1. CONTINUING OPERATIONS

Crew Gold Corporation (“Crew” or the “Company”) is an international mining company focused on identifying, acquiring and developing resource projects worldwide. At present, Crew operates a gold mine in Greenland and has an equity interest in a South African mining operation. Subsequent to June 30, 2005, Crew has acquired a further gold mining operation in the Philippines. The Company also controls development projects in Greenland, Norway, Ghana and the Philippines. The Company’s shares are traded on the Toronto, Oslo and Frankfurt Stock Exchanges and on the over the counter market in the United States.

These financial statements have been prepared on a going concern basis which assumes that the Company will continue to realise its assets and discharge its liabilities in the normal course of operations. During 2005 the Company recorded a net loss of $8,965,000 (2004 - $2,859,000) and at June 30, 2005 has net working capital of $36,175,000 (2004 - $938,000). Continuation of the Company as a going concern is dependent on the Company achieving profitable commercial operation on its Nalunaq mine and other mineral properties and/or the receipt of additional debt or equity contributions from shareholders or third parties. If the Company were unable to continue as a going concern, then material adjustments would be required to the carrying value of assets and liabilities and the balance sheet classifications used.

2. SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). The significant accounting policies used in these consolidated financial statements are as follows:

(a) Change in reporting and functional currency

Effective July 1, 2004 the Company changed its functional currency from the Canadian dollar (“CDN$”) to the United States dollar (“US$”). The change was necessary due to the fact that during the quarter ended September 30, 2004 the Nalunaq Gold Mine completed its development and commenced its commercial mining operations. Revenues and direct costs for the Nalunaq Mine are now principally denominated in US$. Accordingly, the Company considered the results for the Group would be more fairly reflected by adopting US$ as its functional currency. The Company also adopted the US$ as its reporting currency.

The comparative figures for the year ended June 30, 2004, including supplementary information were translated using the current method of translation. Under this method, the income statement and the cash flow statement items were translated into the reporting currency using the rates in effect at the date of the transactions, effectively the average exchange rate for the year of US$1.00 = CDN$1.3436. Assets and liabilities were translated at the June 30, 2004 year end rate of US$1.00 = CDN$1.3453. All resulting exchange differences are reported as cumulative translation adjustments as a separate component of shareholders’ equity.

(b) Basis of presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries, and a proportionate share of joint ventures in which Crew has an interest. The principal subsidiaries of the Company as at June 30, 2005 are as follows:

The Company’s 77.3% (2004 - 72%) interest in Nanortalik I/S (Greenland) is subject to joint control and is consolidated on a proportional basis, whereby the Company includes in its accounts its proportionate share of Nanortalik’s assets, liabilities, and expenses. The Company’s 20% interest in Barberton Mines Limited (“Barberton”) is recorded using the equity method.

(c) Use of estimates

The preparation of financial statements in conformity with Canadian GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant areas where management’s judgement is applied include asset valuations, depreciation and depletion, income taxes, contingent liabilities and the provision for reclamation. Actual results may differ from those estimates.

(d) Revenue recognition

Revenue from mineral ore sales is based on the value of minerals sold, net of value added tax, and is recognized at the time that mineral ore is delivered to the customer, title and risks of ownership have passed, collection is reasonably assured and the price is reasonably determinable.

Revenue from the sale of mineral ore may be subject to adjustment upon final settlement of estimated metal prices, weights and assays. Adjustments to revenue for metal prices are recorded monthly and any other adjustments are recorded on final settlement. The purchaser is responsible for the refining treatment of the ore. The contractual arrangement with the purchaser provides that the proceeds to the Company are calculated after deducting applicable treatment, refining and related charges.

(e) Foreign currency translation

For operations considered financially and operationally integrated with the Company, foreign currency monetary assets and liabilities are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Non-monetary assets, liabilities, revenues and expenses are translated into U.S. dollars at the rate of exchange prevailing n the respective dates of the transactions. Exchange gains and losses are included in earnings.

For operations considered self-sustaining, foreign currency assets and liabilities are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate for the fiscal period. The resulting exchange gains and losses are accumulated in a separate component of shareholders’ equity until there has been a realized reduction in the net investment in such operations.

(f) Cash and cash equivalents

Cash and cash equivalents includes short-term money market instruments with terms to maturity, at the date of acquisition, not exceeding ninety days.

(g) Investments

Investments where the Company has the ability to exercise significant influence, generally 20% to 50% owned by the Company, are accounted for using the equity method. Under this method, the Company’s share of the company’s earnings or losses is included in operations and its investments therein are adjusted by a like amount. Dividends received from these investments are credited to the investment accounts. Other long-term investments are accounted for using the cost method, whereby income is included in operations when received or receivable. Provisions for impairment of long-term investments are made, where necessary, to recognize other than temporary declines in value.

(h) Property, plant and equipment

Property, plant and equipment are recorded at cost. All costs related to the acquisition, exploration and development of mineral properties are capitalised until either commercial production is established, the property is determined to be impaired or it is abandoned.

Buildings, plant and equipment are depreciated on a straight-line or diminishing balance basis over their estimated useful lives. Details of the method and estimated useful lives are as follows:

Depletion of mine properties is charged on a unit-of-production basis over proven and probable reserves including a portion of resources management identifies as having very high potential to be converted to reserves.

Evaluations of the carrying values of each operation and development property are undertaken in each reporting period to determine if estimated undiscounted future net cash flows are less than the carrying value. Estimated undiscounted future net cash flows are calculated using estimated future mineral ore sales prices and production and operating costs, capital costs and reclamation and closure costs. If it is determined that the future net cash flows from an operation or development property are less than the carrying value, then a write-down is recorded with a charge to operations.

The carrying value of exploration stage mineral property interests represent costs incurred to date and does not reflect present or future values. The Company is in the process of exploring its other mineral properties interests and has not yet determined whether they contain ore reserves that are economically recoverable. Accordingly, the recoverability of these capitalized costs is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete their exploration and development, and upon future profitable production.

(i) Inventories

Stockpiled ore is stated at the lower of cost (which includes an applicable proportion of production overheads and depletion and depreciation) and net realizable value. Materials and consumable supplies are recorded at the lower of cost and replacement cost.

(j) Reclamation and closure costs

The Company recognizes the estimated fair value of liabilities for asset retirement obligations including reclamation and closure costs in the period in which they are incurred. A corresponding increase to the carrying amount of the related asset is recorded and depreciated over the life of the asset. The amount of the liability is subject to remeasurement at each reporting period and is accreted over time to the estimated asset retirement obligation ultimately payable through charges to operations. The estimates are based principally on obligations arising through legal and regulatory requirements. It is possible that Crew’s estimates of its ultimate reclamation and closure liabilities could change as a result of changes in regulations, the extent of environmental remediation required, changes in technology and the means and cost of reclamation.

(k) Convertible bonds

The convertible bonds issued during the year ending June 30, 2004 have been segregated into their debt and equity components. The financial liability component, representing the value allocated to the liability at the time of inception, is recorded as a long-term liability. The remaining component, representing the value ascribed to the holders’ option to convert the principal amount into common shares, is classified in shareholders’ equity as “Equity component of convertible bonds”.

These components have been measured at their respective fair values on the date the bonds were issued. The finance costs associated with the issue of the convertible bonds have been deferred and are being amortized over the period of the liability. Over the term of the debt obligation, the debt component is accreted to the face value of the instrument by recording an additional interest expense.

(l) Income taxes

Future income tax assets and liabilities are computed based on differences between the carrying amount of assets and liabilities on the balance sheet and their corresponding tax values using the enacted income tax rates at each balance sheet date. Future income tax assets also result from unused loss carryforwards and other deductions. The valuation of future income tax assets is adjusted, if necessary, by use of a valuation allowance to reflect the estimated realizable amount.

(m) Stock-based compensation

The Company has a share option plan as described in Note 11 (g). Effective July 1, 2003, the Company adopted the fair value method for accounting for all stock-based awards to non-employees and employees, including those that are direct awards of stock. Under the fair value method, employee compensation expense attributed to direct awards of stock is measured at the fair value of the award at the grant date and is recognized over the vesting period of the award using on option-pricing model. If and when the stock options are ultimately exercised, the applicable amounts of additional paid-in capital and contributed surplus are credited to share capital.

(n) Loss per share

Basic loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted loss per share is computed using the treasury stock method. Under the treasury stock method, common equivalent shares consist of the incremental common shares issuable upon the exercise of stock options and warrants or the conversion of convertible bonds, and are excluded from the computation if their effect is anti-dilutive.

(o) Comparative figures

Certain of the prior year’s comparative figures have been reclassified to conform with the presentation in the current year.

3. NALUNAQ MINERAL PROPERTY, PLANT AND EQUIPMENT

The Company has an 82.5% interest in Nalunaq Gold Mine A/S, a Greenlandic limited liability company with an operating gold mine in Greenland.

Commercial operation of the Nalunaq mine commenced on July 1, 2004. Amounts recovered from sale of the ore stockpile accumulated during the development stage, net of direct processing, shipping and selling costs have been recorded as a reduction of mining development costs.

The following table shows the continuity of the Nalunaq mineral property interest during the two years ended June 30, 2005:

The components of the Nalunaq mineral property, plant and equipment are as follows:

As a condition for obtaining the mining license for Nalunaq Gold Mines A/S, the Company issued a guarantee to the Government of Greenland on June 2, 2003 (see Note 14 (a) for a complete description). During the year ended June 30, 2003 Nalunaq Gold Mine provided a security deposit of $652,000 (DKK4.2 million) to the government of Greenland to cover future estimated mine closure costs and a three-year monitoring program. This security deposit was increased to $1,093,000 (DKK6.58 million) during the year ended June 30, 2004 and decreased to $1,077,000 (DKK6.65 million) during the year ended June 30, 2005.

The amount of the deposit was based on an estimate of closure costs prepared by Greenland’s Bureau of Minerals and Petroleum (“BMP”) as set out in a detailed closure plan provided by the BMP. The terms set out in the closure plan are not exhaustive and the BMP reserves the right to set out additional terms in the event of future exploration activities within the areas of the exploitation license.

4.INVENTORIES

Inventories as at June 30, 2005 are as follows:

5. INVESTMENT IN AND ADVANCES TO BARBERTON MINES LTD

The following table shows the continuity of the investment in Barberton for the two years ended June 30, 2005:

Effective June 15, 2003, the Company acquired a 20% interest in the ETC Division of Avgold Limited (renamed “Barberton Mines Limited”) for a total cash cost of $3,816,000 (Rand 30 million). This cash payment comprised of a shareholder loan of $3,816,000 (Rand 30 million) and a nominal equity investment of $3 (Rand 20). The shareholder loans were unsecured, subordinated in favour of all creditors of Barberton, and bore interest at such rate as determined by Barberton’s board of directors, but not to exceed prime. The loans were repayable once certain conditions of Barberton’s term-loan facility agreement with its external financiers had been met. Subject to these conditions, Barberton would distribute 66% of its annual profits as repayment of shareholder loans or dividends, subject to its future cash flow needs.

The acquisition was made by a consortium consisting of Metorex Ltd (54%), MCI Resources Ltd (26%) and the Company (20%). The total purchase price paid by the consortium of Rand 255 million was funded by a Rand 105 million term-loan facility and Rand 150 million of shareholder loans. The term loan facility is secured by a pledge of all Barberton shares held by the shareholders and by Barberton’s assets. In addition, certain financial and operational lending covenants must be achieved by Barberton, of which failure to do so will result in restrictions on the payment of dividends, repayments of shareholder loans and the repayment of interest thereunder.

On October 29, 2003 it was agreed by Special Resolution to increase the authorised share capital of Barberton Mines Limited from Rand 12,000,000 to Rand 12,016,000 by the creation of 16,000 cumulative variable rate redeemable preference shares of Rand 1 each. These shares have no voting rights. On December 23, 2003 the shareholder loans of Rand 150,000,000 were converted to 15,000 cumulative variable rate redeemable preference shares of Rand 1 each. The issue price of each of these shares was Rand 10,000. Rand 9,999, being the surplus between issue price and par value, was credited to a share premium account of Barberton.

In exchange for converting Rand 30,000,000 of shareholder loans, Crew received 3,000 preference shares of par value Rand 1 each with a deemed aggregate issue price of Rand 30,000,000 ($4,311,000). The exchange of shareholder loans for preference shares was recorded at the book value of the loans with no net increase in the carrying values of the Company’s investment in Barberton.

The following is a summary of the assets, liabilities and results of operations of Barberton Mines Limited prepared after adjustments to harmonize accounting policies with those of the Company and converted from South African Rand (“Rand”) to US$.

6. OTHER MINERAL PROPERTY INTERESTS

The carrying value of other mineral property interests includes acquisition costs and deferred exploration expenditures relating to properties in which mining of an ore reserve has not commenced. Details of these at June 30, 2005 and 2004 are as follows:

(a) Hwini-Butre Gold Project
Through a wholly-owned subsidiary, the Company owns 51% of the Hwini-Butre gold concession located in Ghana, Africa . The Company disposed of its shareholding in this subsidiary subsequent to June 30, 2005 (Note 20 (c)).

(b) Seqi Olivine
During the year ended June 30, 2003, the Company exercised an option to acquire 100% of the mineral rights to the Seqi Olivine property in Southern Greenland.

During the year ended June 30, 2004, the Company entered into an agreement with Minelco AB, a subsidiary of iron ore producer LKAB of Sweden, to develop a Bankable Feasibility Study (“BFS”) for the Seqi Olivine project (the “Seqi Project”). The Company was responsible for the management of further drilling and for the preparation of the BFS, whereas Minelco covered related costs. The BFS was completed and approved by the Minelco Board during fiscal 2004.

During fiscal 2005, the Company disposed of its entire interest in the Seqi Project to Minelco AB resulting in a gain on disposal of $9,686,000. The sale price consisted of a cash payment of $10 million paid upon closing and a 17-year royalty agreement based on tonnage produced. Under the terms of the royalty agreement, the Company is entitled to an annual minimum royalty of $1 million in the third through fourteenth year of commercial production of the Seqi Project, subject to certain conditions. The royalty will be recorded in the period it is earned and payable.

(c) Nanortalik I/S
At June 30, 2003, the Company had a 67% interest in Nanortalik I/S, which is a joint venture between the Company and NunaMinerals A/S (33% interest).

During the year ended June 30, 2004 the joint venture incurred $336,000 in exploration costs. For the year ended June 30, 2005, the Company funded the joint venture through intercompany advances. NunaMinerals did not participate in these advances nor in 2004’s capital calls and, as a consequence, suffered a dilution resulting in an increase in the Company’s interest from 67% to 77.3%. After year end, the Company funded the joint venture an additional US$130,000, increasing the Company’s interest to 78.3%. It is expected that the Company will fund all of the remaining exploration commitment for the current program, resulting in a further increase in its joint venture interest. Should the interest of NunaMinerals be reduced below 10% due to continued dilution, NunaMinerals would have the option of converting its interest into a net royalty smelter agreement (“NRS”). The NRS percentage would be determined based on a sliding scale as defined in the joint venture agreement.

Details of the financial position, results of operations and cash flows of Nanortalik I/S are as follows:

(d) Ringvassoy Gold Project
The Ringvassoy gold project is found in an Archean Greenstone belt, in Northern Norway. The Company has secured claims, which cover a number of gold mineralized areas, and has conducted a grassroots exploration campaign. The results were sufficiently encouraging to continue activities and since the year end, a follow up programme on exploration and target definition was undertaken.

(e) Mindoro Nickel Project
In 1997, an Exploration Permit (“EP”) for the Mindoro concession was granted to Aglubang Mining Corp, a fully owned subsidiary of Crew. In 2001 the key section of the concession was granted a Mineral Production-Sharing Agreement (“MPSA”), which secured for the group the exclusive right to develop the property into a mine for a period of 25 years. According to this agreement the Group was granted a five-year period to complete a Bankable Feasibility Study (“BFS”) and an Environmental Impact Assessment (“EIA”). The MPSA covered the area where the Group had defined a measured and indicated resource.

In July 2001 the MPSA was cancelled unexpectedly by the Department of Environment and Natural Resources (“DNER”) in the Philippines. As a consequence of the cancellation the Company recorded impairment provisions against the full carrying valueof its investment in the project totalling $26.4 million. On March 24, 2004 the Company announced that its Philippine subsidiary Aglubang Mining Corp had received notification that the cancellation of its MPSA had been revoked and set aside, which effectively reinstated fully the MPSA and title to the property.

As at June 30, 2005 the carrying value of the project in the financial statements was $47,000 (2004 - $Nil). No adjustments can be made in the financial statements to reinstate the project to its original carrying value.

On July 1, 2005 the Company signed a Memorandum of Understanding (the “MOU”) with Jilin JIEN Nickel Industry Corporation (“Jilin”) relating to the cooperative development of Crew’s Mindoro Nickel Project (“MNP”). The MOU has a term of six months and establishes a framework whereby Crew and Jilin will jointly contribute to further studies and test work on MNP with the objective of finalizing a definitive agreement.

(f) Geothermal project
During the year ended June 30, 2003, the Company granted 800,000 of its shares in North Pacific Geopower Corporation (“NPGP”) to the former Chairman, as part of a settlement agreement.

Due to the difficulties faced by NPGP in raising necessary financing for the geothermal project, the Company wrote down its investment in the geothermal project to $1, resulting in a provision for impairment of $2,153,000 during the year ended June 30, 2003.

On September 26, 2003, pursuant to an agreement dated September 3, 2003 the Company sold its 86.1% shareholding in NPGP. In consideration for the sale of this subsidiary, the Company received cash consideration of $173,000 and forgave an intercompany debt of $416,000, which was repayable by NPGP to the Company.

At the time of closing, NPGP had external liabilities of $423,000 all of which were assumed by the purchaser of NPGP. The Company also agreed to defer the repayment of an additional loan from NPGP of $619,000 which is now be payable to the Company on December 31, 2011. The Company has made full provision for this amount and the gain on the sale of the shares was reduced accordingly.