP requires the stated capital on flow-through share issuances to be equal to the estimated fair market value of the shares on the date of issue.  The difference between the gross proceeds received on the issuance of the shares and the estimated fair market value of the shares is recorded as a liability ("the Premium") until the renunciation of expenditures has occurred.  Under Canadian GAAP, the gross proceeds received on flow-through share issuances are initially recorded as share capital.  The Premium recorded as a current liability under U.S. GAAP for 2003 is $Nil (2002 - $233,932).

When the expenditures are incurred and the tax deductions are renounced to subscribers, Canadian GAAP requires that the stated capital be reduced by and a future tax liability be recorded for the estimated future income taxes payable as a result of the renouncement. Under U.S. GAAP, the future tax liability is recorded through a charge to income tax expense less the reversal of the Premium previously reported.

(d)

Investments

On October 1, 2003, the Company began accounting for its investment in Stratic using the cost method (Note 2[c]).  Under U.S. GAAP, the carrying value of the investment under the equity method of accounting becomes its carrying value as of the date of loss of significant influence which is identical under Canadian GAAP.

Additionally, under U.S. GAAP, the Company must classify investments in equity securities that have readily determinable fair values as either available for sale or trading.  The Company's investments are classified as available for sale as they were not acquired and are not held principally for the purposes of selling them in the near term.  These available for sale investments are revalued at the end of each period based on their fair values and any unrealized gain or loss is recorded, net of tax effects, as a component of other comprehensive income in the period.

(e)

Stock-based compensation

Effective January 1, 2003, the Company prospectively adopted the Canadian Institute of Chartered Accountants' new standard with respect to accounting for stock-based compensation arrangements relating to stock options granted to employees, officers and directors.  Hence, under Canadian GAAP, compensation costs have been recognized in the financial statements for stock options granted to employees, officers and directors in 2003.  For the effect of stock-based compensation on the financial results under Canadian GAAP in 2003, which would be the same adjustment under U.S. GAAP, see Note 9(d).

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

U.S. Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" establishes financial accounting and reporting standards for stock-based employee compensation plans under U.S. GAAP.  The Statement requires disclosure of the pro-forma net income and net income per share as if the fair value based accounting method had been used to account for stock-based compensation costs in advance of the equivalent Canadian standard.  The effects of the fair value disclosures under U.S. GAAP are as follows:

The fair value of the options issued by the Company during 2002 was estimated under U.S. GAAP using the same assumptions as under Canadian GAAP, as disclosed in Note 9(e).

(f)

Asset retirement obligations

Effective January 1, 2003, the Company early adopted the Canadian Institute of Chartered Accountant's new standard on Asset Retirement Obligations (Note 2[g]).  This standard is equivalent to U.S. SFAS No. 143, "Accounting for Asset Retirement Obligations", which is effective for fiscal periods beginning on or after January 1, 2003.  Early adopting the Canadian standard eliminated a U.S. GAAP reconciling item with respect to accounting for the obligations.  However, differences in accounting methodology for changes in accounting policies necessitate additional disclosures under U.S. GAAP.

U.S. GAAP requires that the cumulative impact of a change in accounting policy be presented in the current year Consolidated Statement of Income and prior periods are not restated.

Net income under U.S. GAAP for the year ended December 31, 2003 increased by $446,346 due to the change in accounting policy.  The liability for asset retirement obligations under US GAAP would have been $1,109,588 as at January 1, 2002 and $1,299,681 as at December 31, 2002 had the change in accounting policy been applied retroactively with restatement.

The pro-forma impacts on the Company's financial results under U.S. GAAP if the prior periods had been restated are as follows:

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

Consolidated Balance Sheet

Asset retirement obligations

January 1, 2002

$1,109,588

December 31, 2002

$1,299,681

Consolidated Statement of Income

(g)

Recent accounting pronouncements

(i)

Ceiling Test

The Canadian Institute of Chartered Accountants has issued a new standard for full cost accounting for oil and gas properties which changes the calculation of the ceiling test.  The Company will adopt this standard for the fiscal year beginning on January 1,2004, which is the effective date of the new standard.  Based on January 1, 2004 amounts of property and equipment and undiscounted cash flows from proved reserves, it is estimated that the new standard will not have a material impact on the valuation of property and equipment upon adoption.

(ii)

Flow-Through Shares

The Canadian Institute of Chartered Accountants has issued a new standard effective for all flow-through shares transactions initiated after March 19, 2004.  Under the new standard, the future income tax liability is recognized, and share capital is reduced, on the date that the Company renounces the tax credits associated with the expenditures, provided there is reasonable assurance that the expenditures will be made.  This standard will have no effect on the Company until such time as there is an issuance of flow-through shares.

(iii)

Variable Interest Entities

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

In December 2003, the Financial Accounting Standards Board ("FASB") in the U.S. issued Interpretation Number 46R "Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51".  This standard requires variable interest entities to be consolidated by their primary beneficiary.  The standard is effective the first reporting period ending after March 15, 2004.  In Canada, the Accounting Standards Board ("AcSB") has suspended the effective dates for Accounting Guideline 15, "Consolidation of Variable Interest Entities" in order to amend the guideline to harmonize with corresponding U.S. guidance.  The AcSB plans to issue an exposure draft in the immediate future with an effective period beginning on or after November 1, 2004.

At December 31, 2003, the Company did not have any variable interests in variable-interest entities.

Summary of significant differences between U.S. GAAP and Canadian GAAP

Reconciliation of Consolidated Net Income Under Canadian GAAP to U.S. GAAP

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002  

Statements of Comprehensive Income

Condensed Consolidated Balance Sheets

 

Collins Barrow Calgary LLP

1400 First Alberta Place

777 - 8th Avenue S.W.

Calgary, Alberta,  Canada

T2P 3R5

T. 403. 298.1500

F. 403. 298.5814

email: calgary@collinsbarrow.com

AUDITORS' REPORT

To the Shareholders

Gentry Resources Ltd.

We have audited the consolidated balance sheets of Gentry Resources Ltd. as at December 31, 2002 and
2001 and the consolidated statements of income and retained earnings and cash flows for the years then
ended.  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 generally accepted auditing standards 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 December 31, 2002 and 2001 and the results of its operations and cash
flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Canadian generally accepted accounting principles vary in certain significant respects from accounting
principles generally accepted in the United States.  Application of accounting principles generally
accepted in the United States would have affected results of operations for the years ended December
31, 2002 and 2001 and shareholders' equity as at December 31, 2002 and 2001, to the extent
summarized in note 12 to the consolidated financial statements.

CHARTERED ACCOUNTANTS

Calgary, Alberta

Canada

March 14, 2003

COMMENTS BY AUDITOR FOR U.S. READERS ON CANADA-U.S. REPORTING DIFFERENCES

In the United States, reporting standards for auditors require the addition of an explanatory paragraph
(following the opinion paragraph) when there is a change in accounting principles that has a material
effect on the comparability of the Company's financial statements, such as the changes described in
Notes 2(h), 2(k) and 6 to the consolidated financial statements.  Our report to the shareholders dated
March 14, 2003 is expressed in accordance with Canadian reporting standards which do not require a
reference to such a change in accounting principles in the Auditors' report when the change is properly
accounted for and adequately disclosed in the financial statements.

CHARTERED ACCOUNTANTS

Calgary, Alberta

Canada

March 14, 2003

F-1

     GENTRY RESOURCES LTD. 

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2002 and 2001
__________________________________________

	ASSETS
			2002		2001
CURRENT
Cash and cash equivalents		$	175,915	$	244,227
Accounts receivable			5,356,504		1,854,813
Income taxes recoverable			-		399,334
Prepaid expenses			236,760		252,468
			5,769,179		2,750,842
INVESTMENTS (Note 4)			1,561,111		1,488,242
PROPERTY AND EQUIPMENT (Note 5)			28,437,568		23,929,037
		$	35,767,858	$	28,168,121
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities		$	5,599,989	$	2,998,444
Income taxes payable			403,822		-
Bank debt (Note 6)			6,990,027		7,569,123
			12,993,838		10,567,567
FUTURE REMOVAL AND SITE RESTORATION COSTS			1,374,535		1,192,700
FUTURE INCOME TAXES (Note 7)			5,269,546		3,564,985
			19,637,919		15,325,252
SHARE CAPITAL (Note 8)			13,262,522		11,794,687
RETAINED EARNINGS			2,867,417		1,048,182
			16,129,939		12,842,869
		$	35,767,858	$	28,168,121
Approved by the Board:
Director: signed "Bruce Macdonald"
A. Bruce Macdonald
Director: signed "George Hawes"
George Hawes

F-2

GENTRY RESOURCES LTD.

CONSOLIDATED STATEMENTS OF INCOME & RETAINED EARNINGS

FOR THE YEARS ENDED DECEMBER 31, 2002 and 2001
__________________________________________

		2002		2001
REVENUE
Production	$	19,355,614	$	16,220,430
Less: royalties, net of Alberta Royalty Tax Credit		(4,225,170)		(2,751,698)
Interest and other		168,906		147,980
		15,299,350		13,616,712
EXPENSES
Production		4,463,744		4,414,541
Depletion & depreciation		4,384,540		3,006,610
General & administrative		2,060,198		1,978,800
Interest on bank debt		407,245		370,097
		11,315,727		9,770,048
INCOME FROM OPERATIONS		3,983,623		3,846,664
OTHER INCOME (LOSS)
Dilution gain (loss) on investments in affiliates		295,072		(70,926)
Share of loss of affiliate		(349,520)		(757,700)
Loss on disposal of investment in affiliates		(6,726)		(84,045)
		(61,174)		(912,671)
INCOME BEFORE INCOME TAXES		3,922,449		2,933,993
INCOME TAXES (Note 7)
Current		950,749		583,557
Future		617,930		604,724
		1,568,679		1,188,281
NET INCOME		2,353,770		1,745,712
RETAINED EARNINGS (DEFICIT), beginning of year		1,048,182		(127,314)
LESS: Excess of cost of shares acquired over stated value (Note 8[b])		(534,535)		(570,216)
RETAINED EARNINGS, end of year	$	2,867,417	$	1,048,182
NET INCOME PER SHARE
Basic (Note 9)	$	0.11	$	0.08
Diluted (Note 9)	$	0.10	$	0.08

F-3

GENTRY RESOURCES LTD.

     CONSOLIDATED STATEMENTS OF CASH FLOWS 

FOR THE YEARS ENDED DECEMBER 31, 2002 and 2001
__________________________________________

		2002		2001
OPERATING ACTIVITIES
Net income	$	2,353,770	$	1,745,712
Add (deduct) items not requiring cash
Depletion and depreciation		4,384,540		3,006,610
Dilution (gain) loss on investments in affiliates		(295,072)		70,926
Share of loss of affiliate		349,520		757,700
Loss on disposal of investment in affiliates		6,726		84,045
Future income taxes		617,930		604,724
		7,417,414		6,269,717
Changes in non-cash working capital items		(1,165,210)		(1,186,856)
		6,252,204		5,082,861
INVESTING ACTIVITIES
Capital expenditures		(8,620,870)		(7,960,299)
Acquisition of investments, net		(154,170)		(1,671,700)
Removal and site restoration costs		(90,362)		(92,480)
Acquisition of Sloane Petroleums, net of cash acquired (Note 3)		-		(1,728,845)
Proceeds from sale of investments		-		327,798
Proceeds on disposal of property and equipment		-		361,216
Changes in non-cash working capital items		1,149,115		340,090
		(7,716,287)		(10,424,220)
FINANCING ACTIVITIES
Proceeds on issuance of share capital, net of share issuance costs		2,930,802		2,818,149
Redemption of share capital		(910,871)		(998,414)
Proceeds from (repayments of) bank debt, net		(579,096)		3,553,672
Changes in non-cash working capital items		(45,064)		119,673
		1,395,771		5,493,080
INCREASE (DECREASE) IN CASH		(68,312)		151,721
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		244,227		92,506
CASH AND CASH EQUIVALENTS, END OF YEAR	$	175,915	$	244,227
Supplemental cash flow disclosure:
Interest paid	$	407,245	$	370,097
Income taxes paid	$	313,756	$	2,026,655
The following non-cash transaction has been excluded from the statement of cash flows:
The acquition of property and equipment in exchange for
property and equipment	$	-	$	110,000
Cash flow per share
Basic	$	0.34	$	0.30
Diluted	$	0.32	$	0.29

F-4

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

1.	Company activities The Company's activities are the exploration for and development of petroleum and natural gas properties in Canada.
2.	Summary of significant accounting policies These financial statements have been prepared using accounting principles generally accepted in Canada which include:
	(a)	Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Gentry Resources (Saskatchewan) Ltd., Gentry Income Funds Inc. and Gentry Resources (West Africa) Inc. Both Gentry Income Funds Inc. and Gentry Resources (West Africa) Ltd. are inactive and have no production operations.
	(b)	Cash and cash equivalents Cash and cash equivalents consist of amounts on deposit with banks and broker accounts.
	(c)	Investments The Company records its investment in Stratic Energy Corporation ("Stratic") using the equity method of accounting, whereby the investment is initially recorded at cost and carrying value is adjusted thereafter to include the Company's pro-rata share of earnings and losses. Profit distributions received or receivable are recorded as a reduction to the amount of the investment. The Company records its other investments using the cost method of accounting whereby the investment is initially recorded at cost. Earnings are recognized only to the extent received or receivable. Where there has been a permanent decline in value, the investments are stated at estimated net realizable value.
	(d)	Petroleum and natural gas exploration and development expenditures The Company follows the Canadian full cost method of accounting whereby all costs related to the exploration for and the development of petroleum and natural gas reserves are initially capitalized and accumulated in cost centres by country. Costs capitalized include land acquisition costs, geological and geophysical expenditures, costs of drilling productive and non-productive wells, together with overhead and interest directly related to exploration and development activities and lease and well equipment. Gains or losses are not recognized upon disposition of petroleum and natural gas properties unless such a disposition would significantly alter the related cost centre's rate of depletion and depreciation. A significant disposition is defined as causing a change of 20% or more in the annual depletion rate.

F-5

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

	Costs capitalized are depleted and depreciated using the unit-of-production method by cost centre based upon gross proven petroleum and natural gas reserves as determined by independent engineers. For purposes of the calculation, petroleum and natural gas reserves are converted to a common unit of measure on the basis of their relative energy content, whereby one barrel of oil is equivalent to six thousand cubic feet of natural gas. The cost of significant unproved properties are excluded from the depletion and depreciation base until it is determined whether proved reserves are attributable to the properties, or impairment has occurred. Estimated future removal and site restoration costs are provided for over the life of the proven reserves on a unit-of-production basis. Costs which include the cost of production equipment removal and environmental clean-up are estimated each year by management based on current regulations, costs, technology and industry standards. The annual charge is included in the provision for depletion and depreciation and the actual restoration expenditures are charged to the accumulated provision account as incurred. In applying the full cost method, the Company performs a ceiling test which restricts the capitalized costs less accumulated depletion and depreciation, future income taxes and future site restoration for each cost centre from exceeding an amount equal to the estimated undiscounted value of future net revenues from proven petroleum and natural gas reserves, based on current prices and costs, and after deducting estimated future general and administrative expenses, estimated future removal and site restoration costs, financing costs and income taxes.
(e)	Depreciation Other assets are depreciated using the declining balance method at annual rates of 20% to 100%.
(f)	Income taxes Income taxes are accounted for using the liability method of income tax allocation. Under the liability method, income tax assets and liabilities are recorded to recognize future income tax inflows and outflows arising from the settlement or recovery of assets and liabilities at the carrying values. Income tax assets are also recognized for the benefits from tax losses and deductions that cannot be identified with particular assets or liabilities, provided those benefits are more likely than not to be realized. Future income tax assets and liabilities are determined based on the tax laws and rates that are anticipated to apply in the year of realization.
(g)	Flow-through shares The Company, from time to time, issues flow-through shares to finance a portion of its capital expenditure program. Pursuant to the terms of the flow-through share agreements, the tax deductions associated with the expenditures are renounced to the subscribers. Accordingly, share capital is reduced and a future tax liability is recorded equal to the estimated amount of future income taxes payable by the Company as a result of the renunciations, when the expenditures are made.

F-6

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

(h)	Stock-based Compensation The Company has a stock option plan as described in Note 8(c). Stock options granted to non-employees are accounted for using the fair value method under which compensation expense is recorded based on the estimated fair value of the options at the grant date. No compensation expense is recognized when stock options are issued to officers, directors and employees. Any consideration received by the Company on exercise of stock options is credited to share capital. Effective January 1, 2002, the Company adopted prospectively the Canadian Institute of Chartered Accountants' new accounting standard with respect to accounting for stock-based compensation arrangements. The Company has elected to use the intrinsic value-based method of accounting for its stock option plans, whereby, no compensation expense is recorded for stock options issued to directors, officers and employees that have an exercise price equal to the fair value of the stock at the date options are granted. The Company disclosed in Note 8(d) the pro-forma results of using the fair value method, under which compensation expense is recorded based upon the estimated fair value of the options. Pro-forma results will be presented only for the effects of options granted subsequent to January 1, 2002.
(i)	Income per share Diluted income per share is calculated using the treasury stock method, whereby it is assumed that proceeds from the exercise of stock options and warrants are used by the Company to repurchase Company shares at the weighted average market price during the year.
(j)	Revenue recognition Revenue from the sale of petroleum and natural gas is recognized based on volumes delivered to customers at contractual delivery points and rates. The costs associated with the delivery, including operating and maintenance costs, transportation and production based royalty expenses are recognized in the same period in which the related revenue is earned and recorded.

F-7

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

(k)	Foreign currency translation The Company follows the temporal method when translating foreign currency transactions and the financial statements of its integrated subsidiaries. Under this method, foreign currency denominated assets and liabilities are translated at the exchange rate prevailing at the balance sheet date for monetary items and at the transaction date for non-monetary items. Revenues and expenses, except depletion and depreciation, are translated at average exchange rates for the year. Depletion and depreciation are translated at the same rate as the related assets. Exchange gains or losses on translation of current and non-current monetary items are included in the determination of net income. Effective, January 1, 2002, the Company adopted the Canadian Institute of Chartered Accountants amended accounting standard with respect to accounting for exchange gains or losses on long-term monetary items, whereby such gains or losses are no longer deferred and amortized over the remaining terms of the related items. All gains or losses on long-term monetary items are now recognized in income in the period in which they occur. There was no effect to the consolidated financial statements for the years ended December 31, 2002 and 2001 as a result of this change.
(l)	Joint venture accounting Substantially all of the Company's exploration and production activities are conducted jointly with others, and accordingly, these financial statements reflect only the Company's proportionate interest in such activities.
(m)	Risk management The Company, from time to time, enters into forward contracts and swap agreements to hedge its exposure to the risks associated with fluctuating petroleum and natural gas prices. The purpose of the hedge is to lock in the price for a portion of the Company's production. Gains and losses associated with risk management activities are recorded as adjustments to the production revenue at the time the related production is sold. The Company identifies all relationships between the hedging instruments and hedged production, as well as its risk management objective and strategy for undertaking various risk management transactions. The Company believes that the risk management activities are effective hedges, both at inception and over the term of the contracts. The contracts entered into are not speculative derivative transactions.
(n)	Measurement uncertainty The amounts recorded for depletion and depreciation of exploration and development costs, the provision for future removal and site restoration costs and the ceiling test are based on estimated proven reserves, production rates, future oil and natural gas prices and future costs. By their nature, these estimates are subject to measurement uncertainty and the effect of changes in such estimates in future periods could be significant. The amounts disclosed related to fair values of stock options issued, and the resultant pro-forma income effects (Note 8[d]) are based on estimates of future volatility of the company's share price, expected lives of the options, expected dividends to be paid by the Company and other relevant assumptions. By their nature, these estimates are subject to measurement uncertainty and the effect of changes in such estimates on the financial statements of future periods could be significant.

F-8

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

3.
   Business combination Sloane Petroleums Inc. Effective March 1, 2001, the Company amalgamated with Sloane Petroleums Inc. ("Sloane"), such amalgamation having been approved by the shareholders of both the Company and Sloane on February 28, 2001. Prior to March 1, 2001, the Company owned 37.35% of the issued and outstanding common shares of Sloane. By virtue of the amalgamation, the Company effectively acquired the remaining 62.65% of Sloane's common shares for $3,586,456 cash and 498,118 common shares of the Company at an ascribed value of $398,494. The transaction has been accounted for using the purchase method with the results of Sloane's operations being included in the consolidated financial statements from March 1, 2001. The Company has accounted for this business combination as if 100% of the issued and outstanding share capital of Sloane was acquired, whereby consideration is comprised of the Company's 38.35% investment in Sloane, at equity, plus cash and share capital issued as stated below. Accordingly, the values of Sloane's identifiable assets and liabilities, except for property and equipment, are stated at 100% of their carrying values, which approximated their estimated fair values as at the date of acquisition. Property and equipment is stated at carrying value plus the related fair value increment calculated based upon the remaining 62.65% of Sloane acquired.

Consideration for the purchase consisted of:

Cash	$	3,586,456
Share capital issued		398,494
Investment in Sloane, at equity		1,110,107
	$	5,095,057

F-9

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

The purchase price was allocated as follows:
Cash	$	1,857,611
Non-cash working capital deficiency		(391,024)
Investments		25,285
Property and equipment		5,004,670
Future removal and site restoration costs		(42,008)
Future income taxes	(1,359,477)
	$	5,095,057

4.      Investments
		2002		2001
Stratic Energy Corporation, at equity	$	1,543,111	$	1,470,242
Other, at cost		18,000		18,000
	$	1,561,111	$	1,488,242

During the year ended December 31, 2002, the Company acquired 909,090 Special Warrants of Stratic for $200,000. Each Special Warrant is exercisable, at no additional cost, into one common share and one-half share purchase warrant of Stratic. Each whole share purchase warrant entitles the holder to acquire one voting common share at $0.40 per share until June 4, 2004. The Special Warrants are exercisable at any time before the earlier of (i) five days following the date Stratic obtains a receipt for a prospectus and (ii) May 5, 2003.

Under the same financing, the Company swapped 6,165,000 common shares of Stratic for 6,165,000 Special Warrants and 1,432,500 share purchase warrants. The swap was not in the normal course of operations and the change in the ownership interest in the shares was not substantive. The swap transaction does not represent the culmination of the earnings process as the Company swapped similar assets, therefore, no gain or loss has been recorded and no amount was recorded to shareholders' equity.

No value has been assigned to the share purchase warrants.

During the year ended December 31, 2002, the Company disposed of 201,000 common shares of Stratic for net proceeds of $45,830.

During the year ended December 31, 2001, the Company acquired 2,272,727 Special Warrants of Stratic for $1,250,000. Each Special Warrant was exercisable into 1.1 common shares and 0.55 share purchase warrants of Stratic. During 2002, the Company converted the Special Warrants into 2,499,999 common shares and 1,249,000 share purchase warrants. Each share purchase warrant entitles the holder to acquire one voting common share at $0.75 per share until March 13, 2003. The share purchase warrants expired unexercised.

F-10

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

At December 31, 2002, the Company owned 19.36% (2002 - 37.16%) of the common shares and Special Warrants of Stratic. The Company is related to Stratic by virtue of common directors and officers.

5. Property and equipment

		2002		2001
Petroleum and natural gas properties including
exploration and development thereon	$	36,592,604	$	29,327,598
Production equipment and facilities		7,607,576		6,309,169
Other		542,031		484,570
		44,742,211		36,121,337
Accumulated depletion and depreciation		16,304,643		12,192,300
	$	28,437,568	$	23,929,037

During the year, the Company capitalized $796,265 (2001 - $756,026) of a total of $2,856,463 (2001 - $2,734,826) in general and administrative expenses. No interest has been capitalized.

Costs of unproven petroleum and natural gas properties amounting to $1,569,091 (2001 -$1,048,671) have been excluded from the depletion calculation.

Future removal and site restoration costs are estimated in aggregate to be $3,170,613 (2001 -$3,112,556) of which $272,197 (2001 - $228,354) has been charged to earnings in the current year.

6.
   Bank debt
The Company has a demand revolving production loan to a maximum of $12,000,000. The loan is available to the Company by way of prime rate loans, banker's acceptances and letters of credit. Interest is payable monthly at the bank's prime lending rate plus ¾%. The facility is secured by a general assignment of book debts, a first floating charge demand debenture in the amount of $20,000,000 on all assets with a fixed charge on certain property and equipment, a general security agreement covering all present and after acquired property, and an assignment of certain specific properties. The facility is subject to an annual review. This review will include a borrowing base re-determination and a full assessment of the Company's financial position and operations.< SMALL>

Effective for the fiscal period commencing January 1, 2002, the Canadian Institute of Chartered Accountants amended Canadian Generally Accepted Accounting Principles to require all borrowings, where the lender has the right to demand repayment within 12 months (other than in the event of default or breach of covenants) or where the lender has the right to refuse to roll-over the borrowing for a further lending period longer than 12 months, to be classified as current liabilities. While the nature of the Company's debt has not changed, the accounting guidelines require that this loan must be classified as current. The bank loan at December 31, 2001 has been restated to conform with the current presentation. The Company is not in breach of any covenants under the production loan.

F-11

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

The direct revolving production loan is subject to review on a periodic basis. The next review will be undertaken before May 31, 2003.

7.	Income taxes
	(a)	Significant components of the future income tax liability are as follows:

		2002		2001
Temporary differences related to property and
equipment and future site restoration	$	5,529,244	$	3,858,242
Share issuance and financing costs		(122,125)		(84,857)
Temporary differences related to investments		(137,573)		(208,400)
	$	5,269,546	$	3,564,985

(b)
   Income taxes expense differs from that which would be expected from applying the combined Canadian federal and provincial income tax rates of 45.01% (2001 - 42.62%) to income before income taxes. The difference results from the following:

		2002		2001
Expected tax provision	$	1,765,494	$	1,250,468
Increases (decreases) resulting from:
Resource allowance		(1,187,485)		(849,701)
Non-deductible crown payments, net of
Alberta Royalty Tax Credit		778,486		778,609
Change in value of tax reserves due to tax
reassessments and change in tax rates		120,851		(154,876)
Large corporation and capital taxes		40,552		-
Reduced tax rates for resource allowance
and capital gains		31,724		(41,649)
Tax assets not previously recognized		-		166,386
Saskatchewan Resource Surcharge		-		35,589
Other		19,057		3,455
	$	1,568,679	$	1,188,281

F-12

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

8.
   Share capital   Authorized Unlimited number of voting common shares  Unlimited number of non-voting preferred shares

Issued

(a)
   During the year ended December 31, 2002, the Company issued 1,000,000 (2001- 1,808,549) flow-through common shares at a price of $1.65 (2001 - $1.55) per share. Income tax exploration deductions in the amount of $1,650,000 were renounced to subscribers effective December 31, 2002 (2001 - $2,803,250). Qualifying expenditures in the amount of $106,058 have been incurred to December 31, 2002 (2001 - $103,250). Additional qualifying expenditures in the amount of $1,543,942 must be incurred in 2003. In addition, the Company issued 1,000,000 Units at a price of $1.40 per Unit for total proceeds of $1,400,000. Each Unit is exchangeable, for no additional consideration, into one voting common share and one half share purchase warrant. Each whole purchase warrant will entitle the holder to acquire one voting common share at a price of $1.75 per share until June 18, 2004. All Units were deemed to have been exercised on December 18, 2002 into 1,000,000 voting common shares and 500,000 share purchase warrants. As at December 31, 2002 no share purchase warrants were exercised.

(b)
   Pursuant to Normal Course Issuer Bids, the Company acquired 742,600 (2001 - 962,754) common shares at an average price of $1.23 (2001 - $1.04) per share. The excess of cost of reacquisition over stated value of $534,535 (2001 - $570,216) was charged to retained earnings. At December 31, 2002, a maximum of 1,398,000 common shares may be acquired by the Company until August 9, 2003 under the present Normal Course Issuer Bid.

F-13

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

(c)
   Stock option plan
Under the Company's stock option plan, the Company may grant options to its directors, officers, employees, and consultants. The maximum number of shares which may be reserved for issuance under the plan is 4,300,000 common shares. The maximum number of shares which may be reserved for issuance to any one person under the plan is 5% of the issued common shares. The plan also provides that the price at which options may be granted can not be less than the market price of the common shares at the time the option is granted. Options granted under the plan will have a term not exceeding ten years. The vesting period is set by the Board of Directors at the time the options are granted. At December 31, 2002, 348,336 stock options that have been issued can not be exercised until certain regulatory conditions are satisfied.

A summary of the status of the Company's stock option plan, as of December 31, 2002 and 2001 and changes during the years then ending are as follows:

F-14

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

No options were granted in 2002 with an exercise price that exceeded the market price on the grant date.

The weighted average fair value of options granted in 2002 was $0.60 (2001 - $0.37) per share and the weighted average exercise price of these options was $1.20 (2001 - $0.89) per share.

(d)

Pro-Forma stock-based compensation expense Had compensation costs for the Company's stock option plan been determined using the fair value method for options granted subsequent to January 1, 2002, the Company's pro-forma net income and retained earnings would be reduced by $14,238. There would be no change in net income per share or diluted income per share. The assumptions used to determine the fair value of each option granted on the date of grant using the Black-Scholes option pricing model are as follows: Risk free interest rate of 4.1% Expected life of options of 3.5 years  Expected volatility of 65.50%  Expected dividend rate of 0%

(e)

Employee share purchase plan On January 1, 2003, the Company initiated an employee share purchase plan (the "Plan"), whereby the Company is authorized to match employees' purchases under the plan from a minimum of two percent to a maximum of five percent of the employees' regular gross earnings, through the issuance of Common Shares of the Company, for all full-time employees. Compensation expense will be recognized when shares are issued under the Plan and an equal amount is charged to share capital. Shares will be issued from Treasury to employees at the weighted average market price for the month immediately preceding the date of purchase of the Company's shares.

9.
   Income per share Net income per share has been calculated based on the weighted average number of common shares outstanding during the year of 22,075,233 (2001 - 20,883,082).

	2002	2001
Basic weighted average shares	22,075,233	20,883,082
Effect of dilutive stock options	1,242,054	959,236
Dilutive weighted average shares	23,317,287	21,842,318

A reconciliation of the denominators for the per share calculations is outlined below:

F-15

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

There is no change in to the numerator in the calculation of diluted income per share for either year.

At December 31, 2002, there were 500,000 warrants outstanding with a weighted average exercise price of $1.75 per share that have not been included in the calculation of diluted income per share as the effect would be anti-dilutive.

10.	Financial instruments
	(a)	Risk management The Company did not enter into any derivative financial instruments designated as hedges during 2002 or 2001 and has no outstanding derivative financial instruments designated as hedges as at December 31, 2002.
	(b)	Fair values The fair values of the Company's accounts receivable, and accounts payable and accrued liabilities approximate their carrying values due to the short-term nature of these financial instruments. The fair value of bank debt approximates its carrying value as it bears interest at market rates.

	(c)	Credit risk Virtually all of the Company's accounts receivables are with customers in the petroleum and natural gas industry and are subject to normal industry credit risks.
11.	Commitments
	(a)	The Company must expend $1,543,942 of exploration expenses in 2003 which were renounced to subscribers at December 31, 2002 (Note 8[a]).
	(b)	The Company has obligations under operating leases for office space which expire on September 30, 2003 with annual minimum lease rentals, exclusive of operating costs of $118,471 in 2003.
12.	United States accounting principles and reporting The Company's consolidated financial statements have been prepared in Canadian dollars and in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). Significant differences between these principles, as they pertain to the Company's financial statements, and United States' generally accepted accounting principles ("U.S. GAAP") are as follows:
	(a)	Full cost accounting In accordance with U.S. GAAP, a ceiling test is applied to ensure the unamortized capitalized costs in each cost center do not exceed the sum of the present value, discounted at 10 percent, of the estimated unescalated future net operating revenue from proved reserves plus unimpaired unproved property costs less future development costs, related production, site restoration and applicable taxes. Under Canadian GAAP, a similar ceiling test calculation is

F-16

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

	performed with the exception that future revenues are undiscounted and administrative and interest expenses are deducted from revenues. In computing its consolidated net income for U.S. GAAP purposes, the Company recorded additional depletion in prior years as a result of the application of the ceiling test. These charges were not required under the Canadian GAAP ceiling test. As a result, the depletion base of unamortized capitalized costs is less for U.S. GAAP purposes. No ceiling test write-down is required under Canadian GAAP or U.S. GAAP as at December 31, 2002 and 2001.
(b)	Income taxes Canadian GAAP previously required the Company to record potential future taxes using the deferral method. However, the Canadian Institute of Chartered Accountants has issued an accounting standard which is now similar to U.S. GAAP. This standard will apply for fiscal years commencing on or after January 1, 2000. The Company adopted the new Canadian standard for the year ended December 31, 1999 retroactively without restatement. The recommendations resulted in an increase in deficit for December 31, 1999 representing temporary differences that had not previously been recognized. Under U.S. GAAP, these temporary differences would have already been reflected in property and equipment, therefore further differences in depletion and depreciation expense results in subsequent years. Under U.S. GAAP, enacted tax rates are used to calculate future taxes, whereas Canadian GAAP uses substantively enacted tax rates.
(c)	Flow-through shares U.S. GAAP requires the stated capital on flow-through share issuances to be equal to the estimated fair market value of the shares on the date of issue. The difference between the gross proceeds received on the issuance of the shares and the estimated fair market value of the shares is treated as a liability ("the Premium") until the renunciation of expenditures has occurred. Under Canadian GAAP, the gross proceeds received on flow-through share issuances are initially recorded as share capital. The premium recorded as a current liability under U.S. GAAP for 2002 is $233,932 (2001 - $344,659). When the expenditures are incurred and the tax deductions are renounced to subscribers, Canadian GAAP requires that the stated capital be reduced by and a future tax liability be recorded for the estimated future income taxes payable as a result of the renouncement. Under U.S. GAAP, the future tax liability is recorded through a charge to income tax expense less the reversal of the Premium previously reported.
(d)	Investments Canadian GAAP requires investments that the company does not have a significant influence in to be recorded using the cost method of accounting whereby the investments are initially recorded at cost. Where there has been a permanent decline in value, the investments are stated at estimated net realizable value. Under U.S. GAAP, the Company's investments would be classified as "Available-For-Sale" using the cost method of accounting and require that the securities be recorded at fair market value. As the difference between cost and fair market value has not been realized, any unrealized holding gains or losses would be reported as other comprehensive income (as a separate component of shareholders' equity) until realized. As at December 31, 2002, there are no differences between cost and fair market value of the investments held at cost. Under U.S. GAAP, equity accounting is generally required when and investor's ownership interest is equal to or greater than 20% of the investee's total voting securities. In situations where the ownership is less than 20%, equity accounting may be appropriate if significant influence exists as the result of other contractual relationships and board representation. The Company's 19.6% interest in Stratic has been accounted for under the equity method for U.S. GAAP due to the Company's representation on the Board of Directors and by virtue of common officers.

F-17

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

Net income under U.S. GAAP

If the consolidated financial statements had been prepared in accordance with U.S. GAAP, the following adjustments would be required:

		2002		2001
Net income under Canadian GAAP	$	2,353,770	$	1,745,712
U.S. GAAP adjustments
Depletion and depreciation		355,226		321,946
Future tax expense on flow-through share
renouncements		(821,184)		(30,826)
Future income tax		203,533		(195,204)
Interest capitalized		15,607		6,331
Net income under U.S. GAAP	$	2,106,952	$	1,847,959
Income per share using U.S. GAAP
Basic	$	0.10	$	0.09
Diluted	$	0.09	$	0.08

The adjustments using U.S. GAAP would result in the following changes to the consolidated balance sheets of the Company:

		2002				2001
		Canadian				Canadian
U.S. GAAP GAAP U.S. GAAP GAAP
Assets
Current assets	$	5,769,179	$	5,769,179	$	2,750,842	$	2,750,842
Investments		1,561,111		1,561,111		1,488,242		1,488,242
Property and equipment		28,437,568		26,101,695		23,929,037		21,222,331
	$	35,767,858	$	33,431,985	$	28,168,121	$	25,461,415
Liabilities and Shareholders' Equity
Current liabilities	$	12,993,838	$	13,227,770	$	10,567,567	$	10,912,226
Future removal and site restoration costs		1,374,535		1,374,535		1,192,700		1,192,700
Future income taxes		5,269,546		3,933,169		3,564,985		2,432,142
Shareholders' equity		16,129,939		14,896,511		12,842,869		10,924,347
	$	35,767,858	$	33,431,985	$	28,168,121	$	25,461,415

Non-cash working capital under U.S. GAAP:

F-18

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

		2002		2001
Cash provided by (used for)
Accounts receivable	$	(3,501,691)	$	721,437
Prepaid expenses		15,708		(110,801)
Income taxes recoverable		399,334		(399,334)
Accounts payable and accrued liabilities		2,490,818		(331,922)
Income taxes payable		403,822		(606,473)
Changes in non-cash working capital	$	(192,009)	$	(727,093)

Additional U.S. GAAP Disclosures

Stock Option Plan

Statement of Financial Accounting Standards ("SFAS") No. 123 "Accounting for Stock-Based Compensation" establishes financial accounting and reporting standards for stock-based employee compensation plans. The Statement encourages a fair value based method of accounting for stock options, but permits a company to continue to measure compensation costs for those plans using the intrinsic value based method of accounting as prescribed by Accounting Principles Board Opinion No. 25. The Company has elected to follow the intrinsic value method of accounting. No compensation expense has been recognized in the financial statements. The following table provides pro forma net income and net income per share amounts as if the fair value based accounting method had been used to account for stock-based compensation costs:

		2002				2001
		As Reported		Pro Forma	As Reported			Pro Forma
Net income	$	2,106,952	$	2,011,832	$	1,847,959	$	1,755,304
Net income per share - Basic	$	0.10	$	0.09	$	0.09	$	0.08
-Diluted	$	0.09	$	0.09	$	0.08	$	0.08

The fair value of the Company's options was estimated using the Black-Scholes model assuming a 3.5 year expected hold period of options prior to exercise, 66% (2001 - 53%) volatility in the price of the Company's shares, and a risk-free interest rate of 4.1% (2001 - 1.8%). No future dividend payments were assumed in estimating the fair value of the options.

The weighted average fair market value of options granted in 2002 with an exercise price that exceeded the market price on grant date was Nil (2001 - $0.27) per share, and the weighted average exercise price of these options is Nil (2001 - $0.71). The weighted average fair market value of options granted in 2002 with an exercise price equal to the market price on grant date was $0.60 (2001 - $0.37) per share, and the weighted average exercise price of these options is $1.20 (2001 -$0.89) per share.

Effective January 1, 2002, Canadian GAAP requires similar accounting and reporting standards for stock-based employee compensation. Under Canadian GAAP this accounting standard has been applied prospectively, as described in Note 2(h), therefore, the fair value difference under U.S. GAAP relate to options granted prior to January 1, 2002.

F-19

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

Risk Management

Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging Activities" (as amended by SFAS No. 137 and 138), establishes accounting and reporting standards for derivative instruments and for hedging activities. The Statement requires a company recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. The Statement is effective for the Company's 2001 fiscal year end and the Company has adopted the standard January 1, 2001 prospectively. As at December 31, 2002 and 2001, the Company has no outstanding derivative financial instruments designated as hedges.

New Standards

Accounting for asset retirement obligations

Statement of Financial Accounting Standards No. 143 "Accounting for Asset Retirement Obligations" requires that an obligation associated with the retirement of tangible long-lived assets and the associated asset retirement costs be recognized as a liability when incurred. Upon initial recognition of a liability for an asset retirement obligation, an entity would capitalize that cost by recognizing an increase in the carrying amount of the related long-lived asset by the same amount as the liability. An entity would subsequently allocate that asset retirement cost to expense by depleting and depreciating the related asset over its remaining useful life. The Company will adopt SFAS No. 143 for its fiscal year beginning on January 1, 2003.

Management is currently evaluating the impact of this standard. In the opinion of management, the adoption of SFAS No. 143 will not have a material impact on the Company's operating results or financial position as the Company currently provides for future removal and site restoration costs on property and equipment (Notes 2 (d) and 5).

The Canadian Institute of Chartered Accountants ("CICA") issued an exposure draft "Asset Retirement Obligations", which would harmonize Canadian GAAP with SFAS No. 143. The Canadian standard will be effective for fiscal years beginning on or after January 1, 2004.

Hedging Relationships

The CICA issued Accounting Guideline 13 "Hedging Relationships" which deals with the identification, designation, documentation and effectiveness of hedging relationships for the purpose of applying hedge accounting. The guideline is effective for fiscal years beginning on or after July 1, 2003. Management is currently evaluating the impact of this standard.

Stock-based Compensation

In December 2002 the CICA issued an exposure draft for "Stock-Based Compensation and Other Stock-Based Payments". The new standard proposes to recognize stock-based compensation expense for all stock-based compensation transactions and eliminate the option to disclose fair value pro-forma earnings .

F-20

GENTRY RESOURCES LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2002 AND 2001

Costs Associated with Exit or Disposal Activities

Statement of Financial Accounting Standards No. 146 "Accounting for Costs Associated with Exit or Disposal Activities" requires that liabilities for exit or disposal activity be recognized and measured at fair value when the liability is incurred. This standard is effective for disposal activities initiated after December 31, 2002.

13.
   Comparative figures The presentation of certain amounts from the previous year has been changed to conform with the presentation adopted for the current year.

F-21

ITEM 19

EXHIBITS

The following exhibits are attached and incorporated herein:

Exhibit
1.1	Articles of Amalgamation	(1)
1.2	By-Laws of the Company	(1)
4.1	Engineering Consulting Agreement, dated as of April 1, 2002, as amended April 1, 2003, between the Company and Hawkeye Resources Ltd.	(2)
4.2	Amended and Restated Stock Option Plan of the Company effective as of May 28, 2004
4.3	Amended and Restated Shareholder Rights Plan of the Company, effective as of May 28, 2004
8	Subsidiaries of the Company	(1)
12.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
12.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
13.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)

Incorporated by reference to the Company's Annual Report on Form 20-F for the Year Ended December 31, 2000, filed with the Commission on June 29, 2001.

 (2)

Incorporated by reference to the Company's Annual Report on Form 20-F for the Year Ended December 31, 2002, filed with the Commission on June 30, 2003.

83

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on Form 20F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

GENTRY RESOURCES LTD.

Registrant

By: (signed) "Ketan Panchmatia"

Name:  Ketan Panchmatia

Title:

Vice President, Finance and

Chief Financial Officer

Date:

       June 28, 2004

84

EX-4

GENTRY RESOURCES LTD.

STOCK OPTION PLAN

(Amended and Restated as of May 28, 2004)

ARTICLE 1
PURPOSE OF THE PLAN

1.1

The purpose of the Plan is to attract, retain and motivate persons as key service providers to the Corporation and its Affiliates and to advance the interests of the Corporation by providing such persons with the opportunity, through Options share options, to acquire a proprietary interest in the Corporation.

ARTICLE 2
DEFINED TERMS AND RELATED PROVISIONS

2.1

Where used herein, the following terms shall have the following meanings, respectively:

(a)

"Affiliate" means in respect of the Corporation, any corporation that is an affiliate (as such term is defined in Subsection 2(2) of the Canada Business Corporations Act);

(b)

"Board" means the board of directors of the Corporation;

(c)

"Committee" means the Compensation and Human Resources Committee of the Board;

(d)

"Corporation" means Gentry Resources Ltd. and includes any successor corporation thereof;

(e)

"Eligible Person" means:

(i)

any director, officer or employee of the Corporation or any Affiliate (an "Eligible Individual"); or

(ii)

a corporation controlled by an Eligible Individual, all of the issued and outstanding shares of which are, and continue at all times to be, legally and beneficially owned, directly or indirectly, by such Eligible Individual and/or the spouse, children and/or grandchildren of such Eligible Individual (an "Eligible Corporation"); or

(iii)

any Service Provider;

(f)

"Insider" means, in respect of the Corporation, any "insider" (as such term is defined in the Securities Act (Ontario)) other than a person who falls within that definition solely by virtue of being a director or senior officer of an Affiliate, and includes any "associate" (as such term is defined in the Securities Act (Ontario)) of any such insider;

(g)

"Market Price" at any date in respect of the Shares means the closing sale price of such Shares on the Toronto Stock Exchange (or, if such Shares are not then listed and posted for trading on the Toronto Stock Exchange, on such stock exchange in Canada on which such Shares are listed and posted for trading as may be selected for such purpose by the Board or the Committee) on the last trading day immediately preceding such date, provided that in the event that such Shares did not trade on such trading day, the Market Price shall be the average of the bid and ask prices in respect of such Shares at the close of trading on such trading day and provided that in the event that such Shares are not listed and posted for trading on any stock exchange, the Market Price shall be the fair market value of such Shares as determined by the Board in its sole discretion;

(h)

"Option" means an option to purchase Shares granted to an Eligible Person under the Plan and "Option Agreement" means an agreement between the Corporation and an Optionee respecting such Option;

(i)

"Option Price" means the price per Share at which Shares may be purchased under an Option, as the same may be adjusted from time to time in accordance with  hereof;

(j)

"Optioned Shares" means the Shares issuable pursuant to an exercise of Options;

(k)

"Optionee" means a Eligible Person to whom an Option has been granted and who continues to hold such Option;

(l)

"Plan" means this Stock Option Plan, as the same may be further amended, restated or varied from time to time;

(m)

"Service Provider" means any person (other than an Eligible Individual), company, partnership, trust or corporation (other than an Eligible Corporation) engaged to provide management or consulting services for the Corporation or any Affiliate;

(n)

"Share Compensation Arrangement" means a stock option, stock option plan, employee stock purchase or ownership plan or any other compensation or incentive mechanism of the Corporation involving the issuance or potential issuance of Shares to one or more Eligible Persons, including a share purchase from treasury which is financially assisted by the Corporation by way of a loan, guarantee or otherwise;

(o)

"Shares" means the common shares of the Corporation or, in the event of an adjustment contemplated by  hereof, such other shares or securities to which an Optionee may be entitled upon the exercise of an Option as a result of such adjustment;

(p)

"Change-in-Control" means any change in the registered holdings and/or beneficial ownership of the Shares as a result of which a person or a group of persons or persons acting jointly or in concert or persons associated or affiliated with any such person(s) or group(s) within the meaning of the Canada Business Corporations Act are in a position to exercise effective control of the Corporation, provided that any such person(s) or group(s) directly or indirectly and/or owning and/or controlling shares in excess of the number that would entitle such person(s) to cast more than 50% of the votes attaching to all Shares that may be cast to elect directors of the Corporation be deemed to be in a position to exercise effective control of the Corporation;

(q)

"Cause" means any of the following occurrences:

(i)

theft, fraud or similar conduct inconsistent with the continued faithful discharge by the Optionee of his duties to the Corporation;

(ii)

the willful failure or refusal to perform by the Optionee of those duties reasonably assigned by the Corporation;

(iii)

conduct of the Optionee that materially conflicts with or is clearly incompatible with the business or financial interests of the Corporation or that would reasonably bring the Corporation into disrepute; or

(iv)

a material breach by the Optionee of reasonable policies introduced by the Corporation and communicated to the Optionee from time to time; and

2

(r)

"Good Reason" means any of the following occurrences:

(i)

any material change by the Corporation in the office or employment of the Optionee;

(ii)

any material change by the Corporation without the consent of the Optionee in the nature and scope of the duties of the Optionee;

(iii)

any requirement by the Corporation that the Optionee change his place of employment from the city, municipality or location in which he was previously located unless the change of place of employment is agreed to in writing by the Optionee;

(iv)

any reduction by the Corporation in the remuneration or entitlement to remuneration of the Optionee;

(v)

any withdrawal by the Corporation of benefits or privileges from the Optionee to which the Optionee was previously entitled unless replaced with equivalent or superior benefits; or

(vi)

any exclusion of the Optionee by the Corporation from any Share Compensation Arrangement or any other incentive compensation plans under which the Optionee was previously entitled to receive payments or benefits or failure to include the Optionee as a participant in a plan(s) equal to or exceeding such plans.

ARTICLE 3
ADMINISTRATION OF THE PLAN

3.1

The Plan shall be administered by the Board and/or the Committee as the Board shall determine from time to time.

3.2

The Board and/or Committee, as the Board shall determine from time to time, shall have the power, where consistent with the general purpose and intent of the Plan and subject to the specific provisions of the Plan:

(a)

to establish policies and to adopt rules and regulations for carrying out the purposes, provisions and administration of the Plan;

(b)

to interpret and construe the Plan and to determine all questions arising out of the Plan or any Option, and any such interpretation, construction or determination made shall be final, binding and conclusive for all purposes;

(c)

to determine the number of Shares underlying each Option;

(d)

to determine the Option Price of each Option;

(e)

to determine the time or times when Options will be granted and exercisable;

(f)

to determine if the Shares which are issuable on the exercise of an Option will be subject to any restrictions upon the exercise of such Option; and

(g)

to prescribe the form of the instruments relating to the grant, exercise and other terms of Options.

3.3

Any Option granted under the Plan shall be subject to the requirement that, if at any time the Corporation shall determine that the listing, registration or qualification of the Shares subject to such Option upon any securities exchange or under any law or regulation of any jurisdiction, or the consent or approval of any

3

securities exchange or any governmental or regulatory body, is necessary as a condition of, or in connection with, the grant or exercise of such Option or the issuance or purchase of Shares thereunder, such Option may not be accepted or exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Board or the Committee.  Nothing herein shall be deemed to require the Corporation to apply for or to obtain such listing, registration, qualification, consent or approval.

ARTICLE 4
SHARES SUBJECT TO THE PLAN

4.1

Options may be granted in respect of authorized and unissued Shares, provided that the aggregate number of Shares reserved for issuance upon the exercise of all Options granted under the Plan, subject to any adjustment of such number pursuant to the provisions of  hereof shall not exceed 4,000,000 or such greater number of Shares as may be determined by the Board and approved, if required, by the shareholders of the Corporation and by any relevant stock exchange or other regulatory authority.  Optioned Shares in respect of which Options are not exercised shall be available for subsequent Options.  No fractional Shares may be purchased or issued under the Plan.

ARTICLE 5
TERMS AND CONDITIONS OF OPTIONS

5.1

The Board and/or the Committee, as the Board shall determine from time to time, may grant Options to any Eligible Person.

5.2

Subject as herein and otherwise specifically provided in this , the number of Shares subject to each Option, the Option Price of each Option, the expiration date of each Option, the extent to which each Option is exercisable from time to time during the term of the Option and other terms and conditions relating to each Option shall be determined by the Board or the Committee, as the Board shall determine from time to time.

5.3

Subject to any prior approval, if required, by any stock exchange or other securities regulatory authority, the Board or the Committee, as the Board shall determine from time to time, may, in their entire discretion, subsequent to the time of granting Options hereunder, permit an Optionee to exercise any or all of the unvested options then outstanding and granted to the Optionee under this Plan, in which event all such unvested options then outstanding and granted to the Optionee shall be deemed to be immediately exercisable during such period of time as may be specified by the Board or the Committee, provided that such periods of time shall not be less than the periods of time for the circumstances provided for in  (Termination of Options hereof).  Notwithstanding the foregoing, subject to the rules of any stock exchange upon which the Shares may be listed or other securities regulatory auth ority, the Board or the Committee may, by resolution, accelerate the date on which any unvested Option may be exercised or extend the expiration date of any Option, provided that the Board or the Committee, as the Board shall determine from time to time, shall not, in the event of any such acceleration or extension, be under any obligation to accelerate or extend the date on or by which any other Options may be exercised by any other Optionee(s).

5.4

In the event of a Change-in-Control, each Optionee shall immediately be entitled to exercise any and all Options and purchase any and all Optioned Shares.

5.5

Subject to any adjustments pursuant to the provisions of  hereof, the Option Price of any Option shall in no circumstances be lower than the Market Price on the date on which the Board and/or the Committee, as the Board shall determine from time to time, approves the grant of the Option.  If, as and when any Shares have been duly purchased and paid for under the terms of an Option, such Shares shall be conclusively deemed allotted and issued as fully paid non-assessable Shares at the price paid therefor.

5.6

The terms of an Option shall not exceed ten (10) years from the date of the grant of the Option.

4

5.7

No Options shall be granted to any Optionee if the total number of Shares issuable to such Optionee under this Plan, together with any Shares reserved for issuance to such Optionee under options for services or any other stock option plans, would exceed 5% of the issued and outstanding Shares at the time of such grant.

5.8

An Option is personal to the Optionee and non-assignable (whether by operation of law or otherwise), except as provided for herein.  Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of an Option contrary to the provisions of the Plan, or upon the levy of any attachment or similar process upon an Option, the Option shall, at the election of the Corporation, by notice in writing to the Optionee, cease and terminate and be of no further force or effect whatsoever.

5.9

No Options shall be granted to any Optionee if at the time of such grant such grant could result, at any time, in:

(a)

the number of Shares reserved for issuance pursuant to Options or other stock options granted to Insiders exceeding 10% of the issued and outstanding Shares;

(b)

the issuance to Insiders, within a one (1) year period, of a number of Shares exceeding 10% of the issued and outstanding Shares; or

(c)

the issuance to any one Insider and such Insider's associates, within a one (1) year period, of a number of Shares exceeding 5% of the issued and outstanding Shares.

5.10

For the purposes of Subsections  and , the phrase "issued and outstanding Shares" excludes any Shares issued pursuant to the Plan or other Share Compensation Arrangements over a preceding one-year period, and, for the purpose of Subsection , "associate" means any person associated with such Insider within the meaning of the Securities Act (Ontario).

ARTICLE 6
TERMINATION OF OPTIONS

6.1

Subject to Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7  and  6.10 hereof and to any resolution passed at any time by the Committee or the Board with respect to any Option or any Optionee, an Option and all rights to purchase Shares pursuant thereto shall expire and terminate immediately upon the Optionee who holds such Option ceasing to be an Eligible Person.

6.2

If an Optionee, other than a Service Provider, shall retire, or terminate his employment or directorship with the consent of the Board under circumstances equating to retirement in accordance with the prevailing retirement plan or policy of the Corporation for its directors, officers and employees, while holding an Option which has not been fully exercised, such Optionee may exercise the Option at any time within one hundred and eighty (180) days of the date of such retirement or termination equating to retirement (but only to the same extent to which the Optionee could have exercised the Option immediately before the date of such retirement or termination equating to retirement).

6.3

If an Optionee, other than a Service Provider, ceases to serve the Corporation or any Affiliate, as the case may be, as an employee, officer or director as a consequence of the termination of the employment of the Optionee by the Corporation for Cause, then no Option held by such Optionee may be exercised following the date on which such Optionee ceases to serve the Corporation or any Affiliate, as the case may be, in such capacity.

6.4

If an Optionee, other than a Service Provider, ceases to serve the Corporation or any Affiliate, as the case may be, as an Eligible Individual as a consequence of the termination of the employment of the Optionee by the Optionee for Good Reason, then, unless otherwise provided for in this Plan or the Option

5

Agreement, no Option held by such Optionee at the effective date thereof may (but only to the same extent to which the Optionee could have exercised the Option immediately before such effective date) be exercised by the Optionee following the date which is one hundred and eighty (180) days after the date on which the Option ceased to serve the Corporation or any Affiliate, as the case may be, in such capacity.

6.5

If an Optionee, other than a Service Provider, ceases to serve the Corporation or any Affiliate as an employee, officer or director for any reason other than as a consequence of the termination of the employment of the Optionee by the Corporation for Cause or by the Optionee for Good Reason or otherwise, then, unless otherwise provided for in this Plan or the Option Agreement, no Option held by such Optionee at the effective date thereof may (but only to the same extent to which the Optionee could have exercised the Option immediately before such effective date) be exercised by the Optionee following the date which is ninety (90) days after the date on which the Optionee ceased to serve the Corporation or any Affiliate, as the case may be, in such capacity.  The Board may, by resolution, but subject to applicable regulatory requirements, decide that any of the provisions hereof concerning the effe ct of termination of the Optionee's employment shall not apply to any Optionee for any reason acceptable to the Board.

6.6

In the event that an Optionee commits an act of bankruptcy or any proceeding is commenced against the Optionee under the Bankruptcy and Insolvency Act (Canada) or other applicable bankruptcy or insolvency legislation in force at the time of such bankruptcy and such proceeding remains undismissed for a period of thirty (30) days, no Option held by such Optionee may be exercised following the date on which such Optionee commits such act of bankruptcy or such proceeding remains undismissed, as the case may be.

6.7

If an Optionee shall die holding an Option which has not been fully exercised, his personal representatives, heirs or legatees may, at any time within one (1) year after the date of such death exercise the Option with respect to the unexercised balance of the Shares subject to the Option but only to the same extent to which the decedent could have exercised the Option immediately before the date of such death, and only to the extent that the Option can be exercised within the time constraints as set out in Section  hereof.

6.8

For greater certainty, Options shall not be affected by any change in the terms of employment of any Eligible Individual or by any Eligible Individual ceasing to be a director of the Corporation, provided that the related Optionee continues to be an Eligible Person.

6.9

If the Optionee is an Eligible Corporation, the references to the Optionee in this  shall be deemed to refer to the Eligible Individual associated with the Eligible Corporation.

6.10

Notwithstanding any other provision herein, all Options granted to Service Providers shall terminate in accordance with the terms, conditions and provisions of the associated Option Agreement between the Corporation and such Service Providers, provided that such termination shall occur no later than the earlier of the original expiry date of the term of the Option or the day which is one (1) year following the date of termination of the engagement of the Service Provider.

ARTICLE 7
EXERCISE OF OPTION

7.1

Subject to the provisions of the Plan, an Option may be exercised from time to time by delivery to the Corporation at its registered office of a written notice of exercise addressed to the Secretary of the Corporation specifying the number of Shares with respect to which the Option is being exercised and otherwise in accordance with the exercise procedures respecting Options determined by the Board or the Committee from time to time.  Subject to any provisions of the Plan to the contrary, certificates for such Shares shall be issued and delivered to the Optionee within a reasonable time following the receipt of such notice and compliance with such procedures.

7.2

Notwithstanding any of the provisions contained in the Plan or in any Option Agreement, the Corporation's obligation to issue Shares to an Optionee pursuant to the exercise of any Option shall be subject to:

6

(a)

completion of such registration or other qualification of such Shares or obtaining approval of such governmental or regulatory authority as the Corporation shall determine to be necessary or advisable in connection with the authorization, issuance or sale thereof;

(b)

the listing of such Shares on any stock exchange on which the Shares may then be listed; and

(c)

the satisfaction of any conditions on exercise prescribed pursuant to  hereof.

7.3

Options shall be evidenced by an agreement in such form not inconsistent with this Plan as the Committee or the Board may from time to time determine.

ARTICLE 8
CERTAIN ADJUSTMENTS

8.1

In the event that the Shares are at any time changed or affected as a result of the declaration of a stock dividend thereon or their subdivision or consolidation, the number of Shares reserved for Option shall be adjusted accordingly by the Board or the Committee to such extent as they deem proper in their discretion.  In such event, the number of, and the price payable for, the Board or the Committee to such extent may also adjust any Shares that are then subject to Option, if any, as they deem proper in their discretion.

8.2

If at any time after the grant of an Option to any Optionee and prior to the expiration of the term of such  Option, the Shares shall be reclassified, reorganized or otherwise changed, otherwise than as specified in Section  or, subject to the provisions of Section  hereof, the Corporation shall consolidate, merge or amalgamate with or into another corporation (the corporation resulting or continuing from such consolidation, merger or amalgamation being herein called the "Successor Corporation") the Optionee shall be entitled to receive upon the subsequent exercise of his or her Option in accordance with the terms hereof and shall accept in lieu of the number of Shares which he or she was theretofore entitled upon such exercise but for the same aggregate consideration payable therefor, the aggregate number of shares of the appropriate class and/or other securities of the Corpor ation or the Successor Corporation (as the case may be) and/or other consideration from the Corporation or the Successor Corporation (as the case may be) that the Optionee would have been entitled to receive as a result of such reclassification, reorganization or other change or, subject to the provisions of Section  hereof, as a result of such consolidation, merger or amalgamation, if on the record date of such reclassification, reorganization or other change or the effective date of such consolidation, merger or amalgamation, as the case may be, he or she had been the registered holder of the number of Shares to which he or she was theretofore entitled upon such exercise.

ARTICLE 9
AMENDMENT OR DISCONTINUANCE OF THE PLAN

9.1

The Board may amend the Plan at any time, provided, however, that no such amendment may materially and adversely affect any Option previously granted to an Optionee without the consent of the Optionee, except to the extent required by law.  Any such amendment shall, if required, be subject to the prior approval of, or acceptance by, any stock exchange on which the Shares are listed and posted for trading.

9.2

Notwithstanding anything contained to the contrary in this Plan or in any resolution of the Board in implementation thereof, in the event:

(a)

the Corporation proposes to amalgamate, merge or consolidate with any other corporation (other than a wholly-owned Affiliate) or to liquidate, dissolve or wind-up;

(b)

an offer to purchase or repurchase all of the Shares shall be made to all holders of Shares which offer has been approved or accepted by the Board;

7

(c)

the Corporation proposes the sale of all or substantially all of the assets of the Corporation as an entirety, or substantially as an entirety, so that the Corporation shall cease to operate any active business;

then and in such event, notwithstanding the provisions of Section  hereof, the Corporation shall have the right, upon written notice thereof to each Optionee holding Options under the Plan, to permit the exercise of all such Options, whether or not vested, within the twenty (20) day period next following the date of such notice and to determine that upon the expiration of such twenty (20) day period, all rights of the Optionee to such Options or to exercise same (to the extent not theretofore exercised) shall ipso facto terminate and cease to have further force or effect whatsoever.

9.3

Notwithstanding the provisions of this , should changes be required to the Plan by any securities commission, stock exchange or other governmental or regulatory body of any jurisdiction to which the Plan or the Corporation now is or hereafter becomes subject, such changes shall be made to the Plan as are necessary to conform with such requirements and, if such changes are approved by the Board, the Plan, as amended, shall be filed with records of the Corporation and shall remain in full force and effect in its amended form as of and from the date of its adoption by the Board.

9.4

Notwithstanding any other provision of this Plan, the Board may at any time by resolution terminate this Plan.  In such event, all Options then outstanding and granted to an Optionee whether or not vested may be exercised by such Optionee for a period of thirty (30) days after the date on which the Corporation shall have notified all Optionees of the termination of this Plan

ARTICLE 10
MISCELLANEOUS PROVISIONS

10.1

An Optionee shall not have any rights as a shareholder of the Corporation with respect to any of the Shares underlying any Option until the date of issuance of a certificate for Shares upon the exercise of such Option, in full or in part, and then only with respect to the Shares represented by such certificate or certificates.  Without in any way limiting the generality of the foregoing, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such share certificate is issued.

10.2

Nothing in this Plan or any Option shall confer upon an Optionee any right to continue or be re-elected as a director of the Corporation or any right to continue in the employ of the Corporation or any Affiliate, or affect in any way the right of the Corporation or any Affiliate to terminate his or her employment at any time; nor shall anything in the Plan or any Option be deemed or construed to constitute an agreement, or an expression of intent, on the part of the Corporation or any Affiliate, to extend the employment of any Optionee beyond the time which he or she would normally be retired pursuant to the provisions of any present or future retirement plan or policy of the Corporation or any Affiliate, or beyond the time at which he or she would otherwise be retired pursuant to the provisions of any contract of employment with the Corporation or any Affiliate.

10.3

Notwithstanding Section  hereof and subject to Section  hereof, any vested Options may be transferred or assigned between an Eligible Individual and the related Eligible Corporation provided the assignor delivers notice in writing of the same to the Corporation prior to the assignment and the Committee or the Board, in its sole and absolute discretion, approves such assignment.

10.4

In the event an Eligible Corporation shall cease at any time to be an Eligible Corporation (as defined in Clause  hereof), then it shall immediately by notice in writing to the Corporation retransfer or reassign all of the Options held by it to the related Eligible Individual.

10.5

The Plan and all matters to which reference is made herein shall be governed by and interpreted in accordance with the laws of the Province of Alberta and the federal laws of Canada applicable therein.

8

EX-4

AMENDED AND RESTATED

SHAREHOLDER RIGHTS PLAN AGREEMENT

BETWEEN

GENTRY RESOURCES LTD.

and

COMPUTERSHARE TRUST COMPANY OF CANADA

as Rights Agent

May 28, 2004

(amending and restating the Shareholder Rights Plan Agreement
dated April 24, 1998 as amended May 25, 2001)

TABLE OF CONTENTS

Page

ARTICLE 1
CERTAIN DEFINITIONS

1.1

Certain Definitions

2

1.2

Currency

12

1.3

Acting Jointly or in Concert

12

1.4

Control

13

1.5

Holder of Rights and Common Shares

13

1.6

References to this Agreement

13

ARTICLE 2
THE RIGHTS

2.1

Legend on Common Share Certificates

13

2.2

Initial Exercise Price; Exercise of Rights; Detachment of Rights

14

2.3

Adjustments to Exercise Price; Number of Rights

16

2.4

Date on Which Exercise is Effective

19

2.5

Execution, Authentication, Delivery and Dating of Rights Certificates

19

2.6

Registration, Registration of Transfer and Exchange

20

2.7

Mutilated, Destroyed, Lost and Stolen Rights Certificates

20

2.8

Persons Deemed Owners

21

2.9

Delivery and Cancellation of Certificates

21

2.10

Agreement of Rights Holders

21

ARTICLE 3
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS

3.1

Flip-in Event

22

ARTICLE 4
THE RIGHTS AGENT

4.1

General

23

4.2

Merger, Amalgamation or Consolidation or Change of Name of Rights Agent

24

4.3

Duties of Rights Agent

24

4.4

Change of Rights Agent

26

ARTICLE 5
MISCELLANEOUS

5.1

Redemption and Termination

26

5.2

Expiration

28

5.3

Issuance of New Rights Certificates

29

5.4

Supplements and Amendments

29

5.5

Fractional Rights and Fractional Shares

30

5.6

Rights of Action

31

5.7

Holder of Rights Not Deemed a Shareholder

31

5.8

Notice of Proposed Actions

31

5.9

Notices

31

5.10

Costs of Enforcement

32

- i -

TABLE OF CONTENTS

Page

 

5.11

Successors

33

5.12

Benefits of this Agreement

33

5.13

Descriptive Headings

33

5.14

Governing Law

33

5.15

Language

33

5.16

Counterparts

33

5.17

Severability

33

5.18

Shareholder Review

33

5.19

Regulatory Approvals

34

5.20

Declaration as to Non-Canadian and Non-U.S. Holders

34

5.21

Determinations and Actions by the Board of Directors

34

- ii -

AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT

THIS AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT is made as of the 28th day of May, 2004 (amending and restating the Shareholder Rights Plan Agreement dated April 24, 1998 as amended May 25, 2001).

BETWEEN:

GENTRY RESOURCES LTD., a body corporate organized under the laws of Canada (hereinafter referred to as the "Corporation")

OF THE FIRST PART

- and –

COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company incorporated under the laws of Canada (hereinafter referred to as the "Rights Agent")

OF THE SECOND PART

WHEREAS the Corporation and Montreal Trust Company of Canada entered into an agreement dated April 24, 1998, respecting a shareholder rights plan (the "Original Plan") that would be effective at the latest until the termination of the annual meeting of the shareholders of the Corporation in 2001 unless a resolution ratifying the continued existence of the Original Plan was approved by the Independent Shareholders at that meeting, in which case the Original Plan was to continue to exist;

AND WHEREAS on May 25, 2001 the Independent Shareholders approved a resolution to continue the existence of the Original Plan until the annual meeting of the Corporation's shareholders in 2004 and the Original Plan was amended as of May 25, 2001 (the "2001 Plan", and together with the Original Plan, the "Prior Plan");

AND WHEREAS the board of directors of the Corporation (the "Board of Directors") has determined that it is advisable to continue the rights plan by adopting an amended and restated shareholder rights plan to take effect immediately upon receipt of approval of the Independent Shareholders as defined in the Prior Plan, to conform to current corporate practices to effect the continued distribution of Rights (as defined below) under the Prior Plan as further amended and restated herein (the "Rights Plan") to ensure, to the extent possible, that all shareholders of the Corporation are treated fairly in connection with any take-over offer for the Corporation and to ensure that the Board of Directors are provided with a sufficient time to evaluate unsolicited take-over bids and to explore and develop alternatives to maximize shareholder value;

AND WHEREAS, in order to continue the implementation of the Rights Plan, the Board of Directors  has:

(a)

confirmed the distribution of one right (a "Right") in respect of each Common Share as hereinafter defined) outstanding at the close of business on April 24, 1998 (the "Record Time"), such distribution having been made to shareholders of record at the Record Time; and

(b)

reaffirmed its authorization of the issuance of one Right in respect of each Common Share issued after the Record Time and prior to the earlier of the Separation Time (as hereinafter defined) and the Expiration Time (as hereinafter defined);

AND WHEREAS each Right entitles the holder thereof after the Separation Time to purchase securities of the Corporation pursuant to the terms and subject to the conditions set forth herein;

AND WHEREAS the Corporation desires to confirm its appointment of Computershare Trust Company of Canada, as successor to Montreal Trust Company of Canada, as Rights Agent to act on behalf of the Corporation, and the Rights Agent is willing to continue to so act, in connection with the issuance, transfer, exchange and replacement of Rights Certificates (as hereinafter defined), the exercise of Rights and other matters referred to herein;

NOW THEREFORE in consideration of the premises and the respective agreements set forth herein, the parties hereby agree as follows:

ARTICLE 1
CERTAIN DEFINITIONS

1.1

Certain Definitions

For purposes of this Agreement, the following terms have the meanings indicated:

(a)

"Acquiring Person" shall mean any Person who is the Beneficial Owner of 20% or more of the outstanding Common Shares of the Corporation; provided, however, that the term "Acquiring Person" shall not include:

(i)

the Corporation or any Subsidiary of the Corporation;

(ii)

any Person who becomes the Beneficial Owner of 20% or more of the outstanding Common Shares of the Corporation as a result of any one or a combination of

(A)

an acquisition or redemption by the Corporation of Common Shares of the Corporation which, by reducing the number of Common Shares outstanding, increases the proportionate number of Common Shares Beneficially Owned by such Person to 20% or more of the Common Shares of the Corporation then outstanding;

(B)

share acquisitions made pursuant to a Permitted Bid ("Permitted Bid Acquisitions");

(C)

share acquisitions (1) in respect of which the Board of Directors has waived the application of Section  pursuant to subsections ,  or ; or (2) which were made on or prior to the date of the Original Plan; or (3) which were made pursuant to a dividend reinvestment plan of the Corporation; or (4) pursuant to the receipt or exercise of rights issued by the Corporation to all the holders of the Common Shares (other than holders resident in a jurisdiction where such distribution is restricted or impracticable as a result of applicable law) to subscribe for or purchase Common Shares or Convertible Securities, provided

2

that such rights are acquired directly from the Corporation and not from any other person, and provided that the Person does not thereby acquire a greater percentage of Common Shares or Convertible Securities so offered than the Person's percentage of Common Shares or Convertible Securities Beneficially Owned immediately prior to such acquisition; or (5) pursuant to a distribution by the Corporation of Common Shares or Convertible Securities made pursuant to a prospectus, provided that the Person does not thereby acquire a greater percentage of Common Shares or Convertible Securities so offered than the Person's percentage of Common Shares or Convertible Securities Beneficially Owned immediately prior to such acquisition; or (6) pursuant to a distribution by the Corporation of Common Shares or Convertible Securities by way of a private placement by the Corporation or upon the exercise by an individual employee of stock options granted under a stock option plan of the Corporation or rights to purchase securities granted under a share purchase plan of the Corporation, provided that (i) all necessary stock exchange approvals for such private placement, stock option plan or share purchase plan have been obtained and such private placement, stock option plan or share purchase plan complies with the terms and conditions of such approvals and (ii) such Person does not become the Beneficial Owner of more than 25% of the Common Shares outstanding immediately prior to the distribution, and in making this determination the Common Shares to be issued to such Person in the distribution shall be deemed to be held by such Person but shall not be included in the aggregate number of outstanding Common Shares immediately prior to the distribution ("Exempt Acquisitions");

(D)

the acquisition of Common Shares upon the exercise of Convertible Securities received by such Person pursuant to a Permitted Bid Acquisition, Exempt Acquisition or a Pro Rata Acquisition (as defined below) ("Convertible Security Acquisitions"); or

(E)

acquisitions as a result of a stock dividend, a stock split or other event pursuant to which such Person receives or acquires Common Shares or Convertible Securities on the same pro rata basis as all other holders of Common Shares of the same class ("Pro Rata Acquisitions");

provided, however, that if a Person shall become the Beneficial Owner of 20% or more of the Common Shares of the Corporation then outstanding by reason of any one or a combination of (i) share acquisitions or redemptions by the Corporation or (ii) Permitted Bid Acquisitions or (iii) Exempt Acquisitions or (iv) Convertible Security Acquisitions or (v) Pro Rata Acquisitions and, after such share acquisitions or redemptions by the Corporation or Permitted Bid Acquisitions or Exempt Acquisitions, Convertible Security Acquisitions or Pro Rata Acquisitions, such Person subsequently becomes the Beneficial Owner of more than an additional 1.00% of the number of Common Shares of the Corporation outstanding other than pursuant to any one or a combination of share acquisitions or redemptions of shares by the Corporation, Permitted Bid Acquisitions, Exempt Acquisitions, Convertibl e Security Acquisitions or Pro Rata Acquisitions, then as of the date of any such acquisition such Person shall become an "Acquiring Person";

(iii)

a Grandfathered Person provided, however, that if such Person shall thereafter become the Beneficial Owner of more than an additional 1.00% of the number of Common Shares of the Corporation outstanding other than pursuant to share acquisitions or

3

redemptions of shares by the Corporation, Permitted Bid Acquisitions, Exempt Acquisitions, Convertible Security Acquisitions or Pro Rata Acquisitions, then as of the date of any such acquisition such Person shall become an "Acquiring Person";

(iv)

for a period of 10 days after the Disqualification Date, any Person who becomes the Beneficial Owner of 20% or more of the outstanding Common Shares as a result of such Person becoming disqualified from relying on clause 1.1(e)(B) solely because such Person makes or announces an intention to make a Take-over Bid, either alone, through such Person's Affiliates or Associates or by acting jointly or in concert with any other Person.  For the purposes of this definition, "Disqualification Date" means the first date of public announcement that any Person is making or intends to make a Take-over Bid either alone, through such Person's Affiliates or Associates, or by acting jointly or in concert with any other Person; or

(v)

an underwriter or member of a banking or selling group that becomes the Beneficial Owner of 20% or more of the Common Shares in connection with a distribution of securities by way of prospectus or private placement.

(b)

"Affiliate", used to indicate a relationship with a specified Person, shall mean a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person.

(c)

"Amendment Date" means May 28, 2004.

(d)

"Associate" of a specified individual shall mean any individual to whom such specified individual is married or with whom such specified individual is living in a conjugal relationship, outside marriage, or any relative of such specified individual or said spouse who has the same home as such specified individual.

(e)

A Person shall be deemed the "Beneficial Owner", and to have "Beneficial Ownership", of, and to "Beneficially Own":

(i)

any securities as to which such Person or any of such Person's Affiliates or Associates is the owner at law or in equity;

(ii)

any securities as to which such Person or any of such Person's Affiliates or Associates has the right to acquire (A) upon the exercise of any Convertible Securities, or (B) pursuant to any agreement, arrangement or understanding, in either case where such right is exercisable immediately or within a period of 60 days and whether or not on condition or the happening of any contingency (other than (1) customary agreements with and between underwriters and banking group or selling group members with respect to a distribution of securities to the public or pursuant to a private placement, or (2) pursuant to a pledge of securities in the ordinary course of business); and

(iii)

any securities which are Beneficially Owned within the meaning of clauses  or  above by any other Person with which such Person is acting jointly or in concert;

provided, however, that a Person shall not be deemed the "Beneficial Owner", or to have "Beneficial Ownership" of, or to "Beneficially Own", any security:

4

(A)

(1) where the holder of such security has agreed to deposit or tender such security pursuant to a Permitted Lock-up Agreement to a Take-over Bid made by such Person or any of such Person's Affiliates or Associates or any other person referred to in clause , or (2) such security has been deposited or tendered pursuant to a Take-over Bid made by such Person or any of such Person's Affiliates or Associates or any other Person referred to in clause  until the earliest time at which any such tendered security is accepted unconditionally for payment or exchange or is taken up and paid for;

(B)

where such Person, any of such Person's Affiliates or Associates or any other Person referred to in clause , holds such security provided that (1) the ordinary business of any such Person (the "Investment Manager") includes the management of investment funds for others and such security is held by the Investment Manager in the ordinary course of such business in the performance of such Investment Manager's duties for the account of any other Person, including the acquisition or holding of securities for non-discretionary accounts held on behalf of a client by a broker or dealer registered under applicable securities laws, or (2) such Person (the "Trust Company") is licensed to carry on the business of a trust company under applicable laws and, as such, acts as trustee or administrator or in a similar capacity in relation to the estates of deceased or incompetent Persons or in relation to other accounts and holds such security in the ordinary course of such duties for the estates of deceased or incompetent Persons or for such other accounts, or (3) such Person (the "Plan Trustee") is the administrator or trustee of one or more pension funds or plans (each a "Plan") registered under applicable laws and holds such security for the purposes of its activity as such, or (4) such Person is a Plan or is a Person established by statute (the "Statutory Body") for purposes that include, and the ordinary business or activity of such Person includes the management of investment funds for employee benefit plans, pension plans, insurance plans (other than plans administered by insurance companies) or various public bodies or (5) such Person is a Crown agent or agency; provided in any of the above cases, that the Investment Manager, the Trust Company, the Plan Trustee, the Plan, the Statutory Body or the Crown agent or agency, as the case may be, is not then making a Take-over Bid or has not announced a current intention to make a Take-over Bid, other than an Offer to Acquire Common Shares or other securities pursuant to a distribution by the Corporation or by means of ordinary market transactions (including pre-arranged trades entered into in the ordinary course of business of such Person) executed through the facilities of a stock exchange, securities quotation system or organized over-the-counter market, alone, through its Affiliates or Associates or by acting jointly or in concert with any other Person; or

(C)

because such Person is a client of or has an account with the same Investment Manager as another Person on whose account the Investment Manager holds such security, or where such Person is a client of or has an account with the same Trust Company as another Person on whose account the Trust Company holds such security, or where such Person is a Plan and has a Plan Trustee who is also a Plan Trustee for another Plan on whose account the Plan Trustee holds such security; or

5

(D)

where such Person is (i) a client of an Investment Manager and such security is owned at law or in equity by the Investment Manager, or (ii) an account of a Trust Company and such security is owned at law or in equity by the Trust Company, or (iii) a Plan and such security is owned at law or in equity by the Plan Trustee; or

(E)

where such person is the registered holder of securities as a result of carrying on the business of or acting as a nominee of a securities depositary.

For purposes of this Agreement, the percentage of Common Shares Beneficially Owned by any Person, shall be and be deemed to be the product determined by the formula:

100 x A/B

Where:

A =

the number of votes for the election of all directors generally attaching to the Common Shares Beneficially Owned by such Person; and

B =

the number of votes for the election of all directors generally attaching to all outstanding Common Shares.

For the purposes of the foregoing formula, where any person is deemed to Beneficially Own unissued Common Shares which may be acquired pursuant to Convertible Securities, such Common Shares shall be deemed to be outstanding for the purpose of calculating the percentage of Common Shares Beneficially Owned by such Person in both the numerator and the denominator, but no other unissued Common Shares which may be acquired pursuant to any other outstanding Convertible Securities shall, for the purposes of that calculation, be deemed to be outstanding.

(f)

"Business Day" shall mean any day other than a Saturday, Sunday or a day that is treated as a holiday at the Corporation's principal executive offices in Calgary, Alberta, Canada.

(g)

"Business Corporations Act" shall mean the Canada Business Corporations Act, R.S.C. 1985, c.C-44, as amended, and the regulations thereunder, and any comparable or successor laws or regulations thereto.

(h)

"Canadian-U.S. Exchange Rate" shall mean on any date the inverse of the U.S. Canadian Exchange Rate.

(i)

"Canadian Dollar Equivalent" of any amount which is expressed in United States dollars shall mean on any day the Canadian dollar equivalent of such amount determined by reference to the Canadian-U.S. Exchange Rate on such date.

(j)

"close of business" on any given date shall mean the time on such date (or, if such date is not a Business Day, the time on the next succeeding Business Day) at which the office of the transfer agent for the Common Shares in the City of Calgary, Alberta (or, after the Separation Time, the offices of the Rights Agent in the City of Calgary, Alberta) becomes closed to the public.

6

(k)

"Common Shares of the Corporation" and "Common Shares" shall mean the voting common shares in the capital stock of the Corporation as constituted as at Amendment Date and any other share of the Corporation into which such voting common shares may be subdivided, consolidated, reclassified or changed from time to time.

(l)

"Competing Permitted Bid" means a Take-over Bid that:

(i)

is made after a Permitted Bid has been made and prior to the expiry of the Permitted Bid;

(ii)

satisfies all components of the definition of a Permitted Bid other than the requirements set out in clause (ii) of that definition; and

(iii)

contains, and the take-up and payment for securities tendered or deposited is subject to, an irrevocable and unqualified provision that no Common Shares will be taken up or paid for pursuant to the Take-over Bid prior to the close of business on the date that is no earlier than the later of (1) the earliest date on which Common Shares may be taken up or paid for under any Permitted Bid or Competing Permitted Bid that is then in existence and (2) 35 days (or such other minimum period of days as may be prescribed by applicable law in Alberta) after the date of the Take-over Bid constituting the Competing Permitted Bid.

(m)

"Convertible Securities" means, at any time, any securities issued by the Corporation from time to time (other than the Rights) carrying any exercise, conversion or exchange right pursuant to which the holder thereof may acquire Common Shares or other securities which are convertible into or exercisable or exchangeable for Common Shares.

(n)

Convertible Security Acquisitions" has the meaning set forth in the definition of "Acquiring Person" herein.

(o)

"Co-Rights Agents" shall have the meaning set forth in subsection .

(p)

"Effective Date" shall mean the close of business on April 24, 1998.

(q)

"Exempt Acquisition" has the meaning set forth in the definition of "Acquiring Person" herein.

(r)

"Exercise Price" shall mean, as of any date after the Amendment Date, the price at which a holder may purchase the securities issuable upon exercise of one whole Right and until adjustment thereof in accordance with the terms hereof, the Exercise Price shall equal Cdn. $50.

(s)

"Expiration Time" shall mean the earlier of:

(i)

the Termination Time; and

(ii)

the termination of the annual meeting of the shareholders of the Corporation in the year 2007;

provided however that if the resolution referred to in Section  is approved by Independent Shareholders in accordance with Section  at or prior to such annual meeting, "Expiration

7

Time" means the earlier of (i) the Termination Time and (ii) the termination of the annual meeting of the shareholders of the Corporation in the year 2010.

(t)

"Fiduciary" shall mean a trust company registered under the trust company legislation of Canada or any province thereof, a trust company organized under the laws of any state of the United States, a portfolio manager registered under the securities legislation of one or more provinces of Canada or an investment adviser registered under the United States Investment Advisers Act of 1940 or any other securities legislation of the United States or any state of the United States.

(u)

A "Flip-in Event" shall mean a transaction occurring subsequent to the date of this Agreement as a result of which any Person shall become an Acquiring Person provided, however, that a Flip-in Event, shall be deemed to occur at the close of business on the tenth day (or such later day as the Board of Directors may determine) after the Stock Acquisition Date.

(v)

"Grandfathered Person" means any Person who is the Beneficial Owner of 20% or more of the outstanding Common Shares of the Corporation at the Record Time.

(w)

"Independent Shareholders" shall mean holders of outstanding Common Shares of the Corporation excluding (i) any Acquiring Person; or (ii) any Person (other than a Person referred to in clause 1.1(e)(B) that is making or has announced a current intention to make a Take-over Bid for Common Shares of the Corporation (including a Permitted Bid or a Competing Permitted Bid) but excluding any such Person if the Take-over Bid so announced or made by such Person has been withdrawn, terminated or, expired; or (iii) any Affiliate or Associate of such Acquiring Person or a Person referred to in clause (ii); or (iv) any Person acting jointly or in concert with such Acquiring Person or a Person referred to in clause (ii); or (v) a Person who is a trustee of any employee benefit plan, share purchase plan, deferred profit sharing plan or any simil ar plan or trust for the benefit of employees of the Corporation or a Subsidiary of the Corporation, unless the beneficiaries of the plan or trust direct the manner in which the Common Shares are to be voted or direct whether the Common Shares are to be tendered to a Take-over Bid.

(x)

"Market Price" per security of any securities on any date of determination shall mean the average of the daily Closing Prices Per Security of such securities (determined as described below) on each of the 20 consecutive Trading Days through and including the Trading Day immediately preceding such date; provided, however, that if an event of a type analogous to any of the events described in Section  hereof shall have caused the price used to determine the Closing Price Per Security on any Trading Day not to be fully comparable with the price used to determine the Closing Price Per Security on such date of determination or, if the date of determination is not a Trading Day, on the immediately preceding Trading Day, each such price so used shall be appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section &nbs p;hereof in order to make it fully comparable with the price per security used to determine the Closing Price Per Security on such date of determination or, if the date of determination is not a Trading Day, on the immediately preceding Trading Day.  The "Closing Price Per Security" of any securities on any date shall be:

(i)

the closing board lot sale price or, if such price is not available, the average of the closing bid and asked prices, for such securities as reported by the stock exchange or national securities quotation system on which such securities are listed or admitted to trading, (provided that if at the date of determination such securities are listed or admitted to trading on more than one stock exchange or national securities quotation system, such price or prices shall be determined based on the stock exchange or national securities quotation system on which such securities are then listed or admitted to trading on which

8

the largest number of such securities were traded during the most recently completed calendar year);

(ii)

if, for any reason, none of such prices is available on such date or the securities are not listed or admitted to trading on a stock exchange or national securities quotation system, the last sale price, or in case no sale takes place on such date, the average of the high bid and low asked prices for such securities in the over-the-counter market, as quoted by any reporting system then in use (as selected by the Board of Directors); or

(iii)

if the securities are not listed or admitted to trading as contemplated in clause  or (ii), the average of the closing bid and asked prices as furnished by a professional market maker making a market in the securities provided, however, that if on any such date the Closing Price Per Security cannot be determined in accordance with the foregoing, the Closing Price Per Security of such securities on such date shall mean the fair value per share of such securities on such date as determined in good faith by an internationally recognized investment dealer or investment banker with respect to the fair value per share of such securities.  The Market Price, shall be expressed in Canadian dollars and, if initially determined in respect of any day forming part of the 20 consecutive trading day period in question in United States dollars, such amount shall be translate d into Canadian dollars at the Canadian Dollar Equivalent thereof.

(y)

"1933 Securities Act" shall mean the Securities Act of 1933 of the United States, as amended, and the rules and regulations thereunder, and any comparable or successor laws or regulations thereto.

(z)

"1934 Exchange Act" shall mean the Securities Exchange Act of 1934 of the United States, as amended, and the rules and regulations thereunder, and any comparable or successor laws or regulations thereto.

(aa)

"Offer to Acquire" shall include:

(i)

an offer to purchase, or a solicitation of an offer to sell, Common Shares; and

(ii)

an acceptance of an offer to sell Common Shares, whether or not such offer to sell has been solicited;

or any combination thereof, and the Person accepting an offer to sell shall be deemed to be making an offer to acquire to the Person that made the offer to sell.

(bb)

"Offeror's Securities" means Common Shares Beneficially Owned on the date of an Offer to Acquire by any Person who is making a Take-over Bid and "Offeror" means a Person who has announced a current intention to make or is making a Take-over Bid.

(cc)

"Permitted Bid" means a Take-over Bid made by a Person by means of a Take-over Bid circular and which also complies with the following additional provisions:

(i)

the Take-over Bid is made to all holders of record of Common Shares, other than the Offeror;

(ii)

the Take-over Bid shall contain, and the provisions for the take-up and payment for Common Shares tendered or deposited thereunder shall be subject to, an irrevocable and unqualified condition that no Common Shares shall be taken up or paid for pursuant to

9

the Take-over Bid prior to the close of business on a date which is not less than 60 days following the date of the Take-over Bid;

(iii)

the Take-over Bid shall contain irrevocable and unqualified provisions that, unless the Take-over Bid is withdrawn, Common Shares may be deposited pursuant to the Take-over Bid at any time prior to the close of business on the date of first take-up or payment for Common Shares and that all Common Shares deposited pursuant to the Take-over Bid may be withdrawn at any time prior to the close of business on such date;

(iv)

the Take-over Bid shall contain an irrevocable and unqualified condition that more than 50% of the outstanding Common Shares held by Independent Shareholders, determined as at the date of first take-up or payment for Common Shares under the Take-over Bid, must be deposited to the Take-over Bid and not withdrawn at the close of business on the date of first take-up or payment for Common Shares; and

(v)

the Take-over Bid shall contain an irrevocable and unqualified provision that in the event that more than 50% of the then outstanding Common Shares held by Independent Shareholders shall have been deposited to the Take-over Bid and not withdrawn as at the date of first take-up or payment for Common Shares under the Take-over Bid, the Offeror will make a public announcement of that fact and the Take-over Bid will remain open for deposits and tenders of Common Shares for not less than 10 Business Days from the date of such public announcement;

provided that if a Take-over Bid constitutes a Competing Permitted Bid, the term "Permitted Bid" shall also mean the Competing Permitted Bid.

(dd)

"Permitted Bid Acquisitions" has the meaning set forth in the definition of "Acquiring Person".

(ee)

"Permitted Lock-up Agreement" means an agreement (the "Lock-up Agreement") between a Person and one or more holders of Common Shares (each such holder herein referred to as a "Locked-up Person") (the terms of which are publicly disclosed and a copy of which is made available to the public (including the Corporation) not later than the date of the Lock-up Bid (as defined below), or if the Lock-up Bid has been made prior to the date of the Lock-up Agreement not later than the first Business Day following the date of the Lock-up Agreement) pursuant to which each Locked-up Person agrees to deposit or tender the Common Shares held by such holder to a Take-over Bid (the "Lock-up Bid") made by the Person or any of such Person's Affiliates or Associates or any other Person referred to in clause  provided that:

(i)

the Lock-up Agreement permits the Locked-up Person to withdraw its Common Shares from the Lock-up Agreement in order to deposit or tender the Common Shares to another Take-over Bid or to support another transaction prior to the Common Shares being taken up and paid for under the Lock-up Bid:

(A)

at a price or value per Common Share that exceeds the price or value per Common Share offered under the Lock-up Bid; or

(B)

for a number of Common Shares at least 7% greater than the number of Common Shares that the Offeror has offered to purchase under the Lock-up Bid at a price or value per Common Share that is not less than the price or value per Common Share offered under the Lock-up Bid; or

10

(C)

(a) that contains an offering price for each Common Share that exceeds by as much as or more than a specified amount (the "Specified Amount") the offering price for each Common Share contained in or proposed to be contained in the Lock-up Bid and (b) does not by itself provide for a Specified Amount that is greater than 7% of the offering price contained in or proposed to be contained in the Lock-up Bid; and;

for greater clarity, the agreement may contain a right of first refusal or require a period of delay to give the Person who made the Lock-up Bid an opportunity to match a higher price in another Take-over Bid or transaction or other similar limitation on a Locked-up Person's right to withdraw Common Shares from the agreement, so long as the limitation does not preclude the exercise by the Locked-up Person of the right to withdraw Common Shares during the period of the other Take-over Bid or transaction; and

(ii)

no "break-up" fees, "top-up" fees, penalties, expenses or other amounts that exceed in aggregate the greater of:

(A)

2 1/2% of the price or value of the consideration payable under the Lock-up Bid to a Locked-up Person; and

(B)

50% of the amount by which the price or value of the consideration received by a Locked-up Person under another Take-over Bid or transaction exceeds the price or value of the consideration that the Locked-up Person would have received under the Lock-up Bid;

shall be payable by such Locked-up Person if the Locked-up Person fails to deposit or tender Common Shares to the Lock-up Bid, or withdraws Common Shares previously tendered thereto in order to deposit or tender such Common Shares to another Take-over Bid or support another transaction.

(ff)

"Person" shall mean any individual, firm, partnership, association, trust, trustee, personal representative, body corporate, corporation, unincorporated organization, syndicate or other entity.

(gg)

"Pro Rata Acquisition" has the meaning set forth in the definition of "Acquiring Person" herein.

(hh)

"Record Time" shall mean the close of business on April 24, 1998;

(ii)

"Redemption Price" has the meaning set forth in subsection  herein.

(jj)

"Rights Certificate" shall mean, after the Separation Time, the certificate representing the Rights substantially in the form of Exhibit A hereto.

(kk)

"Securities Act" shall mean the Securities Act (Alberta), R.S.A. 2000, c. S-4, and the rules and regulations thereunder, each as may be amended from time to time, and any comparable or successor laws, rules or regulations thereto.

(ll)

"Separation Time" shall mean the close of business on the tenth Business Day after the earlier of:

11

(i)

the Stock Acquisition Date;

(ii)

the date of the commencement of, or first public announcement of the intent of any Person (other than the Corporation or any Subsidiary of the Corporation) to commence a Take-over Bid (other than a Take-over Bid which is a Permitted Bid so long as such Take-over Bid continues to satisfy the requirements of a Permitted Bid), provided that, if any Take-over Bid referred to in this clause (ii) expires, is cancelled, terminated or otherwise withdrawn prior to the Separation Time, such Take-over Bid shall be deemed, for purposes of this subsection , never to have been made; and

(iii)

the date upon which a Permitted Bid ceases to be a Permitted Bid;

or such later date as may be determined by the Board of Directors acting in good faith provided that, if the foregoing results in the Separation Time being prior to the Record Time, the Separation Time shall be the Record Time, and if the Board of Directors determines pursuant to Section  to waive the application of Section  to a Flip-in Event, the Separation Time in respect of such Flip-in Event shall be deemed never to have occurred.

(mm)

"Stock Acquisition Date" shall mean the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 176 of the Securities Act or Section 13(d) under the 1934 Exchange Act) by the Corporation or an Acquiring Person that a Person has become an Acquiring Person.

(nn)

"Subsidiary" of any specified Person shall mean any corporation or other entity controlled by such specified Person.

(oo)

"Take-over Bid" means an Offer to Acquire Common Shares or securities convertible into Common Shares, where the Common Shares subject to the Offer to Acquire, together with the Common Shares into which the securities subject to the Offer to Acquire are convertible, and the Offeror's Securities, constitute in the aggregate 20% or more of the outstanding Common Shares at the date of the Offer to Acquire.

(pp)

"Termination Time" shall mean the time at which the right to exercise Rights shall terminate pursuant to Section  or  hereof.

(qq)

"Trading Day", when used with respect to any securities, shall mean a day on which the principal securities exchange on which such securities are listed or admitted to trading is open for the transaction of business or, if the securities are not listed or admitted to trading on any securities exchange, a Business Day.

(rr)

"U.S. Canadian Exchange Rate" shall mean on any date:

(i)

if on such date the Bank of Canada sets an average noon spot rate of exchange with a conversion of one United States dollar into Canadian dollars, such rate;

(ii)

in any other case, the rate for such date for the conversion of one United States dollar into Canadian dollars which is calculated in the manner which shall be determined by the Board of Directors from time to time acting in good faith.

12

(ss)

"U.S. Dollar Equivalent" of any amount which is expressed in Canadian dollars shall mean on any day the United States dollar equivalent of such amount determined by reference to the U.S.-Canadian Exchange Rate on such date.

1.2

Currency

All sums of money which are referred to in this Agreement are expressed in lawful money of Canada.

1.3

Acting Jointly or in Concert

For purposes of this Agreement, a Person is acting jointly or in concert with another Person if such Person has any agreement, arrangement or understanding (whether formal or informal and whether or not in writing) with such other Person to acquire, or Offer to Acquire, any Common Shares of the Corporation (other than (A) customary agreements with and between underwriters and banking group or selling group members with respect to a distribution of securities by way of prospectus or private placement, or (B) pursuant to a pledge of securities in the ordinary course of business).

1.4

Control

A Person is "controlled" by another Person or two or more other Persons acting jointly or in concert if:

(a)

in the case of a body corporate, securities entitled to vote in the election of directors of such body corporate carrying more than 50% of the votes for the election of directors are held, directly or indirectly, by or for the benefit of the other Person or Persons acting jointly or in concert and the votes carried by such securities are entitled, if exercised, to elect a majority of the board of directors of such body corporate; or

(b)

in the case of a Person which is not a body corporate, more than 50% of the voting or equity interests of such entity are held, directly or indirectly, by or for the benefit of the other Person or Persons acting jointly or in concert.

and "controls", "controlling" and "under common control with" shall be interpreted accordingly.

1.5

Holder of Rights and Common Shares

As used in this Agreement, unless the context otherwise requires, the term "holder" of any Rights shall mean the registered holder of such Rights (or, prior to the Separation Time, the associated Common Shares).

1.6

References to this Agreement

In this Agreement, unless otherwise provided herein and unless the context otherwise requires, references to "this Agreement", "herein", "hereby" and "hereunder" mean this Amended and Restated Shareholder Rights Plan Agreement dated May 28, 2004 between the Corporation and the Rights Agent as amended and supplemented from time to time.

13

ARTICLE 2
THE RIGHTS

2.1

Legend on Common Share Certificates

Certificates for the Common Shares, including, without limitation, Common Shares issued upon the conversion of Convertible Securities, issued after the Record Time but prior to the earlier of the Separation Time and the Expiration Time shall evidence one Right for each Common Share represented thereby and, commencing as soon as reasonably practicable after the Record Time, shall have impressed on, printed on, written on or otherwise affixed to them prior to the Amendment Date the legend set forth in Section 2.1 of the Original Plan or the 2001 Plan, as applicable, which legend shall be deemed to be amended for all purposes to read the same as the legend set forth below, and after the Amendment Date the following legend:

Until the Separation Time (as defined in the Rights Agreement referred to below), this certificate also evidences and entitles the holder hereof to certain Rights as set forth in an Amended and Restated Shareholder Rights Plan Agreement, dated as of May 28, 2004 (amending and restating the Shareholder Rights Plan Agreement dated April 24, 1998 as amended May 25, 2001), as such may from time to time be amended, restated, varied or replaced, (the "Rights Agreement"), between Gentry Resources Ltd. (the "Corporation") and Computershare Trust Company of Canada as Rights Agent, the terms of which are hereby incorporated herein by reference and, a copy of which is on file at the registered office of the Corporation.  In certain circumstances, as set forth, in the Rights Agreement, such Rights may be amended or red eemed, may expire, may become void (if, in certain cases, they are "Beneficially Owned" by an "Acquiring Person", as such terms are defined in the Rights Agreement, or a transferee thereof) or may be evidenced by separate certificates and may no longer be evidenced by this certificate.  The Corporation will mail or arrange for the mailing of a copy of the Rights Agreement to the holder of this certificate without charge as soon as practicable, after the receipt of a written request therefor.

Certificates representing Common Shares that are issued and outstanding at the Record Time or the Amendment Date shall evidence one Right for each Common Share evidenced thereby notwithstanding the absence of the foregoing legend.

2.2

Initial Exercise Price; Exercise of Rights; Detachment of Rights

(a)

Subject to adjustment as herein set forth, each Right will entitle the holder thereof, after the Separation Time, to purchase, for the Exercise Price, or its U.S. Dollar Equivalent as at the Business Day immediately preceding the day of exercise of the Right, one Common Share.

(b)

Until the Separation Time,

(i)

no Right may be exercised; and

14

(ii)

each Right will be evidenced by the certificate for the associated Common Share and will be transferable only together with, and will be transferred by a transfer of, such associated share.

(c)

After the Separation Time and prior to the Expiration Time, the Rights (i) may be exercised; and (ii) will be transferable independent of Common Shares.  Promptly following the Separation Time the Rights Agent will mail to each holder of record of Common Shares as of the Separation Time and, in respect of each Convertible Security converted into Common Shares after the Separation Time and prior to the Expiration Time, promptly after such conversion to the holder so converting (other than an Acquiring Person and, in respect of any Rights Beneficially Owned by such Acquiring Person which are not held of record by such Acquiring Person, the holder of record of such Rights) at such holder's address as shown by the records of the Corporation (the Corporation hereby agreeing to furnish copies of such records to the Rights Agent for this purpose), (x) a Ri ghts Certificate with registration particulars appropriately completed, representing the number of Rights held by such holder at the Separation Time and having such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Corporation may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or securities quotation system on which the Rights may from time to time be listed or traded, or to conform to usage, and (y) a disclosure statement describing the Rights.

(d)

Rights may be exercised in whole or in part on any Business Day (or on any other day which, in the city at which an Election to Exercise (as hereinafter defined) is duly submitted to the Rights Agent in accordance with this Agreement, is not a Saturday, Sunday or a day that is treated as a holiday in such city) after the Separation Time and prior to the Expiration Time by submitting to the Rights Agent (at its office in the City of Calgary, Alberta, Canada or at any other office of the Rights Agent in the cities designated from time to time for that purpose by the Corporation), the Rights Certificate evidencing such Rights together with an Election to Exercise (an "Election to Exercise") substantially in the form attached to the Rights Certificate duly completed, accompanied by payment in cash, or by certified cheque, banker's draft or money order paya ble to the order of Computershare Trust Company of Canada, of a sum equal to the Exercise Price multiplied by the number of Rights being exercised and a sum sufficient to cover any transfer tax or charge which may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or delivery of certificates for Common Shares in a name other than that of the holder of the Rights being exercised.

(e)

Upon receipt of a Rights Certificate, with a duly completed Election to Exercise (which does not indicate that the holder so exercising is an Acquiring Person) accompanied by payment as set forth in subsection , the Rights Agent will thereupon promptly:

(i)

requisition from the transfer agent or any co-transfer agent of the Common Shares certificates for the number of Common Shares to be purchased (the Corporation hereby irrevocably authorizing its transfer agent to comply with all such requisitions);

(ii)

when appropriate, requisition from the Corporation the amount of cash to be paid in lieu of issuing fractional Common Shares and, after receipt, deliver such cash to or to the order of the registered holder of the Rights Certificate;

15

(iii)

after receipt of the Common Share certificates, deliver the same to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder; and

(iv)

tender to the Corporation all payments received upon exercise of the Rights.

(f)

In case the holder of any Rights shall exercise less than all the Rights evidenced by such holder's Rights Certificate, a new Rights Certificate evidencing the Rights remaining unexercised will be issued by the Rights Agent to such holder or to such holder's duly authorized assigns.

(g)

The Corporation, covenants and agrees that it will:

(i)

take all such action as may be necessary and within its power to ensure that all shares delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Exercise Price), be duly and validly authorized, executed, issued and delivered and fully paid and non-assessable;

(ii)

take all such action as may be necessary and within its power to comply with any applicable requirements of the Business Corporations Act, the Securities Act, the securities acts or comparable legislation of each of the other provinces of Canada, the 1933 Securities Act and the 1934 Exchange Act, and the rules and regulations thereunder or any other applicable law, rule or regulation, in connection with the issuance and delivery of the Rights Certificates and the issuance of any shares upon exercise of Rights;

(iii)

use reasonable efforts to cause all shares issued upon exercise of Rights to be listed on the principal exchanges or traded in the over-the-counter markets on which the Common Shares were traded immediately prior to the Stock Acquisition Date;

(iv)

cause to be reserved and kept available out of its authorized and unissued Common Shares the number of Common Shares that, as provided in this Agreement, will from time to time be sufficient to permit the exercise in full of all outstanding Rights; and

(v)

pay when due and payable any and all Canadian and United States federal, provincial, and state transfer taxes (for greater certainty not including any income taxes or capital gains of the holder or exercising holder or any liability of the Corporation to withhold tax) and charges which may be payable in respect of the original issuance or delivery of the Rights Certificates or certificates for shares, provided that the Corporation shall not be required to pay any transfer tax or charge which may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or delivery of certificates for shares in a name other than that of the holder of the Rights being transferred or exercised.

2.3

Adjustments to Exercise Price; Number of Rights

The Exercise Price, the number and kind of securities subject to purchase upon exercise of each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section .

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(a)

In the event the Corporation shall at any time after the Amendment Date and prior to the Expiration Time:

(i)

declare or pay a dividend on the Common Shares payable in Common Shares (or other capital stock or securities exchangeable for or convertible into or giving a right to acquire Common Shares or other capital stock) other than pursuant to any optional stock dividend program, dividend reinvestment plan or a dividend payable in Common Shares in lieu of a regular periodic cash dividend;

(ii)

subdivide or change the then outstanding Common Shares into a greater number of Common Shares;

(iii)

combine or change the then outstanding Common Shares into a smaller number of Common Shares; or

(iv)

issue any Common Shares (or other capital stock or securities exchangeable for or convertible into or giving a right to acquire Common Shares or other capital stock) in respect of, in lieu of or in exchange for existing Common Shares in a reclassification, amalgamation, merger, statutory arrangement or consolidation,

the Exercise Price and the number of Rights outstanding, or, if the payment or effective date therefor shall occur after the Separation Time, the securities purchasable upon exercise of Rights shall be adjusted in the manner set forth below.  If the Exercise Price and number of Rights outstanding are to be adjusted (x) the Exercise Price in effect after such adjustment shall be equal to the Exercise Price in effect immediately prior to such adjustment divided by the number of Common Shares (or other capital stock) (the "Expansion Factor") that a holder of one Common Share immediately prior to such dividend, subdivision, change, combination or issuance would hold thereafter as a result thereof and (y) each Right held prior to such adjustment shall become that number of Rights equal to the Expansion Factor, and the adjusted number of Rights will be deemed to be allocated among the Common Shares with respect to which the original Rights were associated (if they remain outstanding) and the shares issued in respect of such dividend, subdivision, change, combination or issuance, so that each such Common Share (or other capital stock) will have exactly one Right associated with it.  If the securities purchasable upon exercise of Rights are to be adjusted, the securities purchasable upon exercise of each Right after such adjustment will be the number of securities that a holder of the securities purchasable upon exercise of one Right immediately prior to such dividend, subdivision, change, combination or issuance would hold thereafter as a result thereof.  If after the Amendment Date and prior to the Expiration Time the Corporation shall issue any shares of capital stock other than Common Shares in a transaction of a type described in clause  or , shares of such capital stock shall be treated herein as nearly equivalent to Common Shares as may be practicable and appropriate under the circumstances and the Corporation and the Rights Agent agree to amend this Agreement in order to effect such treatment.  If an event occurs which would require an adjustment under both this Section  and Section  hereof, the adjustment provided for in this Section  shall be in addition to and shall be made prior to any adjustment required pursuant to Section  hereof.  Adjustments pursuant to subsection  shall be made successively, whenever an event referred to in subsection  occurs.

In the event the Corporation shall at any time after the Amendment Date and prior to the Separation Time issue any Common Shares otherwise than in a transaction referred to in the

17

             preceding paragraph, each such Common Share so issued shall automatically have one new Right associated with it, which Right shall be evidenced by the certificate representing such Common Share.

(b)

In the event the Corporation shall at any time after the Amendment Date and prior to the Expiration Time fix a record date for the making of a distribution to all holders of Common Shares of rights or warrants entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Common Shares (or securities convertible into or exchangeable for or carrying a right to purchase or subscribe for Common Shares) at a price per Common Share (or, if a security convertible into or exchangeable for or carrying a right to purchase or subscribe for Common Shares, having a conversion, exchange or exercise price (including the price required to be paid to purchase such convertible or exchangeable security or right per share)) less than 90% of the Market Price per Common Share on such record date, the Exercise Price shall be adjusted in th e manner set forth below.  The Exercise Price in effect after such record date shall equal the Exercise Price in effect immediately prior to such record date multiplied by a fraction, of which the numerator shall be the number of Common Shares outstanding on such record date plus the number of Common Shares which the aggregate offering price of the total number of Common Shares so to be offered (and/or the aggregate initial conversion, exchange or exercise price of the convertible or exchangeable securities or rights so to be offered (including the price required to be paid to purchase such convertible or exchangeable securities or rights)) would purchase at such Market Price and of which the denominator shall be the number of Common Shares outstanding on such record date plus the number of additional Common Shares to be offered for subscription or purchase (or into which the convertible or exchangeable securities or rights so to be offered are initially convertible, exchangeable or exercisable).   In case such subscription price is satisfied in whole or in part by consideration in a form other than cash the value of such consideration shall be as determined in good faith by the Board of Directors whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of Rights.

Such adjustment shall be made successively whenever such a record date is fixed.  For purposes of this paragraph , the granting of the right to purchase Common Shares pursuant to any dividend or interest reinvestment plan and/or any Common Share purchase plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and/or the investment of periodic optional payments and/or employee benefit or similar plans (so long as such right to purchase is in no case evidenced by the delivery of rights or warrants) shall not be deemed to constitute an issue of rights or warrants by the Corporation; provided, however, that in the case of any dividend or interest reinvestment plan, the right to purchase Common Shares is at a price per share of not less than 90% of the current market price per share (determined as provided in such plans) of the Common Shares.

(c)

In the event the Corporation shall at any time after the Amendment Date and prior to the Expiration Time fix a record date for the making of a distribution to all holders of Common Shares of evidences of indebtedness or assets (other than a regular periodic cash dividend or a dividend paid in Common Shares) or rights or warrants entitling them to subscribe for or purchase Common Shares (or Convertible Securities in respect of Common Shares) at a price per Common Share (or, in the case of a Convertible Security, in respect of Common Shares having a conversion or exercise price per share (including the price required to be paid to purchase such Convertible Security)) less than 90% of the Market Price per Common Share on such record date (excluding those referred to in subsection ), the Exercise Price shall be adjusted in the manner set forth below.  The Exercis e Price in effect after such record date shall equal the Exercise Price in effect immediately prior to such record date less the fair market value (as

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determined in good faith by the Board of Directors) of the portion of the assets, evidences of indebtedness, rights or warrants so to be distributed applicable to each of the securities purchasable upon exercise of one Right (such determination to be described in a statement filed with the Rights Agent and the holders of the Rights).  Such adjustment shall be made successively whenever such a record date is fixed.

(d)

Each adjustment made pursuant to this Section  shall be made as of:

(i)

the payment or effective date for the applicable dividend, subdivision, change, combination or issuance, in the case of an adjustment made pursuant to paragraph  above; and

(ii)

the record date for the applicable dividend or distribution, in the case of an adjustment made pursuant to paragraph  or  above subject to readjustment to reverse the same if such distribution shall not be made.

(e)

In the event the Corporation shall at any time after the Amendment Date and prior to the Expiration Time issue any shares of capital stock (other than Common Shares), or rights or warrants to subscribe for or purchase any such capital stock, or securities convertible into or exchangeable for any such capital stock, in a transaction referred to in clause (a)(i) or (a)(iv) above, or if the Corporation shall take any other action (other than the issue of Common Shares) which might have a negative effect on the holders of Rights, if the Board of Directors acting in good faith determines that the adjustments contemplated by paragraphs ,  and  above are not applicable or will not appropriately protect the interests of the holders of Rights, the Corporation may determine what other adjustments to the Exercise Price, number of Rights and/or securities purchasabl e upon exercise of Rights would be appropriate and, if the adjustments contemplated by paragraphs ,  and  above are applicable, notwithstanding such paragraphs, the adjustments so determined by the Corporation, rather than adjustments contemplated by paragraphs ,  and above, shall be made.  The Corporation and the Rights Agent shall amend this Agreement in accordance with subsections  and , as the case may be, to provide for such adjustments.

(f)

Each adjustment to the Exercise Price made pursuant to this Section  shall be calculated to the nearest cent.  Whenever an adjustment to the Exercise Price is made pursuant to this Section , the Corporation shall:

(i)

promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment; and

(ii)

promptly file with the Rights Agent and with each transfer agent for the Common Shares a copy of such certificate and mail a brief summary thereof to each holder of Rights who requests a copy.

Failure to file such certificate or cause such summary to be mailed as aforesaid, or any defect therein, shall not affect the validity of any such adjustment or change.

(g)

Irrespective of any adjustment or change in the securities purchasable upon exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the securities so purchasable which were expressed in the initial Rights Certificates issued hereunder.

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2.4

Date on Which Exercise is Effective

Each person in whose name any certificate for Common Shares is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Common Shares represented thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly surrendered (together with a duly completed Election to Exercise) and payment of the Exercise Price for such Rights (and any applicable transfer taxes and other governmental charges payable by the exercising holder hereunder) was made; provided, however, that if the date of such surrender and payment is a date upon which the Common Share transfer books of the Corporation are closed, such person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the Common Share transfer books of the Corporation are open.

2.5

Execution, Authentication, Delivery and Dating of Rights Certificates

(a)

The Rights Certificates shall be executed on behalf of the Corporation by its Chairman of the Board, President or any Vice President and by the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Corporation.  The signature of any of these officers on the Rights Certificates may be manual or facsimile.  Rights Certificates bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Corporation shall bind the Corporation, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the countersignature and delivery of such Rights Certificates.  Promptly after the Corporation learns of the Separation Time, the Corporation will notify the Rights Agent of such Separation Time and will deliver Rights Certificates executed by the Corporation to the R ights Agent for countersignature and a disclosure statement describing the Rights, and the Rights Agent shall countersign (manually or by facsimile signature) and mail such Rights Certificates and disclosure statement to the holders of the Rights pursuant to subsection  hereof.  No Rights Certificate shall be valid for any purpose until countersigned by the Rights Agent as aforesaid.

(b)

Each Rights Certificate shall be dated the date of countersignature thereof.

2.6

Registration, Registration of Transfer and Exchange

(a)

The Corporation will cause to be kept a register (the "Rights Register") in which, subject to such reasonable regulations as it may prescribe, the Corporation will provide for the registration and transfer of Rights.  The Rights Agent is hereby appointed "Rights Registrar" for the purpose of maintaining the Rights Register for the Corporation and registering Rights and transfers of Rights as herein provided.  In the event that the Rights Agent shall cease to be the Rights Registrar, the Rights Agent will have the right to examine the Rights Register at all reasonable times.

(b)

After the Separation Time and prior to the Expiration Time, upon surrender for registration of transfer or exchange of any Rights Certificate, and subject to the provisions of subsection  below, the Corporation shall execute, and the Rights Agent shall countersign and deliver, in the name of the holder or the designated transferee or transferees, as required pursuant to the holder's instructions, one or more new Rights Certificates evidencing the same aggregate number of Rights as did the Rights Certificates so surrendered.

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(c)

All Rights issued upon any registration of transfer or exchange of Rights Certificates shall be the valid obligations of the Corporation, and such Rights shall be entitled to the same benefits under this Agreement as the Rights surrendered upon such registration of transfer or exchange.

(d)

Every Rights Certificate surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Corporation or the Rights Agent, as the case may be, duly executed by the holder thereof or such holder's attorney duly authorized in writing.  As a condition to the issuance of any new Rights Certificate under this Section , the Corporation may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto.

2.7

Mutilated, Destroyed, Lost and Stolen Rights Certificates

(a)

If any mutilated Rights Certificate is surrendered to the Rights Agent prior to the Expiration Time, the Corporation shall execute and the Rights Agent shall countersign and deliver in exchange therefor a new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so surrendered.

(b)

If there shall be delivered to the Corporation and the Rights Agent prior to the Expiration Time (i) evidence to their satisfaction of the destruction, loss or theft of any Rights Certificate and (ii) such security or indemnity as may be required by them in their sole discretion to save each of them and any of their agents harmless, then, in the absence of notice to the Corporation or the Rights Agent that such Rights Certificate has been acquired by a bona fide purchaser, the Corporation shall execute and upon its request the Rights Agent shall countersign and deliver, in lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so destroyed, lost or stolen.

(c)

As a condition to the issuance of any new Rights Certificate under this Section , the Corporation may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Rights Agent) connected therewith.

Every new Rights Certificate issued pursuant to this Section  in lieu of any destroyed, lost or stolen Rights Certificate shall evidence an original additional contractual obligation of the Corporation, whether or not the destroyed, lost or stolen Rights Certificate shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Agreement equally and proportionately with any and all other Rights, duly issued hereunder.

2.8

Persons Deemed Owners

The Corporation, the Rights Agent and any agent of the Corporation or the Rights Agent may deem and treat the Person, in whose name a Rights Certificate (or, prior to the Separation Time, the associated Common Share certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby for all purposes whatsoever.  

2.9

Delivery and Cancellation of Certificates

All Rights Certificates surrendered upon exercise or for redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Rights Agent, be delivered to the Rights Agent and, in

21

any case, shall be promptly cancelled by the Rights Agent.  The Corporation may at any time deliver to the Rights Agent for cancellation any Rights Certificates previously countersigned and delivered hereunder which the Corporation may have acquired in any manner whatsoever, and all Rights Certificates so delivered shall be promptly cancelled by the Rights Agent.  No Rights Certificate shall be countersigned in lieu of or in exchange for any Rights Certificates cancelled as provided in this Section , except as expressly permitted by this Agreement.  The Rights Agent shall, subject to applicable law, destroy all cancelled Rights Certificates and deliver a certificate of destruction to the Corporation.

2.10

Agreement of Rights Holders

Every holder of Rights by accepting the same consents and agrees with the Corporation and the Rights Agent and with every other holder of Rights that:

(a)

he will be bound by and subject to the provisions of this Agreement, as amended from time to time in accordance with the terms hereof, in respect of all Rights held;

(b)

prior to the Separation Time, each Right will be transferable only together with, and will be transferred by a transfer of, the associated Common Share;

(c)

after the Separation Time, the Rights Certificates will be transferable only on the Rights Register as provided herein.

(d)

prior to due presentment of a Rights Certificate (or, prior to the Separation Time, the associated Common Share certificate) for registration of transfer, the Corporation, the Rights Agent and any agent of the Corporation or the Rights Agent may deem and treat the Person in whose name the Rights Certificate (or, prior to the Separation Time, the associated Common Share certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on such Rights Certificate or the associated Common Share certificate made by anyone other than the Corporation or the Rights Agent) for all purposes whatsoever, and neither the Corporation nor the Rights Agent shall be affected by any notice to the contrary;

(e)

such holder of Rights has waived his right to receive any fractional Rights or any fractional shares upon exercise of a Right (except as provided herein);

(f)

without the approval of any holder of Rights and upon the sole authority of the Board of Directors acting in good faith this Agreement may be supplemented or amended from time to time as provided herein; and

(g)

notwithstanding anything in this Agreement to the contrary, neither the Corporation nor the Rights Agent shall have any liability to any holder of a Right or any other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation.

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ARTICLE 3
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS

3.1

Flip-in Event

(a)

Subject to subsections , ,  and  hereof, in the event that prior to the Expiration Time a Flip-in Event shall occur, the Corporation shall take such action as shall be necessary to ensure and provide, within 10 Business Days thereafter or such longer period as may be required to satisfy the requirements of the applicable securities acts or comparable legislation so that, except as provided below, each Right shall thereafter constitute the right to purchase from the Corporation, upon exercise thereof in accordance with the terms hereof, that number of Common Shares of the Corporation having an aggregate Market Price on the date of consummation or occurrence of such Flip-in Event equal to twice the Exercise Price for an amount in cash equal to the Exercise Price, (such right to be appropriately adjusted in a manner analogous to the applicable adjustment pr ovided for in Section  in the event that after such date of consummation or occurrence an event of a type analogous to any of the events described in Section  shall have occurred with respect to such Common Shares).

(b)

Notwithstanding the foregoing or any other provisions of this Agreement, upon the occurrence of any Flip-in Event, any Rights that are or were Beneficially Owned on or after the earlier of the Separation Time or the Stock Acquisition Date by:

(i)

an Acquiring Person (or any Affiliate or Associate of an Acquiring Person or any Person acting jointly or in concert with an Acquiring Person or any Affiliate or Associate of an Acquiring Person); or

(ii)

a transferee, direct or indirect, of an Acquiring Person (or any Affiliate or Associate of an Acquiring Person or any Person acting jointly or in concert with, an Acquiring Person or any Affiliate or Associate of an Acquiring Person) in a transfer made after the date hereof, whether or not for consideration, that the Board of Directors acting in good faith has determined is part of a plan, arrangement or scheme of an Acquiring Person, (or any Affiliate or Associate of an Acquiring Person or any Person acting jointly or in concert with an Acquiring Person or any Affiliate or Associate of an Acquiring Person) that has the purpose or effect of avoiding clause (i) of this subsection ),

shall become void and any holder of such Rights (including transferees) shall thereafter have no right, to exercise such Rights under any provision of this Agreement and shall not have any other rights whatsoever in respect of such Rights, whether under any provision of this Agreement or otherwise.

(c)

Any Rights Certificate that represents Rights Beneficially Owned by a Person described in either clauses (i) or (ii) of subsection  or transferred to any nominee of any such Person, and any Rights Certificate issued upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain the following legend:

"The Rights represented by this Rights Certificate were Beneficially Owned by a Person who was an Acquiring Person or who was an Affiliate or an Associate of an Acquiring Person (as such terms are defined in the Rights Agreement) or was acting jointly or in concert with

23

any of them.  This Rights Certificate and the Rights represented hereby shall become void in the circumstances specified in subsection 3.1(b) of the Rights Agreement"

provided that the Rights Agent shall not be under any responsibility to ascertain the existence of facts that would require the imposition of such legend but shall be required to impose such legend only if instructed to do so by the Corporation or if a holder fails to certify upon transfer or exchange in the space provided on the Rights Certificate that such holder is not an Acquiring Person or an Affiliate or Associate thereof or a Person acting jointly or in concert with any of them.

ARTICLE 4
THE RIGHTS AGENT

4.1

General

(a)

The Corporation hereby appoints the Rights Agent to act as agent for the Corporation and the holders of Rights in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment.  The Corporation may from time to time appoint such co-rights agents (the "Co-Rights Agents") as it may deem necessary or desirable.  In the event the Corporation appoints one or more Co-Rights Agents, the respective duties of the Rights Agent and Co--Rights Agents shall be as the Corporation may determine.  The Corporation agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements reasonably incurred in the execution and administration of this Agreement and the exer cise and performance of its duties hereunder (including the reasonable fees and other disbursements of any expert retained by the Rights Agent with the approval of the Corporation, such approval not to be unreasonably withheld).  The Corporation also agrees to indemnify the Rights Agent and its directors, officers, employees and agents for, and to hold them harmless against, any loss, liability, cost, claim, action, damage or expense, incurred without negligence, bad faith or wilful misconduct on the part of the Rights Agent or its directors, officers, employees and agents for anything done, suffered or omitted by the Rights Agent or its directors, officers, employees and agents in connection with the acceptance, execution and administration of this Agreement and the exercise and performance of its duties hereunder, including the costs and expenses of defending against any claim of liability, which right to indemnification will survive the termination of this Agreement or the resignation or removal of t he Rights Agent.

(b)

The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any certificate for Common Shares, Rights Certificate, certificate for other securities of the Corporation, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper person or persons.

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4.2

Merger, Amalgamation or Consolidation or Change of Name of Rights Agent

(a)

Any corporation into which the Rights Agent or any successor Rights Agent may be merged or amalgamated or with which it may be consolidated, or any corporation resulting from any merger, amalgamation or consolidation to which the Rights Agent or any successor Rights Agent is a party or any corporation succeeding to the shareholder or stockholder services business of the Rights Agent or any successor Rights Agent, will be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section  hereof.  In case, at the time such successor Rights Agent succeeds to the agency created by this Agreement, any of the Rights Certificates have been countersig ned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates have not been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Rights Certificates will have the full force provided in the Rights Certificates and in this Agreement.

(b)

In case at any time the name of the Rights Agent is changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement.

4.3

Duties of Rights Agent

The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Corporation and the holders of Rights Certificates, by their acceptance thereof, shall be bound:

(a)

The Rights Agent may consult with legal counsel (who may be legal counsel for the Corporation), and the opinion of such counsel will be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion; the Rights Agent may also, with the approval of the Corporation (such approval not to be unreasonably withheld) and at the expense of the Corporation, consult with such other experts as the Rights Agent shall consider necessary or appropriate to properly carry out the duties and obligations imposed under this Agreement and the Rights Agent shall be entitled to rely in good faith on the advice of any such expert.

(b)

Whenever in the performance of its duties under this Agreement the Rights Agent deems it necessary or desirable that any fact or matter be proved or established by the Corporation prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by a person believed by the Rights Agent to be the Chairman of the Board, the Vice Chairman of the Board, the President or any Vice President or by the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Corporation

25

and delivered to the Rights Agent; and such certificate will be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.

(c)

The Rights Agent will be liable hereunder only for its own negligence, bad faith or willful misconduct.

(d)

The Rights Agent will not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the certificates for Common Shares or the Rights Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and will be deemed to have been made by the Corporation only.

(e)

The Rights Agent will not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due authorization, execution and delivery hereof by the Rights Agent) or in respect of the validity or execution of any Common Share certificate or Rights Certificate (except its countersignature thereof); nor will it be responsible for any breach by the Corporation of any covenant or condition contained in this Agreement or in any Rights Certificate; nor will it be responsible for any change in the exercisability of the Rights (including the Rights becoming void pursuant to subsection  hereof) or any adjustment required under the provisions of Section  hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights after receipt of the certificate contemplated by Section  describing any such adjustment); nor will it by any act hereunder be deemed to make any representation or warranty as to the authorization of any Common Shares to be issued pursuant to this Agreement or any Rights or as to whether any Common Shares will, when issued, be duly and validly authorized, executed, issued and delivered and fully paid and non-assessable.

(f)

The Corporation agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.

(g)

The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any person believed by the Rights Agent to be the Chairman of the Board, the Vice Chairman of the Board, the President, any Vice President or, the Secretary or any Assistant Secretary or the Treasurer or any Assistant Treasurer of the Corporation, and to apply to such persons for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered by it in good faith in reliance upon instructions of any such person; it is understood that instructions to the Rights Agent shall, except where circumstances make it impracticable or the Rights Agent otherwise agrees, be given in writing and, where not in writing, such instructions shall be confirmed in writing as soon as reasonably possible after the giving of such instructions.

(h)

The Rights Agent and any shareholder or stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in Common Shares, Rights or other securities of the Corporation or become pecuniarily interested in any transaction in which the Corporation may be interested, or contract with or lend money to the Corporation or otherwise act as fully and freely as though it were not Rights Agent under this Agreement.  Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Corporation or for any other legal entity.

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(i)

The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent will not be answerable or accountable for any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss to the Corporation resulting from any such act, omission, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof.

4.4

Change of Rights Agent

The Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days' notice (or such lesser notice as is acceptable to the Corporation) in writing mailed to the Corporation and to each transfer agent of Common Shares by registered or certified mail, and to the holders of the Rights in accordance with Section .  The Corporation may remove the Rights Agent upon 30 days' notice in writing given to the Rights Agent and to each transfer agent of the Common Shares (by personal delivery, or registered or certified mail).  If the Rights Agent should resign or be removed or otherwise become incapable of acting, the Corporation will appoint a successor to the Rights Agent.  If the Corporation fails to make such appointment within a period of 30 days after such removal or after it has been notified in writing of such resignation or incapacity by the r esigning or incapacitated Rights Agent, then the resigning Rights Agent or any holder of any Rights may apply to any court of competent jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether appointed by the Corporation or by such a court, shall be a corporation incorporated under the laws of Canada or a province thereof authorized to carry on the business of a trust company in the Province of Alberta.  After appointment, the successor Rights Agent will be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder upon payment of its outstanding fees and expenses owing by the Corporation to the predecessor Rights Agent under this Agreement, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose.   Not later than the effective date of any such appointment, the Corporation will file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares, and mail a notice thereof in writing to the holders of the Rights.  Failure to give any notice provided for in this Section , however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

ARTICLE 5
MISCELLANEOUS

5.1

Redemption and Termination

(a)

The Board of Directors, acting in good faith, may, with the prior consent of holders of Common Shares or of the holders of Rights given in accordance with subsection  or , as the case may be, at any time prior to the occurrence of a Flip-in Event as to which the application of Section  has not been waived pursuant to the provisions of this Section , elect to redeem all but not less than all of the then outstanding Rights at a redemption price of $0.00001 per Right appropriately adjusted in a manner analogous to the applicable adjustment provided for in Section  in the event that an event of the type analogous to any of the events described in Section  shall have occurred (such redemption price being herein referred to as the "Redemption Price").

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(b)

The Board of Directors, acting in good faith, may, with the prior consent of the holders of Common Shares given in accordance with subsection , determine, at any time prior to the occurrence of a Flip-in Event as to which the application of Section  has not been waived pursuant to this Section , if such Flip-in Event would occur by reason of an acquisition of Common Shares otherwise than pursuant to a Take-over Bid made by means of a Take-over Bid circular to all holders of record of Common Shares and otherwise than in the circumstances set forth in subsection , to waive the application of Section  to such Flip-in Event.  In the event that the Board of Directors proposes such a waiver, the Board of Directors shall extend the Separation Time to a date subsequent to and not more than ten Business Days following the meeting of shareholders ca lled to approve such waiver.

(c)

The Board of Directors, acting in good faith, may, prior to the occurrence of a Flip-in Event as to which the application of Section  has not been waived under this clause, determine, upon prior written notice to the Rights Agent, to waive the application of Section  to that Flip-in Event provided that the Flip-in Event would occur by reason of a Take--over Bid made by means of a Take-over Bid circular sent to all holders of record of Common Shares; further provided that if the Board waives the application of Section  to such a Flip-in Event, the Board of Directors shall be deemed to have waived the application of Section  to any other Flip-in Event occurring by reason of any Take-over Bid made by means of a Take-over Bid circular to all holders of record of Common Shares which is made prior to the expiry of any Take-over Bid in respect of which a w aiver is, or is deemed to have been, granted under this subsection .

(d)

The Board of Directors, acting in good faith, may, in respect of any Flip-in Event, waive the application of Section  to that Flip-in Event, provided that both of the following conditions are satisfied:

(i)

the Board of Directors has determined that the Acquiring Person became an Acquiring Person by inadvertence and without any intent or knowledge that it would become an Acquiring Person; and

(ii)

such Acquiring Person has reduced its Beneficial Ownership of Common Shares such  that at the time of waiver pursuant to this subsection  it is no longer an Acquiring Person.

(e)

The Board of Directors shall, without further formality, be deemed to have elected to redeem the Rights at the Redemption Price on the date that a Person who has made a Permitted Bid or a Take-over Bid in respect of which the Board of Directors has waived, or is deemed to have waived, pursuant to subsection , the application of Section , takes up and pays for the Common Shares pursuant to the terms and conditions of the Permitted Bid or Take-over Bid, as the case may be.

(f)

If a redemption of Rights pursuant to subsection  or a waiver of a Flip-in Event pursuant to subsection  is proposed at any time prior to the Separation Time, such redemption or waiver shall be submitted for approval to the holders of Common Shares.  Such approval shall be deemed to have been given if the redemption or waiver is approved by the affirmative vote of a majority of the votes cast by Independent Shareholders represented in person or by proxy at a meeting of such holders duly held in accordance with applicable laws and the Corporation's by-laws.

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(g)

If a redemption of Rights pursuant to subsection  is proposed at any time after the Separation Time, such redemption shall be submitted for approval to the holders of Rights.  Such approval shall be deemed to have been given if the redemption is approved by holders of Rights by a majority of the votes cast by the holders of Rights represented in person or by proxy at and entitled to vote at a meeting of such holders.  For the purposes hereof, each outstanding Right (other than Rights which are Beneficially Owned by any Person referred to in clauses (i) to (v) inclusive of the definition of Independent Shareholders) shall be entitled to one vote, and the procedures for the calling, holding and conduct of the meeting shall be those, as nearly as may be, which are provided in the Corporation's by-laws and the Business Corporations Act with respect to meetings of shareholders of the Corporation.

(h)

Where a Take-over Bid that is not a Permitted Bid is withdrawn or otherwise terminated after the Separation Time has occurred and prior to the occurrence of a Flip-in Event, the Board may elect to redeem all the outstanding Rights at the Redemption Price.  Notwithstanding such redemption, all of the provisions of this Agreement shall continue to apply as if the Separation Time had not occurred and it shall be deemed not to have occurred and Rights shall remain attached to the outstanding Common Shares, subject to and in accordance with the provisions of this Agreement.

(i)

If the Board of Directors elects or is deemed to have elected to redeem the Rights, and, in circumstances where subsection  is applicable, such redemption is approved by the holders of Common Shares or the holders of Rights in accordance with subsection  or , as the case may be, the right to exercise the Rights will thereupon, without further action and without notice, terminate and the only right thereafter of the holders of Rights will be to receive the Redemption Price.

(j)

Within 10 Business Days of the Board of Directors electing or having been deemed to have elected to redeem the Rights or, if subsection  is applicable within 10 Business Days after the holders of Common Shares or the holders of Rights have approved a redemption of Rights in accordance with subsection  or , as the case may be, the Corporation shall give notice of redemption to the holders of the then outstanding Rights by mailing such notice to each such holder at its last address as it appears upon the register of the Rights Agent or, prior to the Separation Time, on the register of the transfer agent for the Common Shares.  Any notice which is mailed in the manner herein provided will be deemed given, whether or not the holder receives the notice.  Each such notice of redemption will state the method by which the payment of the Redemption Price wil l be made.  Notwithstanding any other provision of this Agreement, no payment shall me made to a holder of Rights following a redemption of Rights if the redemption amount payable to such holder of Rights is less than $5.00.  The Corporation may not redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section  or in connection with the purchase of Common Shares prior to the Separation Time.

(k)

The Corporation shall give prompt written notice to the Rights Agent of any waiver of the application of Section  made by the Board of Directors under this Section .

5.2

Expiration

No Person shall have any rights pursuant to this Agreement or in respect of any Right after the Expiration Time, except the Rights Agent as specified in subsection  of this Agreement.

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5.3

Issuance of New Rights Certificates

Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Corporation may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the number of or kind or class of shares purchasable upon exercise of Rights made in accordance with the provisions of this Agreement.

5.4

Supplements and Amendments

(a)

The Corporation may make amendments to this Agreement to correct any clerical or typographical error or which are required to maintain the validity of this Agreement as a result of any change in any applicable legislation, rules or regulations thereunder.  The Corporation may, prior to the date of the shareholders' meeting referred to in Section , supplement, amend, vary, rescind or delete any of the provisions of this Agreement without the approval of any holders of Rights or Common Shares (whether or not such action would materially adversely affect the interests of the holders of Rights generally) where the Board of Directors acting in good faith deems such action necessary or desirable.  Notwithstanding anything in this Section  to the contrary, no such supplement or amendment shall be made to the provisions of  except with the written conc urrence of the Rights Agents to such supplement or amendment.

(b)

Subject to subsection , the Corporation may, with the prior consent of the holders of Common Shares, obtained as set forth below, at any time prior to the Separation Time, supplement, amend, vary, rescind or delete any of the provisions of this Agreement and the Rights (whether or not such action would materially adversely affect the interests of the holders of Rights generally).  Such consent shall be deemed to have been given if the action requiring such approval is authorized by the affirmative vote of a majority of the votes cast by Independent Shareholders present or represented at and entitled to be voted at a meeting of the holders of Common Shares duly called and held in compliance with applicable laws and the articles and by-laws of the Corporation.

(c)

The Corporation may, with the prior consent of the holders of Rights, at any time on or after the Separation Time, supplement, amend, vary, rescind or delete any of the provisions of this Agreement and the Rights (whether or not such action would materially adversely affect the interests of the holders of Rights generally), provided that no such amendment, variation or deletion shall be made to the provisions of  except with the written concurrence of the Rights Agents thereto.  Such consent shall be deemed to have been given if such amendment, variation or deletion is authorized by the affirmative votes of the holders of Rights present or represented at and entitled to be voted at a meeting of the holders held in accordance with subsection  and representing 50% plus one of the votes cast in respect thereof.

(d)

Any approval of the holders of Rights shall be deemed to have been given if the action requiring such approval is authorized by the affirmative votes of the holders of Rights present or represented at and entitled to be voted at a meeting of the holders of Rights and representing a majority of the votes cast in respect thereof.  For the purposes hereof, each outstanding Right (other than Rights which are void pursuant to the provisions hereof) shall be entitled to one vote, and the procedures for the calling, holding and conduct of the meeting shall be those, as nearly as may be, which are provided in the Corporation's by-laws and the Business Corporations Act with respect to meetings of shareholders of the Corporation.

30

(e)

Any amendments made by the Corporation to this Agreement pursuant to subsection  which are required to maintain the validity of this Agreement as a result of any change in any applicable legislation, rules or regulation thereunder shall:

(i)

if made before the Separation Time, be submitted to the shareholders of the Corporation at the next meeting of shareholders and the shareholders may, by the majority referred to in subsection , confirm or reject such amendment;

(ii)

if made after the Separation Time, be submitted to the holders of Rights at a meeting to be called for on a date not later than immediately following the next meeting of shareholders of the Corporation and the holders of Rights may, by resolution passed by the majority referred to in subsection , confirm or reject such amendment.

Any such amendment shall be effective from the date of the resolution of the Board of Directors adopting such amendment, until it is confirmed or rejected or until it ceases to be effective (as described in the next sentence) and, where such amendment is confirmed, it continues in effect in the form so confirmed.  If such amendment is rejected by the shareholders or the holders of Rights or is not submitted to the shareholders or holders of Rights as required, then such amendment shall cease to be effective from and after the termination of the meeting at which it was rejected or to which it should have been but was not submitted or from and after the date of the meeting of holders of Rights that should have been but was not held, and no subsequent resolution of the Board of Directors to amend this Agreement to substantially the same effect shall be effective unti l confirmed by the shareholders or holders of Rights as the case may be.

(f)

The Corporation shall be required to provide the Rights Agent with notice in writing of any such amendment, recission or variation to this Agreement as referred to in this Section  within five days of effecting such amendment, recission or variation.

(g)

Any supplement or amendment to this Agreement pursuant to subsections  through  shall be subject to the receipt of any requisite approval or consent from any governmental or regulatory authority having jurisdiction over the Corporation, including without limitation any requisite approval of stock exchanges on which the Common Shares are listed.

5.5

Fractional Rights and Fractional Shares

(a)

The Corporation shall not be required to issue fractions of Rights or to distribute Rights Certificates which evidence fractional Rights.  After the Separation Time there shall be paid to the registered holders of the Rights Certificates with regard to which fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the Market Price of a whole Right in lieu of such fractional Rights as of the date such fractional Rights would otherwise be issuable.  The Rights Agent shall have no obligation to make any payments in lieu of fractional Rights unless the Corporation shall have provided the Rights Agent with the necessary funds to pay in full all amounts payable in accordance with subsection .

(b)

The Corporation shall not be required to issue fractional Common Shares upon exercise of the Rights or to distribute certificates which evidence fractional Common Shares.  In lieu of issuing fractional Common Shares, the Corporation shall pay to the registered holder of Rights Certificates at the time such Rights are exercised as herein provided, an amount in cash equal to the same fraction of the Market Price of one Common Share at the date of such exercise.

31

5.6

Rights of Action

Subject to the terms of this Agreement, rights of action in respect of this Agreement, other than rights of action vested solely in the Rights Agent, are vested in the respective holders of the Rights; and any holder of any Rights, without the consent of the Rights Agent or of the holder of any other Rights, may, on such holder's own behalf and for such holder's own benefit and the benefit of other holders of Rights, enforce, and may institute and maintain any suit, action or proceeding against the Corporation to enforce, or otherwise act in respect of, such holder's right to exercise such holder's Rights, or Rights to which he is entitled, in the manner provided in this Agreement and in such holder's Rights Certificate.  Without limiting the foregoing or any remedies available to the holders of Rights it is specifically acknowledged that the holders of Rights would not have an adeq uate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement.

5.7

Holder of Rights Not Deemed a Shareholder

No holder, as such, of any Rights shall be entitled to vote, receive dividends or be deemed for any purpose the holder of Common Shares or any other securities which may at any time be issuable on the exercise of Rights, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any Rights, as such, any of the rights of a shareholder of the Corporation or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in Section  hereof), or to receive dividends or subscription rights or otherwise, until such Rights, or Rights to which such holder is entitled, shall have been exercised in accordance with the provisions hereof.

5.8

Notice of Proposed Actions

In case the Corporation shall propose after the Separation Time and prior to the Expiration Time:

(a)

to effect or permit (in cases where the Corporation's permission is required) any Flip-in Event; or

(b)

to effect the liquidation, dissolution or winding up of the Corporation or the sale of all or substantially all of the Corporation's assets,

then, in each such case, the Corporation shall give to each holder of a Right, in accordance with Section  hereof, a notice of such proposed action, which shall specify the date on which such Flip-in Event, liquidation, dissolution, or winding up is to take place, and such notice shall be so given at least 10 Business Days prior to the date of taking of such proposed action by the Corporation.

5.9

Notices

Notices or demands to be given or made in connection with this Agreement by the Rights Agent or by the holder of any Rights to or on the Corporation shall be sufficiently given or made if delivered or sent by mail, postage prepaid or by fax (with, in the case of fax, an original copy of the notice or demand sent by first class mail, postage prepaid, to the Corporation following the giving of the notice or demand by fax), addressed (until another address is filed in writing with the Rights Agent) as follows:

32

Gentry Resources Ltd.

2500, 101 - 6th Avenue S.W.

Calgary, Alberta  T2P 3P4

ATTENTION:  President

Fax:  (403) 266-3069

Notices or demands to be given or made in connection with this Agreement by the Corporation or by the holder of any Rights to or on the Rights Agent shall be sufficiently given or made if delivered or sent by mail, postage prepaid, or by fax (with, in the case of fax, an original copy of the notice or demand sent by first class mail, postage prepaid, to the Rights Agent following the giving of the notice or demand by fax), addressed (until another address is filed in writing with the Corporation) as follows:

Computershare Trust Company of Canada

600, 530 - 8th Avenue S.W.

Calgary, Alberta  T2P 3S8

ATTENTION:  Manager, Client Services

Fax:  (403) 267-6529

Notices or demands to be given or made in connection with this Agreement by the Corporation or the Rights Agent to or on the holder of any Rights shall be sufficiently given or made if delivered or sent by first class mail, postage prepaid, or by fax (with, in the case of fax, an original copy of the notice or demand sent by first class mail, postage prepaid, to such holder following the giving of the notice or demand by fax), addressed to such holder at the address of such holder as it appears upon the register of the Rights Agent or, prior to the Separation Time, on the register of the Corporation for the Common Shares.

Any notice given or made in accordance with this Section  shall be deemed to have been given and to have been received on the day of delivery, if so delivered, on the third Business Day (excluding each day during which there exists any general interruption of postal service due to strike, lockout or other cause) following the mailing thereof, if so mailed, and on the day of faxing (provided such sending is during the normal business hours of the addressee on a Business Day and if not, on the first Business Day thereafter).  Each of the Corporation and the Rights Agent may from time to time change its address for notice by notice to the other given in the manner aforesaid.

If mail service is or is threatened to be interrupted at a time when the Corporation or the Rights Agent wishes to give a notice or demand hereunder to or on the holders of the Rights, the Corporation or the Rights Agent may, notwithstanding the foregoing provisions of this Section , give such notice by means, of publication once in each of two successive weeks in the business section of the Financial Post and, so long as the Corporation has a transfer agent in the United States, in a daily publication in the United States designated by the Corporation, or in such other publication or publications as may be designated by the Corporation and notice so published shall be deemed to have been given on the date on which the first publication of such notice in any such publication has taken place.

5.10

Costs of Enforcement

The Corporation agrees that if the Corporation fails to fulfil any of its obligations pursuant to this Agreement, then the Corporation will reimburse the holder of any Rights for the costs and expenses (including legal fees) incurred by such holder in actions to enforce his rights pursuant to any Rights or this Agreement.

33

5.11

Successors

All the covenants and provisions of this Agreement by or for the benefit of the Corporation or the Rights Agent shall bind and enure to the benefit of their respective successors and assigns hereunder.

5.12

Benefits of this Agreement

Nothing in this Agreement shall be construed to give to any Person other than the Corporation, the Rights Agent and the holders of the Rights any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Corporation, the Rights Agent and the holders of the Rights.

5.13

Descriptive Headings

Descriptive headings appear herein for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

5.14

Governing Law

This Agreement and each Right issued hereunder shall be deemed to be a contract made under the laws of the Province of Alberta and for all purposes shall be governed by and construed in accordance with the laws of such Province applicable to contracts to be made and performed entirely within such Province.

5.15

Language

Les parties aux présentes ont exigé que la présente convention ainsi que tous les documents et avis qui s'y rattachent et/ou qui en découleront soient rédigés en langue anglaise.  The parties hereto have required that this Agreement and all documents and notices related thereto and/or resulting therefrom be drawn up in the English language.

5.16

Counterparts

This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

5.17

Severability

If any term or provision hereof or the application thereof to any circumstance is, in any jurisdiction and to any extent, invalid or unenforceable, such term or provision shall be ineffective as to such jurisdiction to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable the remaining terms and provisions hereof or the application of such term or provision to circumstances other than those as to which it is held invalid or unenforceable.

5.18

Shareholder Review

At or prior to the annual meeting of the shareholders of the Corporation in the year 2007, provided that a Flip-in Event has not occurred prior to such time, the Board of Directors shall submit a resolution ratifying the continued existence of this Agreement to the Independent Shareholders for their consideration and, if thought advisable, approval. Unless a majority of the votes cast by Independent

34

Shareholders who vote in respect of such resolution are voted in favour of the continued existence of this Agreement, the Board of Directors shall, immediately upon the confirmation by the chairman of such shareholders' meeting of the result of the vote on such resolution and without further formality, be deemed  to have elected to redeem the Rights at the Redemption Price.

5.19

Regulatory Approvals

Any obligation of the Corporation or action or event contemplated by this Agreement shall be subject to the receipt of any requisite approval or consent from any governmental or regulatory authority.  Without limiting the generality of the foregoing, any issuance or delivery of debt or equity securities (other than non-convertible debt securities) of the Corporation upon the exercise of Rights and any amendment or supplement to this Agreement shall be subject to the prior consent of the Toronto Stock Exchange and any other exchange upon which the Common Shares may be listed.

5.20

Declaration as to Non-Canadian and Non-U.S. Holders

If in the opinion of the Board of Directors (who may rely upon the advice of counsel), any action or event contemplated by this Agreement would require compliance with the securities laws or comparable legislation of a jurisdiction outside Canada and the United States of America, its territories and possessions, the Board of Directors acting in good faith may take such actions as it may deem appropriate to ensure that such compliance is not required, including without limitation establishing procedures for the issuance to a Canadian resident Fiduciary of Rights or securities issuable on exercise of Rights, the holding thereof in trust for the Persons entitled thereto (but reserving to the Fiduciary or to the Fiduciary and the Corporation, as the Corporation may determine, absolute discretion with respect thereto) and the sale thereof and remittance of the proceeds of such sale, if any, t o the Persons entitled thereto.  In no event shall the Corporation or the Rights Agent be required to issue or deliver Rights or securities issuable on exercise of Rights to Persons who are citizens, residents or nationals of any jurisdiction other than Canada and a province or territory thereof and the United States of America and any state thereof in which such issue or delivery would be unlawful without registration of the relevant Persons or securities for such purposes.

5.21

Determinations and Actions by the Board of Directors

All actions and determinations (including all omissions with respect to the foregoing) which are done or made by the Board of Directors, pursuant to this Agreement, in good faith, shall not subject any member of the Board of Directors to any liability whatsoever to the holders of the Rights.

35

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

GENTRY RESOURCES LTD.

Per:                                                        

Name:

Hugh G. Ross

Title:

President and Chief Executive Officer

Per:                                                        

Name:

Ketan Panchmatia

Title:

Vice President, Finance and

Chief Financial Officer

COMPUTERSHARE TRUST COMPANY OF CANADA

Per:                                                       

Name:

Title:

Per:                                                       

Name:

Title:

36

EXHIBIT A

FORM OF RIGHTS CERTIFICATE

Certificate No.                                                                           

 Rights

THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  IN CERTAIN CIRCUMSTANCES (SPECIFIED IN SUBSECTION 3.1(b) OF THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR TRANSFEREE OF AN ACQUIRING PERSON OR ITS AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY PERSON ACTING JOINTLY OR IN CONCERT WITH ANY OF THEM MAY BECOME VOID .

RIGHTS CERTIFICATE

This certifies that                                                                                               

 is the registered holder of the number of Rights set forth above, each of which entitles the registered holder thereof, subject to the terms, provisions and conditions of the Amended and Restated Shareholder Rights Plan Agreement dated as of May 28, 2004 (amending and restating the Shareholder Rights Plan Agreement dated April 24, 1998 as amended May 25, 2001), as such may from time to time be amended, restated, varied or replaced, (the "Rights Agreement") between Gentry Resources Ltd. a corporation incorporated under the laws of Canada (the "Corporation"), and Computershare Trust Company of Canada, a trust company incorporated under the laws of Canada, as Rights Agent (the "Rights Agent"), which term shall include any successor Rights Agent under the Rights Agreement, to purchase from the C orporation at any time after the Separation Time (as such term is defined in the Rights Agreement) and prior to the earlier of (i) the Termination Time (as such term is defined in the Rights Agreement) and (ii) the termination of the annual meeting of the shareholders of the Corporation in the year 2007 (unless extended in accordance with the Rights Agreement), one fully paid common share of the Corporation (a "Common Share") at the Exercise Price referred to below, upon presentation and surrender of this Rights Certificate together with the Form of Election to Exercise duly executed to the Rights Agent at its principal office in the City of Calgary or in such other cities as may be designated by the Corporation from time to time.  The Exercise Price shall initially be CDN $50 per Right and shall be subject to adjustment in certain events as provided in the Rights Agreement.

In certain circumstances described in the Rights Agreement, the number of Common Shares which each Right entitles the registered holder thereof to purchase shall be adjusted as provided in the Rights Agreement.

This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Rights Agent, the Corporation and the holders of the Rights Certificates.  Copies of the Rights Agreement are on file at the registered office of the Corporation and are available upon written request.

This Rights Certificate, with or without other Rights Certificates, upon surrender at any of the offices of the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing an aggregate number of Rights equal to the aggregate number of Rights evidenced by the Rights Certificate or Rights Certificates surrendered.  If this Rights Certificate shall be exercised in part, the registered holder shall be entitled to receive, upon surrender hereof, another Rights Certificate or Rights Certificates for the number of whole Rights not exercised.

A - 1

Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Corporation at a redemption price of $0.00001 per Right, subject to adjustment in certain events, under certain circumstances at its option.  No payment shall be made to a holder of Rights for redemption amounts under $5.00.

No fractional Common Shares will be issued upon the exercise of any Rights evidenced hereby, but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.

No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of Common Shares or of any other securities which may at any time be issuable upon the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the Rights of a shareholder of the Corporation or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement.

This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.

WITNESS the facsimile signature of the proper officers of the Corporation and its corporate seal.

Date:                                                            

GENTRY RESOURCES LTD. Per:                                                            Authorized Officer	Per:                                                           Authorized Officer
Countersigned: COMPUTERSHARE TRUST COMPANY OF CANADA Per:                                                             Authorized Officer

A - 2

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the Rights represented by this Rights Certificate.)

FOR VALUE RECEIVED                                                                               

hereby sells, assigns

and transfers to                                                                                                                              

(Please print name and address of transferee)

the Rights represented by this Rights Certificate, together with all right, title and interest therein, and hereby irrevocably constitutes and appoints

 as attorney, to transfer the within Rights on the books of the Corporation, with full power of substitution.

Dated:

Signature Guaranteed:	Signature
	(Signature must correspond to name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.)

Signature must be guaranteed by a Canadian chartered bank, a Canadian trust company, a member of a recognized stock exchange or a member of the Securities Transfer Association Medallion (STAMP) Program.

(To be completed if true)                                                                      

The undersigned hereby represents, for the benefit of all holders of Rights and Common Shares, that the Rights evidenced by this Rights Certificate are not, and, to the knowledge of the undersigned, have never been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof or by any Person acting jointly or in concert with any of the foregoing (all capitalized terms are used as defined in the Rights Agreement).

Dated:                                                              
Signature:                                                           

A - 3

NOTICE

In the event the certification set forth above in the Form of Election to Exercise is not completed upon exercise of the Right(s) evidenced hereby or in the event that the certification set forth above in the Form of Assignment is not completed upon the assignment of the Right(s) evidenced hereby, the Corporation will deem the Beneficial Owner of the Right(s) evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof or a Person acting jointly or in concert with any of them (each as defined in the Rights Agreement) and, in the case of an assignment, will affix a legend to that effect on any Rights Certificates issued in exchange for this Rights Certificate.

(To be attached to each Rights Certificate)

FORM OF ELECTION TO EXERCISE

TO:

GENTRY RESOURCES LTD.

The undersigned hereby irrevocably elects to exercise

 whole Rights represented by the attached Rights Certificate to purchase the Common Shares (or other securities or property) issuable upon the exercise of such Rights and requests that certificates for such shares (or other, securities or title to such property) be issued in the name of:

(Name)                                                     

(Street)                                                     

(City and State or Province)                      

(Country, Postal Code or Zip Code)           

SOCIAL INSURANCE, SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION NUMBER

A - 4

If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights shall be registered in the name of and delivered to:

	(Name)
	(Street)
	(City and State or Province)
	(Country, Postal Code or Zip Code)
	SOCIAL INSURANCE, SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION NUMBER
Dated:	Signature                                                     Signature must correspond to name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.)

(Signature must be guaranteed by a Canadian chartered bank, a Canadian trust company, a member of a recognized stock exchange or a member of the Securities Transfer Association Medallion (STAMP) Program.

(To be completed if true)                                                                   

The undersigned hereby represents, for the benefit of all holders of Rights and Common Shares, that the Rights evidenced by this Rights Certificate are not, and, to the knowledge of the undersigned, have never been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof or by any Person acting jointly or in concert with any of the foregoing (all capitalized terms are used as defined in the Rights Agreement).

Dated:                                                      
Signature:                                                         

NOTICE

In the event the certification set forth above in the Form of Election to Exercise is not completed upon exercise of the Right(s) evidenced hereby or in the event that the certification set forth above in the Form of Assignment is not completed upon the assignment of the Right(s) evidenced hereby, the Corporation will deem the Beneficial Owner of the Right(s) evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof or a Person acting jointly or in concert with any of them (each as defined in the Rights Agreement) and, in the case of an assignment, will affix a legend to that effect on any Rights Certificates issued in exchange for this Rights Certificate

A - 5

EX-12

Exhibit 12.1

CERTIFICATION

I, Hugh G. Ross, certify that:

1.  I have reviewed this annual report on Form 20-F of Gentry Resources Ltd.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.  The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted pursuant to Transition Period provisions at Section III of Release 34-47986 of the Securities and Exchange Commission entitled “Management’s Reports on Internal Control over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports”] for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [omitted pursuant to Transition Period provisions at Section III of Release 34-47986 of the Securities and Exchange Commission entitled “Management’s Reports on Internal Control over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports”];

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.  The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date:  June 28, 2004

(signed) “Hugh G. Ross”

Hugh G. Ross

President and Chief Executive Officer

EX-12

Exhibit 12.2

CERTIFICATION

I, Ketan Panchmatia, certify that:

1.  I have reviewed this annual report on Form 20-F of Gentry Resources Ltd.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.  The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted pursuant to Transition Period provisions at Section III of Release 34-47986 of the Securities and Exchange Commission entitled “Management’s Reports on Internal Control over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports”] for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [omitted pursuant to Transition Period provisions at Section III of Release 34-47986 of the Securities and Exchange Commission entitled “Management’s Reports on Internal Control over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports”];

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.  The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date:  June 28, 2004

(signed) “Ketan Panchmatia”

Ketan Panchmatia

Vice President, Finance and Chief Financial Officer

EX-13

Exhibit 13.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report on Form 20-F of Gentry Resources Ltd. for the year ended December 31, 2003, as filed with the Securities and Exchange Commission, I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.  The annual report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.  The information contained in the annual report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date:  June 28, 2004

(signed) “Hugh G. Ross”

Hugh G. Ross

President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.

EX-13

Exhibit 13.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report on Form 20-F of Gentry Resources Ltd. for the year ended December 31, 2003, as filed with the Securities and Exchange Commission, I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.  The annual report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.  The information contained in the annual report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date:  June 28, 2004

(signed) “Ketan Panchmatia”

Ketan Panchmatia

Vice President, Finance and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.